ALEX CHADWICK, host:
In New Hampshire this week, a federal judge will rule on a new law about prescription drugs. The law restricts how drug companies market their products to doctors. The goal: to control drug costs. This is the first law of its kind in the nation, although more than half a dozen states elsewhere are considering similar legislation.
Dan Gorenstein of New Hampshire Public Radio reports.
DAN GORENSTEIN: New Hampshire State Representative Cindy Rosenwald originally sponsored the bill because she was worried about rising prescription drug costs.
State Representative CINDY ROSENWALD (Democrat, New Hampshire): In Medicaid, the cost of prescription drugs is greater than the cost for hospitals, physicians and diagnostic services combined.
GORENSTEIN: Some states have tried to keep cost down by limiting what doctors can prescribe to Medicaid patients. But New Hampshire has taken a different tack. Rather than restricting patients' options, it's focusing on how drug companies are marketing their product.
Dr. MARCIA ANGELL (Senior Lecturer in the Department of Social Medicine at Harvard Medical School): They're pitching the most expensive, newest, brand-named drugs.
GORENSTEIN: Dr. Marcia Angell is a lecturer at Harvard, and has written about drug company practices.
Dr. ANGELL: Even when there may be cheaper drugs that are just as good, that's how it adds to the price of drugs.
GORENSTEIN: According to Angell, the drug companies like Merck, Pfizer and Eli Lilly have figured out a way to be more effective in marketing their products. First, they know that drug stores collect data on what brand of drugs doctors prescribe. Drug stores sell this information to so-called data mining companies, and these companies sell it to the pharmaceuticals. Angell says the practice is insidious.
Dr. ANGELL: If they can know what that doctor's prescribing, then they know exactly how to pitch a drug, how to badmouth a competitor's drug, how to talk up their own drug. And then, they can track how successful they've been in their sales pitch by looking at what the doctor prescribes after a visit, as compare with what he prescribed before the visit.
GORENSTEIN: New Hampshire's law to restrict this practice is being challenged by data-mining companies such as IMS. IMS attorney Tom Julin argues against the law, saying it's unnecessary. Doctors can simply just close their doors to all drug reps. But more importantly, he says, New Hampshire is violating IMS's freedom of speech. Julin says IMS functions just like a newspaper. It gathers information and sells it.
Mr. TOM JULIN (Attorney, IMS): Even if there's people that are reading the newspapers and using information for bad purposes, it doesn't give a legislature any justification for banning a newspaper. Information is one of the most precious resources that we have.
GORENSTEIN: And precious it is. In 2005, for example, IMS made $1.8 billion in gross revenues, almost all of it coming from sales to the pharmaceutical industry, according to the company's annual report.
Assistant Attorney General Richard Head argues against IMS in favor of the law. He says the new restriction will force drug reps to deliver more scientifically based sales pitches.
Assistant Attorney General RICHARD HEAD (New Hampshire): It should be about what is the drug, what does the drug do and how does it compare to a generic drug?
GORENSTEIN: Head says that kind of conversation will lead to prescribing cheaper drugs or generic equivalents, ultimately saving patients and the state money. State Representative Cindy Rosenwald believes the cost savings argument will win the day.
State Rep. ROSENWALD: We've framed it in terms almost of David versus Goliath - huge industry, small state. But that doesn't mean that they will be able to win in court. We're all going to be equal there.
GORENSTEIN: With similar legislation already introduced in New York, Arizona and Massachusetts, lawmakers around the country hope she's right. All those with a financial stake - the data mining companies, pharmaceutical manufacturers and drug store chains hope she isn't. A ruling is expected on the case by the end of the week.
For NPR News, I'm Dan Gorenstein, in Concord, New Hampshire.