Those with an interest in reducing health care costs will need to assess the impact of this case. Not every impact on health care costs is the responsibility of legislators. In Sorrell v. IMS Health, Inc., the Supreme Court struck down a Vermont law intended, among other things, to help control health care costs. The case may also be far reaching in numerous other regulatory areas.
A little background before we get to the case. Throughout our history we have assessed First Amendment rights using varying levels of scrutiny. Strict scrutiny is the highest standard. A step down from that would be the rational basis test. A common example is free speech. As applied to individuals expressing opinions, strict scrutiny applies. With regard to commercial speech, First Amendment protection applies, but is subject to exceptions where government has a rational basis for certain restrictions. Some examples include bans on tobacco advertising, FDA labeling requirements, deceptive advertising laws, and the use of consumer credit reports for marketing purposes.
In the world of pharmaceutical marketing there exists a practice called detailing. Pharmacies are required by law to keep records of the names of prescribing doctors and what they prescribe to patients to insure that prescription drugs are sold only pursuant to a valid prescription. That governmentally required practice results in a database. Data miners then purchase the database from the pharmacies, distill the information and sell it to pharmaceutical marketers. The marketers, in turn, use the information to target doctors most likely to prescribe their drugs, particularly more expensive brand name drugs. The marketers also use the information to hone their sales pitch to their selected audience. Anti-detailing is the practice of trying to get doctors to prescribe less expensive generic products.
Vermont passed a law making it illegal to sell the prescriber information data to those who would use it for marketing purposes. The reasons for the law included physician confidentiality and health care cost reduction. Physicians were allowed to consent to their information being disclosed if they wished to do so. The law also provided exceptions to the disclosure prohibition for other purposes, notably research.
A group of pharmaceutical marketers and manufacturers claimed that the Vermont law violated their First Amendment free speech rights and the Supreme Court, in a 6-3 decision agreed. But, that’s not what makes this case important. What makes it important is that the Court, instead of using the rational basis test commonly used in commercial speech cases, employed the strict scrutiny test in a commercial speech context.
The majority found that pharmacies had the First Amendment free speech right to disseminate, for profit, the prescriber information, that detailers had a right to distill and pass on the information, and that marketers/salespeople had a right to formulate sales pitches based on the information. Justice Kennedy, who also authored the main opinion in Citizens United, wrote for the majority here. Breyer wrote for the dissent which was joined by Ginsburg and Kagan. Sotomayor joined the five conservatives in the majority.
The majority opinion correctly observes that the law singles out both content and speaker for restrictions. The majority also expresses the opinion that the law is viewpoint discriminatory in curtailing speech primarily for name brand drugs. The majority opinion, however, relies on artistic freedom cases and political speech cases to rationalize its heightened scrutiny analysis in this commercial speech case.
Breyer, in dissent, disagrees with use of the heightened scrutiny test rather than the rational basis test. He raises issues about other forms of commercial speech restriction and the meaning of this case going forward.
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Opinion. This case has the potential to open a Pandora’s box. Virtually all commercial activity involves conduct that touches on speech. The extent of the ability of federal, state and local government to regulate commercial activity is placed in question by this decision. The long standing constitutional distinction between constitutional standards for general free speech and commercial free speech have been muddied by this decision, and not to our benefit.
To those with such an interest, the case also raises issues of the courts substituting their judgment for that of legislatures. See Breyer’s dissent on this issue, though on that score I regard it as less problematic than he does.
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Additional Note: PHARMA also won a second case in the Supreme Court today, Pliva v. Mensing. The Court threw out a consumer lawsuit against the manufacturer of a generic version of Reglan. Reglan is known to cause severe neurological disorders, which plaintiffs developed.
Contributor, aka tidbits. Retired attorney in complex litigation, death penalty defense and constitutional law. Former Nat’l Board Chair: Alzheimer’s Association. Served on multiple political campaigns, including two for U.S. Senator Mark O. Hatfield (R-OR). Contributing author to three legal books and multiple legal publications.