VIEWPOINT: Healthcare Information Organizations vs. New Hampshire: Striking the Appropriate Balance Between Privacy and Free Speech

Lydia Payne-Johnson, CIPP, and Mike Hubbard

Protecting certain consumer information obviously is an important and legitimate function of government. But at the same time, our democratic society also requires that other types of information remain accessible to the public, and that people have the right to share ideas freely and openly.

Drawing that line between the legitimate need for privacy and protecting the public's right to communicate can be tricky. Sometimes, lawmakers misjudge that delicate balance and create laws that unfairly restrict free speech in the name of privacy.

Such was the case in New Hampshire, where state legislators passed the Prescription Restraint Law, a first-in-the-nation bill that made it illegal to sell or license prescription information that identified the prescribing physician for defined commercial purposes, even though the information did not identify any patient. The bill was passed after lobbying by the state's physicians, not because of a groundswell of public opposition to the practice of sharing this information. Nor was there any evidence that the practice adversely had affected patients or consumers, or that barring this information would lower drug prices.

On the other hand, healthcare information companies made a compelling case that protecting access to this information was in the best interests of the public. The aggregated data collected from pharmacies provides critical data on healthcare trends. The plaintiffs argued that improving the nation's healthcare system depends upon more information, not less. More importantly, they also asserted that access to such data was protected by the First Amendment.

While a small state like New Hampshire only accounts for a small number of prescriptions written in the United States, the Prescription Restraint Law carried chilling ramifications for free speech advocates. If the New Hampshire law had been allowed to stand, more states may have passed similar bills. The law also forced the health information companies to reconfigure their national data collection processes.

Two leading health information organizations, Verispan and IMS Health, challenged New Hampshire's Prescription Restraint Law on Constitutional and Dormant Commerce Clause grounds.

Attorneys for Verispan and IMS Health argued that the law unconstitutionally restricted their free speech by denying them the ability to disseminate truthful information that the healthcare information organizations lawfully possessed.

They noted that patient privacy already was protected during the data collection process, as the information collected does not identify any patient. The data collection companies also had agreed on voluntary restrictions allowing doctors to keep their prescription information from being provided to pharmaceutical sales representatives.

Verispan and IMS Health also explained that the data collection process protects patient safety. By knowing physician prescribing habits, drug companies are able to quickly disseminate relevant information about those medicines. Should a drug recall be required, the system allows drug companies to contact physicians in a direct and timely manner.

The information also is used to conduct long-term public health studies. For example, data collected in this manner has been used in studies on childhood asthma in low-income urban areas. The American Medical Association (AMA) is on record opposing the restrictions on the collecting and disclosing of this data, as are the Biotechnology Industry Organization and researchers from the Mayo Clinic, the University of Wisconsin and the Harvard-MIT Division of Health Sciences and Technology. Many in New Hampshire noted that the law, if allowed to stand, likely would curtail biotech research in the state. In fact, the U.S. Department of Health and Human Services strongly has encouraged the use of patient deidentified data where possible (See pdfs/Handbook.pdf for more information).

But the key to the legal argument was the constitutionality of the restrictive new law. The plaintiffs argued that the New Hampshire law illegally curtailed their rights to disseminate commercial speech.

In April, 2007, a U.S. District Court judge in  New Hampshire agreed with Verispan and IMS Health and struck down the Prescription Restraint Law as unconstitutional. U.S. District Court Judge Paul Barbadoro wrote that the law "unconstitutionally restricted speech without directly serving the state's substantial interests…(and) alternatives exist that would achieve the state's interests as well as or better without restricting speech." (IMS Health Inc. vs. Ayotte, No. 06-cv-280-PB D.N.H. Apr. 30, 2007)

However, the fight isn't over. The New Hampshire case currently is on appeal and two neighboring states - Maine and Vermont - passed nearly identical laws as the New Hampshire dispute was in progress. Those laws are scheduled to take effect January 1, 2008. Healthcare information organizations expect to present federal challenges to these state laws and other similar laws that may be adopted in the future.

Lydia Payne-Johnson is an attorney and president of LPJohnson Consulting LLP in West Orange, N.J., specializing in privacy governance. She is the former Chief Privacy Officer with Morgan Stanley and most recently completed an engagement with Verispan, LLC.

Mike Hubbard is the leader of Womble Carlyle's Privacy and Data Protection Team and practices in the firm's Raleigh, N.C. office. Womble Carlyle has 530 attorneys in 11 offices from Baltimore to Atlanta.

Editor's Note: Lydia Payne-Johnson is a former consultant to Verispan. Mike Hubbard is Verispan's external Counsel on privacy.


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