Supreme Court Issues Rulings on Data Mining, Generic Drug Labeling

On Thursday, the U.S. Supreme Court overturned a Vermont law that sought to limit the practice of selling information about physicians' prescribing habits for marketing purposes, the AP/Burlington Free Press reports (Sherman, AP/Burlington Free Press, 6/23).

Background on Vermont Law

Vermont pharmacies collect certain information when filling prescriptions, including the prescribing physician's name and address, as well as the name of the drug, the dosage, the quantity of the medication, the date and place where the prescription was filled, and the patient's age and gender. The pharmacies then sell the "prescriber information" to data-mining companies which, in turn, sell it to pharmaceutical companies that use it to enhance marketing and promotion of their drugs.

However, the state in 2007 implemented a law banning the sale and use of the information for marketing purposes unless a physician specifically provides permission to use the information. The Vermont Legislature said the law seeks to protect the public health of state residents, to defend the privacy of doctors and their prescribing practices and to reduce drug costs "through the promotion of less costly drugs," such as generics that are not marketed the same way as brand-name medications.

Data-mining companies IMS Health, Verispan and Source Healthcare Analytics filed a lawsuit contesting the merits of the restrictions (Walker, MedPage Today, 6/23).

Details of Ruling

The Supreme Court ruled the Vermont law violated constitutional free-speech rights, even though the statute was drafted to prevent drug companies from using direct marketing to persuade physicians to prescribe brand-name drugs, Modern Healthcare reports.

According to the ruling, the Vermont law inappropriately limited free-speech rights on the grounds that Vermont lawmakers disagreed with the content of the speech.

Justice Anthony Kennedy wrote in the majority opinion, "Fear that speech might persuade provides no lawful basis for quieting it." He added, "While Vermont's goals of lowering the costs of medical services and promoting public health may be proper, (the contested law) does not advance them in a permissible way" (Carlson, Modern Healthcare, 6/23).

Writing for the dissenting opinion, Justice Stephen Breyer argued that the majority placed too much emphasis on commercial speech and rejected concerns about public health and rising medical costs (Biskupic, USA Today, 6/23).

Separate Ruling Protects Generic Drugmakers

In related news, the court on Thursday also voted 5-4 that generic drugmakers cannot be sued under state law by consumers claiming they were not warned about the risks associated with certain drugs, New York Times reports.

The ruling comes two years after the court came to the opposite conclusion for brand-name drugmakers. In that case, the high court ruled that brand-name drugmakers can be held liable because they have the ability to change their product labels without FDA's permission.

Justice Clarence Thomas wrote in the majority opinion for the generics case that federal law requires generic drugs to have the same warning labels as their corresponding brand-name drugs. He noted that although state laws often require generics to change their labeling, federal law pre-empts state law, creating a quandary for generic drugmakers. As a result, the court concluded that generics should not be sued for any risk information not included on labels.

In the dissenting opinion, Justice Sonia Sotomayor wrote that the ruling invents "new principles of pre-emption law out of the air" and will lead to "absurd consequences" for consumers (Liptak, New York Times, 6/23).

Louis Bograd, an attorney for the plaintiffs, said most lower courts have ruled that brand-name drugmakers cannot be sued for inadequate labeling on generics made by different companies. However, he said that the new decision "will provide a powerful impetus for courts to revisit those rulings" (Bravin, Wall Street Journal, 6/24).