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U.S. Supreme Court Grants Cert to Review Constitutionality of Drug Data Mining Law

Confidentiality is a hallmark of the relationship between doctors and their patients. As such, some may be surprised to learn that for years, data companies have been making millions harvesting information on the types and quantities of drugs doctors are prescribing.

After patient information is collected from pharmacies, it is sold to pharmaceutical companies, who use it primarily to boost sales through targeted marketing campaigns. This practice, often referred to as drug data mining, went almost completely unchecked until relatively recently when a number of states began considering laws to abolish or limit the gathering of prescription information for profit.

Vermont was among the first states to adopt legislation to address this problem. In 2007, Vermont state lawmakers passed a bill prohibiting data companies from selling or using prescription information for marketing purposes without the consent of the prescribing doctor.

Now, however, the Vermont law is under fire in a legal battle that will determine the validity of similar laws across the country. Constitutional advocates argue that the Vermont law infringes on commercial free speech rights guaranteed by the First Amendment. Hopefully, individuals won't have to wait long for a definitive ruling on the matter because the U.S. Supreme Court recently granted certiorari to review a case that addressed the issue.

When Vermont legislators targeted drug data mining in 2007, they claimed the new law would safeguard the privacy of both patients and doctors (records collected by pharmacies do not contain data that identifies patients other than age and gender, but the prescribing habits of individual doctors are tracked).

In addition, it was hailed as a cost-saving measure that could drive down the price of drugs. According to the state, drug companies spend approximately $8 billion annually on marketing strategies aimed at doctors. Some felt that using doctors' individual prescription patterns for such marketing can have an undue influence on physicians (who may be convinced to prescribe name-brand pharmaceuticals rather than less expensive generics).

But, data companies have a different take. They argue the information they gather about doctors' prescribing patterns can be put to many beneficial uses: helping law enforcement officials red-flag doctors who overprescribe particular drugs, monitoring safety issues with new pharmaceuticals, identifying geographic areas where health issues are more prevalent, assisting in a range of research, and even reducing costs.

Ultimately though, drug data mining firms are selling and profiting from the information they collect, and this application is at the heart of the legal dispute before the Supreme Court.

The Case

In Sorrell v. IMS, three data companies and a trade group for drug manufacturers have challenged Vermont's prescription data mining ban on the grounds that it violates their First Amendment rights. (The First Amendment to the U.S. Constitution protects free speech, including commercial speech.) Before the case was taken up by the Supreme Court, a lower court struck down Vermont's law for violating the First Amendment rights of data companies and others who may use the prescription data, saying the measure choked off the flow of accurate information and restricted its use as a marketing tool. Different courts have come to the opposite conclusion, upholding similar laws in other states.

Looking Ahead

For some lower courts, the restrictions on drug data mining imposed by Vermont and other states represent a clear stifling of the First Amendment freedoms of companies to use accurate information dynamically in the marketplace. Others, however, do not equate data with speech and refuse to agree that what they see as essentially a product as any restrictions on speech.

It won't be long before the Supreme Court will settle this dispute which will result in vast implications for the pharmaceutical industry. But the outcome of Sorrell v. IMS will likely have an immerse impact even beyond the world of drug makers: innumerable businesses rely on data about consumer buying behavior to drive marketing strategies, and the results of this case could impact all of them.

For the pharmaceutical industry, however, the stakes are very high - information gathered by data companies is at the heart of their multibillion dollar sales strategy. Yet, the patients and doctors Vermont's law were meant to protect also have a real interest in Sorrell v. IMS, albeit one with fewer dollar signs behind it.

Oral arguments are scheduled for April and many hope the U.S. Supreme Court will have a ruling due by the end of June.