On Nov. 23, 2010, the 2nd Circuit Court of Appeals held a 2007 Vermont law
restricting the sale and use of physician prescribing information for marketing
purposes unconstitutional as an impermissible regulation of commercial speech.
See IMS Health v. Sorrell, No. 09-1913-cv(L), 09-2056-cv(CON) (2d
Cir. Nov. 23, 2009).
Pharmaceutical companies regularly purchase such information from data-mining
companies or “data miners” and use the information for sales and informational
campaigns directed toward physicians. With the 2007 law, the Vermont legislature
attempted to curb pharmaceutical companies’ use of prescribing data for
marketing purposes by barring the sale, transmission, or use of prescriber-identifiable
information for such purposes unless the prescribing physician consents to such
In the preamble to the statute, the Vermont legislature cited its interest in
protecting the public health of its citizens, protecting the privacy of
prescribing physicians, containing costs through the promotion of less costly
drugs, and ensuring that prescribers receive unbiased information. See
Vt. Stat. Ann. tit. 18, § 4631.
The 2nd Circuit found the law to be unconstitutional because it fails to meet
the legal standard required for a law that restricts commercial speech to be
permissible. Under the legal standard, a statute that limits commercial speech
must directly advance a substantial state interest. Additionally, the state must
demonstrate that a less restrictive limit on commercial speech would not achieve
the state’s interest.
In 2009, the U.S. District Court for the District of Vermont upheld the law
under the legal standard. The 2nd Circuit overturned the lower court’s decision.
The 2nd Circuit found that the law could have only an indirect effect on public
health and cost control, and therefore did not directly advance a state
interest. Moreover, the court found that the state had not proven that its
interests could not be achieved equally well by employing a more limited
restriction on commercial speech.
The 1st Circuit Court of Appeals reached a contrary conclusion in 2008, when
it upheld a similar New Hampshire law, finding that the law permissibly
restricts the conduct of the data miners and does not impermissibly restrict the
speech of pharmaceutical companies. Earlier this year, the 1st Circuit also
upheld a related Maine law that requires data miners to withhold a physician’s
prescription data from sale or transfer for marketing purposes if the physician
files for confidentiality protection. The Supreme Court declined to grant
certiorari in the New Hampshire case. However, the split in authority between
the 1st and 2nd Circuits may persuade the Supreme Court to grant certiorari on
this issue in the future.
The other information requirements of the Prescription Cost Containment
chapter of the Vermont Statutes, set forth at Vt. Stat. Ann tit. 18, 4631 et
seq., which include prohibitions on certain expenditures by pharmaceutical and
device manufacturers and disclosure requirements, were outside the scope of this
decision and remain in effect.