Supreme Court Hands Drug Companies Twin Wins

The U.S. Supreme Court handed the pharmaceutical industry two major victories on Thursday.

In one case, a First Amendment decision, the court, by a 6-to-3 vote, struck down a Vermont law that barred the buying, selling and profiling of doctors' prescription records — records that pharmaceutical companies use to target doctors for particular pitches. And in a second, the court ruled 5 to 4 that the makers of generic drugs are immune from state lawsuits for failure to warn consumers about possible side effects as long as they copy the warnings on brand-name drugs.

The court's decision in the Vermont case was a sweeping one, sending ripples that almost surely will go beyond the marketing of pharmaceuticals.

It also marked the court's first excursion into data-mining — the practice of collecting and processing vast amounts of information.

The case arose in the context of federal and state regulations that require pharmacies to keep records of all doctors' prescriptions. Pharmacies can, and do, sell those doctor prescription records to data-mining companies, with patient identifiers removed. And the data-mining companies, in turn, sell the information to drugmakers for use in targeting sales pitches at doctors, in an effort to get them to prescribe more brand-name drugs — drugs that are more expensive than generic drugs.

Background

When doctors in Vermont found out their prescription records were being sold this way, they went to the state Legislature, which enacted a law barring the practice. The data miners and the pharmaceutical companies then challenged the law in court, contending that the state had unconstitutionally singled out marketing for different treatment, allowing researchers and state cost-controllers to have access to the data but prohibiting commercial data miners and pharmaceutical companies from accessing the information. On Thursday, the data miners and pharmaceutical companies won when the U.S. Supreme Court struck down the Vermont law as unconstitutional.

Writing for the six-member court majority, Justice Anthony Kennedy said the Vermont law, both on its face and in its operation, imposes a burden based on the content of the speech and identity of the speaker. He dismissed the state's justifications — that the law was aimed at keeping medical costs down and protecting medical privacy, physician confidentiality and the integrity of the doctor-patient relationship. If doctors don't want to get visits from drug company salesmen, said Kennedy, they can just say no.

Kennedy was joined by Justice Sonia Sotomayor and the court's four most conservative members — Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel Alito.

Mixed Reaction To Decision

"When I write a prescription for a patient based on my best medical judgment, that is a private interaction," said Dr. Norman Ward, vice president of the Vermont Medical Society. "For that information to be subsequently sold and repackaged as marketing ammunition to use to influence my prescribing habits is distasteful to me and to many of my colleagues. With health care costs so out of control, to promote a playing field that arms those wishing to promote specific, higher-cost, brand-name drugs that may or may not have more efficacy than generic drugs seems unwise."

Ward said the court seems oblivious to the realities of practicing medicine in an era when drug salesmen target doctors, while the doctors have neither the time nor the quick ability to check the sales claims.

"Basically, it's going to allow the drug companies to have more influence on doctors' prescribing practices, to manipulate their prescribing practices, and to promote the use of more expensive drugs. Almost certainly, health care costs are going to be driven up," said Dr. Gregory D. Curfman, executive editor of the New England Journal of Medicine.

Sen. Patrick Leahy (D-VT) weighed in, too. "This is just one more example of the Supreme Court using the First Amendment as a tool to bolster the rights of big business at the expense of individual Americans," Leahy said. While acknowledging that patients' names are not revealed by data miners, Leahy suggested that such protections are a mere fig leaf since "any 15-year-old" can hack such records to compromise patient identities.

Information privacy experts also criticized Thursday's ruling. "One of the practical consequences of the court's decision will be to make it easier for pharmaceutical companies and data-mining firms and marketing firms to get access to this very sensitive information," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "The states are going to have to go back to the drawing board.

"I think they still have a concern about this practice of 'detailing'; they have argued that it drives up health care costs and that there are some public safety issues, and those are concerns, I suspect, that the states will have to find other ways to address," added Rotenberg, referring to the practice of pharmaceutical representatives visiting doctors to persuade them to prescribe certain brand-name drugs.

But many business and First Amendment lawyers hailed the decision as furthering the availability of information to the public, without the government being able to put its thumb on the scale.

Most immediately, they said to expect challenges to the Food and Drug Administration's ban on advertising drugs for so-called off-label purposes — drugs that have been approved by the FDA for treating one disease but not another. Drug manufacturers will most likely seek to advertise these drugs for nonapproved purposes.

Some business lawyers said they expect challenges to be brought to federal restrictions on the way securities are marketed. Under current law, those offering to sell securities are severely restricted in what they can say about their offerings, observes Richard Samp, of the business-oriented Washington Legal Foundation. Under Thursday's decision, he said, the Securities and Exchange Commission "may have great difficult enforcing those rules."

First Amendment lawyer Robert Corn-Revere of Davis Wright Tremaine LLP said he expects the tobacco industry to use Thursday's ruling to challenge the new and grisly labels that the FDA has required the industry to put on cigarette packs.

"It is the government both limiting what the manufacturers can do to market their products and then essentially deputizing the producers of cigarettes to convey the government's message," said Corn-Revere. "I think the instruction from [Thursday's] opinion is that it's not for the government to control the debate."

Dissenting from Thursday's ruling were Justices Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan. They said that by failing to take account of the regulatory context in which this case arose, the court, at best, had opened up a "Pandora's box" of challenges to ordinary regulatory practices. "At worst," wrote Breyer, "the Court's decision re-awakens [the pre-New Deal] threat of [the court] substituting judicial for democratic decision-making where ordinary economic regulation is at issue."

Second Case

In a second win for the pharmaceutical industry, the high court ruled that generic drug manufacturers cannot be sued for failure to warn consumers about side effects as long as the generic drug labels track the labels on their brand-name counterparts. The five-justice majority acknowledged that its opinion creates a double standard, with users of brand names retaining the ability to sue, and users of generic drugs unable to sue for injuries resulting from inadequately labeled drugs.

Writing for the five-member court majority, Justice Clarence Thomas acknowledged that the decision dealt what he called an "unfortunate hand" that "makes little sense" to those who are harmed by generic drugs and are unable to sue. But the court nevertheless said that the federal law requiring generics to have the same warnings as their brand-name equivalents trumps state laws that require all drug manufacturers to provide warnings about side effects to consumers.

The decision could affect millions of Americans, given that three-quarters of all prescriptions dispensed in the United States are generics.

The court's decision came in cases brought by two women, one in Minnesota and one in Louisiana. Each developed a neurological condition known as tardive dyskinesia as a result of taking a generic version of the drug Reglan for acid reflux. They sued the generic manufacturer under state laws, contending that the generic manufacturers had a duty to strengthen their warning labels as problems related to use of the generic became apparent.

The manufacturers, however, contended that federal rules requiring them to track brand-name labels insulated them from being sued.

Just two years ago, the Supreme Court, by a 6-to-3 vote, rejected similar claims from brand-name manufacturers who claimed that the FDA, by approving their warning labels, had immunized them from suit. Users of generic drugs contended the same rules applied to generics. But on Thursday, a sharply divided court sided this time with the generic manufacturers.

The majority said it was deferring to federal law, reasoning that it would be "impossible" to comply with both state laws that mandate updated warnings and federal rules that demand generic drug labels be the same at all times as the corresponding brand-name drugs.

Justice Sotomayor, writing for the four dissenters, said that as a result of the decision, "whether a consumer harmed by inadequate warnings can obtain relief turns solely on the happenstance of whether her pharmacist filled her prescription with a brand-name or generic drug.

"The court gets one thing right. This outcome makes 'little sense' "

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