Pharmacy Data, Commercial Speech, and the Case for Constitutional Potatoes

By Julie R. Severson, Ph.D.
Articles Editor


At the nexus of technology, business, and free speech an interesting story always seems to percolate.  Well, this summer is no exception; a rift has appeared between the U.S. Supreme Court and the Ninth Circuit on the matter of a state’s right to control commercial speech pertaining to pharmacy records.  Let me explain.  In June, the Supreme Court protected commercial free speech rights in Sorrell v. IMS Health, when in a 6-3 decision it held that Vermont may not restrict data-mining companies from selling pharmacy records revealing “prescriber identifiable data” without prescribers’ consent—despite Vermont’s agenda in passing the legislation in 2007 of lowering the costs of medical services and promoting public health.  (For those who need a 0 to 60 update, such data mining companies often serve as the middle-man between pharmacies and the pharmaceutical industry, buying from the former and selling to the latter records of individual physician prescribing practices so that pharmaceutical companies can fine-tune their commercialization of mostly name brand—as opposed to generic—drugs, and ultimately maximize profit.)  Despite the loophole Vermont provided allowing doctors to opt in and both make their records available for such purposes and receive targeted information based on their prescribing history, the majority remained poignantly sensitive to any ostensible infringement on speech.  Quoting the Second Circuit’s holding, it affirmed that the “First Amendment protects even dry information, devoid of advocacy, political relevance, or artistic expression.”  Sorrell v. IMS Health Inc., — U.S. — at —, 131 S.Ct. 2653, 2666, 180 L.Ed. 2d 544 (2011). 

In July 2011, the Ninth Circuit arguably veered away from Supreme Court’s position in Sorrell in its own holding regarding a related state statute in Breeman v. Anthem Prescription Management.  The appellate court held that California’s Civil Code section 2527(c), which requires mining companies to disclose pharmacy data (and, in particular, prices charged to private customers) to third-party payers, is lawful under the First Amendment.  The two statutes obviously employ different mechanisms: California in effect compels commercial speech unlike Vermont, which restricts it; and both the type of data and the immediate targets differ.  Yet the statutes share their states’ overarching goals of improving competition and lowering the overall costs of health care.

Despite the contextual similarities that operate behind the curtain, the Ninth forewent following the Sorrell majority’s emphasis on the larger picture—that the First Amendment protects even “dry” commercial information, and that any regulation thereof constitutes a violation—and refused to apply heightened scrutiny.  Rather, the appellate court followed a more discrete line of cases centered on compelled speech, reaching the conclusion that the compulsion of factual speech is “quite different from” the prohibition of such speech.  But, as the Breeman dissent points out, might this highlight a distinction without a constitutional difference? Jerry Beeman & Pharmacy Services, Inc. v. Anthem Prescription Mgmt., LLC, 07-56692, 2011 WL 2803561, at *19 (9th Cir. July 19, 2011).  Or, as I like to put it: potato/potahto?

How, and to what extent, this may be so awaits a resolution.  But when one considers the Supreme Court’s recent emphasis on commercial free speech rights (…Citizen’s United, anyone?), one wonders if at least under the current Court, Beeman’s dissent might be on point.

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