The free flow of information drives the marketplace of ideas and the marketplace of commerce. People will pay for data about a ballplayer's batting average, a politician's voting average, and the Dow Jones Industrial average. Thousands of specialized providers sell information in niche markets to buyers with specific interests and needs. At a time when our economy is choking, we should not choke off these useful enterprises.
But after a cert petition was filed on March 27, the Supreme Court will soon decide whether to review a controversial decision by the U.S. Court of Appeals for the 1st Circuit that threatens to do just that.
The state law at issue bans the transfer, use, or sale of information on the medical prescription histories of individual doctors for certain commercial purposes. This information, obtained from sources such as pharmacies, is "patient-anonymized," meaning that no patients are identified and their privacy rights are not implicated.
This prescription data is especially valuable to pharmaceutical and biotechnology companies. Their sales representatives, known as "detailers," use it when visiting doctors to exchange information about medical advances, new treatments and medications, and the benefits and risks of various alternative drugs or protocols. These detailers also may encourage doctors to use their particular drug over alternatives, but of course the doctors, not the detailers, make the final medical decision.
The case, IMS Health Inc. v. Ayotte, arises from a challenge to a New Hampshire law that prohibits the distribution (with certain limited exceptions) of such prescriber-identifiable information for "commercial purposes." New Hampshire, famous for its first presidential primary, is the first state to pass such a law. Two other states have passed similar laws, and bills banning such information have since been introduced in at least 22 other states. The goal behind these laws is to cripple "detailing," on the theory that these visits to doctors encourage the prescription of more-expensive brand-name products over generics, thereby increasing the cost of health care.
The federal judge who tried the case rejected the state's argument, holding that there was no convincing evidence that the law would reduce health care costs without compromising the quality of health care services. The New Hampshire law, the trial judge reasoned, restricted the flow of valuable "commercial speech" and thus violated the First Amendment.
In a stunning reversal, the trial judge's ruling was overturned on appeal.
The 1st Circuit held in November that the law did not regulate "speech" at all, but merely "conduct," the sale of a commercial product, and thus was completely immune from any attack under the First Amendment. The state was as free to regulate the sale of medical prescription information as it would be free to regulate the sale of any other commodity. The court even seemed to imply that the New Hampshire law was akin to the regulation of "beef jerky."
Alternatively, the court reasoned, even if the information qualified as "speech" (and thus higher in the hierarchy of constitutional values than beef jerky), it was at best only "commercial speech," and thus could be banned by the state in furtherance of its goal of reducing health care costs.
Conceding that New Hampshire had little evidence to support its cost-reduction claims, the court invoked the excuse that the lack of evidence could be attributed to the fact that New Hampshire was the initial state to enact such a law and ought not to be penalized for being the first to give it a try.
This deeply flawed decision has alarming implications for our health care system. If the flow of prescription information is shut off, key actors in the medical marketplace are forced to fly blind, without the benefit of concrete data about the prescription practices of physicians.
More broadly, the case has profound implications for the free flow of information in American society, threatening a vast array of American enterprises that collect, analyze, and sell information vital to the public.
The First Amendment cannot be avoided by deftly declaring certain banned data "a commodity" and its sale mere "conduct," thereby turning information into contraband.
To the contrary, our constitutional principles recognize that commerce and speech are inextricably linked. Commercial advertising, while not protected as fully as noncommercial speech (such as political advertising) still receives robust First Amendment protection under the standard emanating from Central Hudson Gas & Electric Corp. v. Public Service Commission (1980). So long as the product or service advertised is legal (there's no right to pitch the sale of cocaine) and truthful (there's no right to engage in false advertising), government may regulate commercial speech only after meeting demanding legal tests that require the government prove that its regulation will "directly and materially advance" substantial societal objectives and that the regulation is narrowly tailored to further those objectives.
Elaborating on Central Hudson, the Supreme Court has in many subsequent decisions emphasized that the regulation of commercial speech is appropriate only as a last resort, after demonstrating that other regulatory alternatives are not adequate substitutes, and that the government must have some interest other than mere paternalism to justify the suppression of speech.
The New Hampshire law fails this test. Among many alternatives to the censorship of speech, the government is free to weigh in with its own speech, presenting to doctors the government's views regarding prescription practices and medical treatments. Moreover, the entire genesis of the law is the paternalistic assumption that doctors cannot fend for themselves in conversations with detailers.
But more fundamentally, the sale of this data is not properly treated as "commercial speech" at all, and it should have been entitled to the full measure of constitutional protection that shelters the distribution of truthful information.
The Supreme Court has repeatedly admonished that constitutional protection of speech is not diminished merely because the speech is sold for profit. Companies such as IMS serve as information middlemen. They service the free flow of information by gathering and synthesizing data and then selling that data to those who find it valuable. This is not advertising or marketing within the classic conception of "commercial speech." This is simply the sale of information for profit.
Many doctors find this information useful because they gain insight or new knowledge from the information that detailers provide. Some doctors like the free samples of new products that often accompany such visits, which they pass on to patients. Others simply will have nothing to do with detailers, because they find the practice unethical or distasteful. Doctors are not children—they can fend for themselves in making these choices. Paternalism is the enemy of the First Amendment.
The Constitution allows advertisers to proclaim that 7 out of 10 doctors prefer "brand x," just as it allows politicians to proclaim that 7 out of 10 voters favor "position y." More pointedly, the Constitution protects the right to disseminate data about the particular prescribing habits of a specific doctor, just as it protects the right to disseminate data about the particular voting patterns of a specific candidate.
The presumption of the First Amendment is that the free flow of information facilitates quality decision-making and enhances accountability. If the government frets that this information will lead people to make poor choices, the government can counter with its own speech. If the government fears that doctors are such fools that they will be bamboozled merely because medical marketers have access to the doctor's past prescription-writing history, the government may publish its own views about the costs and benefits of particular drugs or medical treatments.
Regulators must pursue their policy preferences through more speech, not less. We have staked our prosperity on the constitutional faith that markets best perform when best informed. As the trial judge recognized, the Constitution does not give New Hampshire a free pass merely because it is the first to get a bad law out of the gate.