Ims Health Inc. v. Ayotte, No. 06-cv-280-PB.

CourtU.S. District Court — District of New Hampshire
Writing for the CourtBarbadoro
Citation490 F.Supp.2d 163
Docket NumberNo. 06-cv-280-PB.
Decision Date30 April 2007
PartiesIMS HEALTH INCORPORATED, et. al. v. Kelly AYOTTE, as Attorney General of the State of New Hampshire.
490 F.Supp.2d 163
IMS HEALTH INCORPORATED, et. al.
v.
Kelly AYOTTE, as Attorney General of the State of New Hampshire.
No. 06-cv-280-PB.
United States District Court, D. New Hampshire.
April 30, 2007.

Page 164

COPYRIGHT MATERIAL OMITTED

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James P. Bassett, Jeffrey C. Spear, Orr & Reno PA, Concord, NH, Mark A. Ash, Smith Anderson Blount Dorsett Mitchell & Jernigan LLP, Raleigh, NC, Patricia Acosta, Thomas R. Julin, Hunton & Williams, Miami, FL, for IMS Health Incorporated, et al.

Richard W. Head, NH Attorney General (Consumer Protection), David A. Rienzo, NH Attorney General's Office, Department of Justice, Concord, NH, for Kelly Ayotte, as Attorney General of the State of New Hampshire.

MEMORANDUM AND ORDER

BARBADORO, District Judge.


A lucrative market has developed in recent years for data identifying the prescribing practices of individual health care providers ("prescriber-identifiable data"). Pharmacies acquire prescription data in the ordinary course of business. Data mining companies such as the plaintiffs in this case, IMS Health Incorporated and Verispan, LLC, purchase the prescription data, remove information identifying patients before it leaves the pharmacy, combine what remains with data from other sources, and sell the combined data to interested purchasers. The data miners' biggest clients by far are pharmaceutical companies, which use the data to develop marketing plans targeted to specific prescribers.

The New Hampshire Legislature recently enacted a law that bars pharmacies, insurance companies, and similar entities from transferring or using prescriber-identifiable data for certain commercial purposes. See 2006 N.H. Laws § 328, codified at N.H.Rev.Stat. Ann. §§ 318:47-f, 318:47-g, 318-B:12(IV) (2006) ("Prescription Information Law"). IMS and Verispan have filed this action contending that the new law impermissibly restricts their First Amendment right to free speech.

In this Memorandum and Order, I explain why the new law violates the First Amendment.

I. FACTS1

A. Prescription Information Collection

Approximately 1.4 million licensed health care providers are authorized to write prescriptions in the United States for approximately 8,000 different pharmaceutical products in various forms, strengths, and doses. These prescriptions are filled by approximately 54,000 retail pharmacies and other licensed medical facilities throughout the United States.

Retail pharmacies acquire prescription data during the regular course of business. For each prescription filled, a record is kept that includes the name of the patient, information identifying the prescriber, the name, dosage, and quantity of the prescribed drug, and the date the prescription was filled. If the pharmacy is part of a larger organization with multiple retail outlets, each outlet's prescription data is ultimately aggregated with data from other outlets and stored in a central location.

B Plaintiffs' Acquisition of Prescription Information

IMS and Verispan are the world's leading providers of information, research, and analysis to the pharmaceutical and health care industries. IMS, the largest business in the field, purchases prescriber information from approximately 100 different suppliers. Verispan, a company roughly onetenth the size of IMS, obtains its information from approximately thirty to forty suppliers. Plaintiffs collectively acquire and analyze data from billions of prescription transactions per year throughout the United States.

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Plaintiffs purchase prescriber-identifiable data from participating pharmacies and other sources. To comply with state and federal laws protecting patient privacy, participating pharmacies allow plaintiffs to install software on their computers that encrypts any information identifying patients before it is transferred to plaintiffs' computers. After patient information is "de-identified" in this way, a number is assigned to each de-identified patient that permits prescription information to be correlated for each patient but does not allow the patient's identity to be determined. The prescription information is then transferred to the plaintiffs' computers where it is combined with data from other sources and made available to plaintiffs' customers. IMS and Verispan obtain all of their prescription information, including information on prescriptions filled in New Hampshire, from computers that are located outside of New Hampshire.

One way in which plaintiffs add value to prescriber-identifiable data is to combine it with prescriber reference information. This allows plaintiffs to, among other things, match each prescription to the correct prescriber, identify and use the prescriber's correct name, and add address, specialty, and other professional information about the prescriber to the prescription data. Prescriber reference files are created using information obtained from various sources, including the American Medical Association's ("AMA") Physician Masterfile. The AMA's Masterfile contains demographic, educational, certification, licensure, and specialty information for more than 800,000 active U.S. medical doctors and over 90 percent of osteopathic doctors. Plaintiffs use the patient de-identified prescription data, together with the reference file data, to produce a variety of patient de-identified databases.

The AMA recently adopted a program that gives participating health care providers the power to limit access to their prescribing information ("the Prescribing Data Restriction Program" or "PDRP"). Under the PDRP, pharmaceutical companies are permitted to acquire prescriber-identifiable data for participating providers but they may not share the information with their sales representatives. IMS and Verispan participate in the PDRP and require their customers to abide by its terms.

C. Uses of Prescription Information by Pharmaceutical Companies

Plaintiffs' biggest clients by far are pharmaceutical companies. According to IMS's 2005 Annual Report, "[s]ales to the pharmaceutical industry accounted for substantially all of [IMS's] revenue in 2005, 2004 and 2003." Approximately 95 percent of Verispan's sales of prescriber-identifiable data are to pharmaceutical companies. Plaintiffs also provide prescriber-identifiable information to biotechnology firms, pharmaceutical distributors, government agencies, insurance companies, health care groups, researchers, consulting organizations, the financial community, manufacturers of generic drugs, pharmacy benefit managers, and others. Some of these entities use, license, sell, or transfer the information for advertising, marketing, and promotional purposes, while others use the information for non-commercial purposes.2

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Pharmaceutical companies commit vast resources to the marketing of prescription drugs. In 2000, the pharmaceutical industry spent approximately $15.7 billion on marketing, $4 billion of which was dedicated to direct-to-physician strategies. More recent estimates suggest the industry currently spends between $25 billion and $30 billion per year on marketing. The large pharmaceutical companies spend roughly 30 percent of their revenues on promotion, marketing, and administration, while spending only approximately 13 percent on research and development.

Pharmaceutical companies market to both consumers and prescribers. Companies rely primarily on print and television advertising to reach consumers and depend more heavily on a variety of direct marketing techniques to reach health care providers. Among the companies' direct marketing practices that are most relevant to this case are their efforts to enlist the support of "thought leaders" in the medical community and their use of "detailing" to persuade individual health care providers to prescribe specific brand-name drugs.

1. Thought Leaders

Thought leaders are physicians and researchers whose views are accorded special weight in the medical community. Pharmaceutical companies enlist the support of thought leaders by sponsoring their research, retaining them to serve as consultants and speakers, and entertaining them at dinners and other events. Although thought leaders rarely, if ever, are paid to endorse particular drugs, their tacit support is deemed by pharmaceutical companies to be highly valuable in persuading others to prescribe their products.

2. Detailing

Pharmaceutical detailing generally involves the provision of promotional and educational information during face-to-face contact between sales representatives and health care providers. Sales representatives provide prescribers with both written and oral information about particular drugs in an effort to persuade them to prescribe the drugs being detailed. They also offer prescribers free samples that can then be distributed to patients at no charge. Because many prescribers are reluctant to meet with sales representatives, small gifts, free meals, and other inducements are also frequently offered to health care providers and their staffs in an effort to facilitate access and encourage receptivity to the representative's sales pitch.

a. Promotional Information

Pharmaceutical companies strictly control the information that detailers are authorized to present on their behalf. Although sales representatives generally provide prescribers with accurate information, misstatements and omissions do occur. A 1995 study published in the Journal of the American Medical Association concluded that 11 percent of the in-person statements made to physicians by pharmaceutical sales representatives contradicted information that was readily available to them.3 Michael G. Ziegler, Pauline Lew,

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and Brian C. Singer, The Accuracy of Drug Information From Pharmaceutical Sales Representatives, 273 JAMA 1296, 1296-98 (1995).

The Federal Food and Drug Administration ("FDA") has broad authority to regulate drug advertisements and promotional labeling. See, e.g., Federal Food, Drug,...

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9 practice notes
  • Ims Health Inc. v. Sorrell, Docket Nos. 09–1913–cv(L)
    • United States
    • U.S. Court of Appeals — Second Circuit
    • November 23, 2010
    ...prohibiting the transmission or use of patient-identifiable and PI data for most commercial purposes. See IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 170–71 (D.N.H.2007), rev'd, 550 F.3d 42 (1st Cir.2008). In relevant part, the statute reads: Records relative to prescription information c......
  • Ims Health Inc. v. Sorrell, No. 1:07-CV-188.
    • United States
    • United States District Courts. 2nd Circuit. District of Vermont
    • April 23, 2009
    ...practice of detailing, please refer to the thorough and detailed description in Judge Barbadoro's opinion in IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163 (D.N.H.2007). See also IMS Health Inc. v. Ayotte, 550 F.3d 42 (1st Cir.2008); IMS Health Corp. v. Rowe, 532 F.Supp.2d 153 In the course o......
  • A Subsidiary Of Wolters Kluwer Health Inc. v. Mills, No. 08-1248.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 4, 2010
    ...the legislature had established expertise in the regulation of prescriber-identifiable data.’ ” Id. (quoting IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 177 n. 12 (D.N.H.2007)). 58 Yet the court also cited the Supreme Court's statement in Turner Broadcasting that “the ‘obligation to exerc......
  • Ims Health Inc. v. Ayotte, No. 07-1945.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • November 18, 2008
    ...court found that it worked an unconstitutional abridgement of free speech and enjoined its enforcement. See IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 183 (D.N.H.2007) (D.Ct.Op.). This appeal In the pages that follow, we explain why we are not persuaded that the regulated data transfers ......
  • Request a trial to view additional results
9 cases
  • Ims Health Inc. v. Sorrell, Docket Nos. 09–1913–cv(L)
    • United States
    • U.S. Court of Appeals — Second Circuit
    • November 23, 2010
    ...prohibiting the transmission or use of patient-identifiable and PI data for most commercial purposes. See IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 170–71 (D.N.H.2007), rev'd, 550 F.3d 42 (1st Cir.2008). In relevant part, the statute reads: Records relative to prescription information c......
  • Ims Health Inc. v. Sorrell, No. 1:07-CV-188.
    • United States
    • United States District Courts. 2nd Circuit. District of Vermont
    • April 23, 2009
    ...practice of detailing, please refer to the thorough and detailed description in Judge Barbadoro's opinion in IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163 (D.N.H.2007). See also IMS Health Inc. v. Ayotte, 550 F.3d 42 (1st Cir.2008); IMS Health Corp. v. Rowe, 532 F.Supp.2d 153 In the course o......
  • A Subsidiary Of Wolters Kluwer Health Inc. v. Mills, No. 08-1248.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 4, 2010
    ...the legislature had established expertise in the regulation of prescriber-identifiable data.’ ” Id. (quoting IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 177 n. 12 (D.N.H.2007)). 58 Yet the court also cited the Supreme Court's statement in Turner Broadcasting that “the ‘obligation to exerc......
  • Ims Health Inc. v. Ayotte, No. 07-1945.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • November 18, 2008
    ...court found that it worked an unconstitutional abridgement of free speech and enjoined its enforcement. See IMS Health Inc. v. Ayotte, 490 F.Supp.2d 163, 183 (D.N.H.2007) (D.Ct.Op.). This appeal In the pages that follow, we explain why we are not persuaded that the regulated data transfers ......
  • Request a trial to view additional results

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