The United States District Court for the District of New Hampshire recently held that a state law restricting the license, transfer, use, or sale of prescription data is unconstitutional under the First Amendment because it regulates constitutionally-protected, commercial speech without directly serving a substantial State interest.2 The Prescription Information Law,3 enacted by the New Hampshire Legislature in 2006, prohibits pharmacies and other similar entities from transmitting or using prescription records containing patient-identifiable or prescriber-identifiable information for commercial purposes.4 The statute defines "commercial purpose" to include advertising, marketing, and "any activity that could be used to influence sales or market share of a pharmaceutical product."5
This prohibition directly impacts the "data-mining" business. Data-mining companies purchase prescription data from pharmacies, match it with detailed information about individual prescribers, and sell the resulting prescriber "profiles" to interested parties. Their revenue derives nearly exclusively from sales to pharmaceutical companies which use the prescriber profiles to tailor their drug marketing efforts to individual physicians. In 2006, two leading data-mining companies, IMS Health, Inc. and Verispan, L.L.C., sued the State of New Hampshire challenging the constitutionality of the statute and seeking declaratory judgment to bar its enforcement. The plaintiffs claimed the law impermissibly restricted their right to free speech under the First Amendment. The court agreed.
In its opinion, the court first detailed the ways in which the use of prescriher-identifiable prescription data facilitates pharmaceutical marketing. The court then discussed the language of the New Hampshire statute and the legislative history establishing the State's purpose in passing the bill: to protect patient and physician privacy and to contain health care costs. The court subjected the statute to intermediate scrutiny by analyzing the nexus between the legislation and this asserted purpose. The defendant, the Attorney General of New Hampshire, bore the burden of proof in seeking to uphold the statute; therefore, the court structured its opinion around her arguments, rejecting each.
As an initial matter, the court discarded the Attorney General's contention that the plaintiffs lacked standing to sue, reasoning that the plaintiffs could be prosecuted for their resale of prescriber-identifiable information as "other similar entities" or conspirators under the Prescription Information Law, and, in any case, suffered sufficient economic injury from the law to procure standing.6
Substantively, the Attorney General first argued that the law does not regulate speech and is not, therefore, in violation of the First Amendment. She contended that prescription data constitutes "factual information" rather than speech, and that, even if it does constitute speech, a law that restricts its use and not its disclosure does not regulate speech for the purposes of the First Amendment. The court held that the Prescription Information Law does not escape First Amendment review "merely because it targets factual information rather than viewpoints, beliefs, emotions, or other types of expression."7 The court stated that "transfer" of prescription information is a form of disclosure, and that the statute's prohibition on the transfer and use of prescription data directly regulates speech.8 Furthermore, the court noted that laws that only indirectly regulate speech may nonetheless be subject to the First Amendment when they "affect . . . the speaker's ability to communicate with his intended audience."9
The Attorney General next argued that, even if the law regulates speech, it survives intermediate scrutiny because it directly serves substantial State interests. The court applied intermediate scrutiny, following the rule for commercial speech restrictions in the First Circuit and rejecting the plaintiffs' contention that the restricted prescription information falls outside the definition of commercial speech, thereby requiring strict scrutiny of the statute. …