Federal appeals court overturns Vermont data ban

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A federal appeals court on Tuesday reversed a district court ruling that limited the use of prescriber-identifiable data in Vermont, signaling a victory for plaintiffs IMS Health, SDI and Wolters Kluwer Health. The decision to strike down Vermont's law, despite the fact that another circuit court upheld a similar law in New Hampshire, created contradictory federal rulings, setting up a possible review of the issue by the US Supreme Court.

Vermont's data ban, which made it illegal to gather and sell information about a physician's prescribing habits without his or her consent, was overturned in part because it “does not directly advance the substantial state interests asserted by Vermont,” wrote District Judge John Koeltl, in the ruling. State interests as defined by the data ban include an interest in “protecting the public health,” “protecting the privacy of prescriber and prescribing information,” and “ensuring [healthcare] costs are contained.

The Vermont ruling, decided by the 2nd US Circuit Court of Appeals, runs counter to a 1st US Circuit Court of Appeals decision in 2008, which examined a similar data ban in New Hampshire. In that case, Judge Bruce Selya said the societal benefits of prescriber data, which is used by pharmaceutical companies to inform marketing strategies, “pale in comparison to the negative externalities produced.”

Based on the variety of court rulings in New Hampshire, Maine, and Vermont — the only three states that have passed laws banning prescriber data -- the jury is still out on whether prescriber data qualifies as protected commercial speech under the First Amendment, without caveat.

“We have a split between the 1st and 2nd Circuits now, perhaps increasing the chances of a review by the US Supreme Court of these fundamental First Amendment issues,” said Cathy Betz, VP, government affairs at Wolters Kluwer Health. “This split may also give pause to other states contemplating similar approaches to restricting the use of prescriber information.” Over 100 bills dealing with prescriber data have been submitted in state legislatures, but no new laws have been passed since 2007, according to an SDI statement on the Vermont ruling.

In 2009, the Supreme Court declined to hear arguments about New Hampshire's data ban, which was enacted in 2006, overturned 10 months later by a district court, and then reinstated by the 1st Circuit Court of Appeals.

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