A dispute between Big Pharma and Vermont may impact legal precedent on information technology and privacy for years to come


Big Pharma takes on little Vermont at the United States Supreme Court Tuesday morning in what ought to be a fascinating oral argument about the lucrative practice of corporate data mining for information about prescription drugs. In Sorrell v. IMS Health, the justices will determine under First Amendment law whether and to what extent a state may ban the use of "prescriber-identifiable data" (a.k.a "'PI') to market or promote those drugs to doctors. 

The closely-watched case will give the justices yet another opportunity (or excuse, depending upon your point of view) to explore the contours of free speech rights of corporations when those rights happen to collide with earnest legislative action. And no matter which way they vote, the justices will offer a trove of new talking points (and legal precedent) to everyone else who pays attention to this particular corner of the world of information technology.

The story begins in 2007 when Vermont's duly-elected representatives took a crack at 1) protecting the privacy rights of doctors; 2) restricting the dissemination of patient information, and; 3) encouraging the prescription of generic drugs. The state legislature passed a provision-- Section 17 of Act 80, to be exact-- to stop one particular kind of data mining that impact all three of those policy priorities. From the lower court's order:

When filling prescriptions, pharmacies in Vermont collect information including the prescriber'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. Pharmacies sell this PI data to the data mining appellants.... These data mining companies, all located outside of Vermont, aggregate the data to reveal individual physician prescribing patterns and sell it outside of Vermont, primarily to pharmaceutical manufacturers.

The idea behind Section 17 was to restrict commercial access to the information pharmacists gather and then sell. In its "factual findings" in support of its measure, Vermont declared among other things that it wanted to try to correct the "massive imbalance" it was seeing "in the information provided to doctors and other prescribers" as a result of the data mining and subsequent use of information. The health care data miners immediately challenged the law. 

The federal trial judge who first looked at the case ruled Vermont's statute a permissible restriction on "commercial" speech rights. And the 1st U.S. Circuit of Court of Appeals, dealing with similar statutes in New Hampshire and Maine, has declared both of those efforts constitiutionally permissible. But last November, 13 months after hearing oral argument in the case, a divided (2-1) panel of the 2nd U.S. Circuit Court of Appeals struck down Section 17. 

The 2nd Circuit majority said that the provision was an impermissible restriction on first amendment rights because it was not "narrowly tailored" and did not "directly advance" Vermont's professed interest in regulating PI data. Because Vermont's statute "influenced" the supply of "truthful information" made commercially available to the data miners, the judges wrote, it required a heighentened level of judicial scrutiny which it could not withstand.

The dissent blistered this analysis. Federal appeals court judge Debra Ann Livingston wrote that her colleagues misapplied the law, misinterpreted the facts, and side-stepped important First Amendment principles. She wrote: "I am unwilling to presume that simply because a business is engaged in the transfer of information rather than widgets that its activities are automatically entitled to the potent shield of the First Amendment."

There is, indeed, a lot of ground for the justices to cover Tuesday as they seek to break the conflict between circuits. Will they agree with the 2nd Circuit that Vermont's law warranted a more stringent level of scrutiny? Will they agree with the 1st Circuit? Will the Court say "Dig, Baby, Dig" to the data miners who cull and shape gazillions of bits and bytes of information about us? Or will it encourage state efforts to manage burgeoning data loads?

You can easily see why so many civil libertarians beyond the health care industry, both in and out of government, are waiting to see which way the justices turn. And you can easily understand why advocates on both sides of the legal debate over the Patient Protection and Affordable Health Care Act are paying close attention, too. Let's give the last word on the case to Lyle Denniston, the veteran Supreme Court reporter, who summed it up well

It is a reality of the Information Age that a vast amount of information of a very personal nature is gathered and stored in computer data banks, and it is a reality that many Americans are worried about the potential for public disclosure of such private data.  But it also a reality that "mining" such data can turn it into highly useful information to guide a vast array of private decisions and government actions -- in some ways, creating the information database that makes a complex modern society actually able to function.  And the potential conflict among these realities is mirrored in a constitutional conflict: privacy versus expression, the right to be let alone versus the right to gather and use information freely...

This week marks the final week for oral arguments this Term and the justices are only two months away from their summer vacation. Now's when they roll up the sleeves of their robes and start cranking out opinions in the dozens of cases still unresolved. So I'm guessing the book tours and the speeches and the visits to Capitol Hill will be put on hold, at least until July.

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