High Court Agrees Data-|Mining Ban Goes Too Far

(CN) - A Vermont law banning prescription-data aggregators from selling their information to drug manufacturers was properly struck down as an unconstitutional restriction on commercial speech, the Supreme Court ruled Thursday.

In filling prescriptions, pharmacies generally collect information about those orders, including the prescribing doctor's name and address; the name, dosage and quantity of the drug; the date and place the prescription is filled; and the patient's age and gender.

The Vermont law, section 17, which was passed in 2007 on the heels of similar legislation in New Hampshire and Maine, concerns the data-mining companies that buy the prescriber-identifiable, or PI, data.

After the law was passed, three such companies, IMS Health, Verispan and Source Healthcare Analytics, sued Vermont Governor Jim Douglas, Vermont Attorney General William Sorrell and Robert Hofmann, the state secretary of the Agency of Human Services.

The companies aggregate the data, "stripped of patient information to protect patient privacy," and sell it primarily to pharmaceutical manufacturers, who use it for "detailing."

Pharmaceutical Research and Manufacturers of America, a nonprofit group of pharmaceutical researchers and manufacturers, which make up data miners' primary customer bare, joined the companies suing over the Vermont law.

Though a federal judge in Vermont said the law was a constitutionally sound restriction of commercial speech and did not violate the dormant Commerce Clause, the 2nd Circuit disagreed. A panel of judges from that Manhattan-based federal appeals court noted the various uses for PI data, though section 17 affects only marketing opportunities. Left untouched are the ability to track disease progression, aid law enforcement and assist the Food and Drug Administration.

Still, the data aggregators said those companies are their biggest customers and the sales make the permitted uses, such as assisting law enforcement, possible.

The 2nd Circuit had said Vermont's law could only survive scrutiny if the government proves how the legislation advances substantial state interest and extends only as necessary to achieve the government's interest.

The court explained that section 17 does not improve protection of patient data, since it is still being collected for the permitted uses.

But that decision contradicted the holding of the 1st Circuit concerning the similar legislation in Maine and New Hampshire, leading the Supreme Court to take up the case this year.

In affirming that decision Thursday, a majority of Supreme Court justices said the First Amendment protects speech in aid of pharmaceutical marketing.

"Both on its face and in its practical operation, Vermont's law imposes a burden based on the content of speech and the identity of the speaker," Justice Anthony Kennedy wrote for the six-member majority. "While the burdened speech results from an economic motive, so too does a great deal of vital expression."

"The capacity of technology to find and publish personal information, including records required by the government, presents serious and unresolved issues with respect to personal privacy and the dignity it seeks to secure," the decision concludes later. "In considering how to protect those interests, however, the State cannot engage in content-based discrimination to advance its own side of a debate."

Justice Stephen Breyer authored a dissenting opinion on behalf of Justices Ruth Bader Ginsburg and Elena Kagan.

"In my view, this effect on expression is inextricably related to a lawful governmental effort to regulate a commercial enterprise," Breyer wrote. "The First Amendment does not require courts to apply a special 'heightened' standard of review when reviewing such an effort. And, in any event, the statute meets the First Amendment standard this Court has previously applied when the government seeks to regulate commercial speech. For any or all of these reasons, the Court should uphold the statute as constitutional."

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