Appendix — IMS Health Health, Inc. v. Ayotte (No. 08-1202)

No.— 981202 MAR 27 2009

Jn THPFFICE OF THE CLERK

Supreme Court of the Gnited States

IMS HEALTH INCORPORATED and VERISPAN LLC,

Petitioners,

V.

KELLY M. AYOTTE, AS ATTORNEY GENERAL

OF THE STATE OF NEW HAMPSHIRE,

Respondent.

,

v

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the First Circuit

rs

v

Appendix to Petition for a Writ of Certiorari

®

v

Thomas R. Julin Thomas C. Goldstein

Jamie Z. Isani Counsel of Record

Patricia Acosta Kevin Amer

HUNTON & WILLIAMS LLP AKIN GUMP STRAUSS HAUER

1111 Brickell Avenue — FELD LLP

Suite 2500 1333 New Hampshire

Miami, FL 33131 Avenue, N.W.

(305) 810-2516 Washington, D.C. 20036

tjulin@hunton.com (202) 887-4000

tgoldstein@akingump.com

James P. Bassett Mark Ash

Jeffrey C. Spear SMITH ANDERSON BLOUNT

ORR & RENO, P.A. DORSETT MITCHELL &

One Eagle Square JERNIGAN LLP

P.O. Box 3550 2500 Wachovia Capitol

Concord, N.H. 03302 Center

jbassett or jspear@orr-reno.com P.O. Box 2611

Raleigh, N.C. 27602

mash@smithlaw.com

Counsel for Petitioners

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

App. 1

550 F.3d 42

United States Court of Appeals,

First Circuit.

IMS HEALTH INC. and Verispan, LLC,

Plaintiffs, Appellees,

v.

Kelly A. AYOTTE, New Hampshire Attorney Gen-

eral,

Defendant, Appellant.

No. 07-1945.

Heard Jan. 9, 2008.

Decided Nov. 18, 2008.

Laura E.B. Lombardi, Assistant Attorney Gen-

eral, with whom Richard W. Head, Associate Attorney

General, was on brief, for appellant.

Sean M. Fiil-Flynn, with whom Stacy Canan,

Bruce Vignery, and Michael Schuster, were on brief,

for AARP, Community Catalyst, National Legislative

Association on Prescription Drug Prices, National

Physicians Alliance, New Hampshire Medical Society,

and Prescription Policy Choices, amici curiae.

Mark Rotenberg and Melissa Ngo on brief for

Electronic Privacy Information Center and 16 Ex-

perts in Privacy Law and Technology, amici curiae.

Thomas R. Julin, with whom Patricia Acosta,

Michelle Milberg, Hunton & Williams LLP, James P.

Bassett, Jeffrey C. Spear, Orr & Reno, PA., Mark

Ash, and Smith Anderson Blount Dorsett Mitchell &

Jernigan LLP were on brief, for appellees.

App. 2

William S. Bernstein, Terri D. Keville, and

Manatt, Phelps & Phillips, LLP on brief for EHealth

Initiative, National Alliance for Health Information

Technology, and Surescripts, LLC, amici curiae.

Don L. Bell, II, Garry R. Lane, and Ransmeier &

Spellman, P.A., on brief for National Association of

Chain Drug Stores, amicus curiae.

Craig S. Donais, Getman, Stacey, Schulthess &

Steere, PA, Daniel J. Popeo, and Richard A. Samp on

brief for Washington Legal Foundation, amicus

curiae.

Bert W. Rein, Andrew M. Miller, Joshua S.

Turner, Wiley Rein LLP, and John Kamp on brief for

Coalition for Healthcare Communications, amicus

curiae.

Stephen J. Judge, Wadleigh, Starr & Peters,

Donald B. Ayer, Donald Ear] Childress III, and Jones

Day on brief for Wolters Kluwer Health, Inc., amicus

curiae.

Before LIPEZ, SELYA, and SILER,* Circuit

Judges.

SELYA, Circuit Judge.

The spiraling cost of brand-name prescription

drugs is a matter of great concern to government at

every level. New Hampshire has attempted to curb

* Of the Sixth Circuit, sitting by designation.

App. 3

this escalating problem by enacting innovative legis-

lation. Certain affected companies have challenged

New Hampshire’s legislative response, and that

challenge raises important constitutional questions

that lie at the intersection of free speech and cyber-

space. The tale follows.

Pharmaceutical sales representatives, known in

industry argot as “detailers,” earn their livelihood by

promoting prescription drugs in one-on-one interac-

tions with physicians. A valuable too] in this en-

deavor, available through the omnipresence of

computerized technology, is knowledge of each indi-

vidual physician’s prescribing history. With that

informational asset, detailers are able to target

particular physicians and shape their sales pitches

accordingly. Convinced that this detailing technique

induces physicians to prescribe expensive brand-name

drugs in place of equally effective but less costly

generic drugs, New Hampshire enacted a law that

among other things prohibited certain transfers of

physicians’ prescribing histories for use in detailing.

See 2006 N.H. Laws § 328, codified at N.H.Rev.Stat.

Ann. §§ 318:47-f, 318:47-g, 318-B:12(IV) (2006) (the

Prescription Information Law). A duo of data miners

promptly challenged the law as invalid on various

grounds. The district 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 ensued.

App. 4

In the pages that follow, we explain why we are

not persuaded that the regulated data transfers

embody restrictions on protected speech. In our view,

the portions of the law at issue here regulate conduct,

not speech. Unlike stereotypical commercial speech,

new information is not filtered into the marketplace

with the possibility of stimulating better informed

consumer choices (after all, physicians already know

their own prescribing histories) and the societal

benefits flowing from the prohibited transactions pale

in comparison to the negative externalities produced.

This unusual combination of features removes the

challenged portions of the statute from the proscrip-

tions of the First Amendment.

There is a second basis for our decision. Even if

the Prescription Information Law amounts to a

regulation of protected speech — a proposition with

which we disagree — it passes constitutional muster.

In combating this novel threat to the cost-effective

delivery of health care, New Hampshire has acted

with as much forethought and precision as the cir-

cumstances permit and the Constitution demands.

BACKGROUND

The raw facts are largely undisputed. Modern-

day detailing begins when a prescription is filled.’ At

‘ Our description of detailing owes much to the precise

accounts provided by two district courts, including the court

(Continued on following page)

App. 5

that moment, the pharmacy stores in its computer-

ized database a potpourri of information about the

transaction, such as the name of the patient, the

identity of the prescribing physician, the drug, its

dosage, and the quantity dispensed. Due to the com-

plex relationships that mark the delivery of health

care products and services in the twenty-first century,

this information quickly finds its way into other

databases, including those of insurance carriers and

pharmacy benefits managers.

The plaintiffs in this case, IMS Health Inc. and

Verispan, LLC, are in the business of data mining.

For present purposes, that means that they purchase

data of the type and kind described above, aggregate

the entries, group them by prescriber, and cross-

reference each physician’s prescribing history with

physician-specific information available through the

American Medical Association. The final product

enumerates the prescriber’s identity and speciality,

the drug prescribed, and kindred information. The

scope of the enterprise is mind-boggling: these two

plaintiffs alone record, group, and organize several

billion prescriptions each year. To protect patient

privacy, prescribees’ names are encrypted, effectively

eliminating the ability to match particular prescrip-

tions with particular patients.

below. See IMS Health Corp. v. Rowe, 532 F.Supp.2d 153, 157-65

(D.Me.2007); D. Ct. Op., 490 F Supp.2d at 165-74.

App. 6

These massive collections of information have

great utility for certain non-profit entities (e.g.,

educational] institutions, public interest groups, and

law enforcement agencies). New Hampshire’s con-

cern, however, is with a frankly commercial use: the

exploitation of the mined data by pharmaceutical

companies, whose detailers use it in marketing drugs

to physicians.

At this point, the art of detailing warrants fur-

ther elaboration. Detailing involves tailored one-on-

one visits by pharmaceutical sales representatives

with physicians and their staffs. This is time-

consuming and expensive work, not suited to the

marketing of lower-priced bioequivalent generic

drugs (drugs that are pharmacologically indistin-

guishable from their brand-name counterparts save

for potential differences in rates of absorption). The

higher profit margins associated with brand-name

drugs leaves the personal solicitation field open to

brand-name drug manufacturers, who in the year

2000 spent roughly $4,000,000,000 on detailing.’

Brand-name drug manufacturers engage in

detailing in several situations. For instance, detailing

is employed where a manufacturer seeks to encour-

age prescription of a patented brand-name drug as

* Because of the ready availability of reliable figures, the

parties used the year 2000 as a benchmark year for illustrative

purposes. It is clear from the anecdotal evidence that both the

incidence of detailing and the gross amounts expended in its

service have increased in the intervening years.

App. 7

against generic drugs, or as against a competitor’s

patented brand-name drug, or as a means of main-

taining a physician’s brand loyalty after its patent on

a brand-name drug has expired.

If a physician’s prescribing habits present an

appropriate opportunity, the detailer attempts to gain

access to the physician’s office, usually by presenting

herself as a helpful purveyor of pharmaceutical

information and research. The detailer comes to the

physician’s office armed with handouts and offers to

educate the physician and his staff about the latest

pharmacological developments. In other’ words,

detailers open doors by holding out the promise of a

convenient and efficient means for receiving practice-

related updates.

Withal, a physician’s time is precious, and detail-

ers must manage their way around physicians’ natu-

ral reluctance to make time for promotional

presentations. To this end, detailers typically distrib-

ute an array of small gifts to physicians and their

staffs, host complimentary lunches, and pass out free

drug samples. From time to time, a detailer will

invite a physician to attend an all-expense-paid

conference or to accept a lucrative speaking engage-

ment.

Most of these freebies cut very little ice. The free

samples, however, are highly prized. Their sheer

volume is astounding: in the year 2000, an estimated

$1,000,000,000 in free drug samples flowed from

detailers to physicians. That flood of free medications

App. 8

enables physicians to offer drugs free of charge to

selected patients. Many physicians thus tolerate

detailing visits in order to reap the harvest of sam-

ples that these visits bring.”

Once inside a physician’s office, detailers are

capable of mounting an impressively sophisticated

and intense marketing pitch. The detailer works to

establish an ongoing relationship with the physician

and, in most cases, detailers’ visits become a regular

occurrence. For example, the average primary care

physician interacts with no fewer than twenty-eight

detailers each week and the average specialist inter-

acts with fourteen.

Given the frequency of these exchanges, it is not

surprising that prescriber-identifiable information

can be an invaluable asset to the detailer. That in-

formation enables the detailer to zero in on physi-

clans who regularly prescribe competitors’ drugs,

physicians who are prescribing large quantities of

drugs for particular conditions, and “early adopters”

(physicians with a demonstrated openness to pre-

scribing drugs that have just come onto the market).

The information also allows the detailer to tailor her

promotional message in light of the physician’s pre-

scribing history.

* Nevertheless, a significant number of physicians flatly

refuse detailing visits, convinced that they are either unethical

or a waste of time.

App. 9

Il. THE LEGISLATIVE RESPONSE

In time, the New Hampshire legislature moved to

combat what it saw as a pernicious effect of detailing.

On January 4, 2006, a bill, which would become the

Prescription Information Law, was introduced in the

House of Representatives. Hearings before the House

and Senate followed. Those hearings made the goals

of the proposed statute pellucid: the protection of

privacy interests, the safeguarding of patient health,

and cost containment. Testimony taken at the hear-

ings indicated that the last of these was the bill’s

driver.

In due course, the proposed bill passed both

chambers, was signed by the governor, and took effect

on June 30, 2006. In relevant part it provides:

Records relative to prescription information

containing patient-identifiable and prescriber-

identifiable data shall not be licensed, trans-

ferred, used, or sold by any pharmacy bene-

fits manager, insurance company, electronic

transmission intermediary, retail, mail order,

or Internet pharmacy or other similar entity,

for any commercial purpose, except for the

limited purposes of pharmacy reimburse-

ment; formulary compliance; care manage-

ment; utilization review by a health care

provider, the patient’s insurance provider or

the agent of either; health care research; or

as otherwise provided by law. Commercial

purpose includes, but is not limited to, ad-

vertising, marketing, promotion, or any ac-

tivity that could be used to influence sales or

App. 10

market share of a pharmaceutical product,

influence or evaluate the prescribing behav-

ior of an individual health care professional,

or evaluate the effectiveness of a professional

pharmaceutical detailing sales force.

N.H.Rev.Stat. Ann, § 318:47-f.

The statute further provides that nothing con-

tained in this language should be read to prohibit the

aispensing of prescription medications to a patient,

the transmission of prescription information either

between a prescriber and a pharmacy or between

pharmacies, the transfer of prescription records

evident to a pharmacy’s change in ownership, the

distribution of care management materials to a

patient, or the like. Jd. The statute makes explicit

that nothing in the above-quoted language should be

read to “prohibit the collection, use, transfer, or sale

of patient and prescriber de-identified data by zip

code, geographic region, or medical specialty for

commercial purposes.” Jd. Last — but surely not least

— it provides both criminal and civil penalties for

violations. Id. §§ 318:55, 358-A:6.

lil. THE LITIGATION

Within a month of the effective date of the Pre-

scription Information Law, the plaintiffs initiated this

constitutional challenge. They filed a civil action in

the United States District Court for the District of

New Hampshire, naming the Attorney General in

her official capacity as the defendant and seeking

App. 1l

declaratory and injunctive relief. Their complaint

alleged that the statutory ban on transfer and use of

prescriber-identifiable information transgressed the

Free Speech Clause of the First Amendment, was

void for vagueness, and offended the Commerce

Clause.

A period of expedited discovery and a four-day

bench trial ensued. The district court took the matter

under advisement and subsequently wrote a thought-

ful rescript in which it concluded that the Prescrip-

tion Information Law regulated speech, not conduct.

D. Ct. Op., 490 FSupp.2d at 174-75. Accordingly, it

applied the conventional constitutional test for com-

mercial speech, inquiring whether the law (i) sup-

ported a substantial government interest, (ii) directly

advanced that interest, and (iii) was more extensive

than necessary to serve that interest. Jd. at 177

(citing Cent. Hudson Gas & Elec. Corp. v. Pub. Serv.

Comm’n, 447 U.S. 557, 566, 100 S.Ct. 2343, 65

L.Ed.2d 341 (1980)).

The district court found the governmental inter-

ests advanced in support of the law insufficient. Jd. at

178-81 & n. 13. With specific reference to cost con-

tainment, the court maintained that the state had

failed to prove that substituting non-bioequivalent

generic drugs for brand-name drugs would be gener-

ally advantageous to patients’ health. Jd. at 180-81.

The court also said that cost containment could not

satisfy the third prong of the Central Hudson test

because so many other regulatory options existed for

curtailing detailing — none of which would involve

App. 12

restrictions on speech. See id. at 181-83 (listing

continuing medical education, gift bans, and possible

revisions of the state’s Medicaid program).

In the end, the court declared the relevant por-

tions of the Prescription Information Law unconstitu-

tional and enjoined its enforcement. Jd. at 183. The

court did not reach the plaintiffs’ other constitutional

challenges.

This timely appeal followed. The issues raised

engender de novo review. See Bose Corp. v. Consum-

ers Union, 466 U.S. 485, 514, 104 S.Ct. 1949, 80

L.Ed.2d 502 (1984); Mandel v. Boston Phoenix, Inc.,

456 F.3d 198, 209 (1st Cir.2006).

IV. STANDING

“Standing is a threshold issue in every federal

case.” Berner v. Delahanty, 129 F.8d 20, 23 (lst

Cir.1997). It bears directly upon a court’s power to

adjudicate a dispute. Jd. Consequently, we first

address an issue of standing ~ an issue that touches

upon the nature of the conduct that should serve as

the focal point of our inquiry.

New Hampshire has sought to improve the

quality of interactions between detailers and physi-

cians by regulating upstream transactions of pre-

scriber-identifiable information between data miners

and those who would put that information to use in

detailing. The state directs our attention to these

prohibited upstream transactions, claiming that they

App. 13

comprise the relevant conduct for present purposes.

The plaintiffs demur, positing that the relevant

conduct is composed of the downstream interactions

between detailers and physicians because it is those

interactions that the legislature intended to affect.

The district court sided with the plaintiffs on this

point. See D. Ct. Op., 490 F.Supp.2d at 175.

The record reveals that three sets of transactions

are interwoven here. These include (i) the data min-

ers’ acquisition of prescriber-specific information from

pharmacies and others; (ii) the data miners’ sale of

that information (now processed) to pharmaceutical

companies for use in detailing (transfers for other

purposes are exempted); and (iii) the use of that

information by pharmaceutical company detailers to

promote particular products to physicians. New

Hampshire chose to regulate the first and second of

these transactional subsets, not the third. Given this

model, basic principles of standing jurisprudence help

us to resolve this preliminary dispute.

“A party ordinarily has no standing to assert the

First Amendment rights of third parties.” Wine &

Spirits Retailers, Inc. v. Rhode Island (Wine & Spirits

I), 418 F.3d 36, 49 (1st Cir.2005); accord Eulitt ex rel.

Eulitt v. Me. Dep't of Educ., 386 F.3d 344, 351 (1st

Cir.2004). No pharmaceutical company, detailer, or

physician is a party in this case.“ It follows that

“ To be sure, some of the amici profess to represent such

interests. But, absent special circumstances (not present here),

(Continued on following page)

App. 14

unless they can come within some exception to the

general jus tertii principle, the plaintiffs lack stand-

ing to assert the First Amendment rights of the

participants in the targeted downstream (third-stage)

interactions. In other words, they cannot assert the

rights of detailers to use _prescriber-identifiable

information in communicating face-to-face with physi-

cians, nor can they assert the rights of physicians to

receive that information during such interactions. Cf.

U.S. West, Inc. v. FCC, 182 F.3d 1224, 1232 (10th

Cir.1999) (considering commercial speech rights

where the plaintiff directly sought to use the informa-

tion for its own marketing).

The plaintiffs convinced the district court that

the exception laid down in Craig v. Boren, 429 U.S.

190, 194-95, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976),

allowed their assertion of third-party rights. See D. |

Ct. Op., 490 F.Supp.2d at 175 n. 10 (citing Craig for

the proposition that vendors may assert the rights of

their customer base). We think that in so concluding

the court lost sight of the narrowness of this jus tertii

exception. See Wine & Sprits I, 418 F.3d at 49 (char-

acterizing the exception as “isthmian” and refusing to

allow franchisor to assert First Amendment rights of

franchisees).

issues advanced exclusively by an amicus ought not to be

considered on appeal. See, e.g., United States v. Bongiorno, 106

F.3d 1027, 1034 (1st Cir.1997); United States v. Taylor, 54 F.3d

967, 972 (1st Cir.1995); Lane v. First Nat'l Bank, 871 F.2d 166,

175 (1st Cir. 1989).

App. 15

The exception is rooted in practical considera-

tions. Under it, a litigant will be permitted to raise a

third party’s rights only when three criteria are met.

the third party has suffered a constitutional injury in

fact, the litigant enjoys a close relationship with the

third party, and an obstacle exists to the third party

assertion of his or her own rights. See Powers v. Ohio,

499 U.S. 400, 410-11, 111 S.Ct. 1364, 113 L.Ed.2d 411

(1991) (citing Craig, 429 U.S. at 190, 97 S.Ct. 451).

The inapplicability of the exception is evident.

There is no indication in the record that pharmaceu-

tical companies, detailers, or physicians are somehow

incapable of or inhibited from vindicating their own

rights. In the absence of any such barrier, Craig does

not pertain. See Euliti, 386 F.3d at 352-53; see also

Singleton v. Wulff, 428 U.S. 106, 110, 114-16, 96 S.Ct.

2868, 49 L.Ed.2d 826 (1976).

Of course, the Court has indicated some willing-

ness to relax third-party standing in the First

Amendment context. See Kowalski v. Tesmer, 543 U.S.

125, 130, 125 S.Ct. 564, 160 L.Ed.2d 519 (2004). But

in practical terms, this relaxation evinces nothing

more than a receptiveness to facial attacks on alleg-

edly overbroad laws. See Osediacz v. City of Cranston,

414 F.3d 136, 140 (1st Cir.2005). Otherwise, hin-

drance — the existence of an obstacle to the vindica-

tion of one’s own rights — remains a necessary

prerequisite; and no court has exhibited a willingness

to write the hindrance element out of the standing

App. 16

test as a matter of general convenience.” See Wine &

Spirits I, 418 F.3d at 49; Richard H. Fallon, Jr., As-

Applied and Facial Challenges and Third Party

Standing, 113 Harv. L.Rev. 1321, 1359-64 (2000); see

also Osediacz, 414 F.3d at 140 n. 2 (noting that

“[elven this limited relaxation ... is controversial”).

Thus, the data miners must assert their own rights

and explain how those rights are infringed by the

operation of the Prescription Information Law.

As we proceed, we restrict our analysis to

whether the data miners’ activities ~ the acquisition,

aggregation, and sale of prescriber-identifiable data —

constitute speech or conduct and whether New

Hampshire’s legitimate governmental interests are

sufficient to counterbalance any speech rights inher-

ent therein. We think it important to note, however,

that this restriction on jus tertii rights does not

° The dissent seems to equate prudential standing rules

with precatory guidelines. That is an incorrect assessment.

Although the Court has said that prudential standing doctrine

derives primarily from pragmatic concerns, that is a far cry from

saying that standing rules can be ignored by a district court in

the interests of expediency. See Valley Forge Christian Coll. v.

Americans United for Sep’n of Church and State, Inc., (“Merely

to articulate these principles is to demonstrate their close

relationship to the policies reflected in the Art. III requirement

of actual or threatened injury amenable to judicial remedy.”).

For example, the prohibition against adjudicating generalized

grievances is a prudential doctrine — but we can find no case in

which that barrier has been lifted in the interest of pragmatism.

Here, then, detouring around third-party standing rules re-

quires a showing of hindrance. See Kowalski, 543 U.S. at 129-30,

125 S.Ct. 564.

App. 17

prevent consideration of New Hampshire’s interest in

combating detailing. Standing rules are at bottom a

limitation on a court’s competence to adjudicate a

dispute. See Warth v. Seldin, 422 U.S. 490, 501, 95

S.Ct. 2197, 45 L.Ed.2d 343 (1975). Conversely, con-

sideration of a state’s interest addresses the state’s

power to enact laws and is in no way denigrated by a

lack of standing. After all, courts long have recog-

nized that a law may be predicated on criteria

broader than those presented by a particular case.

See, e.g., Crawford v. Marion Cty. Election Bd., ___

U.S. __, 128 S.Ct. 1610, 1623, 170 L.Ed.2d 574

(2008); Gonzales v. Raich, 545 U.S. 1, 17, 125 S.Ct.

2195, 162 L.Ed.2d 1 (2005).

V. SPEECH OR CONDUCT?

The next issue requires a determination of

whether or not the challenged portions of the Pre-

scription Information Law regulate protected speech.

The state offers a simplistic solution to this nuanced

problem: it asseverates that the law falls under the

exception to First Amendment coverage limned in

Bartnicki v. Vopper, 532 U.S. 514, 121 S.Ct. 1753, 149

L.Ed.2d 787 (2001), so that it may prohibit the use of

prescriber-identifiable information without further

ado. See id. at 526-27, 121 S.Ct. 1753 (dictum).

Bartnicki does not take the state very far. The

Bartnicki Court confronted a bizarre situation, in

which an illegally intercepted wire communication

fell fortuitously into the hands of an individual who

App. 18

had neither played a role in its interception nor knew

the interceptor. Given that the information bore upon

a matter of public concern, the Court opined that

Congress could not constitutionally prchibit the

disclosure of that information by the innocent recipi-

ent. Id. at 534, 121 S.Ct. 1753. In so concluding, it

introduced a distinction between “use” and “disclo-

sure” of illegally intercepted communications: the

First Amendment allowed absolute prohibition of the

former but only allowed prohibition of the latter when

the discloser had participated in the interception. Jd.

at 529, 121 S.Ct. 1753. It carefully distinguished the

situation at hand from other situations in which valid

laws prohibited the use of illegally intercepted wire

communications. See id. at 527 n. 10, 121 S.Ct. 1753.

The state does not explain why Bartnicki should

be understood to shed light on the instant case, and

we believe that any comparison is inapt. The facts of

the two cases are materially distinguishable, and the

state’s expansive reading of Bartnicki is insupport-

able on policy grounds. Were the state capable of

forbidding every use of information regardless of the

specific nature of either the use or the information,

the state’s power to control the flow of information

would be nearly absolute. The First Amendment does

not protect the rights of persons to give and receive

information only to allow the wholesale prohibition of

its use by government fiat. While various uses of

transferred information can be barred or restricted

for independent reasons (licensing agreements are a

App. 19

prime example), they cannot be prohibited merely

because they are “uses.”

Rejecting the state’s mechanistic reliance on

Bartnicki is only the beginning, not the end. Although

Bartnicki does not control, we nonetheless believe

that what the state seeks to regulate here is conduct,

not expression. This case poses the relatively narrow

question of whether the Prescription Information

Law constitutionally may bar these plaintiffs (data

miners) from aggregating, manipulating, and trans-

ferring data for one particular purpose only. This

brings vividly to mind Chief Justice Roberts’s admo-

nition that “it has never been deemed an abridgement

of freedom of speech or press to make a course of

conduct illegal merely because the conduct was in

part initiated, evidenced, or carried out by means of

language, either spoken, written, or printed.” Rums-

feld v. Forum for Acad. & Inst. Rights, Inc. (FAIR),

547 U.S. 47, 62, 126 S.Ct. 1297, 164 L.Ed.2d 156

(2006) (quoting Giboney v. Empire Storage & Ice Co.,

336 U.S. 490, 502, 69 S.Ct. 684, 93 L.Ed. 834 (1949)).

We recognize, of course, that pure informational

data can qualify for First Amendment protection. See

Univil City Studios, Inc. v. Corley, 273 F.3d 429, 446-

47 (2d Cir.2001) (“Even dry information, devoid of

advocacy, political relevance, or artistic expression,

has been accorded First Amendment protection.”); see

also Va. Bd. of Pharm. v. Va. Citizens Consumer

Council, Inc., 425 U.S. 748, 770, 96 S.Ct. 1817, 48

L.Ed.2d 346 (1976) (deeming ordered pairs of drug

prices and products commercial speech). But that coin

App. 20

has a flip side. As Justice Holmes famously observed,

“the First Amendment while prohibiting legislation

against free speech as such cannot have been, and

obviously was not, intended to give immunity for

every possible use of language.” Frohwerk v. United

States, 249 U.S. 204, 206, 39 S.Ct. 249, 63 L.Ed. 561

(1919).

The proof of this pudding is that entire categories

of speech receive no protection at all from the First

Amendment. Some have been explicitly recognized as

lying outside the compass of the Free Speech Clause

by virtue of longstanding tradition. See, e.g., Chap-

linsky v. New Hampshire, 315 U.S. 568, 571-72, 62

S.Ct. 766, 86 L.Ed. 1031 (1942) (listing as examples

“the lewd and obscene, the profane, the libelous, and

the insulting or ‘fighting’ words”); see also Thompson

vu. W. States Med. Ctr, 535 U.S. 357, 367, 122 S.Ct.

1497, 152 L.Ed.2d 563 (2002) (explaining that false or

misleading commercial speech may be barred com-

pletely without constitutional concern).

There are other species of speech-related regula-

tions that effectively lie beyond the reach of the First

Amendment. These include agreements in restraint

of trade, see, e.g., Nat'l Soc’y of Prof. Eng’rs v. United

States, 435 U.S. 679, 697-98, 98 S.Ct. 1355, 55

L.Ed.2d 637 (1978); communications in furtherance of

crimes, see, e.g., Giboney, 336 U.S. at 498, 69 S.Ct.

684; statements or actions creating hostile work

environments, see, e.g., O'Rourke v. City of Prov., 235

F.3d 713, 735 (1st Cir.2001); and promises of benefits

made by an employer during a union election, see,

App. 21

e.g., NLRB v. Gissel Packing Co., 395 U.S. 575, 618-

20, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969). The Su-

preme Court has recognized that these exceptions

exist, see, e.g., Cal. Motor Transp. Co. v. Trucking

Unlimited, 404 U.S. 508, 515, 92 S.Ct. 609, 30

L.Ed.2d 642 (1972); see also Richard H. Fallon, Jr.,

Sexual Harassment, Content Neutrality, and the First

Amendment Dog That Didn’t Bark, 1994 Sup.Ct. Rev.

1, 8, but for whatever reason, the Justices have never

deemed it necessary to address why or how these

content-based prohibitions manage to escape First

Amendment scrutiny. Thus, these laws loom as tacit

but unexplained exceptions to the suzerainty of the

First Amendment. See Wine & Spirits I, 418 F.3d at

53.

Scholars have labored to formulate theories

about why First Amendment immunity exists in such

cases. See, e.g., Neil M. Richards, Reconciling Data

Privacy and the First Amendment, 52 U.C.L.A. L.Rev.

1149, 1165-74 (2005); Frederick Schauer, The

Bounde ies of the First Amendment: A Preliminary

Exploration of Constitutional Salience, 117 Harv.

L.Rev. 1765, 1777-84 (2004). Despite these efforts, the

matter remains a doctrinal mystery.

In our view, the most natural explanation for this

phenomenon is that this complex of de facto excep-

tions derives from a felt sense that the underlying

laws are inoffensive to the core values of the First

Amendment — inoffensive because they principally

regulate conduct and, to the extent that they regulate

speech at all, that putative speech comprises items of

App. 22

nugatory informational value. It is this unusual

combination of features that distinguishes these laws

and places them outside the ambit of the First

Amendment. Cf. Chaplinsky, 315 U.S. at 572, 62 S.Ct.

766 (explaining inapplicability of First Amendment to

fighting words because these words are “of such slight

social value as a step to truth that any benefit that

may be derived from them is clearly outweighed by

the social interest in order and morality”).

We believe that the transfers of prescriber-

identifiable information regulated by the Prescription

Information Law (transfers that otherwise would flow

from pharmacies to data miners to detailers for the

purpose of promoting the dispensation of expensive

brand-name drugs) fit within this integument. The

challenged portions of the statute principally regulate

conduct, and to the extent that the challenged por-

tions impinge at all upon speech, that speech is of

scant societal value.

We say that the challenged elements of the

Prescription Information Law principally regulate

conduct because those provisions serve only to re-

strict the ability of data miners to aggregate, compile,

and transfer information destined for narrowly de-

fined commercial ends. In our view, this is a restric-

tion on the conduct, not the speech, of the data

miners. Cf. Wine & Spirts I, 418 F.3d at 49 (viewing

“provision of advertising services, including designing

advertisements, arranging for their placement in

various media, and licensing the common use of trade

names” as conduct rather than speech). In other

App. 23

words, this is a situation in which information itself

has become a commodity. The plaintiffs, who are in

the business of harvesting, refining, and selling this

commodity, ask us in essence to rule that because

their product is information instead of, say, beef jerky,

any regulation constitutes a restriction of speech. We

think that such an interpretation stretches the fabric

of the First Amendment beyond any rational meas-

ure.

The plaintiffs advance two related theories as to

why their information processing constitutes speech.

First, they analogize their situation to that of a

newspaper, noting that they, like a newspaper, collect

information of public concern, analyze it, and distrib-

ute it for a fee. Second, they liken this case to those in

which the Supreme Court has struck down commer-

cial speech restrictions on the ground that the speech

contributes to the efficiency of the marketplace. The

response to both of these arguments is rooted in the

conduct/speech distinction: While the plaintiffs lip-

synch the mantra of promoting the free flow of infor-

mation, the lyrics do not fit the tune.” The Prescrip-

tion Information Law simply does not prevent any

information-generating activities. The plaintiffs may

" Characterizing the Prescription Information Law as a

paternalistic ban on the influx of information into the market-

place misses the point. Detailers do not routinely disclose a

physician’s prescribing history to that physician. Indeed, many

physicians who interact with detailers never discover that the

detailers possess such information,

App. 24

still gather and analyze this information; and may

publish, transfer, and sell this information to whom-

ever they choose so long as that person does not use

the information for detailing. Like in FAIR, 547 U.S.

at 62, 126 S.Ct. 1297, the restriction here is on the

conduct (detailing) not on the information with which

the conduct is carried out.

The plaintiffs’ true complaint, of course, is that in

banning this use of their data, we risk drying up the

market for their services. To that concern we repeat:

“the First amendment does not safeguard against

changes in commercial regulation that render previ-

ously profitable information valueless.” Wine &

Spirits I, 418 F.3d at 48. In that case, we offered an

example of the closure of a tax loophole rendering

tax-shelter information worthless. See id. It is the

same here: the seller of information can not be heard

to complain that .ts speech is infringed by a law

making the most profitable use of that information

illegal. See id. (“The First Amendment’s core concern

is with the free transmission of a message or idea

from speaker to listener, not with the speaker’s

ability to turn a profit.”).

Although speech, protected or not, is implicated

by the Prescription Information law, it consists

primarily of communications between detailers and

doctors — but no detailer or doctor is a plaintiff here.

Therefore, an adjudication of that aspect of the law

must await a proper plaintiff.

App. 25

We add, moreover, that the fact that this infor-

mation can be freely transferred to anyone for non-

detailing purposes renders this case a world apart

from statutes that have been struck down in the

interest of “provid{ing] a forum where ideas and

information flourish.” Thompson, 535 U.S. at 367, 122

S.Ct. 1497 (quoting Edenfield v. Fane, 507 U.S. 761,

767, 113 S.Ct. 1792, 123 L.Ed.2d 543 (1993)); see also

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484,

516, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996) (striking

down statute prohibiting advertisement of liquor

prices); Edenfield, 507 U.S. at 777, 113 S.Ct. 1792

(striking down statute prohibiting in-person solicita-

tion by accountants); Va. Bd. of Pharm., 425 U.S. at

771-73, 96 S.Ct. 1817 (striking down statute prohibit-

ing advertisement of price information for drugs).

Pharmaceutical detailing has pushed the art of

marketing into uncharted waters. In the service of

maximizing drug sales, detailers use prescribing

histories as a means of targeting potential customers

more precisely and as a tool for tipping the balance of

bargaining power in their favor. As such, detailing

affects physician behavior and increases the likeli-

hood that physicians will prescribe the detailers’

(more expensive) drugs. The New Hampshire legisla-

ture found this advantage in bargaining power in-

vidious (chiefly because of its inflationary impact on

drug prices) and determined that it compromised the

integrity of physician decisionmaking. Consequently,

the legislature sought to level the playing field not by

eliminating speech but, rather, by eliminating the

App. 26

detailers’ ability to use a particular informational

asset — prescribing histories — in a particular way.

To be sure, certain information exchanges are

foreclosed by the Prescription Information Law. They

are not, however, the sorts of exchanges valued by the

Supreme Court’s First Amendment jurisprudence but,

rather, are exchanges undertaken to increase one

party’s bargaining power in negotiations. We believe

that in moving to combat the novel problems pre-

sented by detailing in the information age, New

Hampshire has adopted a form of conduct-focused

economic regulation that does not come within the

First Amendment’s scope.

Accordingly, we hold that the challenged portions

of the Prescription Information Law fall outside the

compass of the First Amendment. They thus engen-

der rational basis review as a species of economic

regulation. See, e.g., Nat'l Amusements, Inc. v. Town

of Dedham, 43 F.3d 731, 736 (1st Cir.1995). The

plaintiffs concede that the challenged portions of the

law survive that modest level of scrutiny. The chal-

lenge under the Free Speech Clause must, therefore,

fail.

VI. FIRST AMENDMENT SCRUTINY

Although we could end our odyssey here, there is

another path open to us that leads to the same dis-

tinction. Even if the Prescription Information Law is

treated as a restriction on protected speech, it is

App. 27

nonetheless constitutional. This, then, constitutes an

alternative ground for our decision.

Assuming, arguendo, that the acquisition, ma-

nipulation, and sale of prescriber-identifiable data

comes within the compass of the First Amendment,

the Prescription Information Law would have to

survive intermediate scrutiny as a regulation of

commercial speech. See Florida Bar v. Went For It,

Inc., 515 U.S. 618, 623, 115 S.Ct. 2371, 132 L.Ed.2d

541 (1995). As we explained above, see supra Part IV,

the plaintiffs lack standing to assert the rights of the

pharmaceutical companies, the detailers, or the

physicians. Their challenge must therefore rise or fall

based on the curtailment of their own rights (rights

emanating from the upstreara transactions to which

they are privy).

If speech at all, these transactions are commer-

cial speech; that is, they at most embody “expression

related solely to the economic interest of the speaker

and its audience.” Cent. Hudson, 447 U.S. at 561, 100

S.Ct. 2343. While the plaintiffs argue for a narrower

definition of commercial speech limited to activities

“propos(ing] a commercial transaction,” Bd. of Trs. of

State Univ. of N.Y. v. Fox, 492 U.S. 469, 473-74, 109

S.Ct. 3028, 106 L.Ed.2d 388 (1989), the case law is

inhospitable to this argument. See, e.g., Pharm. Care

Mgmt. Ass'n v. Rowe, 429 F.3d 294, 309 (1st Cir.2005);

El Dia, Inc. v. P-R. Dept of Consumer Affairs, 413

F.3d 110, 115 (1st Cir.2005). We therefore reject it and

conclude instead that the Prescription Information

Law, if regarded as a restriction on protected speech,

App. 28

must be analyzed under the rubric of commercial

speech.

That conclusion brings front and center the

familiar Central Hudson test. Under Central Hudson

- so long as the speech in question concerns an oth-

erwise lawful activity and is not misleading — statu-

tory regulation of that speech is constitutionally

permissible only if the statute is enacted in the

service of a substantial governmental interest, di-

rectly advances that interest, and restricts speech no

more than is necessary to further that interest. See

Cent. Hudson, 447 U.S. at 556, 100 S.Ct. 2343; Wine

& Spirits Retailers, Inc. v. Rhode Island (Wine &

Spirits IT), 481 F.3d 1, 8 (1st Cir.2007). In administer-

ing this test, we must remain mindful that the party

seeking to sustain a restriction on commercial speech

bears the burden of justifying that restriction.

Thompson, 535 U.S. at 373, 122 S.Ct. 1497; Eden-

field, 507 U.S. at 770, 113 S.Ct. 1792.

On behalf of the Prescription Information Law,

New Hampshire cites three governmental interests:

maintaining patient and prescriber privacy, protect-

ing citizens’ health from the adverse effects of skewed

prescribing practices, and cost containment. For

simplicity’s sake, we restrict our analysis to the third

of these interests.

Fiscal problems have caused entire civilizations

to crumble, so cost containment is most assuredly a

substantial governmental interest. As such, cost

App. 29

containment suffices to satisfy the first prong of the

Central Hudson test.

The next question — whether the law directly

advances that interest — is not so cut and dried. To

succeed on this prong of the test, the state “must

demonstrate that the harms it recites are real and

that [the] restriction will in fact alleviate them to a

material degree.” Edenfield, 507 U.S. at 770-71, 113

S.Ct. 1792. Speculation, surmise, or fevered imagin-

ings will not carry the day. Jd. at 770, 113 S.Ct. 1792.

This does not mean, however, that certitude is

required. A state need not go beyond the demands of

common sense to show that a statute promises di-

rectly to advance an identified governmental interest.

See, e.g., Burson v. Freeman, 504 U.S. 191, 211, 112

S.Ct. 1846, 119 L.Ed.2d 5 (1992). While empirical

data must plausibly point to a conclusion, that data

need not be “accompanied by a surfeit of background

information.” Florida Bar, 515 U.S. at 628, 115 S.Ct.

2371. States are allowed “to justify speech restric-

tions by reference to studies and anecdotes” or even

to justify them “based solely on history, consensus,

and simple common sense.” /d. (internal quotation

marks omitted).

Here, the state’s evidence falls into three eviden-

tiary subsets, each of which forges some part of the

causal chain leading from transfers of prescribers’

histories for use in detailing to higher drug prices.

The first category embodies evidence showing

that detailing increases the cost of prescription drugs.

App. 30

The second involves a showing that prescribers’

histories enhance the success of detailing. The final

category encompasses evidence indicating that,

notwithstanding these escalating costs, detailing does

not contribute to improved patients’ health. Drawing

these inferences, the state reasons that stripping

detailers of the ability to use prescribers’ histories as

a marketing tool will decrease the quantities of

(relatively expensive) brand-name drugs dispensed,

increase the quantities of (relatively inexpensive)

generic drugs dispensed, and thus reduce or contain

overall costs. The plaintiffs respond with evidence of

the positive effects of detailing enhanced by prescrib-

ers’ histories and by noting that the state has not

proven that health care costs will ebb following

increased substitution of generic drugs for brand-

name drugs.

The state’s initial point is unarguable: pharma-

ceutical companies use detailing to promote the sale

of brand-name drugs, and those drugs cost signifi-

cantly more than their generic counterparts.’ Detail-

ing works: that it succeeds in inducing physicians to

prescribe larger quantities of brand-name drugs

seems clear (even if the exact magnitude of that effect

” Of course, targeted detailing is employed not only to

promote the sale of brand-name drugs in lieu of generic drugs,

but also to encourage prescribers to choose one particular brand-

name drug over another. The latter situation is not the state’s

primary concern because the cost differential between competing

brand-name drugs is less likely to be significani

App. 31

is not). See, e.g., Puneet Manchanda & Elisabeth

Honka, The Effects and Role of Direct-to-Physician

Marketing in the Pharmaceutical Industry: An inte-

grative Review, 5 Yale J. Health Pol’y L. & Ethics 785,

809 (2005); Ashley Wazana, Physicians and the

Pharmaceutical Industry: Is a Gift Ever Just a Gift?,

283 J. Am. Med. Ass’n 373, 378 (2000). The fact that

the pharmaceutical industry spends over $4,000,000,000

annually on detailing bears loud witness to its effi-

cacy.

The testimony adduced at trial reinforced these

common-sense conclusions. Dr. Jerome Avorn, a pro-

fessor at Harvard Medical School specializing in

pharmacoepidemiology and pharmacoeconomics, de-

scribed studies showing that detailing substantially

increases physicians’ rates of prescribing brand-name

drugs. This account echoed testimony of the president

and president-elect of the New Hampshire Medical

Society.

The evidence in support of the second step in the

progression — that detailing becomes incrementally

more successful when pursued with the aid of physi-

cian-specific prescribing histories — is less formidable.

Still, Dr. Avorn drew analogies to opine that detailers

armed with prescribing histories enjoyed a significant

marketing advantage, resulting in greater leverage,

increased sales of brand-name drugs, and higher drug

costs — all with no corresponding benefit to patients.

In addition, a former detailer, relying on personal

experience, testified about various kinds of leverage

that prescribing histories afforded detailers (e.g., the

App. 32

ability to target physicians prescribing large quanti-

ties of generic drugs, the ability to zero in on a physi-

cian’s customary prescribing choices, and the ability

to punish physicians who fail to display allegiance to

particular brand-name drugs). Each of these wit-

nesses emphasized that prescribing histories helped

the detailer to become more adversarial in her pres-

entation and to focus on the weakness of the physi-

cian’s erstwhile drug of choice as opposed to the

clinical virtues of the detailed drug. A promotional

brochure published by IMS for detailers’ use corrobo-

rated many of these claims, as did a submitted news-

paper article that formed part of the legislative

history underlying the Prescription Information Law.

See Liz Kowalczyk, Drug Companies’ Secret Reports

Outrage Doctors, Boston Globe, May 25, 2003, at Al.

The plaintiffs did not deny that prescribing

histories made detailing more efficacious. They did,

however, try to cast detailing as a helpful and infor-

mative activity. In their view, prescribing histories

enable detailers both to target the physicians most

likely to benefit from an educational interaction and

to craft a marketing message tailored to the physi-

cian’s practice. The plaintiffs offered the testimony of

Dr. Thomas Wharton, a distinguished cardiologist, to

support this characterization. Dr. Wharton found

detailing to produce highly informative interactions

in which “the level of discourse is elevated.” Other

testimony indicated that the availability of prescrib-

ing histories permitted detailers to inform physicians

more quickly of negative information. Finally, the

App. 33

plaintiffs adduced evidence anent the purported value

of identifying and targeting “early adopters.”

The district court determined that the state’s

asserted cost containment interest failed to satisfy

the second prong of the Central Hudson test. The

court based this determination on its conclusion that

the final link in the chain of reasoning was missing:

“(tlhe Attorney General appears to assume that any

health care cost savings that will result from a ban on

the use of prescriber-identifiable data can be achieved

without compromising patient care.” D. Ct. Op., 490

F.Supp.2d at 180. This assumption was flawed, the

court wrote, because brand-name drugs sometimes

served patients better than their generic counter-

parts; thus, it was possible that an increase in generic

drug prescriptions might compromise patient care,

engender new medical costs, and overwhelm any

savings. Jd. at 180-81.

Admittedly, the state’s showing that health care

costs would lessen should prescriber histories be

denied to detailers was not overwhelming. But even

though there was no direct evidence on that point,

the state did present unrebutted testimony to the

effect that detailing tended dramatically to increase

the prescription of brand-name drugs (and, thus,

the cost of prescription drugs) without conferring

any corresponding public health benefit. This was

the opinion of Dr. Avorn, and Dr. Wazana’s article

reached the same conclusion. See Wazana, supra, at

375. The record also contains evidence of widespread

incidents — Vioxx and calcium channel blockers are

App. 34

two prominent examples — that pointed in the same

direction. Finally, the record contains a study that

found that 11% of detailers’ statements to physicians

were demonstrably inaccurete.* See M.G. Ziegler, P.

Lew & B.C. Singer, The Accuracy of Drug Information

from Pharmaceutical Sales Representatives, 273 J.

Am. Med. Ass’n 1296 (1995).

In the face of this highly suggestive eviden‘iary

predicate, the district court’s demand that the state

prove that the substitution of generic drugs for brand-

name drugs would not lead to higher net health care

costs subjected the state to a level of scrutiny far

more exacting than is required for commercial speech.

See City of Renton v. Playtime Theatres, Inc., 475 U.S.

41, 51, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986) (permit-

ting city to rely on experiences of different localities);

Nat'l Amusements, 43 F.3d at 742 (permitting town to

rely on residents’ complaints, “constabulatory concern

with a pattern of incidents,” and common sense). The

state provided competent evidence that detailing

increases the prescription of brand-name drugs, that

brand-name drugs tend to be more expensive, that

detailers’ possession of prescribing histories height-

ens this exorbitant effect, that many aggressively

detailed drugs provide no benefit vis-a-vis their far

* The plaintiffs responded to this study by citing the federal

Food and Drug Administration regulations prohibiting false

medical advertisements. See 21 C.F.R. § 202.1. That response is

a non-sequitur. The fact that certain behavior is prohibited by

law is net a guarantee that persons will not engage in it.

App. 35

cheaper generic counterparts, and that detailing had

contributed to pharmaceutical scandals endangering

both the public health and the public coffers. Viewed

against that background, the fact that some detailed

brand-name drugs may produce superior results in

some cases is too flimsy a hook on which to hang a

conclusion that a decrease in the prescription of

brand-name drugs would be unlikely to yield a net

diminution in health care costs. While the state’s

position is not ironclad, the district court’s objection

to it partakes of a far greater degree of conjecture.

In the last analysis, this is more a matter of

policy than of prediction. Just as some brand-name

drugs produce superior results when compared to

generic drugs, some generic drugs produce superior

(or, at least, equal) results when compared to brand-

name drugs. The record contains substantial evidence

that, in several instances, detailers armed with

prescribing histories encouraged the overzealous

prescription of more costly brand-name drugs regard-

less of both the public health consequences and the

probable outcome of a sensible cost/benefit analysis.

By way of contrast, the record contains no evidence

that in the absence of detailing, physicians have

tended to prescribe generic drugs more often than

either their patients’ health or their patients’ pocket-

books warranted. The district court seems to have

overlooked this dichotomy.

Perhaps more important, the court appears to

have disregarded the constraints under which states

operate in formulating public policy on cutting-edge

App. 36

issues. New Hampshire was the first state to deny

detailers access to prescribing histories. Had other

states been in the vanguard, it might be permissible

to take New Hampshire to task for not presenting

studies relative to the law’s effect on net health care

costs. But to demand such evidence from the first

state to refuse detailers access to prescribing histo-

ries is to demand too much: that evidence simply does

not exist. The First Amendment requires states to

assess their own interests realistically and to take

only reasonable steps in furtherance of these dis-

cerned interests; it does not require Augean feats in

order to sustain regulations restricting commercial

speech.

The short of the matter is that while a state

legislature does not have unfettered discretion “to

suppress truthful, nonmisleading information for

paternalistic purposes,” 44 Liquormart, 517 U.S. at

510, 116 S.Ct. 1495, there is in this area “some room

for the exercise of legislative judgment,” id. at 508,

116 S.Ct. 1495. We are duty bound to grant the New

Hampshire legislature such elbow room here.

To this we add that, as Justice Brandeis famously

observed, “[i]Jt is one of the happy incidents of the

federal system that a single courageous state may, if

its citizens choose, serve as a laboratory; and try

novel social and economic experiments.” New State

Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371,

76 L.Ed. 747 (1932) (Brandeis, J., dissenting). That

is the case here — and we must allow the state legisla-

ture some leeway to experiment with different

App. 37

methods of combating a social and economic problem

of growing magnitude.

At this point, the plaintiffs interpose yet another

potential roadblock: they urge us to withhold defer-

ence to the legislature’s choice of goals and measures

in light of the thinness of the legislative record and

the relative celerity (four months) with which the

legislature acted. They compare New Hampshire’s

legislative record to the legislative record granted

deference by the Supreme Court in Turner Broadcast

System v. FCC, 520 U.S. 180, 199, 117 S.Ct. 1174, 137

L.Ed.2d 369 (1997) (noting that the congressional

record included “years of testimony and reviewing

volumes of documentary evidence and studies offered

by both sides” compiled three years of hearings).

This is a red herring. It is fanciful to suggest that

the congressional record in Turner represents the

threshold for deference. Furthermore, the plaintiffs’

argument converts the issue of deference into a

mechanical counting of days and pages. We flatly

reject this myopic approach. After all, deference is a

matter of degree. Here, we defer to the New Hamp-

shire legislature only on the narrow question of

whether it is sensible to conclude (hypothetically)

that net medical outlays will decrease as a result of

the withdrawal of prescribing histories from detail-

ers. Given the contents of the legislative record, we

believe that deference is in order.

App. 38

We need not probe this point more deeply. In the

end, we conclude that the state adequately demon-

strated that the Prescription Information Law is

reasonably calculated to advance its substantial

interest in reducing overall health care costs within

New Hampshire.

This leaves the third Central Hudson question:

whether the regulation is no more extensive than

necessary to serve the state’s interest in cost con-

tainment. The Supreme Court has explained that this

standard requires the restriction to be “in reasonable

proportion to the interest served.” Edenfield, 507 U.S.

at 767, 113 S.Ct. 1792. More recently, the Court

applied a gloss, stating that “if the Government could

achieve its interests in a manner that does not re-

strict speech, or that restricts less speech, the Gov-

ernment must do so.” Thompson, 535 U.S. at 371, 122

S.Ct. 1497.

Invoking Thompson, the district court concluded

that New Hampshire's goal of cost containment could

have been achieved by three alternative measures,

none of which would have restricted speech. D. Ct.

Op., 490 F.Supp.2d at 181-83. On that basis, the court

found that the third prong had not been met.

Our starting point is well-marked: “If the First

Amendment means anything, it means that regulat-

ing speech must be a last — not first — resort.” Thomp-

son, 535 U.S. at 373, 122 S.Ct. 1497. This does not

mean, however, that a state must forgo legitimate

regulatory goals merely because an objector can

App. 39

hypothesize alternative measures of doubtful efficacy

that would leave speech unencumbered.

In this instance, the district comrt seems to have

overestimated the extent to which the alternatives it

described were geared to accomplish the state’s

objective. The Prescription Information Law was a

targeted legislative response to a particular problem

that had proven resistant to a number of different

regulatory approaches. The three measures embraced

by the district court were no improvement on those

ineffectual approaches.

The first of the measures comprises a ban on

gifts between detailers and physicians. Such a meas-

ure would target a harm that the legislature never

deemed central to its aims. Some studies do indicate

that detailers’ gifts influence prescribing behavior,

but the New Hampshire legislature only saw such

gift-giving as pernicious when it occurred within the

context of a high-intensity sales pitch made possible

by a detailer’s possession of a physician’s prescribing

history. Moreover, such a ban would have unintended

consequences; it would necessarily cut off the flow of

free samples that physicians receive from detailers

and often dispense to indigent patients. New Hamp-

shire was constitutionally entitled to attempt to

regulate detailing without killing this golden goose.

The second measure comprises an envisioned

campaign to educate physicians to prescribe generic

drugs whenever possible. This suggested measure

fails as a matter of simple economics. Pharmaceutical

App. 40

companies spend over $4,000,000,000 per year on

detailing. Against that marketing juggernaut, the

state would need to commit enormous resources to

put across a contrary message. It is not a ground for

striking down a commercial speech regulation that

some counter-informational campaign, regardless of

the cost, might restore equilibrium to the market-

place of ideas. See Posadas de P.R. Assocs. v. Tourism

Co., 478 U.S. 328, 344, 106 S.Ct. 2968, 92 L.Ed.2d

266 (1986).

The third measure hinges on the thought that it

would be workable for New Hampshire to retool its

Medicaid program so that non-preferred drugs — such

as expensive brand-name drugs for which non-

bioequivalent generic substitutes exist — would only

be dispensed upon a physician’s consultation with a

pharmacist. See D. Ct. Op., 490 F.Supp.2d at 182.

This suggested measure fails for impracticability, for

incompleteness, and for coming too late in the pre-

scription precess. Implementing it would take extra

time out of a doctor’s day and, in all events, would

make no inroads with respect to privately insured

patients. And finally, this third measure represents a

crude attempt to remedy the compromised prescrib-

ing habits of physicians after the fact. We explain

briefly.

Physicians prescribe medications for individuals

on the basis of a multitude of factors. A generic drug —

whether or not bioequivalent — will rarely be capable

of being recommended across the board as a substi-

tute for a brand-name drug because each drug offers

App. 41

subtly different situation-specific advantages. The

physician must attend to the patient’s individual

symptoms, make a diagnosis, and prescribe accord-

ingly. Detailing provably skews physicians toward

prescribing more brand-name drugs by highlighting

strengths of brand-name drugs unrelated to the

patient’s individual condition. Inserting one more

laborious step into the decisionmaking process may

incline physicians to prescribe fewer brand-name

drugs and more generic drugs; but it will do nothing

to correct for or efface the distorting factors previ-

ously introduced into the physician’s prescribing

habits. The New Hampshire legislature enacted the

Prescription Information Law not only to lower costs

but also to prevent detailers from exerting so much

influence over physicians’ prescribing habits.

In sum, we find that neither the plaintiffs nor the

district court has identified an alternative to the

Prescription Information Law that promises to

achieve the goals of the law without restricting

speech. Consequently, we hold that the Prescription

Information Law is no more restrictive than neces-

sary to accomplish those goals.

That ends our First Amendment inquiry. For the

reasons elucidated above, we hold that the challenged

portions of the Prescription Information Law survive

the rigors of intermediate scrutiny. Thus, even if one

assumes that those provisions to some extent impli-

cate commercial speech, they do not violate the First

Amendment.

App. 42

VII. VOID FOR VAGUENESS

Terming numerous undefined words and phrases

in the Prescription Information Law amorphous or

ambiguous, the plaintiffs contend that the statute is

unconstitutionally vague.’ This contention need not

detain us.

The pertinent statutory text is set out earlier in

this opinion, see supra Part II, and it would serve no

useful purpose to repastinate that ground. It suffices

to say that the plaintiffs question virtually everything

from soup to nuts — from the meaning of the adjective

“identifiable” to the scope of the phrase “commercial

purpose.” They allege that this pervasive imprecision

chills protected speech (especially since violations of

the statute may trigger both criminal and civil penal-

ties). See Reno v. ACLU, 521 U.S. 844, 872, 117 S.Ct.

2329, 138 L.Ed.2d 874 (1997).

We readily acknowledge that the Prescription

Information Law is not a model of legislative crafts-

manship. But statutes do not need to be precise to the

point of pedantry, and the fact that a statute requires

some interpretation does not perforce render it un-

constitutionally vague. See Ridley v. Mass. Bay

Transp. Auth., 390 F.3d 65, 93 (1st Cir.2004). That is

the case here.

* The plaintiffs mention in passing that the Prescription

Information Law is overbroad but they do not develop an

overbreadth argument. Any such argument is, therefore, waived.

See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990).

App. 43

A federal court may interpret state law by using

the same method and approach that the state’s high-

est court would use. See Natl Pharms., Inc. v. Fe-

liciano-de-Melecio, 221 F.3d 235, 241-42 (lst Cir.2000);

see also Planned Parenthood of Idaho, Inc. v. Wasden,

376 F.3d 908, 930 (9th Cir.2004) (“Ordinarily, in

construing a state statute, we follow the state’s rules

of statutory interpretation.”).

Under New Hampshire law, an inquiring court

may consider legislative history to aid in clarifying an

ambiguous statute. Hughes v. N.H. Div. of Aero., 152

N.H. 30, 871 A.2d 18, 26 (N.H.2005). The objective is

to construe a statute “in light of the legislature’s

intent in enacting [it], and in, light of the policy

sought to be advanced by the entire statutory

scheme.” Carlisle v. Frisbie Mem. Hosp., 152 N.H.

762, 888 A.2d 405, 417 (N.H.2005). Consistent with

that approach, an inquiring court should not hesitate

to “presume any narrowing construction or practice to

which the law is fairly susceptible.” City of Lakewood

uv. Plain Dealer Publ’g Co., 486 U.S. 750, 770 n. 11,

108 S.Ct. 2138, 100 L.Ed.2d 771 (1988) (internal

quotation marks omitted); see Stenberg v. Carhart,

530 U.S. 914, 944-45, 120 S.Ct. 2597, 147 L.Ed.2d 743

(2000); R.J. Ass’n of Realtors, Inc. v. Whitehouse, 199

F.3d 26, 36 (1st Cir.1999).

Read in light of the legislature’s manifest intent,

the Prescription Information Law is sufficiently clear

to withstand the plaintiffs’ vagueness challenge. The

legislature’s avowed intent was to curtail in New

Hampshire what it viewed as the pernicious practice

App. 44

of targeted detailing by pharmaceutical companies. It

sought to do so by prohibiting “for any commercial

purpose” the dissemination and use of the data on

which targeting had come to depend: prescriber

histories. In keeping with this narrow purpose, the

statute excludes from its coverage almost every

commercial use other than detailing; the listed ex-

emptions include “pharmacy reimbursement; formu-

lary compliance; care management; utilization review

by a health care provider, the patient’s insurance

provider or the agent of either; health care research

or as otherwise provided by law.” N.H.Rev.Stat. Ann.

§ 318:47-f.

As we understand the state’s position, these

categories of exceptions are to be construed broadly to

avoid impinging upon uses of prescriber-identifiable

data that do not implicate the state’s core concern.

For example, the Attorney General explicitly ac-

knowledged in the court below that the Prescription

Information Law does not bar the plaintiffs from

selling prescriber-identifiable data to pharmaceutical

companies for research or for recruiting physicians to

participate in clinica: trials of newly developed drugs.

Given that understanding, the fact that data derived

from such research or trials later may be used in the

companies’ general marketing cannot transform

the permitted uses into ones that have an impermis-

sible purpose. After all, marketing and sales are

the ultimate purposes for virtually all research done

by pharmaceutical companies. As long as the compa-

nies do not undertake targeted detailing of New

App. 45

Hampshire-based clinical trial participants — whose

prescribing data was obtained for research purposes —

there is no violation of the Prescription Information

Law.

We recognize that this construction of the Pre-

scription Information Law is not inevitable. But this

is a facial challenge, and the state’s articulated

purpose narrows the interpretive lens through which

we must view the problem. See Davis v. FEC, ____ U.S.

___, 128 S.Ct. 2759, 2770-71, 171 L.Ed.2d 737 (2008)

(noting that in facial challenges courts should “ex-

tend[ ] a measure of deference to the judgment of the

legislative body that enacted the law”); Wash. State

Grange v. Wash. State Repub. Party, ____ U.S. , 128

S.Ct. 1184, 1194, 170 L.Ed.2d 151 (2008) (expla.ning

that deference requires an inquiring court to ask

whether challenged law could possibly be imple-

mented constitutionally). This perspective requires us

to give the exceptions their full scope and eliminates

any chilling effect. Health care professionals who use

prescriber-identifiable data to influence physician

prescribing decisions other than through direct

marketing need not be concerned that their activity

will offend the statute.

This narrow reading of the Prescription Informa-

tion Law similarly serves to allay concerns that

pharmacies and other sources of prescriber data will

be subject to prosecution based on some improper

downstream use of that data. As long as such entities

impose conditions on the transfer of such data that

require purchasers to comply with the terms of the

App. 46

law, they are safe. Thus, when data is requested for

one of the myriad uses that are permissible under the

Prescription Information Law, there should be no

chilling effect.”

For these reasons, we reject the plaintiffs’ conten-

tion that the law is void for vagueness.

VIII. DORMANT COMMERCE CLAUSE

Finally, the plaintiffs mount a Commerce Clause

challenge to the Prescription Information Law. They

maintain that the statute violates the Constitution by

regulating conduct wholly outside New Hampshire.

This argument is unavailing.

The Commerce Clause, ostensibly an affirmative

grant of power to Congress “[t]o regulate Commerce

... among the several states,” U.S. Const. art. I § 8 cl.

3, embodies a negative aspect that “prevents state

and local governments from impeding the free flow of

goods from one state to another.” Alliance of Auto.

Mfrs. v. Gwadosky, 430 F.3d 30, 35 (lst Cir.2005)

(quoting Houlton Citizens’ Coal. v. Town of Houlton,

175 F.3d 178, 184 (1st Cir.1999)). The proper mode of

analysis under this so-called “dormant Commerce

Clause” depends upon the scope of the challenged

'’ Because no pharmaceutical company is a party to this

litigation, we decline to address whether an action could be

maintained under the Prescription Informaticn Law against a

pharmaceutical company that uses data properly acquired for

one purpose to target physicians for detailing.

App. 47

statute. See id. A law that purports to regulate con-

duct occurring wholly outside the enacting state

“outstrips the limits of the enacting state’s constitu-

tional authority and, therefore, is per se invalid.” /d.;

see Pharm. Research & Mfrs. of Am. v. Concannon,

249 F.3d 66, 79 (1st Cir.2001), aff’d, 538 U.S. 644,

123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). This is the

principle that the plaintiffs see as controlling here.

Their argument runs along the following lines.

They point out that the New Hampshire law lacks

any explicit mention of a geographic limitation.

Building on this foundation, they invite us to hold

that the N.H.Rev.Stat. Ann. § 318:47-f. prohibits the

licensing, transfer, use, and sale of prescriber-

identifiable data everywhere, (including transactions

that take place wholly outside New Hampshire). So

interpreted, the statute would, among other things,

prohibit the transfer of data from a pharmacy bene-

fits manager located in, say, New York to Verispan, a

Delaware firm headquartered in Pennsylvania. Such

a direct regulation of out-of-state transactions would,

the plaintiffs assert, be per se invalid under the

dormant Commerce Clause. See Alliance of Auto.

Mfrs., 430 F.3d at 35.

For its part, the state urges us to interpret the

law as governing only in-state transactions. As we

already have explained, a federal court normally

should interpret state law using the same method

and approach that the highest court of the state

would use. See Natl Pharms., 221 F.3d at 241-42.

App. 48

An assertion that the Commerce Clause invali-

dates a particular statutory scheme presents a facial

challenge to that statute. See generally United States

uv. Nascimento, 491 F.3d 25, 41 (1st Cir.2007) (distin-

guishing facial and as-applied Commerce Clause

challenges to federal law), cert. denied, __. U.S. ___,

128 S.Ct. 1738, 170 L.Ed.2d 543 (2008). “[I]n evaluat-

ing a facial challenge to a state law, a federal court

must ... consider any limiting construction that a

state court or enforcement agency has proffered.”

McGuire v. Reilly, 386 F.3d 45, 58 (1st Cir.2004)

(quoting Ward v. Rock Against Racism, 491 U.S. 781,

795-96, 109 S.Ct. 2746, 105 L.Ed.2d 661 (1989)). This

same deference obtains in the courts of New Hamp-

shire. See In re Morgan, 144 N.H. 44, 742 A.2d 101,

109 (N.H.1999) (counseling deference to administra-

tive interpretations of statutes unless such an inter-

pretation is “plainly incorrect”).

Two additional principles of statutory interpreta-

tion figure into the equation. First, state statutes

should be presumed to govern only conduct within the

borders of the enacting state. See K-S Pharms., Inc. v.

Am. Home Prods. Corp., 962 F.2d 728, 730 (7th

Cir.1992); State v. McGlone, 96 N.H. 448, 78 A.2d 528,

530 (N.H.1951). Second, statutes should be given a

constitutional as opposed to an arguably unconstitu-

tional interpretation whenever fairly possible. See

Arizonans for Official English v. Arizona, 520 U.S. 48,

78, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997); Nasci-

mento, 491 F.3d at 38; see also Sibson v. State, 110

App. 49

N.H. 8, 259 A.2d 397, 400 (N.H.1969) (explaining that

“a statute will be construed to avoid a conflict with

constitutional rights whenever that course is rea-

sonably possible”).

Here, the New Hampshire Attorney General —

the state official charged with enforcing its laws — has

exhorted us to read the Prescription Information Law

to “relate only to activity that takes place domesti-

cally.” Appellant’s Reply Br. at 13. This narrowing

construction is reasonable and accords with the tenet

that laws should not be presumed to have extraterri-

torial effect. It also avoids any doubt about the law’s

constitutionality under the dormant Commerce

Clause. As the Seventh Circuit wisely observed when

confronted with a similar state statute lacking any

built-in geographic restriction, it would make no

sense to read the statute to regulate out-of-state

transactions when the upshot of doing so would be to

annul the statute. See K-S Pharms., 962 F.2d at 730.

There is no need to belabor the point. We are

confident that the New Hampshire Supreme Court

would interpret the Prescription Information Law to

affect only domestic transactions. Seen in this light,

the plaintiffs’ dormant Commerce Clause challenge

necessarily fails. This law may result in a loss of

profit to out-of-state data miners due to the closing of

one aspect of the New Hampshire market for their

wares, but that circumstance amounts neither to

regulating conduct outside the state nor to “necessar-

ily requir[ing] out-of-state commerce to be conducted

App. 50

according to in-state terms.” Wine & Spirits II, 481

F.3d at 15.

We add a coda. Our dissenting brother concedes

that, on its face, the Attorney General’s interpretation

of the Prescription Information Law obviates any

Commerce Clause problem. He nevertheless suggests

that that interpretation leaves the Act with “negligi-

ble impact” and is, therefore, unreasonable. We fail to

see the logic in this suggestion.

To be sure, the Attorney General’s plausible

interpretation of the Prescription Information Law,

which permits the routine transfer of data to out-of-

state facilities where it can then be aggregated and

sold legally to others, may not accomplish very

much.'' But that does not make the Attorney Gen-

eral’s interpretation unreasonable. See McGuire, 386

F.3d at 58; In re Morgan, 742 A.2d at 109. There is no

rule that forbids a legislature from enacting prophy-

lactic legislation to prevent disfavored activity before

individuals engage in that activity.

IX. CONCLUSION

We need go no further. For the reasons elucidated

above, we reverse the decision of the district court

" The question remains, however, whether the purchasers

could subsequently make use of the aggregated data in New

Hampshire. That question is not before us.

App. 51

and vacate the injunction against enforcement of the

Prescription Information Law.

Reversed.

LIPEZ, Circuit Judge, concurring and dissenting.

Although I agree with the majority that the

district court’s decision cannot stand, I respectfully

disagree with the majority’s refusal to address the

First Amendment issue at the core of this case. The

majority focuses on the so-called upstream transac-

tions — the acquisition, aggregation, and sale of

prescriber-identifiable data by the plaintiffs — and

concludes that such activity is not speech within the

purview of the First Amendment. That conclusion is

self-evident and beside the point. In enacting the

Prescription Information Confidentiality Act (“the

Prescription Act” or “the Act”),’* the New Hampshire

Legislature chose to regulate the upstream transac-

tions because it wanted to alter the message used by

pharmaceutical detailers in pursuing a downstream

transaction with health care professionals. In other

words, the Act was designed to limit the speech of

those detailers. The majority relies on the prudential

doctrine of standing to avoid deciding whether that

limitation violates the First Amendment. In my view,

“ The legislation did not include a formal title for the

statute; I have adopted a formulation that blends the district

court’s and the partics’ usage.

App. 52

that avoidance is wasteful and unwise, unsupported

by principles of standing, and analytically flawed.

Consequently, after examining the issue of stand-

ing, I address the issue that we should be addressing

— whether the Act restricts protected commercial

speech between detailers and prescribers and, if so,

whether the State can justify that restriction under

the commercial speech test of Central Hudson Gas &

Electric Corp. v. Public Service Commission, 447 U.S.

557, 566, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). I

conclude that the Act does restrict commercial speech,

and that the State’s interest in cost containment

justifies that restriction. I also conclude, contrary to

the majority, that we should remand the case for

consideration of the plaintiffs’ Commerce Clause

challenge.

I.

The majority admits that speech is implicated by

the Prescription Act and identifies that speech as

“primarily [the] communications between detailers

and doctors.” It purports to refuse to address the Act’s

impact on that targeted speech, based on principles of

standing, because “no detailer or doctor is a plaintiff

here.” However, not only do my colleagues misguid-

edly invoke standing to avoid explicitly resolving the

constitutionality of the Act’s restriction on communi-

cations between detailers and doctors, but they also

accept the State’s justification for the restriction

without allowing the plaintiffs to establish the First

App. 53

Amendment values at stake. The majority’s use of

standing principles is thus doubly wrong.

A. The Prudential Policies of Third Party

Standing

In Craig v. Boren, 429 U.S. 190, 97 S.Ct. 451, 50

L.Ed.2d 397 (1976), the Supreme Court considered

whether a beer vendor could challenge on equal

protection grounds an Oklahoma statute that prohib-

ited the sale of “nonintoxicating” 3.2% beer to males

under 21 and to females under 18. The question was

whether the beer vendor had standing to raise the

equal protection objections of 18- to 20-year-old

males. The Court nected that the plaintiff had the

requisite “injury in fact” to satisfy the constitutional

standing requirement, id. at 194, 97 S.Ct. 451,”

leaving only a prudential concern about whether the

'’ The Court stated there:

The legal duties created by the statutory sections un-

der challenge are addressed directly to vendors such

as appellant. She is obliged either to heed the statu-

tory discrimination, thereby incurring a direct eco-

nomic injury through the constriction of her buyers’

market, or to disobey the statutory command and suf-

fer, in the words of Oklahoma’s Assistant Attorney

General, “sanctions and perhaps loss of license.” This

Court repeatedly has recognized that such injuries es-

tablish the threshold requirements of a “case or con-

troversy” mandated by Art. III.

429 U.S. at 194, 97 S.Ct. 451.

App. 54

plaintiffs should be allowed to raise third-party

constitutional claims.

In concluding that the vendor’s claims could go

forward, the Court observed that it is “settled that

limitations on a litigant’s assertion of jus tertii are

not constitutionally mandated, but rather stem from

a salutary ‘rule of self-restraint’ designed to minimize

unwarranted intervention into controversies where

the applicable constitutional questions are ill-defined

and speculative.” Jd. at 193, 97 S.Ct. 451. However, in

the circumstances before the Court in Craig, such

“prudentialobjectives” could not be furthered because

“the lowe court already ha[d] entertained the rele-

vant sore challenge and the parties hajd]

sought or at least ha[d] never resisted an authorita-

tive constitutional determination.” The Court contin-

ued:

In such circumstances, a decision by us to

forgo consideration of the constitutional] mer-

its in order to await the initiation of a new

challenge to the statute by injured third par-

ties would be impermissibly to foster repeti-

tive and time-consuming litigation under the

guise of caution and prudence. Moreover, in-

sofar as the applicable constitutional ques-

tions have been and continue to be presented

vigorously and “cogently,” the denial of jus

tertii standing in deference to a direct class

suit can serve no functional purpose.

Id. at 193-94, 97 S.Ct. 451 (citation omitted).

App. 55

There is no debate that the plaintiffs in this case

also meet the requirements for Article III standing.

Like the beer vendors in Craig, the plaintiffs here are

direct targets of the challenged statute. By seeking to

prevent pharmaceutical detailers from using pre-

scriber data in their sales pitches to New Hampshire

health care providers, the Act diminishes the market

for the prescriber data collected, organized and sold

by plaintiffs and thereby inflicts “a direct economic

injury through the constriction of [the] buyers’ mar-

ket.” 429 U.S. at 194, 97 S.Ct. 451. Thus, as in Craig,

only the prudential standing doctrine is at issue, and

here, too, pragmatic considerations are paramount.

The district court heard evidence from about a dozen

witnesses and considered voluminous other materials

in preparing its thoughtful and comprehensive deci-

sion. Nothing in the extensive record even hints that

the plaintiffs were unable or unwilling to aggressively

litigate the First Amendment issues at stake in the

“downstream” transactions between the detailers and

physicians. Such an inability or unwillingness would

counsel prudence in resolving the First Amendment

issues raised by those transactions without the

participation of the pharmaceutical companies or

doctors. But here the First Amendment issues raised

by the exchanges between detailers and physicians

were explored exhaustively.

Moreover, the district court expressly confronted

the question of third-party standing before proceeding

with the case. The court told the parties that, if the

State sought to invoke standing as a barrier to full

App. 56

resolution of the action, it would stay the case for

thirty days to allow intervention by a pharmaceutical

company. The court explained:

[I]t’s very clear you are working closely with

the pharmacy companies here. They don’t

want to be the ones to stand up and fight the

doctors. They want you to do it. We all know

what’s going on here, and the reality is if

they have to, they will come out from behind

the scenes and get out into the forefront, be-

cause they want this information, and they

want you to be fighting the battle for them.

But if we have to, we'll get them in here. /

Just don’t think it really matters.

So the state should think about that. If

you want to fight on that issue, that’s what I

would do. I would first do an argument on

third-party standing. If I think there’s any

issue with third-party standing, if the plain-

tiff asked for it, i will give them 30 days to

amend to bring in a new plaintiff pharmacy

company, in which case it seems to me the

third-party standing argument disappears.

I didn’t think we were going to be talk-

ing about third-party standing today, since

it’s not really raised in the briefs now. But if

you want to press that, I think we'll have to

deal with it that way.

(Emphasis added.) The Attorney General then said

that “we don’t intend to press that at this time.” The

issue was not addressed by either party on appeal.

App. 57

In these circumstances, as in Craig, “a decision

... to fergo consideration of the constitutional merits

in order to await the initiation of a new challenge to

the statute by injured third parties would be imper-

missibly to foster repetitive and time-consuming

litigation under the guise of caution and prudence.”

429 U.S. at 193-94, 97 S.Ct. 451. The prudence in-

voked by the majority serves no purpose and it ig-

nores the judgment of the district court, based on its

immersion in the details of the case, that the absence

of the pharmaceutical companies as parties did not

compromise the proper adjudication of the case.

I recognize that the Supreme Court’s precedent

on third-party standing since Craig, as well as our

own precedent, set out a formal three-prong inquiry

that could not be satisfied here because, as the major-

ity observes, there is no indication in the record that

pharmaceutical companies or health care providers

who prescribe medication are unable to assert their

own rights. See, e.g., Kowalski v. Tesmer, 543 U.S.

125, 129-30, 125 S.Ct. 564, 160 L.Ed.2d 519 (2004);

Powers v. Ohio, 499 U.S. 400, 410-11, 111 S.Ct. 1364,

113 L.Ed.2d 411 (1991); Wine & Spirits Retailers, Inc.

v. Rhode Island (Wine & Spirits I), 418 F.3d 36, 49

(1st Cir.2005). However, none of those cases suggests

that the pragmatic factors emphasized by the Court

in Craig no longer have force in comparable circum-

stances.

The prudential limitations on standing were

designed to “add to the constitutional minima a healthy

concern that if the claim is brought by someone other

App. 58

than one at whom the constitutional protection is

aimed, the claim not be an abstract, generalized

grievance that the courts are neither well equipped

nor well advised to adjudicate.” Sec’y of State of Md.

v. Joseph H. Munson Co., 467 U.S. 947, 955 n. 5, 104

S.Ct. 2839, 81 L.Ed.2d 786 (1984); see also Miller v.

Albright, 523 U.S. 420, 446, 118 S.Ct. 1428, 140

L.Ed.2d 575 (1998) (O’Connor, J., concurring) (stating

that the requirement that a litigant assert his own

legal rights “arises from the understanding that the

third-party rightholder may not, in fact, wish to

assert the claim in question, as well as from the belief

that ‘third parties themselves usually will be the best

proponents of their rmghts’”) (citation omitted). The

Supreme Court has recognized that the “lessening” of

these limitations may be justified where other con-

cerns, such as the danger of chilling free speech, are

more pressing, Munson, 467 U.S. at 956, 104 S.Ct.

2839, or where, as in Craig, such limitations do not

serve the purpose for which they were designed.

Indeed, the Court in Tesmer conceded that it had

been “quite forgiving with the[] criteria [for third-

party standing] in certain circumstances,” and identi-

fied the context of the First Amendment as one

in which flexibility may be warranted. Tesmer, 543

U.S. at 130, 125 S.Ct. 564. In Munson, the Court

described its conclusion to allow third-party standing

in terms also applicable here: “The activity sought to

be protected is at the heart of the business relation-

ship between [the plaintiff] and its clients, and [the

piaintiff’s] interests in challenging the statute are

App. 59

completely consistent with the First Amendment

interests of the [third parties] it represents. We see

no prudential reason not to allow it to challenge the

statute.” 467 U.S. at 958, 104 S.Ct. 2839. Thus,

notwithstanding the Court’s more detailed articula-

tion of the third-party standing inquiry since Craig,

see Miller, 523 U.S. at 447, 118 S.Ct. 1428 (O’Connor,

J., concurring), the pragmatic considerations high-

lighted in that decision remain relevant.

This case illustrates the importance of pragma-

tism. There is no reason to reject the district court’s

decision to proceed without a pharmaceutical com-

pany as a plaintiff unless that decision would result

in a trial of the “generalized grievance that the courts

are neither well equipped nor well advised to adjudi-

cate,” Munson, 467 U.S. at 955 n. 5, 104 S.Ct. 2839.

The reality is that the court and the parties have

expended substantial time, resources and energy to

address comprehensively the First Amendment issue

at the heart of this case. That issue has been vigor-

ously tried and thoughtfully adjudicated. Given our

authority to review the court’s entire judgment, it is

imprudent to avoid that issue.

B. The Unavoidable Issue

The majority's analysis reveals yet another

reason why its reliance on standing is inappropriate.

In the first part of its analysis, the majority finds no

constitutional flaw in the Act’s restriction on “certain

information exchanges” because those transfers “are

App. 60

not ...the sorts of exchanges valued by the Supreme

Court’s First Amendment jurisprudence.” However, to

reach that conclusion, the majority considers the

societal benefits of a particular form of detailing — the

very speech that it claims is beyond the scope of this

appeal.

My colleagues insist that the limited scope of

review “does not prevent consideration of New Hamp-

shire’s interest in combating detailing.” I do not

understand how the majority can have it both ways.

If the constitutionality of the Act’s impact on the

detailers’ speech is off limits in this case because a

pharmaceutical company is not a party, how can the

majority make a judgment about the low value of that

speech in deciding that the Act regulates only conduct

and not speech? Surely we must consider the plain-

tiffs’ First Amendment contentions before concluding

that the upstream information “exchanges” that

make the speech possible are not worthy of First

Amendment protection.

This inconsistency pervades the majority’s deci-

sion. After making judgments about the nature of the

detailing transaction and how it increases the likeli-

hood that physicians will prescribe more expensive

drugs, the majority asserts that “the legislature

sought to level the playing field not by eliminating

speech but, rather, by eliminating the detailers’

ability to use a particular informational asset —

prescribing histories — in a particular way.” (Empha-

sis added.) Here the majority is character.zing the

speech interest that is supposedly beyond the scope of

App. 61

its opinion, and characterizing it incorrectly. The very

elimination of the detailers’ ability to use “a particu-

lar informational asset” restricts the message they

are allowed to disseminate and implicates the free

speech concerns of the First Amendment.

Moreover, in discussing its alternative holding,

which treats the plaintiffs’ upstream transactions as

speech subject to the First Amendment rather than

conduct, the majority weighs the value of detailing,

based on the regulated data, against the Legislature’s

policy objectives and the harms identified by the

government. Again, the majority’s -onclusion that the

Act does not violate the First Amendment rests on a

judgment about the speech — 1.e., the detailing — that

the majority purports to place off limits for analysis.

For example, the majority points to “substantial

evidence” in the record

that, in several instances, detailers armed

with prescribing histories encouraged the

overzealous prescription of more _ costly

brand-name drugs regardless of both the

public health consequences and the probable

outcome of a sensible cost/benefit analysis.

By contrast, the record contains no evidence

that in the absence of detailing, physicians

have tended to prescribe generic drugs more

‘’ The majority never actually identifies the specific speech

component of the acquisition, aggregation and sale of informa-

tion from pharmacies to data miners and from data miners to

pharmaceutical] companies.

App. 62

often than either their patients’ health or

their patients’ pocketbooks warranted.

The majority ultimately concludes that “the

state adequately demonstrated that the Pre-

scription Information Law is reasonably cal-

culated to advance its substantial interest in

reducing overall health care costs within

New Hampshire.”

Thus, the majority does what it says standing doc-

trine forbids: it evaluates the Act based on the law’s

impact on the speech between detailers and prescrib-

ers. The majority’s approach is hardly surprising

given that this speech was the Act’s target. What is

surprising is the majority’s failure to appreciate that

reliance on standing principles is misplaced where, as

here, the issue that the majority seeks to avoid is

unavoidable. Although ostensibly limiting its First

Amendment inquiry to the upstream transactions —

the acquisition, aggregation, and sale of prescriber-

identifiable data — and deciding in its primary hold-

ing that these transactions involve conduct only, the

majority makes judgments about the nature, value,

and consequences of the speech that occurs in the

downstream transactions between detailers and

doctors. As the majority discovered, it is impossible to

assess the constitutionality of the Act without factor-

ing in the Legislature’s specific objective to limit the

speech of the detailers.

Moreover, there is no reason to think that the

majority’s judgments about the statute would change

in a case where a pharmaceutical company was a

App. 63

plaintiff. All of the relevant considerations were

explored by the district court. They have similarly

been explored in the majority’s analysis because the

majority could not characterize the upstream transac-

tions as merely conduct without making judgments

about the value of the “downstream” speech between

the detailers and the doctors.

Thus, both the practicalities of this litigation and

the nature of the First Amendment issue require that

the case be analyzed as the parties tried it and the

district court decided it. I therefore proceed with that

analysis. Although my discussion will at times over-

lap with the majority’s, I have chosen to present my

complete view of the record and the governing law.

The First Amendment question here is both impor-

tant and close, and I wish to fully explain why, in the

end, I conclude that the district court erred in declar-

ing the Prescription Act unconstitutional.

II.

In recounting the background of this case, I draw

heavily on the comprehensive and thoughtful recita-

tion of the facts set out by the district court. See IMS

Health Inc. v. Ayotte, 490 FSupp.2d 163, 165-74

(D.N.H.2007). Those facts are largely undisputed; the

parties primarily contest their legal significance.”

The appellees argue that we should apply the deferential

clear error standard in reviewing the facts found by the district

court, rather than the de novo standard that typically applies in

(Continued on following page)

App. 64

A. Pharmaceutical Sales and Marketing

More than three billion prescriptions are written

each year by doctors and other licensed health care

professionals, covering approximately 8,000 different

pharmaceutical products. These prescriptions are

filled by approximately 54,000 retail pharmacies; in

2004, such retail prescription sales totaled $168

billion.” In an effort to increase and protect their

share of this vast market, pharmaceutical companies

engage in various promotional activities. The public

is most familiar with direct-to-consumer advertising,

in which the drug companies tout the virtues of their

products in television commercials and other media,

First Amendment cases, see Bose Corp. v. Consumers Union, 466

U.S. 485, 514, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984), because

the court held in favor of the free speech claim. Several circuits

have adopted such an approach, see, e.g., Multimedia Publ’g Co.

of S.C., Inc. v. Greenville-Spartanburg Airport Dist., 991 F.2d

154, 160 (4th Cir.1993); Daily Herald Co. v. Munro, 838 F.2d

380, 383 (9th Cir.1988), while others exercise independent

review regardless ui the outcome in the district court. Our court

has not yet spoken on the issue, see United States v. Frabizio,

459 F.3d 80, 97 (1st Cir.2006) (Torruella, J., concurring), but I

need not resolve the question here because my disagreement

with the district court stems from a different view of the law

rather than the facts. Legal issues, as well as mixed questions

dominated by legal issues, are subject to de novo review. See Jn

re PolyMedica Corp. Sec. Litig., 432 F.3d 1, 4 (1st Cir.2005).

‘* The number of prescriptions per capita averaged 10.6 in

the United States overall; New Hampshire was close to that

average, with 10.1 prescriptions per capita. Trends and Indica-

tors in the Changing Health Care Marketplace, Kaiser Family

Foundation, http://www.kff.org/insurance/7031/print-secl.cfm, at

20-21 [hereinafter Trends and Indicators].

App. 65

typically urging consumers to ask their doctors for

the advertised drugs. However, the bulk of the drug

companies’ promotional efforts are aimed directly at

physicians and other prescribers.’ The primary

method for such promotion is detailing, which usually

is accompanied by the provision of free drug samples

that prescribers can distribute to patients.” As

1

’ The record contains varying reports on the amount that

pharmaceutical companies spend on promotion, although the

figures consistently are in the billions. For example, a declara-

tion by two experts for the Attorney General, Dr. Jerry Avorn

and Dr. Aaron Kesselheim, stated that the industry spent about

$4 billion in 2000 on direct-to-physician strategies. Declaration

at 4 (citing Susan Okie, AMA criticized for letting drug firms pay

for ethics campaign, Wash. Post, Aug. 30, 2001). A 2005 Report

by Rep. Henry Waxman to the Democratic Members of the

Committee on Government Reform stated that promotions

targeting physicians totaled $5.7 billion in 2003, including

advertising in professional journals. Memorandum Re “The

Marketing of Vioxx to Physicians,” May 5, 2005, at 6 n. 15 (citing

Pharmaceutical Research and Manufacturers Ass’n). The Kaiser

Family Foundation reported that drug manufacturers spent $7.8

billion in 2004 on advertising directed toward physicians. See

Trends and Indicators, supra, at 22. The Foundation is a

nonprofit organization that provides information and analysis

on health care issues to the government, media, health care

community and the general public. Finally, a brief submitted by

amici (AARP, et al.) cites a New York Times article reporting

that drug companies spent $13.9 billion promoting their prod-

ucts in 1999, most of which was directed toward doctors and

other prescribers. Sheryl Gay Stolberg & Jeff Gerth, High-Tech

Stealth Being Used to Sway Doctor Prescriptions, N.Y. Times,

Nov. 16, 2000, at Al.

“ The companies also place advertisements in medical

journals and sponsor meetings in which physicians are recruited

(Continued on following page)

App. 66

inducements to increase their access to physicians

who are sometimes reluctant to meet with them,

detailers also frequently offer free meals and other

gifts to the doctors and their staffs. As I shall explain,

these practices are both widely used and widely

criticized.

1. Detailing

Detailing is the face-to-face advocacy of a product

by sales representatives who visit doctors’ offices and

hospitals to meet with the prescribing health care

professionals. Although the objective of these visits is

to make sales, detailers often provide valuable infor-

mation about the drugs they are selling. Doctors may

be alerted by a detailer to tests showing the risk of a

drug interaction or a drug’s side effects. One survey

showed that most physicians meet with pharmaceuti-

cal representatives about four times a month. See

Ashley Wazana, Physicians and the Pharmaceutical

Industry: Is a Gift Ever Just a Gift?, 283 J. Am. Med.

Ass'n 373, 375 (Jan. 19, 2000). Consumers Union has

reported research showing many more encounters:

“(T]he average primary care physician interacts with

28 sales representatives each week; the average

specialist interacts with 14.’” Consumers Union,

Prescription for Change, http://www.consumersunion.

org/pdf/drugreps.pdf (March 2006) (quoting research

to speak to their colleagues about medical conditions and

therapics

App. 67

from Health Strategies Group). Whatever the fre-

quency, it is undisputed that pharmaceutical detail-

ing plays a substantial role in the dissemination of

information about drugs to physicians.

Detailing focuses primarily on brand-name drugs

that are entitled to patent protection. Once a patent

expires, competitors may obtain approval to sell

generic bioequivalent versions of the drug, which are

equally effective for most patients but usually much

less expensive than their brand-name counterparts.

New Hampshire law provides that pharmacies may

substitute a bioequivalent generic drug for a brand-

name drug unless the prescriber specifies that the

brand-name drug is “medically necessary.” N.H.Rev.Stat.

Ann. § 318:47-d (2003). Thus, once bioequivalent

generic drugs become available, sales of the related

brand-name drug tend to fall and detailing is no

longer considered a cost-effective marketing tech-

° 19 . . .

nique. However, non-bioequivalent options also are

available for some medical conditions, and the drug

companies aggressively market to urge physicians to

choose their patented brand-name medications over

such alternatives. Thus, it is this choice — between a

still-under-patent, branded drug and a similar, but

Pharmaceutical manufacturers attempt in vanmous ways

to retain the dominance of a brand-name drug. For example

they may create a modified version — such as a new time-release

capsule — that will have its own period of patent protection.

App. 68

biologically different generic medication — that is at

the heart of this case.”

As I will discuss below, studies indicate that

detailing has “a significant effect on physician pre-

scription behavior.” Puneet Manchanda & Elisabeth

Honka, Symposium-Pharmaceutical Innovation and

Cost: An American Dilemma: The Effects and Role of

Direct-to-Physician Marketing in the Pharmaceutical

Industry: An Integrative Review, 5 Yale J. Health

Pol’y, L. & Ethics 785, 809 (Summer 2005) (“While

there seems to be little consensus about the size of

the effect, it is clear that the effect is positive and

significant in a statistical sense.”).

2. Samples and Other Perks

Free samples and courtesy gifts are routinely

given by detailers as part of their sales visits, and

2U

Even “bioequivalent” generic drugs are not identical to

their branded counterparts. They are required to demonstrate

absorption capability between 80 and 125 percent of the branded

version, and variations in absorption may trigger different side

effects when patients switch from the brand-name drug to a

generic version. In addition, because there may be multiple

generic options, a patient may experience different reactions

depending upon which generic alternative is dispensed. For

some patients, these variations could have significant impact,

making continued use of the brand-name druy the best ap-

proach. However, as | understand the record, a doctor's decision

to continue prescribing a brand-name drug after its patent has

expired is not at issue here because the prescribing choice in

that situation is not typically the focus of pharmaceutical

detailing

App. 69

they are important tools in pharmaceutical market-

ing. Doctors rely on receiving drug samples that they

can distribute to patients who are unable to afford

the high cost of some medications.” Keeping office

doors open to detailers ensures that the doctors will

have a continued supply of samples, and some physi-

clans are therefore reluctant to restrict detailing.

Even when drug cost is not an issue, the free samples

are helpful to physicians who want to test new reme-

dies before committing to them. A patient’s positive

results during a trial period may lead to a long-term

prescription — the detailer’s desired outcome. En

route to that objective, however, the free samples

have provided access to helpful treatment that pa-

tients otherwise may not have received. The cost of

the samples distributed annually by pharmaceutical

* During the legislative process leading to adoption of the

statute, the president of the New Hampshire Medical Society,

Marc Sadowsky, noted the importance of the samples to his

psychiatric practice:

Some of the medicines I prescribe are $8 a pill, $8-10

a pill. I have patients who are stable on these medi-

cines and then they lose their job, don’t qualify for any

insurance and I am carrying them to keep them sta-

ble. That is, ’m giving them samples. I have to sign

for the samples every time I get them. So, when the

drug reps come in, | have to talk to them.... So, I

think it is kind of an important thing because these

medicines can cost people thousands of dollars a year

and I have a good number of citizens of New Hamp-

shire that I am giving free samples to... .

App. 70

representatives has been estimated at more than $11

billion.”

It is not only the patients who benefit from the

drug companies’ largess, however. Physicians and

other medical office staff members frequently receive

“good will” gifts from detailers, including office sup-

plies, free meals, and conference travel funding —

perks that are designed to encourage long-term

relationships with, and loyalty toward, the detailers.”

* The parties’ Second Amended Joint Stipulation of Facts

(“Stipulation of Facts”) used this figure; the Kaiser Family

Foundation reported that the retail value of drug samples

provided in 2004 was $15.9 billion. See Trends and Indicators,

supra, at 22.

* As an example, a nurse-practitioner who was the director

of a hospital-based cholesterol management center testified at a

committee hearing on the New Hampshire law that one drug

representative offered to bring coffee and bagels to the center

every Tuesday in exchange for “‘two prescriptions every week.’”

Legislative History, at 41 (hereinafter Legis. Hist.) (testimony of

Carolyn Finocchiaro).

A similar anecdote was described in a 2006 New York

Times article that also was included in the Legislative

History. The article reported that a district manager

for a pharmaceutical company sent an e-mail to de-

tailers stating:

“Our goal is 50 or more scripts per week for each

territory. If you are not achieving this goal, ask

yourself if those doctors that you have such great

relationships with are being fair to you. Hold

them accountable for all of the time, samples,

lunches, dinners, programs and past [consulting

arrangements] that you have provided or paid

for and get the business!! You can do it!!”

(Continued on following page)

App. 71

Studies have shown that these sorts of gifts can have

a subtle effect on physicians, and, because they

typically are unrelated to the provision of medical

care, they have come under particular fire by both

consumer advocates and medical professionals them-

selves. The Pharmaceutical Research and Manufac-

turers of America (“PhRMA”) in 2002 adopted a

voluntary code governing interactions with health

care professionals that discourages such inducements

unless either the value of what is provided is

insubstantial (less than $100) and the in-

ducement is primarily for the benefit of pa-

tients, or the value of the inducement is

minimal and the inducement is directly re-

lated to the provider’s practice. For example,

an occasional gift of a stethoscope is accept-

able under the Code because it is not deemed

to be of substantial value and the gift bene-

fits patients. In contrast, an unrestricted gift

certificate to a local bookstore may not be of-

fered under the Code regardless of its value

because it does not benefit patients and is

Gardiner Harris & Robert Pear, Drug Maker’s Efforts

to Compete in Lucrative Insulin Market are Under

Scrutiny, N.Y. Times, Jan. 28, 2006.

“ Although studies show that physicians have a “mostly

negative” attitude toward gifting, the studies also report that

such gifts “induce reciprocal feelings among physicians.” Man-

chanda & Honka, 5 Yale J. Health Pol’y, L. & Ethics, at 809; see

also Jason Dana & George Loewenstein, A Social Science

Perspective on Gifts to Physicians from Industry, 290 J. Am.

Med. Ass’n 252, 252-54 (July 9, 2003).

App. 72

unrelated to the health care professional’s

practice. The Code draws similar distinctions

with respect to meals and entertainment.

490 F.Supp.2d at 168-69 (citations omitted).”

3. Data Mining and Prescriber Profiles

When detailers enter medical offices to market

their products, they are equipped not only with

detailed information about the drugs they are at-

tempting to sell but also with considerable knowledge

about their audience. Much of that prescriber infor-

mation is supplied by the plaintiffs and similar

companies, who play a crucial behind-the-scenes role

in the flirtation between pharmaceutical sales repre-

sentatives and prescribers.” These so-called “data

* In 2007, a health care consumer advocacy group based in

Boston, Community Catalyst, and the Institute on Medicine as a

Profession, a research group at Columbia University, announced

a national campaign calling for restrictions on the interaction

between doctors and pharmaceutical companies. Stephanie Saul,

Doctors and Drug Makers: A Move to End Cozy Ties, N.Y. Times,

Feb. 12, 2007, at C10. A number of medical centers, including

those at Yale, the University of Pennsylvania and Stanford, have

announced restrictions on gifts and other interactions between

their staff members and the pharmaceutical industry. Some

states, including Maine, Vermont and Minnesota, have passed

laws either prohibiting gifts to doctors from drug companies or

requiring disclosure of the gifts. Id.; see Me.Rev.Stat. Ann. tit.

22, § 2698-A (2004) (disclosure); Minn.Stat. § 151.461 (1994)

(prohibition); Vt. Stat. Ann. tit. 18, § 4632 (2007) (disclosure).

* The Stipulation of Facts states that plaintiffs IMS Health

Inc. and Verispan LLC “are the world’s leading providers of

(Continued on following page)

App. 73

mining” companies collect and organize information

about doctors and their prescribing patterns, convert-

ing information gleaned from “thousands of sources”

into a commodity for which the pharmaceutical

industry pays substantial sums.” From retail phar-

macies and other entities, such as insurers, that

acquire the data as part of the business they conduct,

the data miners obtain information on every pharma-

ceutical sale, including the form, streng..: and dosage

of the drug, the amount dispensed, and the name and

address of the prescriber. The information includes an

identifying code for each patient, although the patient

is not personally identified. From other sources,

including the American Medical Association, the

plaintiffs obtain information about individual pre-

scribers and their specialities.”

The data mining companies weave the informa-

tion together to produce, among other databases,

“prescriber profiles” — individualized reports on the

prescriptions being written by particular doctors.

The information is then sold to third parties for

various commercial uses, including pharmaceutical

information, research and analysis to the pharmaceutical and

healthcare industries.”

” According to the Stipulation of Facts, these sources are:

pharmaceutical wholesalers, pharmacies, physicians, hospitals

and clinics.

“ The AMA’s Physician Masterfile contains demographic,

educational, certification, licensing and speciality information

for more than 800,000 active U.S. medical doctors and more

than ninety percent of practicing osteopathic doctors.

App. 74

marketing, and also is provided at no charge for

nonprofit purposes. such as academic and medical

research.” The data provide a historical view of a

physician’s prescribing practices, allowing the phar-

maceutical companies to identify doctors who have

displayed a willingness to try new products (the

“early adopters”) and to target doctors whose drug

choices they seek to change. With knowledge of the

physicians’ prescribing history, the detailers are able

to tailor their messages to those doctors’ specific

circumstances — for example, emphasizing the poten-

tial side effects of a competitor’s brand-name product

that the detailer knows the doctor has been using, or

highlighting the advantages of the detailers’ branded

drug over the generic alternative the doctor routinely

prescribes. The detailer’s verbal message in favor of

the brand-name drug may be furthered by the provi-

sion of free samples of the medication, encouraging

what is initially a “no-cost” switch to the more expen-

sive drug. The companies also use reports obtained

shortly after detailing visits to assess whether the

sales calls had an effect on the targeted prescribers’

drug choices. The detailer’s compensation is some-

times tied to the success of his or her efforts.

* Pharmaceutical companies also have non-marketing uses

for the prescriber-identified data, including to “[dJetermine

which products to develop and license,” to “[iJmplement prescrip-

tien recall programs,” and to accelerate the development of new

drugs based on “the needs and habits of those whose health

these new drugs are designed to improve.” Stipulation of Facts,

at 4-5.

App. 75

This use of prescriber-identified data has drawn

sharp criticism on many fronts, including among

physicians who object both to the disclosure of infor-

mation they deem confidential and to the hard-sell

messages delivered by detailers who may know more

about their prescribing habits than do the doctors

themselves. In 2006, the AMA responded to the

concerns by initiating the Prescribing Data Restric-

tion Program (“PDRP”), which allows physicians to

restrict access to their prescribing data by pharma-

ceutical detailers. The AMA also developed guidelines

for the use of prescribing data “to provide ethical

guidance to the healthcare industry.” The guidelines

urge that companies, inter alia, “[clontinually rein-

force that use of prescribing data to overtly pressure

or coerce physicians to prescribe a particular drug is

absolutely an inappropriate use.” Neither the PDRP

nor the guidelines have quelled the concerns. The

PDRP has been criticized because prescriber informa-

tion will be withheld only if doctors affirmatively opt

out, and the opt-out choice must be renewed every

three years. Voluntary guidelines are seen as insuffi-

cient to offset the commercial incentives to use the

information. Some _ states, like New Hampshire,

turned to legislation to address the concerns.

App. 76

B. New Hampshire’s Statutory Response

The Prescription Act prohibits the transmission

or use of both patient-identifiable and prescriber-

identifiable data for certain commercial purposes.”

Violators are subject to both criminal and civil penal-

ties. N.H.Rev.Stat. Ann. § 318:55. In pertinent part,

the statute provides:

Records relative to prescription information

containing patient-identifiable and _pre-

scriber-identifiable data shall not be lhi-

censed, transferred, used, or sold by any

pharmacy benefits manager, insurance com-

pany, electronic transmission intermediary,

retail, mail order, or Internet pharmacy or

other similar entity, for any commercial pur-

pose, except for the limited purposes of

pharmacy reimbursement; formulary com-

pliance; care management; utilization review

by a health care provider, the patient’s in-

surance provider or the agent of either;

health care research; or as otherwise pro-

vided by law. Commercial purpose includes,

but is not limited to, advertising, marketing,

promotion, or any activity that could be used

to influence sales or market share of a

pharmaceutical product, influence or evalu-

ate the prescribing behavior of an individual

health care professional, or evaluate the

” Plaintiffs have not challenged the restrictions on patient-

identifiable data.

App. 77

effectiveness of a professional pharmaceuti-

cal detailing sales force.

In effect, the statute prohibits the use of pre-

scriber-identifiable data for all purposes re-

lated to detailing, but seeks to preserve

access to the data for other uses — including

other commercial purposes.” I agree with the

district court that the prohibited uses are

narrowly defined and that the statute does

not, for example, prohibit pharmaceutical

companies from using prescriber-identifiable

data for their own research. See 490

F.Supp.2d at 171.”

1. Legislative History

In introducing the proposed legislation at a

hearing before the Senate Committee on Executive

Departments and Administration, Representative

Cindy Rosenwald, one of the statute’s co-sponsors,

explained that it had two goals: “It will protect pri-

vacy and it will save money for the state, for consum-

ers and businesses. It will accomplish these goals

by prohibiting the sale or use of individual patient

or prescriber identity for marketing brand name

" The Act also permits the continued use of aggregated

prescriber data, categorized by speciality, zip code and geo-

graphic region, but without prescriber identification.

* Indeed, on the first day of trial, counsel for the Attorney

General agreed that pharmaceutical companies could use the

prescriber information to recruit physicians to participate in

clinical trials.

App. 78

prescription drugs.” A written attachment to her

testimony, which included a section entitled “What

H.B. 1346 will do,” states that the law will, inter alia,

“(hjopefully reduce the prescription drug costs for

patients, employers & the State Medicaid program.”

About sixteen individuals testified at the hear-

ing.” A representative of the Department of Health

and Human Services, Gregory Moore, emphasized

both the privacy and cost reduction purposes of the

legislation. He described the prescriber data as the

physicians “trade secrets” and further stated:

The Department also believes that these ac-

tivities ultimately drive up the cost of pre-

scription drugs and the cost of health care

in the aggregate. Since no other state has

passed legislation like this, it would be hard

for us to quantify what that impact might be,

but I find it unlikely the drug companies are

sending details into doctors’ offices for the

purpose of selling doctors cheaper medica-

tion. In fact, I’m confident that, if you’re a

doctor, that one of the best ways to get a de-

tailer into your office would be if you

switched to prescribing a generic drug over a

brand drug.

Also testifying in favor of the legislation was

the president-elect of the New Hampshire

“ An earlier, less comprehensive hearing was held before

the House Committee on Health, Human Services and the

Environment.

App. 79

Medical Society, Dr. Seddon Savage, who

said the law “will deter marketing intended

to manipulate the practice of individual phy-

sicians that is intended to increase market

share for the individual companies, possibly

at the expense of appropriate decision mak-

ing for the patients.” He further stated that

“[InJumerous studies have shown that

[doctors’] decision making can be and some-

times is shaped by marketing efforts.”

Savage’s general testimony was reinforced by com-

ments from Dr. Marc Sadowsky, a psychiatrist and

the president of the New Hampshire Medical Society.

He reported a phone conversation with a patient who

said that her primary care doctor had thought a

brand-name medicine might be better for her than

the generic she was using. Sadowsky continued:

I said, “Well, you’re doing fine on the generic

and your co-pay is going to go up $40 a

month, $500 a year. So, it is not entirely

clear to me why we're doing this.” ... I think

that that was an example of the primary care

physician having been marketed to directly

and didn’t really have a clinical reason for

doing it except that that was the last drug

rep who came to see him and said this is a

better medicine for anxiety, even though the

person was asymptomatic at the time.

In Sadowsky’s view, there was “no apparent reason”

for the requested switch “except presumably that [the

doctor| ha{d] been marketed to effectively.”

App. 80

Among those speaking against the statute was a

representative of the New Hampshire Association of

Chain Drug Stores, Stuart Trachy, who described the

proposed legislation as “too broad” and observed that

“the opt out program that the AMA is going to be

instituting should take care of the concerns that we

have heard in terms of specific doctors being con-

cerned that their prescribing data is out there.” A

spokesman for plaintiff IMS, Robert Hunkler, stated

that restricting prescriber-identifiable information

would not lower health care costs because “pharma-

ceutical companies will[] in all likelihood continue to

send sales reps to all doctors without the ability to

more specifically hone in on the right people with the

right message. It will likely incur more costs to the

system.” Hunkler also predicted that the acknowl-

edged beneficial uses of the data, including medical

research, would be compromised because the infor-

mation would no longer be readily available. Re-

sponding to complaints from doctors that drug

companies “know more about [their] prescribing

behavior than [they] know,” Hunkler stated that IMS

was working toward greater access: “|WJe think that

a preferable solution is to provide this information to

doctors, to health researchers and others instead of

turning out the light and taking it away from every-

one.” The American Medical Association also ex-

pressed opposition to the legislation, commenting in a

prepared statement that the PDRP would “provide| |

physicians with the tools they need to restrict infor-

mation that they do not want shared while avoiding

App. 81

legislatively-mandated restrictions that could have

unintended consequences.”

2. Legislative Action and Legal Challenge

The Prescription Act was approved by the Legis-

lature in May 2006, and it took effect on June 30 of

that year. Four weeks later, on July 28, 2006, IMS

and Verispan filed the complaint in this case, alleging

that the Act violated the First Amendment and the

Commerce Clause, and that it was void for vagueness

and overbreadth. They sought declaratory and in-

junctive relief against the statute’s enforcement.

Meanwhile, in compliance with the Act, Verispan

modified its databases so that it could identify and

suppress all prescriber-identifiable data from New

Hampshire prescriptions before the information was

released to third parties. IMS also stopped selling

prescriber-identifiable information obtained from

New Hampshire sources to third parties.

During a four-day bench trial in January and

February 2007, the court heard live testimony from

ten witnesses, most of whom were physicians. A

former detailer and a representative of each plaintiff

also testified. The parties also submitted voluminous

written materials, including a number of journal

articles describing studies on detailing. The State

highlighted the testimony of Dr. Jerry Avorn, a pro-

fessor at Harvard Medical School whose research

focuses on the use of prescription drugs and their

outcomes, and who also works at Brigham and

App. 82

Women’s Hospital in the Division of Pharmacoepide-

miology and Pharmacoeconomics.” Through Avorn’s

testimony on the medical literature and the testi-

mony of practitioners who recounted specific experi-

ences with detailing, the Attorney General sought to

show that detailing in general, and use of prescriber-

identifiable data in particular, influences physicians

to prescribe brand-name drugs more frequently than

would occur with “evidence-based” decision-making

that was untainted by the detailers’ marketing mes-

sages. The Attorney General asserted that the Act

advanced the State’s substantial interests in pre-

scriber privacy, public health and cost-containment.

On their behalf, the plaintiffs elicited consider-

able testimony about the beneficial aspects of detail-

ing and the use of prescriber-identifiable data to

“ He explained those two fields as follows:

Pharmacoepidemiology is the study of the utilization

of drugs in large populations, as well as the conse-

quences of that use, whether a benefit or adverse

event; and pharmacoeconomics is the connection be-

tween drug use and economics, what the drugs cost{]J,

but also how they fit into the health care system and

what their benefits might save the health care sys-

tem.

* The parties and witnesses at times contrasted prescribing

decisions that relied on “evidence-based” data — i.e., decisions

resulting solely from consideration of replicable clinical data —

with decisions influenced by the “contact and communication”

from detailers. See, e.g., Stipulation of Facts, at 12; Avorn and

Kesselheim Declaration, at 5; Avorn Testimony, Day 3, PM

Session, at 60, 110.

App. 83

target physicians. For example, Dr. Thomas Wharton,

Jr., director of cardiology at Exeter Hospital, testified

that discussions initiated by drug company represen-

tatives provide “a very stimulating forum” for dis-

cussing the treatment of coronary disease.” He also

stated that the “level of discourse is elevated” when a

drug representative knows his prescribing habits:

“(I]f they know that I’m a user of the drug, they will

direct what they have to say to me toward any brand-

new information that might have come out rather

than starting with the basics. If they know that I’m a

user of a drug, I would think that they are more

likely to come to me if a new adverse effect is an-

nounced regarding that drug.” Plaintiffs also empha-

sized the lack of evidence showing that restriction of

prescriber-identifiable data would lead to a decrease

in drug costs and attempted to show that less effi-

cient detailing would result, potentially increasing

the pharmaceutical companies’ marketing costs and,

in turn, increasing the cost of their products.”

* Wharton stated that “there is a lot of good intellectual

stimulation, education, cross-fertilization, all in a sense based

upon the drug rep initiating discussion, presenting data, pre-

senting papers, some of which we know about and some of which

we don’t. So it’s a very educational, informational experience.”

* Plaintiffs offered two anecdotes on this point through

Dr. Wharton. First, he testified that, since passage of the

Prescription Act, he had been “visited for the first time ever”

by a detailer seeking to sell drugs for diabetes, a condition

his practice does not treat. In addition, Wharton stated that he

was surprised that it took “months and months and even a

request to the company” for him to be detailed on a “purportedly |

(Continued on following page)

App. 84

C. The District Court’s Decision

On April 30, 2007, the district court ruled that

the Prescription Act impermissibly restricted com-

mercial speech and therefore violated the First

Amendment. It rejected the Attorney General’s argu-

ment that the Act targeted only unprotected factual

information rather than constitutionally protected

speech and also rejected her contention that the

statute regulated only non-speech “uses” of the pre-

scriber-identifiable data. Having concluded that the

Act restricted protected commercial speech, the court

examined whether the Attorney General had suffi-

ciently justified the regulation under the three-part

inquiry set out in Central Hudson Gas & Electric

Corp. v. Public Service Commission, 447 U.S. 557,

566, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980).

Under Central Hudson, truthful commercial

speech that does not promote unlawful activity may

be limited only if it “(1) is in support of a substantial

government interest, (2) ‘directly advances the gov-

ernmental interest asserted, and (3) ‘is not more

extensive than is necessary to serve that interest.’”

El Dia, Inc. v. P.R. Dept of Consumer Affairs, 413

F.3d 110, 113 (1st Cir.2005) (quoting Central Hudson,

447 U.S. at 566, 100 S.Ct. 2343). The district court

considered the State’s asserted interests in protecting

prescriber privacy, promoting public health, and

revolutionary” anti-smoking drug, despite the practice’s sub-

stantial history of prescribing other anti-smoking products.

App. 85

containing health care costs. It concluded that the

record did not reveal a distinct privacy interest that

was supported by the Act and held that neither the

public health interest nor the interest in containing

health care costs was directly advanced by the stat-

ute.

In addition, the court found a “fundamental flaw”

in the Attorney General’s argument that the regula-

tion was necessary because “pharmaceutical compa-

nies manipulate health care providers by using

prescriber-identifiable data to enhance the effective-

ness of highly persuasive but truthful commercial

speech.” 490 F.'Supp.2d at 181. Instead of restricting

such information, the court stated, “if the State is

concerned that truthful detailing is causing health

care providers tc make inadvisable prescribing deci-

sions, ‘the remedy to be applied is more speech, not

enforced silence.’” [d. (quoting Whitney v. California,

274 U.S. 357, 377, 47 S.Ct. 641, 71 L.Ed. 1095 (1927)

(Brandeis, J., concurring)).

The court also addressed the third Central Hud-

son prong and found that the State could advance its

health and cost-containment interests, and specifi-

cally the unnecessary prescription of brand-name

drugs, without restricting protected speech. The court

noted that the State could, inter alia, directly limit

the samples and gifts given to prescribers and

their staffs, educate health care providers about the

health and cost implications of their prescribing

decisions, require health care providers to participate

in continuing education programs offering objective

App. 86

irformation about the advantages and disadvantages

o: different drug choices, or adopt a Medicaid phar-

macy program that takes cost considerations into

account.

Accordingly, the court held that the statute could

not be enforced “to the extent that it purports to

restrict the transfer or use of prescriber-identifiable

data.” /d. at 183. It therefore granted the plaintiffs’

request for declaratory relief and a permanent injunc-

tion. It did not reach their vagueness or Commerce

Clause arguments.

IIT.

The Attorney General continues to argue on

appeal that the Prescription Act restricts only the use

of information and that this regulation of non-

expressive conduct does not implicate the First

Amendment. From the Attorney General’s perspec-

tive, the statute regulates a commercial transaction

and not protected speech. See generally Neil M.

Richards, Reconciling Data Privacy and the First

Amendment, 52 UCLA L.Rev. 1149, 1194 (2005)

(concluding that restrictions on use of consumer data

to target advertisements were “not a regulation of

speech at all, but rather a regulation of information

use — the business activity of deciding to whom to

market products”). At trial, the Attorney General

contended that the Act did not restrict the content of

the pharmaceutical manufacturers’ advertising or

marketing messages, which she acknowledges would

App. 87

trigger First Amendment scrutiny.” Rather, the

legislature made the “unusua/]” — and in the Attorney

General’s view — permissible choice “to strike at the

source of the information,” Day 1, AM Session, at 45,

thereby regulating the distribution and use of a

“commodity” rather than limiting a speaker’s mes-

sage.”

Like the district court, I think this argument

attempts to create a dividing line that does not exist

in the factual context of this case. While the statute

* The Attorney General points out that the Act does not

regulate the “speakers” (the pharmaceutical companies) at all,

but restricts only the entities that sell prescriber-identifiable

prescription data to other parties.

* The Attorney General wisely no longer contends that the

First Amendment is inapplicable to the Prescription Act because

it targets only factual information. As the district court held,

“the transmission of truthful information concerning the pre-

scribing practices of New Hampshire’s health care providers .. .

is not exempt from First Amendment review merely because it

targets factual information rather than viewpoints, beliefs,

emotions, or other types of expression.” 490 F.Supp.2d at 175;

see Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council,

425 U.S. 748, 762, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976) (“Purely

factual matter of public interest may claim protection.”); Univer-

sal City Studios, Inc. v. Corley, 273 F.3d 429, 446-47 (2d

Cir.2001) (“Even dry information, devoid of advocacy, political

relevance, or artistic expression, has been accorded First

Amendment protection.”) (citing Supreme Court precedent).

Moreover, while the statute directly regulates the prescriber-

identifiable data, the Legislature’s objective is to restrict the

messages presented by the detailers to their physician custom-

ers. As I explain, this objective informs my assessment of the

regulation.

App. 88

explicitly prohibits any “use” of prescriber-identifiable

data,” one of the Legislature’s desired outcomes is the

modification of the marketing messages communi-

cated by pharmaceutical detailers. See, e.g., Defen-

dant’s Memorandum of Law in Support of its

Objection to Plaintiff’s Motion for Preliminary In-

junction, at 30-31 (“By prohibiting the license, trans-

fer, use, or sale of prescriber-identifiable prescription

data for commercial purposes, the Act prevents

pharmaceutical companies from using that informa-

tion to pressure physicians into changing their pre-

scriptions from less costly medications to name brand

drugs for reasons unrelated to the clinical needs of

patients.”). The State has attempted to insulate this

expression-based intention from First Amendment

scrutiny by directing its legislation to an earlier step

in the communicative process. However, it may not

skirt the Constitution’s requirements in such fashion.

Indeed, the Attorney General seeks to minimize the

impact of the Act by emphasizing that detailers may

continue to use the same face-to-face marketing

approach with physicians, notwithstanding’ the

Prescription Act. But if the State acknowledges that

the form of marketing conduct remains the same (i.e.,

face-to-face promotion by detailers), it is difficult to

see how the statute may be viewed solely as a regula-

tion of the commercial transaction itself, rather than

‘ In addition to the catch-all prohibition on “use,” the

statute, as previously noted, prohibits the licensing, transfer or

sale of the information.

App. 89

as a limitation on the content of the expression that

may be used to conduct that transaction. See U.S.

West, Inc. v. FCC, 182 F.3d 1224, 1232 (10th Cir.1999)

(finding that prohibition of telecommunications

companies’ use of customer proprietary data for

targeted marketing constitutes a restriction on pro-

tected commercial speech).

I recognize that there are three separate com-

mercial activities involved here: first, the transfer of

the data to data miners, including the plaintiffs, from

the entities that acquire prescription information in

the ordinary course of their businesses (such as

pharmacies and insurance companies); second, the

transfer of the data in aggregated form from the

plaintiffs to the pharmaceutical companies; and,

third, the marketing of drugs to prescribers by detail-

ers whose sales pitches make use of the data. To serve

its interests in protecting privacy, promoting public

health and containing health care costs, the Legisla-

ture targeted the content of the message communi-

cated in the third transaction. The statute restricts

that message indirectly by imposing restrictions on

the first two transactions.” Because the statute’s

“The Prescription Act expressly governs the first type of

transaction by restricting the conduct of “any pharmacy benefits

manager, insurance company, electronic transmission interme-

diary, retail, mail order, or Interne: pharmacy or other similar

entity.” Whether the Legislature viewed the plaintiffs — the

“middlemen” in the data transfer process — as “electronic trans-

mission intermediarfies]” or “other similar entit[ies]” is unclear,

but I think they are properly treated as such for purposes of our

(Continued on following page)

App. 90

purposes are linked to the third transaction, I con-

clude — as did the district court — that the assessment

of the statute’s impact must be similarly focused.”

See IMS Health, 490 F.Supp.2d at 176 (“The law is

. squarely aimed at speech that proposes a com-

mercial transaction even though it does not explicitly

bar such speech.”); Boos v. Barry, 485 U.S. 312, 321,

108 S.Ct. 1157, 99 L.Ed.2d 333 (1988) (noting that

“(rjegulations that focus on the direct impact of

speech on its audience” must be viewed as speech-

based for purposes of First Amendment analysis).

The Attorney General asserts that the Supreme

Court drew “a sharp distinction” in Bartnicki v.

Vopper, 532 U.S. 514, 121 S.Ct. 1753, 149 L.Ed.2d 787

(2001), between regulating the use of information —

which she claims does not implicate the First

discussion. To comply with the statute, all parties making this

prescriber-identifiable available for sale presumably must

condition the sale on an agreement by the purchasers not to use

the data in ways prohibited by the Act. By restricting the release

of the information into the marketplace, the State limits the

content of the message ultimately communicated by the detail-

ers.

” The State’s interest in patient privacy is implicated as

well by the first two transactions, through which prescription

data is transferred to entities uninvolved in individual patients’

health care. That interest does not play a part in our analysis

because, as noted, the plaintiffs do not challenge the statute’s

restriction on patient-identifiable data. The State’s articulated

privacy interest in prescriber information is intertwined with its

health and cost-containment interests and relates solely to the

third transaction. See infra Section IV.A.

App. 91

Amendment — and regulating its disclosure. In Bart-

nicki, the Court held that the First Amendment

protected a reporter’s disclosure of the contents of an

illegally intercepted communication about a matter of

public interest. Jd. at 518, 121 S.Ct. 1753. In its

discussion, the Court described a prohibition against

the “use” of the contents of an illegal wiretap as “a

regulation of conduct,” while holding that a prohibi-

tion against the “disclosure” of such material “is fairly

characterized as a regulation of pure speech.” Jd. at

526-27, 121 S.Ct. 1753. The Attorney General seizes

on this language to argue that the Prescription Act

and its prohibition against “use” of prescriber-

identifiable data is similarly immune from First

Amendment attack. However, the examples of prohib-

ited “uses” listed by the Court in Bartnicki are mate-

rially different from the prohibition at issue here.

They involve conduct in which the impact on speech

is non-existent or, at most, incidental] — for example,

using unlawfully intercepted information about a

business rival to create a competing product or using

illegally recorded information to trade in securities or

for extortion. Jd. at 527 n. 10, 121 S.Ct. 1753. Here,

by contrast, the prohibited “use” at issue is the

dissemination of a commercial message through

marketing, advertising or promotion — expressions

that unquestionably are entitled to First Amendment

protection. See Thompson v. W. States Med. Ctr., 535

U.S. 357, 366-67, 122 S.Ct. 1497, 152 L.Ed.2d 563

(2002) (quoting Va. State Bd. of Pharmacy, 425 U.S.

at 763, 96 S.Ct. 1817, for the proposition “that a

‘particular consumer’s interest in the free flow of

App. 92

commercial information ... may be as keen, if not

keener by far, than his interest in the day’s most

gt Tagg

urgent political debate

The multi-step nature of the statutory prohibi-

tion — imposing the restraint on the providers of the

underlying information rather than directly on the

communicator of the message — does not remove that

protection. Supreme Court precedent establishes that

where the goal of a regulation relates to suppression

of expression, even a restriction that indirectly

achieves that objective may run afoul of the First

Amendment. See Grosjean v. Am. Press Co., 297 U.S.

233, 249, 56 S.Ct. 444, 80 L.Ed. 660 (1936) (invalidat-

ing a license tax on publications with circulations of

20,000 or more that sold advertising “because, in light

of its history and of its present setting, it is seen to be

a deliberate and calculated device in the guise of a

tax to limit the circulation of information to which the

public is entitled”); see generally Minneapolis Star &

Tribune Co. v. Minnesota Comm’r of Revenue, 460

U.S. 575, 581, 103 S.Ct. 1365, 75 L.Ed.2d 295 (1983)

“ The Attorney General’s analogy to Bartnicki is not

entirely inapplicable to the Prescription Act. The prohibited

commercial purposes listed by the Act also include “evaluat{ing]

the prescribing behavior of an individual health care profes-

sional ... or the effectiveness of a professional pharmaceutical

detailing sales force.” Such activities do not themselves consti-

tute protected commercial speech and are equivalent to the

“uses” identified in Bartnicki. They are not our concern here.

App. 93

(holding unconstitutional a tax on newsprint and ink

used in the production of newspapers).”

By contrast, legislation whose purpose is to

regulate economic conduct, and which only inciden-

tally affects speech, typically does not raise First

Amendment concerns. See generally Rumsfeld v.

Forum for Acad. & Inst. Rights, Inc., 547 U.S. 47, 62,

126 S.Ct. 1297, 164 L.Ed.2d 156 (2006) (“FAIR”)

(“I]t has never been deemed an abridgement of

freedom of speech or press to make a course of con-

duct illegal merely because the conduct was in part

initiated, evidenced, or carried out by means of lan-

guage, either spoken, written, or printed.’”) (quoting

Giboney v. Empire Storage & Ice Co., 336 U.S. 490,

502, 69 S.Ct. 684, 93 L.Ed. 834 (1949)). Our circuit

considered this principle at some length in two re-

lated decisions concerning a Rhode Island statute

regulating the retail sale of alcohol. See Wine &

Spirits Retailers, Inc. v. Rhode Island, 481 F.3d 1, 6-7

(1st Cir.2007) (“Wine & Spirits II”); Wine & Spirits

Retailers, Inc. v. Rhode Island, 418 F.3d 36, 48-49 (1st

Cir.2005) (“Wine & Spirits I’). Although the State

relies on the Wine & Spirits decisions in arguing

that the Prescription Act falls outside the First

“ The Court in Minneapolis Star & Tribune Co. made no

finding on the State’s motive, but observed that “differential

treatment, unless justified by some special characteristic of the

press, suggests that the goal of the regulation is not unrelated to

suppression of expression, and such a goal is presumptively

unconstitutional.” 460 U.S. at 585, 103 S.Ct. 1365.

App. 94

Amendment’s scope, those cases support a contrary

conclusion.

The regulation at issue in Wine & Spirits origi-

nally prohibited any “chain store organization” from

holding a Class A retail liquor license, but gave the

Department of Business Regulation the discretion to

determine whether a business was a “chain store.”

Some businesses were evading the restriction by

adopting chain-store-like features witnin a different

business structure, described as “franchised package

stores.” The State responded by amending the statute

to identify the specific conduct it sought to prohibit;

i.e., it defined the term “chain store organization” to

include businesses that participated in “a coordinated

or common advertisement with one or more liquor

licensed business in any advertising media” or that

coordinated marketing strategies. At the same time,

the State adopted a provision explicitly excluding

franchisees from holding Class A liquor licenses.”

Wine & Spirits had been operating as a franchisor of

independently owned liquor retailers and, among

other activities, provided marketing, advertising and

“ The statute provides, in part:

To promote the effective and reasonable control and

regulation of the Rhode Island alcoholic beverage in-

dustry and to help the consumer by protecting their

choices and ensuring equitable pricing. Class A liquor

license[s] authorized by this title shall not be granted,

issued, renewed or transferred to or for the use of any

liquor franchisor or franchisee.

R.I. Gen. Laws § 3-5-11.1(a).

App. 95

business advice and services. In the first of the two

cases, Wine & Spirits claimed that the regulation

improperly infringed on its right to communicate with

its customers by, for example, designing advertise-

ments and arranging for their placement in various

media. Wine & Spirits I, 418 F.3d at 49. In the second

case, we also considered a claim by Wine & Spirits’

franchisees that the regulation imposed an improper

limitation on the content of their advertising. Wine &

Spirits II, 481 F.3d at 6.

We found no First Amendment issue in either

instance. In the first case, we stated that the regula-

tion did not “prohibit the communication of advice

between a franchisor and the holders of Class A liquor

licenses,” 418 F.3d at 47, but only forbade implemen-

tation of Wine & Spirits’ business model. We con-

cluded that “(t]he provision of advertising and

licensing services is not speech that proposes a com-

mercial transaction and therefore does not constitute

commercial speech.” Jd. at 49. In the later case, we

observed that the prohibition on coordinated or

common advertisements “does not target speech; each

individual liquor licensee remains at liberty to dis-

seminate information about its prices and products to

other retail stores and to the public at large.” 481

F.3d at 6. We observed: “The statute at issue here

merely proscribes conduct — the launching of adver-

tisements resulting from pre-agreed commercial

strategies. Such a ban is not a ban on commercial

speech.” Id.

App. 96

Thus, the Wine & Spirits prohibition was against

an acting-in-concert business approach — not against

the message the liquor stores were seeking to dis-

seminate.” To be sure, the statute had an incidental

impact on the speech of both the franchisor and

franchisees. Wine & Spirits was, in effect, prevented

from marketing its services to particular businesses,

and the franchisees could not distribute advertise-

ments in coordination with other retail liquor stores.

But the statute’s objective was to regulate business

methods, see supra n. 35, and, as we observed in Wine

& Spirits I, “the First Amendment does not safeguard

against changes in commercial regulation that render

previously profitable information: valueless.” 418 F.3d

at 48. rf

Fd

Here, however, the LegéSlature did not simply

prohibit a business model or strategy. Instead, it

restricted the substance of the messages being com-

municated by pharmaceutical detailers in their sales

pitches by curtailing information previously available

to detailers. In other words, the State targeted, albeit

indirectly, the speech of the detailers in order to

achieve its multiple objectives. Such a regulation is a

limitation on commercial speech, and the State

consequently must bear the burden of demonstrating

that it satisfies the Central Hudson test. See, e.g., 44

** We observed that “the statute imposes no burden on the

communication between the speaker and the intended audience

but has the effect of decreasing the audience’s demand for a

particular kind of business advice.” 418 F.3d at 48 n. 3.

App. 97

Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 499,

116 S.Ct. 1495, 134 L.Ed.2d 711 (1996) (noting that

“the State retains less regulatory authority when its

commercial speech restrictions strike at ‘the sub-

stance of the information communicated’ rather than

the ‘commercial aspect of [it]’”) (quoting Linmark

Assocs., Inc. v. Willingboro, 431 U.S. 85, 96, 97 S.Ct.

1614, 52 L.Ed.2d 155 (1977)); cf City of Cincinnati v.

Discovery Network, Inc., 507 U.S. 410, 429, 113 S.Ct.

1505, 123 L.Ed.2d 99 (1993) (noting the Court’s prior

“statements that the test for whether a regulation is

content based turns on the ‘justification’ for the

regulation”) (citing Ward v. Rock Against Racism, 491

U.S. 781, 791, 109 S.Ct. 2746, 105 L.Ed.2d 661

(1989); Clark v. Cmty. for Creative Non-Violence, 468

U.S. 288, 293, 104 S.Ct. 3065, 82 L.Ed.2d 221

(1984)).“”

“ The plaintiffs argue that the Act should be analyzed as a

content-based restriction on speech subject to strict scrutiny

rather than as a regulation of commercial speech subject to

intermediate scrutiny. Although the statute unquestionably

affects content by limiting the information the detailer may

communicate, I find no merit in this view of the applicable

standard. The targeted speech concerns the promotion of a

product — the classic context for commercial speech. Content-

based restrictions on commercial speech are subject only to

intermediate scrutiny. See Naser Jewelers, Inc. v. Concord, 513

F.3d 27, 33 (1st Cir.2008) (“Central Hudson serves as “n alterna-

tive to the more exacting standards applied to content-based

restrictions on non-commercial speech.”). Alternatively, the

plaintiffs contend that the statute should be subject to strict

scrutiny because it has a chilling effect on non-commercial

speech. However, I agree with the majority that, properly

(Continued on following page)

App. 98

IV.

Before delving into the Central Hudson test and

its application here, I pause briefly to clarify what

this case is not about. We are not considering the

State’s authority to restrain untruthful, unlawful or

otherwise misleading speech. Such communications —

e.g., insider information about securities, fraudulent

statements, or speech that would violate intellectual

property laws — are routinely regulated without First

Amendment inquiry.” Although the State is con-

cerned about the potentially misleading effect of the

information provided by detailers to prescribers, it

does not characterize the messages it seeks to restrict

as categorically untruthful or deceptive. Thus, my

analysis presumes that New Hampshire’s prohibition

on the use of prescriber-identifiable data affects

communications that are truthful and otherwise

lawful. As such, they may be limited only with ade-

quate justification.

To justify a commercial speech restriction, the

State bears the burden of proving the three elements

construed, the terms of the statute are exceedingly narrow and

that, so understood, the Act does not impermissibly burden

speech outside its scope.

““ The Supreme Court has treated as a threshold question

under the Central Hudson test “whether the commercial speech

concerns unlawful activity or is misleading.” Zhompson v. W.

States Med. Ctr., 535 U.S. 357, 367, 122 S.Ct. 1497, 152 L.Ed.2d

563 (2002). “If so, then the speech is not protected by the First

Amendment.” Jd. My references to the three-pronged Central

Hudson inquiry do not include this preliminary inquiry.

App. 99

of the Central Hudson test: (1) the restriction is in

support of a substantial government interest; (2) it

directly advances the asserted interest; and (3) it is

“not more extensive than is necessary to serve that

interest.” Central Hudson, 447 U.S. at 566, 100 S.Ct.

2343; El Dia, 413 F.3d at 113; see also Thompson, 535

U.S. at 367, 122 S.Ct. 1497. I consider each prong in

turn.

A. Substantial Government Interest

The Attorney General maintains that the Pre-

scription Act supports the State’s substantial inter-

ests in protecting patient and prescriber privacy,

promoting public health, and containing health care

costs. Although the plaintiffs do not challenge the

importance of the public health and cost-containment

interests, they contend that the evidence in the record

fails to prove that either interest is directly advanced

by the statute as required by the second prong of

Central Hudson. They wholly reject the Attorney

General’s contention that the Act serves a privacy

interest.

I, too, accept as substantial the State’s asserted

interests in cost-containment and quality health care.

However, | join the district court in rejecting on this

record prescriber privacy as a sufficient interest to

justify the Prescription Act. The State does not claim

an interest in preventing public disclosure of the

prescriber-identifiable data, and indeed it could not,

as the statute allows the data to be disclosed and

App. 100

used for a myriad of purposes. See Defendant's Trial

Memorandum, at 20 n. 10 (conceding that the law

does not “attempt to keep prescriber-identifiable data

secret or entirely private”).

Rather, the Attorney General explains in her

brief that the State’s privacy interest is in the “pa-

tient-physician relationship,” specifically in New

Hampshire patients’ “reasonable right to expect that

their relationship with the physician is private, and

[that] a pharmaceutical detailer is not manipulating

the physician’s prescribing behavior.” The Attorney

General contends that detailers have become “an

invisible intruder in the physician’s examination

room.”

However, the regulation does not in any cogniza-

ble way touch on the privacy of the examination

room. Although the statute bars disclosure of patient-

identifiabl2 information as well as prescriber data,

the plaintiffs do not challenge the prohibition on the

use of specific patient data. Thus, no patient identify-

ing information is at issue in this case. Any privacy

justification must therefore reside in the prescriber-

identifiable data. Rather than arguing that “the

[prescriber-identifiabie] data is being exploited to

compromise patient privacy,” the Attorney General

argues that “pharmaceutical companies are using the

data to help persuade doctors to make inadvisable

prescribing decisions.” 490 F.Supp.2d at 179. The

district court properly recognized the flaw in this

depiction of a privacy interest:

App. 101

[W]hat the Attorney General claims as a dis-

tinct interest in protecting prescriber privacy

is nothing more than a restatement of her

contentions that the law can be justified be-

cause it prevents pharmaceutical companies

from using prescriber-identifiable data in

ways that undermine public health and in-

crease health care costs.

Id. Accordingly, I join the district court in rejecting

the Attorney General’s argument that the Prescrip-

tion Act is justified by a substantial privacy interest.

I thus turn to consider whether the Prescription

Act is a narrowly tailored provision that directly

advances the State’s substantial interests in quality

health care and cost-containment.

B. Advancing the Interest

The Attorney General asserts that the Prescrip-

tion Act satisfies the second prong of the Central

Hudson test — that it advances the State’s interest —

because it reduces the likelihood that prescribers will

make unnecessarily expensive and unwise drug

choices. I borrow the district court’s well stated

description of the Attorney General’s logic:

The chain of reasoning ... begins with the

major premise that prescriber-identifiable

data allows pharmaceutical companies to

target health care providers for marketing

and tailor marketing messages in ways that

make detailing more persuasive. Next, it as-

sumes that because prescriber-identifiable

App. 102

data makes detailing more persuasive, it in-

evitably leads to more prescriptions for

brand-name drugs when compared with ge-

neric alternatives because only branded

drugs are detailed. Finally, it assumes that

any increase in the number of prescriptions

written for brand-name drugs when com-

pared to generic alternatives harms the pub-

lic health and increases health care costs

because branded drugs often turn out to be

more harmful than generic alternatives and

almost always are more expensive. Accord-

ingly, a ban on the use of prescriber-

identifiable data for marketing purposes

promotes public health and contains health

care costs by prohibiting pharmaceutical

companies from using prescriber-identifiable

data to promote the sale of brand-name

drugs.

490 F.Supp.2d at 180.

The district court accepted the premise that

detailing with prescriber-identifiable data is more

persuasive, but found that the Attorney General had

failed to establish a link between such detailing and

any negative impact on public health or drug costs.

On the health concern, the court found that it is

“counterintuitive and unproven” that, on balance,

“brand-name drugs are more injurious to the public

health than generic alternatives.” Jd. In addition, the

court was unpersuaded that the State’s public health

purpose was served by barring the use of prescriber

data to target “early adopters”

This text is long and has been trimmed here. Open the source document for the complete record.