Sorrell v. IMS Health Inc.

564 U.S. 552

131 S.Ct. 2653

180 L.Ed.2d 544

SORRELL, Attorney General of Vermont, et al.

v.IMS HEALTH INC. et al.

No. 10–779.

Supreme Court of the United States

Argued April 26, 2011.

Decided June 23, 2011.

David C. Frederick, Scott H. Angstreich, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., William H. Sorrell, Attorney General, Bridget C. Asay, Counsel of Record, Sarah E.B. London, David R. Cassetty, Assistant Attorneys General, Office of the Attorney General, Montpelier, Vermont, for Petitioners.

Thomas R. Julin, Jamie Z. Isani, Patricia Acosta, Hunton & Williams LLP, Miami, FL, Robert B. Hemley, Matthew B. Byrne, Gravel and Shea, Burlington, VT, Thomas C. Goldstein, Counsel of Record, Kevin K. Russell, Amy Howe, Tejinder Singh, Goldstein, Howe & Russell, P.C., Bethesda, MD, for Respondents.

Karen McAndrew, Linda J. Cohen, Dinse, Knapp & McAndrew, P.C., Burlington, VT, Lisa S. Blatt, Counsel of Record, Jeffrey L. Handwerker, Robert J. Katerberg, Sarah Brackney Arni, Kristin M. Hicks, Arnold & Porter LLP, Washington, DC, for Respondent Pharmaceutical Research and Manufacturers of America.

David C. Frederick, Scott H. Angstreich, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., William H. Sorrell, Attorney General, Bridget C. Asay, Counsel of Record, Sarah E.B. London, David R. Cassetty, Assistant Attorneys General, Office of the Attorney General, Montpelier, VT, for Petitioners.

Justice KENNEDY delivered the opinion of the Court.

Vermont law restricts the sale, disclosure, and use of pharmacy records that reveal the prescribing practices of individual doctors. Vt. Stat. Ann., Tit. 18, § 4631 (Supp.2010). Subject to certain exceptions, the information may not be sold, disclosed by pharmacies for marketing purposes, or used for marketing by pharmaceutical manufacturers. Vermont argues that its prohibitions safeguard medical privacy and diminish the likelihood that marketing will lead to prescription decisions not in the best interests of patients or the State. It can be assumed that these interests are significant. Speech in aid of pharmaceutical marketing, however, is a form of expression protected by the Free Speech Clause of the First Amendment. As a consequence, Vermont's statute must be subjected to heightened judicial scrutiny. The law cannot satisfy that standard.

I

A

Pharmaceutical manufacturers promote their drugs to doctors through a process called "detailing." This often involves a scheduled visit to a doctor's office to persuade the doctor to prescribe a particular pharmaceutical. Detailers bring drug samples as well as medical studies that explain the "details" and potential advantages of various prescription drugs. Interested physicians listen, ask questions, and receive followup data. Salespersons can be more effective when they know the background and purchasing preferences of their clientele, and pharmaceutical salespersons are no exception. Knowledge of a physician's prescription practices—called " prescriber-identifying information"—enables a detailer better to ascertain which doctors are likely to be interested in a particular drug and how best to present a particular sales message. Detailing is an expensive undertaking, so pharmaceutical companies most often use it to promote high-profit brand-name drugs protected by patent. Once a brand-name drug's patent expires, less expensive bioequivalent generic alternatives are manufactured and sold.

Pharmacies, as a matter of business routine and federal law, receive prescriber-identifying information when processing prescriptions. See 21 U.S.C. § 353(b) ; see also Vt. Bd. of Pharmacy Admin. Rule 9.1 (2009); Rule 9.2. Many pharmacies sell this information to "data miners," firms that analyze prescriber-identifying information and produce reports on prescriber behavior. Data miners lease these reports to pharmaceutical manufacturers subject to nondisclosure agreements. Detailers, who represent the manufacturers, then use the reports to refine their marketing tactics and increase sales.

In 2007, Vermont enacted the Prescription Confidentiality Law. The measure is also referred to as Act 80. It has several components. The central provision of the present case is § 4631(d).

"A health insurer, a self-insured employer, an electronic transmission intermediary, a pharmacy, or other similar entity shall not sell, license, or exchange for value regulated records containing prescriber-identifiable information, nor permit the use of regulated records containing prescriber-identifiable information for marketing or promoting a prescription drug, unless the prescriber consents .... Pharmaceutical manufacturers and pharmaceutical marketers shall not use prescriber-identifiable information for marketing or promoting a prescription drug unless the prescriber consents ...."

The quoted provision has three component parts. The provision begins by prohibiting pharmacies, health insurers, and similar entities from selling prescriber-identifying information, absent the prescriber's consent. The parties here dispute whether this clause applies to all sales or only to sales for marketing. The provision then goes on to prohibit pharmacies, health insurers, and similar entities from allowing prescriber-identifying information to be used for marketing, unless the prescriber consents. This prohibition in effect bars pharmacies from disclosing the information for marketing purposes. Finally, the provision's second sentence bars pharmaceutical manufacturers and pharmaceutical marketers from using prescriber-identifying information for marketing, again absent the prescriber's consent. The Vermont attorney general may pursue civil remedies against violators. § 4631(f).

Separate statutory provisions elaborate the scope of the prohibitions set out in § 4631(d). "Marketing" is defined to include "advertising, promotion, or any activity" that is "used to influence sales or the market share of a prescription drug." § 4631(b)(5). Section 4631(c)(1) further provides that Vermont's Department of Health must allow "a prescriber to give consent for his or her identifying information to be used for the purposes" identified in § 4631(d). Finally, the Act's prohibitions on sale, disclosure, and use are subject to a list of exceptions. For example, prescriber-identifying information may be disseminated or used for "health care research"; to enforce "compliance" with health insurance formularies, or preferred drug lists; for "care management educational communications provided to" patients on such matters as "treatment options"; for law enforcement operations; and for purposes "otherwise provided by law." § 4631(e).

Act 80 also authorized funds for an "evidence-based prescription drug education program" designed to provide doctors and others with "information and education on the therapeutic and cost-effective utilization of prescription drugs." § 4622(a)(1). An express aim of the program is to advise prescribers "about commonly used brand-name drugs for which the patent has expired" or will soon expire. § 4622(a)(2). Similar efforts to promote the use of generic pharmaceuticals are sometimes referred to as "counter-detailing." App. 211; see also IMS Health Inc. v. Ayotte, 550 F.3d 42, 91 (C.A.1 2008) (Lipez, J., concurring and dissenting). The counterdetailer's recommended substitute may be an older, less expensive drug and not a bioequivalent of the brand-name drug the physician might otherwise prescribe. Like the pharmaceutical manufacturers whose efforts they hope to resist, counterdetailers in some States use prescriber-identifying information to increase their effectiveness. States themselves may supply the prescriber-identifying information used in these programs. See App. 313; id., at 375 ("[W]e use the data given to us by the State of Pennsylvania ... to figure out which physicians to talk to"); see also id ., at 427–429 (Director of the Office of Vermont Health Access explaining that the office collects prescriber-identifying information but "does not at this point in time have a counterdetailing or detailing effort"). As first enacted, Act 80 also required detailers to provide information about alternative treatment options. The Vermont Legislature, however, later repealed that provision. 2008 Vt. Laws No. 89, § 3.

Act 80 was accompanied by legislative findings. Vt. Acts No. 80, § 1. Vermont found, for example, that the "goals of marketing programs are often in conflict with the goals of the state" and that the "marketplace for ideas on medicine safety and effectiveness is frequently one-sided in that brand-name companies invest in expensive pharmaceutical marketing campaigns to doctors." §§ 1(3), (4). Detailing, in the legislature's view, caused doctors to make decisions based on "incomplete and biased information." § 1(4). Because they "are unable to take the time to research the quickly changing pharmaceutical market," Vermont doctors "rely on information provided by pharmaceutical representatives." § 1(13). The legislature further found that detailing increases the cost of health care and health insurance, § 1(15); encourages hasty and excessive reliance on brand-name drugs, before the profession has observed their effectiveness as compared with older and less expensive generic alternatives, § 1(7); and fosters disruptive and repeated marketing visits tantamount to harassment, §§ 1(27)-(28). The legislative findings further noted that use of prescriber-identifying information " increase[s] the effect of detailing programs" by allowing detailers to target their visits to particular doctors. §§ 1(23)-(26). Use of prescriber-identifying data also helps detailers shape their messages by "tailoring" their "presentations to individual prescriber styles, preferences, and attitudes." § 1(25).

B

The present case involves two consolidated suits. One was brought by three Vermont data miners, the other by an association of pharmaceutical manufacturers that...