Supreme Court Rx Records Case: Not So Bad

This morning the Supreme Court issued its 6-3 decision (PDF here) in a strange case that many privacy scholars had watched closely, Sorell v. IMS Health Inc. In my view, there are a few unfortunate signals in the case, mostly in dicta, but I’m not sure it’s terrible given its odd facts. (For more background, take a look at the SCOTUSBlog case page.)

To grossly oversimplify the dispute: Vermont passed a law that prohibited pharmacies from selling information about prescriptions to data miners for commercial purposes. The main users of this data are pharmaceutical sales representatives, who analyze physicians’ prescribing patterns and accordingly target their marketing efforts (especially the “detailing” appointments in which they visit doctors). Many critics of the pharmaceutical industry believe (quite reasonably) that detailing tends to encourage doctors to use costlier patented drugs rather than generics or other alternatives, thus driving up health care costs.

The data miners and pharmaceutical companies challenged the law as an unconstitutional limitation on speech, in violation of the First Amendment. While the First Circuit had upheld similar laws in Maine and New Hampshire, the Second Circuit struck down the Vermont statute. That circuit split set the stage for the Supreme Court to take the case.

Many of us had worried that the resulting decision would rely on broad statements equating data mining or processing with speech and placing a protective First Amendment blanket over many sensible privacy regulations aimed at those practices. Instead, the opinion repeatedly emphasizes that Vermont continued to allow most possible uses of prescription information and singled out detailing alone. While the state at times had proferred some poorly defined arguments about the privacy of either patients (who aren’t even named in the records) or doctors, the Court correctly concluded that the real purpose of the law was to stop detailing by drug companies. And the suppression of that particular message by those particular speakers was the focus of its First Amendment analysis. The Court determined, quite rightly, that the state just doesn’t like what the pharmaceutical representatives say to the doctors and wants to silence them. Indeed, the conclusion of the opinion draws the contrast explicitly, in a way that I think preserves core privacy issues for another day:

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. In considering how to protect those interests, however, the State cannot engage in content-based discrimination to advance its own side of a debate. If Vermont’s statute provided that prescriber-identifying information could not be sold or disclosed except in narrow circumstances then the State might have a stronger position. Here, however, the State gives possessors of the information broad discretion and wide latitude in disclosing the information, while at the same time restricting the information’s use by some speakers and for some purposes, even while the State itself can use the information to counter the speech it seeks to suppress. 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.

The Sorrell decision also underscores that the case did not involve problems of false or misleading speech, or of regulating the safety or efficacy of pharmaceuticals (which of course justifies significant regulation of drug companies’ speech by the FDA and other entities). And the opinion notes the very poor “fit,” under the Central Hudson line of commercial speech cases, between the public health goals advanced by the state and the information-limiting means to achieve those goals.

That does not mean that Sorrell was hunky-dory for data privacy protection in every respect.

For one, the Court rejects the proposition that the prescription records did not implicate speech interests at all, and were merely commodities. Vermont advanced this argument and the First Circuit had embraced it. (The Supreme Court quotes the always-colorful Judge Selya of that court comparing the records to “beef jerky”). Justice Breyer’s dissent relies on this rationale too. And a number of scholars, most notably Neil Richards in an important 2005 article, had forcefully argued something similar. I was always ambivalent about this argument, though, and in any case thought it was unlikely to prevail in the current Court. Here, at least, the Court found that the records were a necessary component of effective speech by the drug companies, analogizing to the Minnesota tax on paper and ink struck down in Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue as a discriminatory imposition on newspapers. That’s not obviously wrong, and it hinges once again on the fact that the government was choosing among possible speakers rather than laying down a broadly neutral rule.

The Court also engages in some troubling dicta about the United Reporting case, which involved limitations on commercial uses of certain police records as conditions of their release. Many privacy lawyers–and the attorneys for Vermont–have pointed to this case as an important precedent justifying noncommercial use restrictions on access to records. The Sorrell Court found that case inapposite, partly because the information in United Reporting was in the government’s possession while private pharmacies held the records in Sorrell (even though they held them subject to a very specific regulatory regime about prescription drugs). This seems like a weak basis to distinguish the cases. More worrisome, the Court portrayed United Reporting as a decision solely concerning the procedural requirements of the parties’ standing to sue, and hinted that the First Amendment merits might go against such laws. That type of substantive decision might threaten similar noncommercial use restrictions now applied to many court records, campaign finance disclosure reports, health data, and more. Since this is only dicta it is not binding, for now, but it may send an unfortunate signal.

Despite these problems, I believe the primary importance of Sorrell will be limited. Vermont screwed up in the way it designed its policy. Things might have been different if protecting privacy (and not containing health care costs) were the true goal of the regulations, or if the mechanisms employed were content-neutral and viewpoint-neutral. The Court makes this point directly, illustrating a “more coherent policy” by comparing Vermont’s cockamamie rule to HIPAA, the main federal medical privacy regime:

For instance, the State might have advanced its asserted privacy interest by allowing the information’s sale or disclosure in only a few narrow and well-justified circumstances. See, e.g., Health Insurance Portability and Accountability Act of 1996, 42 U. S. C. §1320d–2; 45 CFR pts. 160 and 164 (2010). A statute of that type would present quite a different case than the one presented here. But the State did not enact a statute with that purpose or design. Instead, Vermont made prescriber-identifying information available to an almost limitless audience. The explicit structure of the statute allows the information to be studied and used by all but a narrow class of disfavored speakers. Given the information’s widespread availability and many permissible uses, the State’s asserted interest in physician confidentiality does not justify the burden that [the Vermont law] places on protected expression.

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