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Akron Univ. School of Law

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Wednesday, November 19, 2008

Federal Court Upholds Drug Privacy Law

The New York Times reports that a federal appeals court in Boston on Tuesday dealt a setback to the pharmaceutical industry and companies that collect prescription data for use in drug marketing.  Stephanie Saul writes,

Gavel3Ruling in support of a New Hampshire law, the court upheld the right of states to prohibit the sale of doctor-specific prescription drug data that is widely used in pharmaceutical marketing.

The case is a defeat for two large data-mining companies, IMS Health and Verispan. They sued in 2006 to block implementation of the New Hampshire law, which prohibited the sale of computerized data showing which doctors were prescribing what drugs.

The law was intended to cut down on state health care costs by eliminating the tool used by drug sales representatives in promoting brand name drugs. By purchasing the data describing which doctors prescribe what drugs, pharmaceutical sales forces are better able to identify which doctors might use their products and be receptive to their sales pitches. They can also focus on persuading doctors who do not write many prescriptions for their products to change their minds.

The sale of prescription data, in which individual patients’ identities have been removed, has become a lucrative industry. The information is purchased from pharmacy chains and the companies that manage drug benefits for employers.

Sales representatives — known as detailers in industry argot — often visit doctors’ offices carrying laptop computers with detailed reports on each doctor’s prescription-writing habits.

Saying in Tuesday’s opinion that the enterprise of buying and reselling prescription information was “mind-boggling” in its scope, United States Court of Appeals Judge Bruce Marshall Selya wrote, “The record contains substantial evidence that, in several instances, detailers armed with prescribing histories encourage the overzealous prescription of more costly brand-name drugs regardless of both the public health consequences and the probable outcome of a sensible cost/benefit analysis.”

The three-judge panel concluded that “the state adequately demonstrated that the Prescription Information Law is reasonably calculated to advance its substantial interest in reducing overall health care costs within New Hampshire.”

The appeals court ruling overturned a decision last year by United States District Judge Paul Barbadoro of Concord, N.H., that stuck down the New Hampshire law on First Amendment grounds.

In a statement, IMS, based in Norwalk, Conn., said it was disappointed with the decision and was evaluating its potential next steps. Shares in IMS fell 12 cents, or 1 percent, to $11.75 on the New York Stock Exchange.

Along with Verispan, which is located in Yardley, Pa., IMS had argued that the purchase and collection of prescription data were valuable for public health reasons and, also, that the law infringed on commercial free speech.

The New Hampshire law, which was to take effect in July 2006 before it was challenged, was the first state law to specifically prohibit the sale or transfer of information identifying doctors for commercial purposes.

Tuesday’s decision could also have implications in other states that have either adopted or are considering similar legislation, particularly Maine, which is in the same appellate district as New Hampshire and where a similar law was also struck down by a district court this year. Vermont has also enacted a similar law that is to take effect next year but is also facing a court challenge.

Such legislation has been urged by doctors who object to the disclosure of their prescribing patterns.

The American College of Physicians asked the larger American Medical Association to prohibit the release or sale of doctors’ prescribing information. In 2006, the A.M.A. established a registry of doctors who could “opt out” of having their prescription data shared with sales representatives. That was part of a voluntary arrangement the A.M.A. reached with the data companies.

In sponsoring the New Hampshire legislation in 2006, Representative Cindy Rosenwald of Nashua, said she was motivated partly by high state Medicaid drug costs, which she said had been driven up by pharmaceutical marketing.

Besides her state, Maine and Vermont, Ms. Rosenwald predicted Tuesday that other states would now take a more serious look at enacting such laws.

“A lot of states have been looking at this and have come very close to enacting it,” she said, “and then they’ve basically said while this is still on appeal, we should just wait.”

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