Plea for freer commercial speech
on Mar 27, 2009 at 10:00 am
UPDATE: The case has been docketed as 08-1202.
Two companies that gather wide-ranging data on health care, including several billion reports each year on drugs that doctors are prescribing for patients, asked the Supreme Court on Friday to give the highest level of constitutional protection to assembling and selling commercial data.
“This case,” the companies’ argued, “highlights the social benefit of expression driven by the speaker’s commercial interests.” As a result, it said, the case would provide the Court “with the opportunity to revisit whether commercial speech should remain subject to lessened First Amendment protection.”
The petition in IMS Health v. Ayotte (available here) is a sweeping challenge to a First Circuit Court decision last November upholding a New Hampshire law that seeks to stop the use of Rx reports to try to persuade doctors to prescribe brand-name drugs. The Circuit Court ruling is available here; it is a large file. The petition appendix, which includes the lower court ruling, is available here.
As the case reached the Supreme Court, it was framed as a major new test of how far the First Amendment allows government to go to regulate the gathering of data and re-packaging it for publication, in a case with particular focus on using new electronic media to assemble, package and distribute huge volumes of data.
The First Circuit ruling at issue is “really an Information Age kind of decision,” according to First Amendment scholar Rodney Smolla of Washington and Lee University, who is helping to draw attention to the new controversy.
The so-called “Prescription Information Law” (or PIL), enacted three years ago, provides criminal and civil penalties for those who distribute prescription histories for a “commercial purpose,” although it includes a number of exceptions. The state legislature concluded that consumers are paying higher prices for brand-name drugs that pharmaceutical company sales agents promote in “detailing” encounters with doctors, using those doctors’ own prescription histories or histories from other doctors to make their case.
The law, however, does not block such “detailing” exchanges directly. Rather, it outlaws “upstream” gathering and distribution of Rx histories when done commercially. And, as interpreted by the Circuit Court, it does so by barring the data-gatherers from distributing it to anyone who would “use the informastion for detailing” — that is, the major drug companies, who reportedly spend more than $4 billion a year on “detailing” expenses (including free samples).
(Lawyers for Akin Gump are involved in the petition to the Supreme Court. The author of this post, however, operates independently of the firm’s law practice.)
The Rx reports at issue in the case are assembled from computer databases, showing the identity of the doctor, the drug p;rescribed, and the dosage and quantity. The identity of patients is deleted for privacy, but the remaining information allows charting of types of medicines and types of treatment regimens that can then be used for research or other purposes beyond mere commercial applications.
The IMS Health petition to the Supreme Court, joined by another data-mining firm, SDI (formerly Verispan, LLC, raises three questions: a broad query on how far the First Amendment protects the gathering and publication of accurate factual date, a test of whether the law bans only some commercial uses of this kind of data, and a test of whether the First Amendment allows such a ban when it has a wide array of exceptions and reaches more commercial expression than is necessary to serve the law’s claimed purpose.
But the petition goes further: it urges the Court to reconsider the basic definition of commercial speech and to cast aside the current middle level of court scrutiny of such expression, substituting for it the most rigorous standard available under the First Amendment — the kind of “strict scrutiny” now used in judging restraints on political and other favored forms of communication.
The First Circuit, though limiting its examination to the “upstream” part of Rx data distribution, spoke broadly and found that this form of commercial speech is not protected in any way by the First Amendment. It said the use of the data to assist drugmakers in “detailing” was of “scant social value.”
It accepted the state legislature’s argument that there is a sufficient link between the data IMS and SDI gather and sell, the detailing process and higher drug prices for consumers. Detailinig works, it said, to get doctors to prescribe brand-name instead of lower-priced generic drugs; otherwise, it said, the pharmaceutical companies would not be spending $4 billion a year to make expensive one-on-one marketing visits with doctors.
As an alternative basis for its ruling, the Circuit Court said that, even if what the data-miners do is a form of speech, it is commercial speech that gets less First Amendment protection. It went on to find that the legislature’s interest in containing costs of medicines for patients justified the restrictions.
The Court may not reach the case before the end of its current Term in early summer, especially if the state of New Hampshire seeks added time to file its defense of the law.
