Supreme Court Favors Data Mining Companies in Prescription Privacy Case

Federal law requires pharmacies to keep records of each physician’s prescription history. Companies like IMS Health purchase the data from pharmacies and mine the information to derive better marketing data for pharmaceutical companies. Vermont enacted a law that allows physicians to withhold consent for their prescription data to be sold by pharmacies or used for marketing purposes. In November, the 2nd U.S. Circuit Court of Appeals ruled the Vermont law and its opt-in mandate violate the First Amendment because it restricts commercial speech.

Justices confirmed the appeals court’s decision that the Vermont law does not maintain the First Amendment’s free speech standard, Kennedy wrote. He said the state law unfairly imposed a First Amendment burden “based on the content of speech and the identity” of pharmaceutical manufacturing companies. “The capacity of technology to find and publish personal information, including records required by the government, presents serious and unresolved issues with respect to personal privacy and the dignity it seeks to secure,” Kennedy wrote. “In considering how to protect those interests, however, the State cannot engage in content-based discrimination to advance its own side of a debate,” he said. “Privacy is a concept too integral to the person and a right too essential to freedom to allow its manipulation to support just those ideas the government prefers.”

Vermont’s opt-in law offered doctors a “contrived choice,” wrote Kennedy. Doctors can either consent, “which will allow your prescriber-identifying information to be disseminated and used without constraint; or, withhold consent, which will allow your information to be used by those speakers whose message the State supports.” Kennedy suggested that the state could have addressed physician confidentiality through “a more coherent policy,” that allowed the sale or disclosure of private information in “only a few narrow and well-justified circumstances.” Justice Sonia Sotomayor had drawn comparisons to Internet privacy rules during the oral argument in April and asked whether a narrow opt-out mechanism for data collection would have been more appropriate than an opt-in (WID April 27 p1).

Vermont’s law was comparable to a law that “prohibits trade magazines from purchasing or using ink,” Kennedy added. The state had previously sought to classify prescriber-identifying information as a commodity with no greater entitlement to First Amendment protection than “beef jerky” in a separate case. But Kennedy disagreed and said that prescriber-identifying information is indeed speech that is protected by the First Amendment. “Facts, after all, are the beginning point for much of the speech that is most essential to advance human knowledge and to conduct human affairs,” he wrote.

Justice Stephen Breyer wrote a dissent joined by Justices Ruth Bader Ginsburg and Elena Kagan, saying the Vermont statute meets the First Amendment standard applicable to regulation of commercial speech. “Until today, this Court has never found that the First Amendment prohibits the government from restricting the use of information gathered pursuant to a regulatory mandate, whether the information rests in government files or has remained in the hands of the private firms that gathered it,” Breyer wrote. “At best the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message. At worst, it reawakens Lochner’s pre-New Deal threat of substituting judicial for democratic decision making where ordinary economic regulation is at issue.”

Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., denounced the court’s decision to overturn what he called a “sensible” law. “This divided ruling is a win for data miners and large corporations and a loss for those of us who care about privacy,” Leahy said. “State legislatures should be allowed to protect their citizens’ privacy rights over corporate interests in profits.” The court’s decision to extend First Amendment protections to the sale of private prescription information is regrettable, said Sean Flynn, associate director of American University’s program on information justice and intellectual property. “The First Amendment’s interests in promoting a marketplace of ideas and facilitating democratic decision making through the free flow of public information are not furthered by protecting from regulation the private commercial trade of private information in medical records,” he wrote in a blog post Thursday.

Lawmakers should heed the court’s decision and ensure that any legislative attempts to restrict data collection, use and transfer “must satisfy First Amendment scrutiny,” TechFreedom President Berin Szoka said in a written statement. “Policymakers should carefully consider the values recognized by the Court today before further clamping down on the flow of data that drives speech throughout the information economy.” The court rightly identified the law as a tool to suppress a particular type of speech it did not like, namely marketing messages, said a spokesman from the Center for Democracy and Technology. “The Court in this case refused to allow privacy to be used as a smokescreen to shield a law that on its face discriminated based on the type of speaker,” the spokesman said in an e-mail sent Thursday.