US Supreme Court to decide whether Vermont can control the use of prescribing data by IMS health and Pharma companies
In a case of national significance to the pharmaceutical and biotechnology industry, the United States Supreme Court on January 7 decided to hear the case of Sorrell (Attorney General of Vermont) v. IMS Health Inc & Pharmaceutical Research and Manufacturers of America (PhRMA).
This case is about whether States have the right to regulate how physician prescriber data is sold and used, and whether physicians have a right to privacy in the use of their personal information. In Vermont, the legislature enacted a law that allowed prescribers on their annual licensing renewal to opt-out of allowing the use of information that would identify them in any data used for marketing or promotion of prescription drugs.
The Vermont law also states that “pharmaceutical manufacturers and pharmaceutical marketers shall not use prescriber-identifiable information for marketing or promoting a prescription drug” unless the prescriber consents. Vt Stat. Ann. 18, § 4631(d).
Without the identity of prescribers, companies such as IMS Health would not be able to provide the level of granularity about prescribing behavior that allows targeted detailing by medical representatives to take place.
Currently, individual patient names in the prescription data are redacted by encryption technology, but this process results in a unique identifier for each patient. Tracking this unique patient identifier coupled with the name of the physician allows the prescribing behavior of different doctors for a patient to be monitored. This has major significance to medical reps allowing them to identify physicians who: do or do not prescribe their products, switch patients to competitor products or use lower cost generics.
The Vermont legislature in 2009 passed the Prescription Confidentiality Law, 18 V.S.A. § 4631 that requires prescribers to give their consent to the use of personally identifiable information and allowed them the ability to opt-out at the time of license renewal. In the absence of consent, all other prescription data was still available for use in marketing and promotion, but not the identity of the prescribing doctor. Not surprisingly this law was not well received by data mining companies such as IMS Health and pharmaceutical manufacturers.
The District Court upheld the legal challenge to the Vermont law, while the United States Court of Appeals for the Second Circuit over-turned it. Similar laws in Maine and New Hampshire have been upheld by the United States Court of Appeals for the First Circuit, raising a circuit conflict that the Supreme Court has now decided to resolve.
The Supreme Court decision will not only impact Vermont, but all those States who are interested in regulating this area.
The question presented to the Supreme Court for answer is:
“Whether a law that restricts access to information in nonpublic prescription drug records and affords prescribers the right to consent before their identifying information in prescription drug records is sold or used in marketing runs afoul of the First Amendment.”
The case of Sorrell v IMS Health raises multiple questions that the Supreme Court will have to consider at the intersection of information technology, privacy and commerce:
- If pharmacists are required by law to gather prescription data that identifies individual physicians and their prescribing habits, do States have the authority to regulate the use of this information?
- Does pharmacy prescribing data constitute commercial speech that is protected by the First Amendment to the United States Constitution?
- And if it is protected, does the Vermont law meet the standard to regulate the use of this data in the marketing and promotion of prescription drugs?
These are all difficult questions of law, and I am sure that legal scholars will be busy writing amicus briefs in support of both sides of the debate.
However, I predict the decision in this case will also have a far-reaching impact on electronic privacy rights and the extent to which data mining can be regulated, not only in the pharmaceutical industry but across all industries.
Sales of pharmaceuticals are the fuel of the industry and provide the $ for investment in R&D, but could there be life without such in-depth IMS data? Although medical sales might be less efficient and less targeted, the industry would survive and sales would still take place. When I lived in the United Kingdom over ten years ago, IMS only provided prescribing data on the equivalent of a zip code level, but medical reps were still effective without knowing the identity of individual prescribers. You could still work out which areas in a territory were important, and the key practices to target.
The case of Sorrell v IMS Health is one that all U.S. biotechnology and pharmaceutical companies will be watching with great interest given the tremendous impact it could have on the industry business model. I look forward to writing an update as the case develops and oral argument is scheduled.
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Source: Xoma November 2010 Corporate Presentation
Intellectual property (IP) rights are important in the biotechnology industry; one only has to look at a licensing, consulting or service agreement to appreciate this.
I recently attended the annual meeting of the 