Vermont data mining ban in doubt with Supreme Court

Prescription drugs. Photo by Alissa Walker

The media relations director for the association, Robert Mills, wrote in an email that the AMA’s “contractual requirements prohibit the use of DEA identifying numbers from the AMA’s Physician Masterfile to be used for matching purposes.” He said, “Health Information Organizations actually purchase DEA identifying numbers directly from the U.S. Department of
Commerce, National Technical Information Service.”

Dr. John Hearst could be forgiven for feeling like someone is looking over his shoulder when he’s writing prescriptions at Bennington Family Practice.

Although Hearst tries to avoid contact with drug-company sales representatives, he bumps into them in the halls of his practice as they visit another doctor, and they always seem to know just what drug to pitch.

One of the sales reps drops the names of drugs whenever she sees him, as if trying to implant their names into his brain.

“When she sees me, she’d say, ‘Don’t forget,’ and she says the names of the drugs,” Hearst said. “It’s sort of like a Big Brother feeling.”

It isn’t his imagination. Drug companies probably know Hearst’s prescribing patterns because data collection companies bought his prescription records from pharmacies, online sources and insurance companies through a process known as data mining.

Often these prescription records don’t contain a doctor’s name but will contain his or her Drug Enforcement Agency identifying number. The data companies then sell the records to drug companies, who cross-reference the information with a database of doctors from the American Medical Association – a database that includes DEA identifying numbers.

Drug-company representatives then target each doctor with pitches tailored to his or her prescribing history.

Vermont passed a law in 2009 banning the use of prescription data for marketing unless a doctor gives permission. The law is part of a broader effort by legislators to curb drug-company practices they contend are driving up health care costs. Critics of these practices say pharmaceutical firms use direct marketing, free meals and gifts to nudge doctors into prescribing more expensive brand-name drugs over cheaper generics.

But legal scholars believe the law might soon be overturned after the in Supreme Court held oral arguments on the case in late April. Supreme Court Justices were openly skeptical of the law, and had Vermont Assistant Attorney General Bridget Asay backpedaling throughout the oral arguments. Chief Justice John Roberts summed up that skepticism most forcefully when he argued that Vermont enacted the law to drive down drug prices at the expense of free speech.

“You want to lower your health care costs, not by direct regulation, but by restricting the flow of information to the doctors, by, to use a pejorative word, but by censoring what they can hear to make sure they don’t have full information, so they will do what you want them to do when it comes to prescribing drugs,” Roberts told Asay.

Asay and Deputy Solicitor General Edwin S. Kneedler tried to argue that the law merely protects the doctor’s right to privacy by restricting public access to a doctor’s prescribing patterns, making it no different than a measure that would restrict access to the doctor’s tax records.

But the justices seemed to disagree. Justice Antonin Scalia and others disliked that the same information being restricted by the law can be used by drug companies to help guide clinical trials and could be used by university researchers. Thus, it was implied, the state was singling out this one use of the data to drive down costs.

Scalia wondered why the free speech of the companies needs to be restricted when doctors simply could refuse to see drug company sales representatives. Even Justice Sonia Sotomayor, considered by legal observers to be the one justice who was sympathetic to the state’s case, didn’t understand why the state couldn’t just create an opt-out mechanism for doctors to use to shield their prescribing information from data mining, much like what is done with telemarketers.

Targeted marketing

Data mining has become popular as a way for drug companies to raise profits by fine-tuning their marketing. A document co-authored by IMS Health, a data-mining company in Norwalk, Conn., put it like this: “Research has shown that winning just one more prescription per week from each prescriber yields an annual gain of $52 million in sales. So, if you’re not targeting with the utmost precision, you could be throwing away a fortune.”

Although drug companies have a right to conduct marketing campaigns in general, that right shouldn’t extend to using prescription information for marketing, said Marcia Hams, director of Community Catalyst, a Boston-based nonprofit group that aims to give consumers a bigger voice in health-care policy.

“That level of information is really inappropriate to be using on a physician,” Hams said. “It interferes in the physician-patient relationship.”

But drug companies contend that data mining represents a quick and efficient way to help them get the most useful drug information to busy physicians. They also contend that prescription data mining helps quicken response time for drug recalls and gives valuable information to drug researchers.

The American Medical Association largely has backed this argument and opposed laws restricting prescription data mining.

Critics contend the AMA backs data mining because it is dependent on money generated from sales of its database – sales that totaled $44.5 million in 2005.

The issue is being debated in state capitals around the country. In addition to Vermont and New Hampshire, Maine also has passed a bill banning data mining. Similar bills are pending in Massachusetts, New York and Hawaii, though their prospects for enactment are unclear. Data-mining restrictions have been rejected in eight other states.

Curbing free speech?

Data-mining and drug companies challenged the Vermont and New Hampshire laws in two separate cases, arguing in court that they jeopardized free speech and did little to help public health.

PhRMA, a trade group representing pharmaceutical and biotechnology companies, filed the court challenge to the Vermont law, while IMS Health challenged the New Hampshire law.

Diane Bieri, the general counsel for PhRMA, said in an interview that the new Vermont law “actually impedes the free speech rights for not only the data companies, but also the pharmaceutical companies.”

But in refusing PhRMA’s request to keep the law from taking effect while its appeal is pending, judges on the federal Second Circuit Court of Appeals wrote in late June that the drug companies “have not demonstrated a clear and/or substantial likelihood of success on the merits.”

A few days earlier, the U.S. Supreme Court declined to hear a similar appeal from IMS Health against the New Hampshire law. That law had previously been upheld by the First Circuit Court of Appeals in Boston, which held that information gathered through data mining is not protected as free speech but instead amounts to “exchanges undertaken to increase one party’s bargaining power in negotiations.”

Although the appeals court ruling was unanimous, one judge disagreed with the court majority, saying the information could be considered speech, but still held that New Hampshire was in its right to regulate the practice to protect the health of its citizens.

Now the state will wait for the Supreme Court decision. Many legal observers believe the question is not whether the Court will strike down the law, but whether the finding against the law will be so broad that it will strike down all data mining laws.