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Supreme Court Looks Skeptically At Prescription Privacy Law

A variety of bills are being debated in Washington now that would create some new rules for how to handle data and privacy in the digital age. But in the health care field, a few small states have already passed regulations that spurred a major clash with industry, which reached the U.S. Supreme Court today. The results could foreshadow any data-privacy battles that emerge over digital media and advertising. Today’s oral argument show a majority of justices seem to be sympathetic to industry’s argument that their sales of massive data stores is a form of “free speech” that’s protected under the First Amendment.

The Sorrell v. IMS Health lawsuit began when Vermont passed a law in 2007 that banned data-mining companies, like IMS Health, from selling information about what drugs doctors prescribe without permission. In most states, data-mining companies like IMS Health collect highly detailed records on what each individual doctors prescribe, then sell that information to pharmaceutical companies. Pharma companies then use that data to arm their sales force with heaps of data about individual doctors’ habits; together with specialized software, it’s a system that lets them target the doctors they think will most likely prescribe their new drugs.

Vermont and New Hampshire both passed laws banning this practice, and industry challenged both laws, with different results. In New Hampshire, which is situated in the 1st Circuit, the state regulation was upheld; in Vermont, which is in the 2nd Circuit, industry won the battle. The attorney general of Vermont has appealed the case, and the Sorrell v. IMS Health case will now resolve the issue nationally, one way or another.

The implications go far beyond health care. As Thomas Goldstein, a lawyer representing IMS Health, told NPR today, “if Vermont is right that the collection and manipulation of data isn’t free speech, then the government can regulate it however it wants.”

The transcript [PDF] from today’s argument doesn’t look good for Vermont. Supreme Court watcher Josh Blackman has excerpted some of the choice quotes, and argues convincingly that we’re going to see at least “five solid votes to kill” the Vermont law. Several justices seem persuaded that the states’ regulations interfere with the rights of companies like IMS Health to freely exchange data.

If the U.S. Supreme Court refuses to allow states to regulate information as personal as what drugs doctors prescribe, it’s hard to imagine they’ll look favorably on the other types of data regulations now under discussion. Proposals like the McCain-Kerry privacy bill deal with less invasive-but still controversial-types of data exchanges, such as the ones that allow targeted advertising.

During arguments, Justice Antonin Scalia noted repeatedly that if doctors don’t like the drug companies’ sales tactics, they’re free were free to simply slam the door on them. But the attorney representing the State of Vermont said that wasn’t really a viable solution:

JUSTICE SCALIA: And, and he could achieve the same objective, could he not, by simply refusing to talk to the marketer. When the marketer says, you know, I want to talk to you about a new drug, he says: I don’t talk to drug manufacturers and marketers.

MS. ASAY: He could not achieve the same result, Your Honor. What the record shows is that doctors are particularly concerned about having access to the best information and the most complete information to make decisions for their patients.

If the case ultimately results in a 5-4 vote in favor of corporate free speech rights, it would mirror the results in the controversial Citizens United decision, which President Obama and some Democrats have denounced.

But even Justice Sonia Sotomayor, who dissented in the Citizens United case, seemed skeptical of the Vermont regulation. She questioned why the state didn’t go for an opt-out system-assuming doctors were OK with the targeted drug sales-rather than an opt-in one which would require them to specifically authorize it.

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