State Laws Restricting the Use of Drug Prescriber Data in Marketing by Pharmaceutical Companies Struck Down as Unconstitutional

September 1, 2008

(Article originally published in Healthcare Review – Northeast Network, Issue 7, 2008)

In April of 2007, the United States District Court for the District of New Hampshire struck down a law that limited the use of prescription data in pharmaceutical marketing. The law was the first attempt by any state to limit the use of prescription information matched with detailed prescribers’ data to tailor drug marketing efforts to individual health care providers. Earlier this year, similar legislation in Maine was also struck down.

The New Hampshire and Maine cases have been appealed. The results of those appeals will likely help shape future attempts by states to regulate the manner in which pharmaceutical companies will use specific prescriber information to market their products to health care providers.

In May of 2006, the New Hampshire legislature passed a law that barred pharmacies, insurance companies and others from transferring or using prescriber identifiable data for certain commercial purposes. Less than a month after the law took effect, two of the leading prescription drug information gathering companies, IMS Health, Inc. and Verispan, L.L.C., sued the State of New Hampshire, challenging the constitutionality of the statute. The companies claimed the law impermissibly restricted their right to free speech under the First Amendment of the United States Constitution.

The State argued in court that there was a substantial privacy interest in protecting physicians from “unwarranted intrusions into their decision-making process” by pharmaceutical companies. The State also argued that the law helped to contain costs because the use of prescriber-identifiable data made it possible for companies to target their marketing to certain providers and tailor their messages to make them more persuasive, which in turn led to increased prescribing of higher-cost brand name drugs.

The Court was not persuaded. With respect to the State’s privacy concerns, the Court observed that there was no evidence that pharmaceutical companies unlawfully infringed on prescribers’ professional privacy through their marketing efforts. With respect to cost savings, the Court noted that although some brand name drugs, particularly those without generic equivalents, were the most appropriate medication for certain conditions, the law restricted the promotion of both helpful and harmful brand name drugs. Because some patients benefit when taking brand name drugs when non-bioequivalent generic drugs are available, the law did not help to reduce costs without “compromising patient care.” Finally, the Court found that even if drug marketers used prescriber data to create targeted, highly persuasive and manipulative advertising, there was no evidence that the data gathered was used to create “false or misleading” messages and thus the advertising was not unlawful.

In evaluating the law’s scope, the Court concluded that it was “more extensive than necessary” to serve the State’s interests since there were alternative methods the State could use to reduce costs and prevent pharmaceutical companies from improperly using gifts and samples to promote inadvisable prescribing practices. For example, the State could ban on gifts from pharmaceutical marketing representatives, equip prescribers with information on the efficacy of generic drugs to counter industry marketing efforts, and create a Medicaid pharmacy program that would allow cost to be considered before authorizing a prescription. Finding that the State could address its concerns about improper marketing and costs saving as well or better without restrict the companies’ rights to free speech, the Court found the law unconstitutional.

At the time it was passed, New Hampshire’s law was the only one of its kind in the United States. In 2007, Maine and Vermont enacted similar statutes. Both differed from the New Hampshire law in they it allowed prescribers to “opt-out” of having their information used for marketing purposes. The opt-out provisions did not affect the gathering of prescriber data, only prohibited its sale or transfer for marketing purposes.

In August of 2007, IMS Health Corp., Verispan, and Source Healthcare Analytics challenged Maine’ statute on the same First Amendment grounds as in the New Hampshire case (the companies have not yet challenged the Vermont statute, apparently because Vermont has opted not to enforce its law pending the outcome of the New Hampshire case). Using the New Hampshire case as a guide, the United States District Court for the District of Maine found that the Maine law impermissibly infringed on the companies’ free speech rights. Importantly, the Court found that Maine’s opt-out provision did not advance prescriber confidentiality concerns because it did not prevent data gathering, but instead only prevented the data’s use in certain contexts. The Court noted that the law did not prevent pharmaceutical companies from continuing to present sales pitches that were consistent with a favorable view of their products. Instead, it simply filtered out information that was not slanted, such as data about the prescriber’s personal prescribing practices. Therefore, the law simply did not reach the problems it was enacted to address.

Both the New Hampshire and Maine decisions are on appeal to the United States Court of Appeals for the First Circuit. The New Hampshire case was argued on January 9, 2008 and, as of the time this article was submitted for publishing, no decision has been issued. The Maine appeal has been stayed pending the outcome of the New Hampshire appeal.

The decisions in these cases in New Hampshire and Maine will, for the time being, likely dampen legislative efforts in other states. Twelve states have proposed legislation similar to that passed in New Hampshire, Maine and Vermont. Based on the amount of proposed legislation pending around the country, there appears to be a growing interest in limiting methods by which pharmaceutical companies market to health care providers. Regardless of the outcome of the IMS Health appeals in New Hampshire and Maine, state legislatures are likely to use these cases as guides in drafting legislation that restricts how prescriber information is used. It remains to be seen, however, if such laws can be drawn up in a way to pass constitutional muster, and if, in the end, those laws will have the impact that lawmakers intend.

Eric Sommers is a member of the Litigation Department at the law firm of McLane, Graf, Raulerson & Middleton, Professional Association. Eric can be reached at 603-628-1260 or The McLane Law Firm is the largest full-service law firm in the state of New Hampshire, with offices in Concord, Manchester and Portsmouth.