Federal District Court Strikes Down Maine Law Restricting the Sale of Prescriber Identifiable Data for Use by Drug Manufacturers

January 10, 2008

A federal district court in Maine recently issued a preliminary injunction prohibiting enforcement of certain portions of L.D. 4, “An Act to Amend the Prescription Privacy Law,” on the ground that those provisions restrict the freedom of commercial speech in violation of the First Amendment to the United States Constitution. IMS Health Corp. v. Rowe, No. cv-07-127-B-W (D. Me. Dec. 21, 2007) (order granting preliminary injunction). The law, which became effective January 1, 2008, provides that:

a carrier, pharmacy or prescription drug information intermediary may not license, use, sell, transfer or exchange for value, for any marketing purpose, prescription drug information that identifies a prescriber who has filed for confidentiality protection.

Under the law, if a physician or other prescriber files an “opt out” notice with the State of Maine, health information intermediaries may not sell that prescriber’s information to a drug manufacturer for use in marketing the manufacturer’s drug products.

The Maine legislature enacted the law based upon its finding that the use of prescriber identifiable data by pharmaceutical manufacturers for marketing purposes is detrimental to the healthcare system because it increases the price of drugs, compromises patient and prescriber privacy, and encourages improper sales tactics by drug sales representatives. In IMS Health Incorporated v. Ayotte, a federal district court in New Hampshire invalidated a similar law, N.H. Rev. Stat. Ann. §§ 318.47-f, 318.47-g, 318-B:12(IV) (2006), enacted by the New Hampshire legislature on First Amendment grounds. However, unlike the New Hampshire law, which would have prohibited the sale of the data of all prescribers, the Maine law included an “opt out” provision, so that the sale of prescriber identifiable data would only be prohibited if the prescriber filed an objection to such sale with the state. In this respect, the Maine law was more narrowly tailored to achieve at least one of its purposes, i.e., the protection of prescriber and patient privacy.

The Maine law was challenged by IMS Health Corporation and two other prescription drug information intermediaries (“PDIIs”), each of which buy prescriber identifiable data, format the information so that drug manufacturers can use it to identify individual prescriber patterns, and sell the data to the drug manufacturers. In addressing the plaintiffs’ challenge, the Court acknowledged the importance of curbing health care costs and protecting the health care system through legislation. At the same time, as in Ayotte, the Court found “that prescription information is commercial speech, that the Maine statute restricts speech, and that, as such, it is subject to intermediate scrutiny.” IMS Health Corp. v. Rowe at 18 (citing Ayotte). According to the Court, to survive intermediate scrutiny, a law may restrict truthful commercial speech only if the restriction: (1) is in support of a substantial government interest; (2) directly advances the government interest asserted; and (3) is not more extensive than is necessary to serve that interest.” IMS Health Corp. v. Rowe at 20.

The Court concluded that despite the opt-out provision, portions of the Maine law could not survive intermediate scrutiny because the law did not directly advance several of the governmental interests supporting its enactment and was more extensive than necessary to serve such interests. The Court acknowledged that the law generally supported several substantial government interests including protecting patient confidentiality, inhibiting the influence of drug sales representatives, ending the use of prescriber comparisons for purposes related to manufacturer profitability, decreasing unnecessary marketing costs, and enhancing the effectiveness of other laws. However, the Court found that the law did not directly advance those interests. For example, the law did not directly address the legislature’s concern regarding overly aggressive marketing by drug manufacturers. In fact, the law would have subjected PDIIs, but not drug manufacturers, to sanctions for the improper use of prescriber information by manufacturers. IMS Health Corp. v. Rowe at 28-29. The Court also found that the law was not as narrowly tailored as possible to achieve its intended purpose. According to the Court, a law narrowly tailored to decrease the influence of drug representatives would have banned them from giving gifts to prescribers. IMS Health Corp. v. Rowe at 31.

In issuing the preliminary injunction, the Court gave specific recognition to the awkward role in which the law cast PDIIs. Specifically, the Court noted that if the law were to become effective, PDIIs would be required to spend considerable sums of money to alter their computer systems and would be forced to renegotiate their contracts with drug companies to prevent improper use of opt-out data. Moreover, because the law penalizes the party who sells prescriber identifiable that is used for marketing purposes and not the party that actually uses the data, if the law had become effective, it would have required PDIIs to police their customers so as to avoid fines and penalties. For this reason, the court found that the “balance of the equities” weighed in favor of enjoining enforcement of the law on First Amendment grounds and maintaining the status quo.