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U.S. Supreme Court Skeptical About Vermont's Physician Data Mining Law

April 27, 2011

Vermont Law School Professor Cheryl Hanna, a Constitutional law expert, offers a post-argument analysis of Sorrell v. IMS Health Inc., which was argued before the U.S. Supreme Court on April 26, 2011. Hanna attended the arguments with several students from her Constitutional law class.Image of Cheryl Hanna

A lawyer is only as good as the law that the Legislature hands her, and it was clear after yesterday's U.S. Supreme Court argument in Sorrell v. IMS Health Inc. that Vermont Assistant Attorney General Bridget Asay had a not-so-good law to defend. The state is fortunate to have an assistant attorney general as skilled as Asay. But nothing she could have said or done would likely have saved Vermont's physician data mining law from a near certain death.

At issue was whether a Vermont law that seeks to ban the sale of physician prescription data to drug companies—which use the information to target their marketing to individual doctors in a practice called "detailing"—violates the First Amendment.

Asay was barely a few minutes into her argument when Chief Justice John Roberts challenged the state's motives in passing the law; he later accused Vermont of censorship of commercial speech. His skepticism was followed by Justice Antonin Scalia's downright hostility. He insisted the law was intended to impede drug companies from providing information to doctors, not protecting doctors who could simply refuse to see pharmaceutical representatives.

Image of VLS Students at SCOTUS

VLS Constitutional Law students and Vermont Attorney General William Sorrell at the U.S. Supreme Court

Justice Kennedy, often the swing vote in close cases, then accused the state of regulating the use of speech. He asked whether the law would allow the sale of the data for research purposes. Justice Ruth Bader Ginsburg at first seemed open to the state's ability regulate the sale of the information if that was the only commercial use of the data, but she was then frustrated when it appeared that other commercial sales would be permitted.

Even Justice Sonia Sotomayor, who was more sympathetic to Vermont's position that doctors should have some control over the dissemination of their prescription drug patterns, was troubled by the law's provision that allowed doctors to opt-in to the sale of their records. She instead suggested a scheme that mirrored the Do Not Call policy, which allows consumers to opt-out of telemarketing calls, would be more in line with the First Amendment.

Justice Samuel Alito then suggested the Vermont law may have misled the lower court on what transactions could be regulated by the statute. This clearly signaled skepticism not only about the law itself but with the state's representation of what exactly the statute regulated.

The U.S. government, through the Office of the Solicitor General, weighed in on the case in favor of Vermont. Yet Deputy Solicitor General Edwin S. Kneedler had no better luck than Asay in convincing the Court that all the law did was level the playing field between pharmacies and physicians, and that the state was within its power to restrict this information given that prescription drugs are a highly regulated industry.

Thomas Goldstein, a highly regarded attorney who is a frequent advocate before the Court, represented the data mining and drug companies. Goldstein seemed to command the Court, more like a professor steering his students than a lawyer pandering to the justices. He opened by having the justices turn to the red brief, which contained the statute. (All briefs before the Court are color-coded to identify the parties.) Even Justice Clarence Thomas, who often merely sits back and listens to the arguments, followed Goldstein's command, perking up, opening the brief and privately bantering with Justice Stephen Breyer over the law's language. Goldstein had to be content with the predictable "what-if" hypothetical questions posed by Justice Breyer. To Goldstein's credit, his argument was not radical, but he urged the justices to seek some balance between free speech and state regulation. The justices took seriously Goldstein's contention that the law, as written, did not protect doctor privacy, but rather discriminated against the speech of clients who were providing FDA-approved true and accurate information about their drugs to physicians.

Perhaps the most compelling part of his argument was when he directed the Court to read the finding made by the Vermont legislature when passing the law. "My favorite," Goldstein quipped, was the finding that Vermont intended to impact the "marketplace of ideas" because drug companies had more money. (How such a finding ever made it into any legislative record baffles the mind of this Constitutional law professor.) This, Goldstein insisted, the state can not do under the First Amendment.

While it's risky to make conclusive predictions based on oral argument, it is likely that a majority of the Court will vote to strike down Vermont's law. Less clear is whether the holding will be narrow, focusing only on the defects of the Vermont statute or whether the Court will announce a more sweeping decision that could hinder the states from regulating data mining when it truly implicates consumer privacy. Clearly, some justices, including Sotomayor, Breyer and Ginsburg, seemed to appreciate that restricting the use of private, personal information might be appropriate, but disagreement among the justices over whether to draw that line might likely produce a fractured decision.

While the Court could leave room for the Legislature to go back and draw a more narrowly tailored statute that does not impinge upon the free speech rights of corporations, it can't save it from having to pay for its mistakes. If the state loses this case, it is on the hook for attorney's fees paid by the data mining and pharmaceutical companies who brought the case. When the state violates a constitutional right of a litigant, even if that litigant is a corporation, the state has to pay the costs that litigant incurred defending its rights. Given the number of attorneys involved in the case, the extremely high caliber of both local and national counsel and the hours involved in preparing a case for the Supreme Court, a loss will likely cost Vermont taxpayers more than $1 million. But that is the price Vermonters have to pay when the legislature goes out on a limb and passes a law that is intended to be progressive but crosses a constitutional line.

A decision on the merits of this case is expected by the end of June.

Read a transcript of the argument.


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