Apr 26, 2011

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Instant Analysis: Sorrell v. IMS Health Oral Arguments

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The Court just posted the oral arguments transcript for Sorrell v. IMS Health. I will post my analysis here as I read through it.

My prediction: Five solid votes to kill this. Maybe even Sotomayor is on board.

Petitioner

Chief Justice Roberts and Justice Scalia argued about what the purpose of this statute was. Petitioner contended that the purpose is to allow doctors to decide whether “sales representatives will have access to this inside information about what they have been prescribing to their patients.” The Chief and Scalia demurred:

CHIEF JUSTICE ROBERTS: The purpose — the purpose is to prevent sales representatives from contacting particular physicians, right?

JUSTICE SCALIA: So what the Chief Justice suggested is right, that the purpose is to stop them from using it in order to market their drugs? . . . Isn’t that the obvious purpose of it? I mean, it doesn’t necessarily make it bad, but — but let’s not quibble over what the purpose is.

Scalia asks if a doctor could simply refuse to talk with a pesky sales representative. The Petitioner disagrees that this is a viable option:

JUSTICE SCALIA: And, and he could achieve the same objective, could he not, by simply refusing to talk to the marketer. When the marketer says, you know, I want to talk to you about a new drug, he says: I don’t talk to drug manufacturers and marketers.

MS. ASAY: He could not achieve the same result, Your Honor. What the record shows is that doctors are particularly concerned about having access to the best information and the most complete information to make decisions for their patients.

Justice Alito, and Justice Kennedy inquire about the so-called “academic detailing” program whereby the information could be made available to research institutions.

JUSTICE
KENNEDY: Could that data be sold to a university for research purposes? The university says: We really want this information to do some research. Could the data be sold to the university for that purpose?
MS. ASAY: Yes, Your Honor, the statute does permit it to be sold for health care research -JUSTICE
KENNEDY: Could the researcher then have a profile, a data bank, that is very helpful to the general public, and sell that to the general public, to the newspapers and so forth?
MS. ASAY: We do not believe so, Your Honor, because of the background regulations that govern this information, including Pharmacy Board Rule 20, which we cited at page 4 of our brief, which also places restrictions on disclosure of patient and practitioner
JUSTICE KENNEDY: No, no. It’s sold to the researcher. The researcher then comes up with a design or database that is very fascinating for a number of reasons. Can that researcher sell it to the New England Journal of Medicine?

JUSTICE KENNEDY: The researcher is at the university. The researcher has a data bank or has some results that are very fascinating. The researcher then wants to sell that to the New England Journal of Medicine. What result under the statute?
MS. ASAY: The statute would have required the pharmacy to prevent the further dissemination of the data except for health care research.

Justice Ginsburg followed up to Justice Kennedy’s question, and confirmed that the data sold to data miners, as well as universities.

JUSTICE GINSBURG: You answered my question earlier that they don’t sell it to anyone else. That’s why I was trying to clarify your answer to Justice Kennedy, because you told me the only sale — the pharmacists, they sell this to the data miners, they do not sell it to the other people. But now you’re answering Justice Kennedy’s question, yes, they sell it to universities.
MS. ASAY: I apologize, Your Honor, if I was not clear. As a factual matter, we know absolutely that the pharmacies do not sell it to researchers. I had understood this to be a hypothetical, if they did. But as a factual matter, they do not.

Justice Scalia questions what the difference is between data be sold, and being given away to research institutions, with respect to the pharmacists right to privacy.

JUSTICE SCALIA: How does it increase the prescribing physician’s right of privacy that the data about his prescribing can only be given away but can’t be sold? Does that make him feel happier about his privacy?
MS. ASAY: What it allows the doctor to do is to avoid an intrusive and invasive marketing practice.
JUSTICE SCALIA: He can do that by saying: I don’t want to talk to you.
MS. ASAY: The doctor cannot — can shut off any communication and any information from the
pharmaceutical companies by slamming the door on the detailers, but that’s not necessarily in the interest of doctors or patients. And what this -JUSTICE
SCALIA: That may well be, but then just don’t tell me that the purpose is to protect their privacy. Now you’re arguing a totally different purpose: It makes it easier for the physician to cut off approaches by drug companies that want to sell drugs. If that’s the purpose of this statute, it’s quite different from protecting his privacy. His privacy isn’t protected by saying you can’t sell it but you can give it away.

Scalia, no fan of the right to privacy, notes that this law doesn’t protect the pharmacists privacy. It just makes it difficult for salesmen to market doctors.

And this is where the arguments go meta, and Petitioner provides his definition of the right to privacy.

MS. ASAY: Your Honor, I think the legislature here was using privacy to refer to the autonomy interest that everyone has to some degree in controlling the flow or the use of information about them. This Court recognized in the Reporters Committee case in the FOIA context that there was a privacy interest in the aggregation of information on an FBI rap sheet.

Justice Sotomayor inquires about the right to privacy and the opt-out/opt-in distinction, asking if an opt-out is less restrictive in light of the First Amendment interests.

JUSTICE SOTOMAYOR: Counsel, that -assuming there’s some form of privacy that relates to not being harassed because there’s certainly legislative record of doctors or groups of doctors testifying to feeling harassed by detailers, if Thompson requires a less restrictive method, why does this have to be an opt-in rather than an opt-out? Because isn’t an opt-out I call up and say I, don’t want you to have this information? So isn’t an opt-out less restrictive?
MS. ASAY: An opt-out would not protect the privacy interests as much because it would assume that doctors want to consent. I would like to say that here the statute is -JUSTICE
SOTOMAYOR: Well, but, given the restrictions on speech, why is that a bad thing? Meaning you don’t really intend to tell us that the State couldn’t and wouldn’t — just like we got all of that advertising relating to the opt-out on telephone solicitations, virtually every American knew they could do it if they chose. Maybe some didn’t, but a vast majority did. You can’t really say Vermont’s incapable of telling doctors in a mailing or in some public professional magazine, if you want to opt out, here’s the number?

Justice Ginsburg asks about health care, and stifling the voice of drug producers to help out generic drug producers. CJ Roberts seems quite upset by this argument.

JUSTICE GINSBURG: There’s another -there’s another purpose that I would like you to comment on, and that is the, the State is interested in promoting the sale of generic drugs and correspondingly to reduce the sale of brand name drugs. And if that’s the purpose, why doesn’t that run up against what this Court has said that you can’t, you can’t lower the decibel level of one speaker so that another speaker, in this case the generics, can be heard better?

MS. ASAY: The State does have an interest in reducing health care costs here. What’s important about this statute is the mechanism by which it allows doctors to decide what information and what kind of marketing they want, and it’s different because what it’s about is access to information in this highly regulated area. It’s the difference between a doctor who prescribes a nonprescription drug and a patient who can take that information, walk into the pharmacy with a $20 bill and leave with their medication, and no one has learned anything about what the doctor prescribed for the patient, about the patient’s concerns, or the doctor’s concerns.

CHIEF JUSTICE ROBERTS: You want to lower – you want to lower your health care costs, not by direct regulation, but by restricting the flow of information to the doctors, by, to use a pejorative word, but by censoring what they can hear to make sure they don’t have full information, so they will do what you want them to do when it comes to prescribing drugs, because you can’t take, I gather, direct action and tell them, you must prescribe generics, right?

Abrogating a constitutional right in order to lower health care costs? The Chief does not seem to accept this line of reasoning. Hrmm… I wonder how this logic would apply to a different case that involves limiting free-rider problems to lower costs by mandating action. Hrm…

This discussion continues:

MS. ASAY: I disagree, Your Honor, for -for two reasons. The statute does not limit any of the information that doctors receive. So the State has not in any way intervened in the information that the pharmaceutical manufacturers can provide to the doctors. They are free -CHIEF
JUSTICE ROBERTS: You’re restricting their — you’re — you’re making it far more burdensome for the manufacturers to reach their intended audience, right? It’s as if I want — there’s a demonstration in town, all right? They need a permit to hold the demonstration. They get the permit. I want to hold a counter-demonstration, and you’re saying it doesn’t make any difference whether I know where their demonstration is going to be or not?
MS. ASAY: I disagree, Your Honor. The -the
ability of drug companies to locate the doctors that are interested in their products is — is not something that calls for this data. It’s very -

Next Justice Kennedy gets in the mix, and asks about limiting a constitutional right (free speech) to lower prices.

JUSTICE KENNEDY: Well, I think maybe you’re being — you were the one that made the argument that the State has an interest in reducing health care costs. I assume that is by selling generics. And the Chief Justice asked you a question: In effect, aren’t you doing this by regulating speech? And you say no, you disagree. I don’t understand that answer that you gave to the Chief Justice.
MS. ASAY: It’s not a restriction on speech because it’s a restriction only on the access to the information that the pharmaceutical manufacturers would like to use to inform their advertising, and it’s only in play if the doctors have objected to the use.

Justice Scalia acknowledges that this law is “making it more difficult for [the manufacturers] to speak by restricting access to information that would enable their speech to be most effective.

Chief Justice Roberts gave Petitioner an additional five minutes for rebuttal in order to answer more questions. The Chief asked whether it was appropriate for the state to determine what speech is effective.

But you’re making a judgment about how their — whether or not their speech will be as effective or not. Don’t you think they’re the ones who are entitled to make that judgment? It doesn’t mean that you’re right or wrong. It just means that we would not rely on your determination that it is — their speech is just as effective. They’re the ones doing the speaking and they think it’s not.
MS. ASAY: Again, Your Honor, I don’t think we disagree that the — the pharmaceutical manufacturers consider this information useful and helpful in targeting their marketing campaigns. The issue in this case is whether their right trumps the right of the doctor.

Wow. That was brutal. No questions from Justice Breyer. One question from Justice Kagan.

Argument of the United States

Justice Scalia asked the SG about whether this actually protects the doctor’s privacy. The United States counters that “privacy” refers more broadly to the control over information.

JUSTICE SCALIA: But it doesn’t protect his privacy. I mean, the — his name and — and the extent of his prescriptions can be given away for a lot of uses. It doesn’t protect his privacy.
MR. KNEEDLER: It — it -JUSTICE
SCALIA: It protect — it enables him to protect himself against drug companies that want to talk to him.
MR. KNEEDLER: And that’s — the term “privacy” is used to embrace that sort of autonomy and control over information. That’s — that’s the way in which we’re -JUSTICE
SCALIA: All right, so long as I know that’s what you’re talking about. When you say “privacy,” you don’t mean the prescriber’s concern that people will know that he prescribed certain drugs. He doesn’t care about that, right.

MR. KNEEDLER: But what this allows for -physicians see value to this, but what this allows for is for the physician to say: I don’t want my information to be used by this drug company in a way -sort of inside information about my overall prescribing practices. I would — I would prefer to have a presentation made to me without the information about me, but information about the drugs that might be -

Roberts asks about the state’s determination that some speech should be communicated and others should not.

CHIEF
JUSTICE ROBERTS: I thought our precedents made — indicated that it’s problematic for the State to make a determination about what uses information can be — to what uses information can be put, particularly when it’s an interested party as it is here.
MR. KNEEDLER: Well, what the statute does is allow the physician — or the prescriber to make that choice. It’s information about the prescriber that the prescriber was required to furnish in connection with issuing a prescription.

The United States also distinguishes this case from the traditional advertising commercial speech case, and is similar to Dun & Bradstreet:

It’s also important to recognize that this is very different from the general advertising cases this Court has had under the commercial speech doctrine. This is not public advertising. This I think falls into the camp of Dun and Bradstreet, where you have a — a targeted limited business audience, a — a — really one-on-one. It’s not — it’s not radio or television advertising. It’s one-on-one advertising in which the public interest is — is much more limited, and it’s one-on-one with respect to the very person whose information was first furnished by the physician to the pharmacy, so

Justice Kennedy isn’t buying this, as the policy still allows the state to determine and prohibit the most efficient type of speech.

JUSTICE
KENNEDY: Well, that’s because the pharmaceutical company deems this to be the most efficient. What you’re saying is that the State can prohibit the most efficient sort of speech, whereas if it just had general dissemination which didn’t serve any particular purpose, that would be all right.
MR. KNEEDLER: But it -JUSTICE
KENNEDY: — but if it becomes -becomes focused and important and effective, then the State can prohibit it.

Argument of Repsondents

Tom Goldstein up for the Respondents.

Goldstein read from the briefs, to show, I think, how Petitioner has changed their position from the Second Circuit arguments. Justice Alito commented on this during arguments. Goldstein also found in the record statements from state legislatures saying that the purpose of this statute is to limit “information getting into the hands of the doctor.”

And my favorite, obviously, is number 4: “The marketplace for ideas on medicine safety, the State determined, was operating in conflict with the goals of the State.” They didn’t like the marketplace of ideas.

Goldstein also noted that a purpose of this law was to keep costs down by ensuring that generic drugs were prescribed:

want to start with subsection A because the State helpfully reiterates its goals here. The second half of this paragraph: “The State sought to ensure costs are contained in the private health care sector, as well as for State purchasers of prescription drugs, through the promotion of less costly drugs and ensuring prescribers received unbiased information.” That’s what they’re trying to do. They’re trying to say: We would like the drug companies to have a harder time finding the doctors while the insurance companies and the State have an easy time finding the doctors.

At page 40 of the transcript, Justice Breyer asks his first question (that must be a record!). It is a lengthy question about what would happen if the FTC banned the disclosure of a doctor’s prescriptions as it is false and harmful to trade. Would the Constitution prevent this law? Goldstein punts.

And therefore marketing that focuses upon who the doctor is and what his previous practices were is irrelevant and harmful and false; and therefore we find that it is a false and deceptive practice under section 5 of the Federal Trade Commission Act to use the following prior practices of the doctor in selling him new drugs, because it’s irrelevant and because it’s false and because it’s harmful. And they enact that as a — as a rule of the Federal Trade Commission.
Does the Constitution of the United States forbid them, having made those findings in detail, from controlling advertising to prevent what they have determined is a false and misleading practice?
MR. GOLDSTEIN: I do know — I don’t know, but I do know the First Amendment applies to the rule.
JUSTICE BREYER: Oh, nobody says it doesn’t apply. The question -MR.
GOLDSTEIN: They — they do. I’ve got a couple people -JUSTICE
BREYER: I’m not interested in what they’re saying for the present purposes. I’m interested, surprisingly enough, in what I’m saying.
(Laughter.)

JUSTICE BREYER: If the Federal Trade Commission’s specialists and experts in false and deceptive advertising concludes that this is a false and deceptive practice, are you going to say that the Constitution of the United States forbids them from doing that?
MR. GOLDSTEIN: I am, but I’m also going to say that I don’t have to win that argument to win this case.

Goldstein, with an assist from Nino, attempts to distinguish Breyer’s massive hypo, and note that “biased” info (in Vermont) is not the same as “false” (Breyer’s FTC hypo).

MR. GOLDSTEIN: I don’t think that the government can say that because speech is so influential it is false and biased. But I will say, Justice Breyer, in my defense that –
JUSTICE SCALIA: I don’t take “biased” to mean false. “Biased” means one-sided.
MR. GOLDSTEIN: Yes, that’s exactly right. And what we like –
JUSTICE
SCALIA: You state the true facts only on one side and not the other.
MR. GOLDSTEIN: Right.
JUSTICE SCALIA: This case has not been argued as a case restricting false advertising, has it?
MR. GOLDSTEIN: No, it’s a case about restricting true advertising.

Goldstein even gets snarky with Breyer.

JUSTICE BREYER: That’s where I was going.
MR. GOLDSTEIN: Okay.

JUSTICE BREYER: I chose an example that’s beyond your case.
MR. GOLDSTEIN: That’s why it’s called a hypothetical.

Wow.

Goldstein specifically hammers home the First Amendment argument here:

Third, the way the First Amendment works in the marketplace of ideas that so upsets Vermont is that both sides get to tell their story, right? The thing that is supposed to be biased here is that the drug companies have too much money. That is not a basis for restricting speech.
The way it works is if the message is accurate, as the FDA has determined it to be, the drug companies can go make their pitch. Vermont can come along and make the opposite pitch. Terrific. So can insurance companies.
But what you can’t do is have a rule that says one side is going to have a much harder time getting to their audience.

Justice Sotomayor notes that in light of today’s technology, there is “virtually no privacy [that] individuals have.” She repeats her question about an opt-out regime. I think I see where her vote is (concurring in judgment).

JUSTICE SOTOMAYOR: Mr. Goldstein, I — I understand your argument and I have a difficulty. Today with the Internet and with computers, there’s virtually no privacy individuals have. Any transaction you do could be spread across the world instantaneously, and for the longest time catalogs would sell your name and address to other catalogers, and if you bought one product from one company, you would get a thousand catalogs from 50 million others.
Today the industry is policing that, in part to get the State not to intercede, by giving you an opt-out option. And so, if you’re a consumer who doesn’t want a million catalogs, the industry is giving you the right to opt out, so they don’t sell your address.
If there is, as I see, some interest that the State legitimately has in protecting that part of the public who says, I entered into this transaction, I didn’t really want you to sell my name, I didn’t want you to do other things with it, all I did was this transaction, why can’t the State say — there is a difference in my mind between an opt-in and opt-out? Why can’t the State say, your desire to enter a transaction in which you’re doing just that transaction and not others is something we can protect?

Goldstein in reply brings up the proposed Privacy Bill of Rights.

MR. GOLDSTEIN: It can. And let me explain why it is that that rule — and let me typify it for you. There is a pending bill in the Congress called the McCain-Kerry Consumer Protection Act and it does what you’re talking about. It says we’re not just going to
leave it to the industry; we’re going to have a set of governmental rules.

Sotomayor asked whether the state could stop the spread of information:

JUSTICE
SOTOMAYOR: So what you’re saying I think to Justice Kennedy is answering my earlier question by saying the State cannot constitutionally stop the spread of information. So if the State said to the pharmacy, all you can do is fill the prescription, that’s what doctors think pharmacies are doing, and that’s all you can do, you’re saying that’s unconstitutional?
MR. GOLDSTEIN: I am saying that that’s unconstitutional.

Breyer, almost sarcastically, quipped whether something called a “regulated industry” still existed. I could tell he is getting a tad testy.

JUSTICE
BREYER: It used to be true there was something called a regulated industry.
MR. GOLDSTEIN: Yes.
JUSTICE BREYER: And selling was within activity among many.
MR. GOLDSTEIN: Sure.
JUSTICE BREYER: And there were lots of regulations that could be imposed upon selling.
MR. GOLDSTEIN: Sure, right.
JUSTICE BREYER: Are you saying that all those should be reexamined?
MR. GOLDSTEIN: I — I thankfully am not.

Later Goldstein referred to one of Justice Kennedy’s hypos to reply to a question from CJ Roberts. Roberts did not remember Kennedy’s hypo.

MR. GOLDSTEIN: You would take Justice Kennedy’s hypothetical, and I don’t think the Court has to confront whether such a statute would be constitutional because it would be very different.
CHIEF JUSTICE ROBERTS: Would you remind me what Justice Kennedy said?
(Laughter.)
MR. GOLDSTEIN: Sure. He said the rule is the pharmacy can’t give it to anybody.

Arguments concluded at 11:14 a.m. One hour and eight minutes after it started.

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