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Court Upholds Vermont's Prescription Privacy Law

As urged by AARP, a federal court in Vermont upheld the state's Prescription Confidentiality Law, which was enacted in an effort to reduce prescription drug costs.


Vermont's law restricts some commercial, nonconsensual uses of data in prescription drug records. The prohibitions are narrow. The law prohibits pharmacies and insurers from selling prescriber's identifying information or using that information for marketing or promoting prescription drugs, unless the prescriber consents. The law specifically exempts the use of data for numerous other purposes, including treatment and safety-related uses (recalls, public safety notices, clinical trials, etc.); it does not apply to data used in health care research.

The law is intended to prevent doctors from being unduly influenced to prescribe brand-name drugs instead of less costly generic alternatives. Since the early 1990s, health information companies have bought electronic records of prescriptions from pharmacies and other sources and linked them with information about individual doctors, enabling pharmaceutical companies to target doctors for marketing outreach about their brands of drugs. By 2003, drug manufacturers were spending more than $20 billion per year on direct marketing to doctors.

Most of this money is spent by dispatching "detailers" to individual doctors. Using prescriber reports compiled by information companies, detailers craft highly targeted sales pitches, sometimes even surprising doctors with detailed information about that doctor's own prescription-writing history.

The tactic is effective. Study after study has shown that this approach results in doctors tending to prescribe newer and more expensive drugs, even when the medical evidence reveals that less expensive, older options would be cheaper, equally effective and in some cases safer. These studies show that the more doctors rely on drug detailers for prescription drug information, the less likely they are to prescribe drugs in a manner consistent with patient needs.

The Dispute

Data mining companies sued to overturn Vermont's law. As they have argued in other states where similar laws have been enacted (most notably, in New Hampshire where the first such law came into being), they claim that Vermont's law unconstitutionally infringes on constitutional protections of free speech and free commerce, specifically preventing states from interfering with interstate trade.

AARP Foundation Litigation (AFL) attorneys filed AARP's "friend of the court" brief in support of the law, joined by Community Catalyst, the National Legislative Association on Prescription Drug Prices, Prescription Policy Choices and the Vermont Medical Society. In both this litigation (IMS Health v. Sorrell) and in separate litigation in New Hampshire and Maine, AFL has worked closely with the state AARP offices that supported enactment of the state laws.

AARP's briefs argue that the laws do not restrict or regulate speech, and even if they did, they would fall under the long-recognized exemption for commercial speech. AARP also argues that each law is a legitimate exercise of a state's power to protect its consumers and to regulate medical practices.

AARP's briefs cite numerous studies and investigations that have documented a significant, measurable and increasing influence of direct-to-physician marketing on the adoption of prescribing practices contrary to clinical guidelines and the weight of objective scientific studies.

The briefs also detail the pernicious effects of high prices for prescription drugs, financial pressures exacerbated when competition in pharmaceuticals is hampered. One study showed that using highly marketed branded medicines for high blood pressure instead of less expensive and actually more effective generic therapies increased health costs in the United States by $3 billion per year. As just a single high profile example, the briefs note that the expensive and aggressive push to use the now-withdrawn and discredited Vioxx resulted not only in increased costs but in significantly increased health risks.   

AARP's brief in Sorrell noted that Vermont's law was an important step forward. In the words of the brief, "Permitting pharmaceutical marketers to track prescribing choices and use that information to tailor commercial messages and target gifts and enticements amplifies the undue influence of pharmaceutical companies in our health system that raises health care costs, promotes irrational drug selection, threatens professional integrity, compromises patient privacy and increases the prevalence of harassing marketing practices. States have an overriding interest in combating these social ills."

The Ruling

After carefully considering the rulings about Maine and New Hampshire's laws, the U.S. District Court for the District of Vermont turned to the specifics of the Vermont law. Rejecting arguments that the speech was outside the protections of the First Amendment, the court nonetheless held that the state's interests justified its regulation of this speech.

The court noted that the government is allowed to regulate otherwise protected speech if such regulation (1) supports a substantial government interest, (2) directly advances that interest and (3) is not more extensive than necessary to advance that interest.

Applying that three-pronged test, the court first ruled that containing costs in the purchase of pharmaceuticals for publicly funded health insurance programs and the state's efforts to protect public health through these programs were substantial government interests.

Second, the court cited testimony and studies detailing the billions of dollars spent to market higher-priced drugs, as well as evidence of the market share gained by those drugs, to find that the government had met its burden of showing that the law directly advances those government's interests it sought to protect.

Third, the court ruled that the law is "a targeted response to the harm of overprescription caused by detailers' use of … data" and took pains to note that the law did not prohibit the practice of detailing, but left the decision to prescribers. "The law is in reasonable proportion to the State's interests," ruled the court.

The court then disposed of other constitutional challenges brought to the law (interstate commerce, federal preemption, and a First Amendment objection to the law's establishment of an education program for prescribers). All these arguments, the court ruled, either had no merit or were either premature because the law had not yet taken effect so its alleged harm had not yet been shown.


The U.S. Court of Appeals for the First Circuit has upheld New Hampshire's law, though data mining companies have asked the U.S. Supreme Court to review that dispute. Maine's law, which had been invalidated, was also before the U.S. Court of Appeals for the First Circuit, which stayed its consideration of the Maine dispute until it ruled on New Hampshire's. With this ruling on the Vermont law (which is in a different appellate jurisdiction), there is now a growing body of law supporting state prescription privacy protection laws. Now the Supreme Court will decide whether or not to take up the issue and determine whether these laws are implemented — or invalidated.

The dramatic rise in price of brand-name drugs — a rise that far exceeds the general rate of inflation — is absorbing an increasing share of each American's pocketbook. Studies show that people with chronic conditions (such as heart disease or depression) often skip some of their prescription medicines because of out-of-pocket cost pressures, and that one in four older persons do not fill all of the prescriptions written by their doctors due to cost issues. The consequences are dire and include increased emergency room visits, psychiatric and nursing home admissions, as well as general decline in health status.

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