The Second Circuit Court of Appeals decided yesterday that the Vermont law restricting pharmaceutical companies’ uses of information about the drugs that physician prescribe is unconstitutional as a violation of free speech. This ruling is a particularly interesting development because Maine and New Hampshire laws prohibiting data mining have both been upheld by the First Circuit Court of Appeals in the last several years. All of these laws involve limiting the type of information that pharmacies can give to pharmaceutical and health information companies, as those companies use the prescribing pattern information for marketing purposes.
In 2007, Vermont enacted a law to increase transparency in prescription drug information and pricing. The law limited companies’ access to prescriber data for marketing purposes unless the prescribing physician consents by notifying the state licensing board. Later in 2007, three health information companies, Verispan, LLC, Wolters Kluwer Health, and IMS Health Inc., filed a lawsuit against the State of Vermont to declare portions of its “Prescription Restraint” law unconstitutional, claiming the law violates the First Amendment by improperly restricting commercial speech. In 2009, a federal district court judge in Vermont held that the law was constitutional, rejecting the health information companies’ challenge.
In yesterday’s ruling, however, the Second Circuit struck down the Vermont law in a 2-1 decision, finding that the law is a restriction on commercial free speech in violation of the First Amendment. In the majority opinion, the court determined that “[Vermont] has not demonstrated that its interests in protecting public health and containing health care costs could not be as well served by a more limited restriction on speech.” Vermont officials have stated that the state is considering appealing this ruling to the U.S. Supreme Court.
This decision follows two previous rulings—the first in November 2008 and the second in August 2010—by the First Circuit Court of Appeals upholding similar laws in New Hampshire and Maine, respectively. Interestingly, Vermont’s data mining law was modeled after the New Hampshire law. Given the Second Circuit’s ruling this week, however, there is now a circuit split between the First Circuit and Second Circuit on these data mining restrictions, making it increasingly difficult for companies to navigate compliance with the different restrictions in each state. This is especially true given that many other state legislatures currently have similar data mining laws pending. Although last year the U.S. Supreme Court refused to grant cert to the First Circuit Court of Appeals decision upholding the New Hampshire law, the Second Circuit’s decision this week on the Vermont law has created a divergence in the Circuit Courts’ decisions, making this issue particularly suited for U.S. Supreme Court review.