IMS Health Inc. v. Ayotte

United States Court of Appeals
For the First Circuit

Volume I of II
No. 07-1945

IMS HEALTH INC. AND VERISPAN, LLC,

Plaintiffs, Appellees,

v.

KELLY A. AYOTTE, NEW HAMPSHIRE ATTORNEY GENERAL,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Paul J. Barbadoro, U.S. District Judge]

Before

Lipez, Selya, and Siler,*
Circuit Judges.

Laura E. B. Lombardi, Assistant Attorney General, 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 Experts in Privacy Law and Technology,
amici curiae.
Thomas R. Julin, with whom Patricia Acosta, Michelle Milberg,

*
Of the Sixth Circuit, sitting by designation.
Hunton & Williams LLP, James P. Bassett, Jeffrey C. Spear, Orr &
Reno, P.A., Mark Ash, and Smith Anderson Blount Dorsett Mitchell &
Jernigan LLP were on brief, for appellees.
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 Earl Childress III, and Jones Day on brief for Wolters
Kluwer Health, Inc., amicus curiae.

November 18, 2008
 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 this escalating

problem by enacting innovative legislation. 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 cyberspace. The tale

follows.

Pharmaceutical sales representatives, known in industry

argot as "detailers," earn their livelihood by promoting

prescription drugs in one-on-one interactions with physicians. A

valuable tool in this endeavor, available through the omnipresence

of computerized technology, is knowledge of each individual

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

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unconstitutional abridgement of free speech and enjoined its

enforcement. See IMS Health Corp. v. Ayotte, 490 F. Supp. 2d 163,

183 (D.N.H. 2007) (D. Ct. Op.). This appeal ensued.

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 proscriptions 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 circumstances permit and the

Constitution demands.

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I. BACKGROUND

The raw facts are largely undisputed. Modern-day

detailing begins when a prescription is filled.1 At that moment,

the pharmacy stores in its computerized 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 complex 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

1
Our description of detailing owes much to the precise
accounts provided by two district courts, including the court
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.

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prescriptions each year. To protect patient privacy, prescribees'

names are encrypted, effectively eliminating the ability to match

particular prescriptions with particular patients.

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 concern, 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 further

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 indistinguishable 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.2

2
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.

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 Brand-name drug manufacturers engage in detailing in

several situations. For instance, detailing is employed where a

manufacturer seeks to encourage prescription of a patented brand-

name drug as against generic drugs, or as against a competitor's

patented brand-name drug, or as a means of maintaining 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 detailers

must manage their way around physicians' natural reluctance to make

time for promotional presentations. To this end, detailers

typically distribute 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 engagement.

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 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 enables physicians to offer drugs free of charge

to selected patients. Many physicians thus tolerate detailing

visits in order to reap the harvest of samples that these visits

bring.3

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 interacts 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 information enables the

detailer to zero in on physicians 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 prescribing drugs that

3
Nevertheless, a significant number of physicians flatly
refuse detailing visits, convinced that they are either unethical
or a waste of time.

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have just come onto the market). The information also allows the

detailer to tailor her promotional message in light of the

physician's prescribing history.

II. 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 hearings 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, transferred, used, or sold by any
pharmacy benefits 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
reimbursement; formulary 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.
Commercial purpose includes, but is not
limited to, advertising, marketing, promotion,

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 or any activity that could be used to
influence sales or market share of a
pharmaceutical product, influence or evaluate
the prescribing behavior 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 contained in

this language should be read to prohibit the dispensing 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. Id. 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." Id. Last — but

surely not least — it provides both criminal and civil penalties

for violations. Id. §§ 318:55, 358-A:6.

III. THE LITIGATION

Within a month of the effective date of the Prescription

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

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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 thoughtful rescript in which it concluded

that the Prescription Information Law regulated speech, not

conduct. D. Ct. Op., 490 F. Supp. 2d at 174-75. Accordingly, it

applied the conventional constitutional test for commercial speech,

inquiring whether the law (i) supported a substantial government

interest, (ii) directly advanced that interest, and (iii) was more

extensive than necessary to serve that interest. Id. at 177

(citing Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447

U.S. 557, 566 (1980)).

The district court found the governmental interests

advanced in support of the law insufficient. Id. at 178-81 & n.13.

With specific reference to cost containment, the court maintained

that the state had failed to prove that substituting non-

bioequivalent generic drugs for brand-name drugs would be generally

advantageous to patients' health. Id. 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

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existed for curtailing detailing — none of which would involve

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 portions of

the Prescription Information Law unconstitutional and enjoined its

enforcement. Id. 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. Consumers Union, 466 U.S. 485,

514 (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.3d 20, 23 (1st Cir. 1997). It bears

directly upon a court's power to adjudicate a dispute. Id.

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 physicians by regulating

upstream transactions of prescriber-identifiable information

between data miners and those who would put that information to use

in detailing. The state directs our attention to these prohibited

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upstream transactions, claiming that they 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 miners' 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

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physician is a party in this case.4 It follows that unless they

can come within some exception to the general jus tertii principle,

the plaintiffs lack standing 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 physicians, 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 information 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 (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

4
To be sure, some of the amici profess to represent such
interests. But, absent special circumstances (not present here),
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).

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(characterizing the exception as "isthmian" and refusing to allow

franchisor to assert First Amendment rights of franchisees).

The exception is rooted in practical considerations.

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

The inapplicability of the exception is evident. There

is no indication in the record that pharmaceutical 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 Eulitt, 386 F.3d at 352-53; see also

Singleton v. Wulff, 428 U.S. 106, 110, 114-16 (1976).

Of course, the Court has indicated some willingness to

relax third-party standing in the First Amendment context. See

Kowalski v. Tesmer, 543 U.S. 125, 130 (2004). But in practical

terms, this relaxation evinces nothing more than a receptiveness to

facial attacks on allegedly overbroad laws. See Osediacz v. City

of Cranston, 414 F.3d 136, 140 (1st Cir. 2005). Otherwise,

hindrance — the existence of an obstacle to the vindication of

one's own rights — remains a necessary prerequisite; and no court

has exhibited a willingness to write the hindrance element out of

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the standing test as a matter of general convenience.5 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 "[e]ven 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 inherent therein.

We think it important to note, however, that this restriction on

jus tertii rights does not prevent consideration of New Hampshire's

interest in combating detailing. Standing rules are at bottom a

5
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 requires a
showing of hindrance. See Kowalski, 543 U.S. at 129-30.

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limitation on a court's competence to adjudicate a dispute. See

Warth v. Seldin, 422 U.S. 490, 501 (1975). Conversely,

consideration 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 recognized 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., 128 S. Ct. 1610,

1623 (2008); Gonzales v. Raich, 545 U.S. 1, 17 (2005).

V. SPEECH OR CONDUCT?

The next issue requires a determination of whether or not

the challenged portions of the Prescription 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 (2001), so that it may prohibit the use of

prescriber-identifiable information without further ado. See id.

at 526-27 (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 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 prohibit the disclosure of

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that information by the innocent recipient. Id. at 534. In so

concluding, it introduced a distinction between "use" and

"disclosure" 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. Id. at 529. 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.

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 insupportable 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 prime example), they cannot be

prohibited merely because they are "uses."

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 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 transferring data for one

particular purpose only. This brings vividly to mind Chief

Justice Roberts's admonition 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." Rumsfeld v. Forum for Acad. & Inst. Rights,

Inc. (FAIR), 547 U.S. 47, 62 (2006) (quoting Giboney v. Empire

Storage & Ice Co., 336 U.S. 490, 502 (1949)).

We recognize, of course, that pure informational data

can qualify for First Amendment protection. See Univ'l 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 (1976) (deeming ordered pairs of

drug prices and products commercial speech). But that coin has a

flip side. As Justice Holmes famously observed, "the First

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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 (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., Chaplinsky v. New Hampshire, 315 U.S. 568, 571-72

(1942) (listing as examples "the lewd and obscene, the profane,

the libelous, and the insulting or 'fighting' words"); see also

Thompson v. W. States Med. Ctr., 535 U.S. 357, 367 (2002)

(explaining that false or misleading commercial speech may be

barred completely without constitutional concern).

There are other species of speech-related regulations

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

(1978); communications in furtherance of crimes, see, e.g.,

Giboney, 336 U.S. at 498; 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, e.g., NLRB v. Gissel

Packing Co., 395 U.S. 575, 618-20 (1969). The Supreme Court has

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recognized that these exceptions exist, see, e.g., Cal. Motor

Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 515 (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

Boundaries 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 exceptions 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 nugatory

informational value. It is this unusual combination of features

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that distinguishes these laws and places them outside the ambit of

the First Amendment. Cf. Chaplinsky, 315 U.S. at 572 (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 portions 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 restrict the ability of data miners to

aggregate, compile, and transfer information destined for narrowly

defined commercial ends. In our view, this is a restriction 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 words, this is a

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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 measure.

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 distribute it for a fee. Second, they liken this

case to those in which the Supreme Court has struck down

commercial 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 information, the lyrics do not fit the

tune.6 The Prescription Information Law simply does not prevent

any information-generating activities. The plaintiffs may still

6
Characterizing the Prescription Information Law as a
paternalistic ban on the influx of information into the marketplace
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.

-23-
gather and analyze this information; and may publish, transfer,

and sell this information to whomever they choose so long as that

person does not use the information for detailing. Like in FAIR,

547 U.S. at 62, 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 previously 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 its 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.

-24-
 We add, moreover, that the fact that this information

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 (quoting

Edenfield v. Fane, 507 U.S. 761, 767 (1993)); see also 44

Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996)

(striking down statute prohibiting advertisement of liquor

prices); Edenfield, 507 U.S. at 777 (striking down statute

prohibiting in-person solicitation by accountants); Va. Bd. of

Pharm., 425 U.S. at 771-73 (striking down statute prohibiting

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 likelihood that

physicians will prescribe the detailers' (more expensive) drugs.

The New Hampshire legislature found this advantage in bargaining

power invidious (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

-25-
eliminating the 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 presented 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 engender 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 challenge 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 distinction. Even if the

Prescription Information Law is treated as a restriction on

-26-
protected speech, it is nonetheless constitutional. This, then,

constitutes an alternative ground for our decision.

Assuming, arguendo, that the acquisition, manipulation,

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 (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 upstream transactions

to which they are privy).

If speech at all, these transactions are commercial

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. 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 (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 Día, Inc. v. P.R.

Dep't of Consumer Affairs, 413 F.3d 110, 115 (1st Cir. 2005). We

therefore reject it and conclude instead that the Prescription

-27-
Information Law, if regarded as a restriction on protected speech,

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 otherwise lawful activity and is not

misleading — statutory regulation of that speech is

constitutionally permissible only if the statute is enacted in the

service of a substantial governmental interest, directly advances

that interest, and restricts speech no more than is necessary to

further that interest. See Cent. Hudson, 447 U.S. at 556; Wine &

Spirits Retailers, Inc. v. Rhode Island (Wine & Spirits II), 481

F.3d 1, 8 (1st Cir. 2007). In administering 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; Edenfield, 507 U.S. at 770.

On behalf of the Prescription Information Law, New

Hampshire cites three governmental interests: maintaining patient

and prescriber privacy, protecting 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

-28-
governmental interest. As such, cost 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. Speculation,

surmise, or fevered imaginings will not carry the day. Id. at

770.

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 directly to advance an identified

governmental interest. See, e.g., Burson v. Freeman, 504 U.S. 191,

211 (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. States

are allowed "to justify speech restrictions by reference to

studies and anecdotes" or even to justify them "based solely on

history, consensus, and simple common sense." Id. (internal

quotation marks omitted).

Here, the state's evidence falls into three evidentiary

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.

-29-
 The first category embodies evidence showing that

detailing increases the cost of prescription drugs. 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 prescribers' 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: pharmaceutical

companies use detailing to promote the sale of brand-name drugs,

and those drugs cost significantly more than their generic

counterparts.7 Detailing works: that it succeeds in inducing

physicians to prescribe larger quantities of brand-name drugs

7
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 significant.

-30-
seems clear (even if the exact magnitude of that effect is not).

See, e.g., Puneet Manchanda & Elisabeth Honka, 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 (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 efficacy.

The testimony adduced at trial reinforced these common-

sense conclusions. Dr. Jerome Avorn, a professor at Harvard

Medical School specializing in pharmacoepidemiology and

pharmacoeconomics, described 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 physician-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

-31-
detailer, relying on personal experience, testified about various

kinds of leverage that prescribing histories afforded detailers

(e.g., the ability to target physicians prescribing large

quantities of generic drugs, the ability to zero in on a

physician's customary prescribing choices, and the ability to

punish physicians who fail to display allegiance to particular

brand-name drugs). Each of these witnesses emphasized that

prescribing histories helped the detailer to become more

adversarial in her presentation and to focus on the weakness of

the physician's erstwhile drug of choice as opposed to the

clinical virtues of the detailed drug. A promotional brochure

published by IMS for detailers' use corroborated many of these

claims, as did a submitted newspaper 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 A1.

The plaintiffs did not deny that prescribing histories

made detailing more efficacious. They did, however, try to cast

detailing as a helpful and informative 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 physician's

practice. The plaintiffs offered the testimony of Dr. Thomas

Wharton, a distinguished cardiologist, to support this

-32-
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

prescribing histories permitted detailers to inform physicians

more quickly of negative information. Finally, the 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: "[t]he 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 counterparts;

thus, it was possible that an increase in generic drug

prescriptions might compromise patient care, engender new medical

costs, and overwhelm any savings. Id. 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

-33-
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 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 inaccurate.8 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 evidentiary

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 (1986) (permitting city to rely on experiences of

different localities); Nat'l Amusements, 43 F.3d at 742

(permitting town to rely on residents' complaints, "constabulatory

8
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
not a guarantee that persons will not engage in it.

-34-
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 heightens this exorbitant effect, that many aggressively

detailed drugs provide no benefit vis-à-vis their far 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 regardless of both the public health consequences

and the probable outcome of a sensible cost/benefit analysis. By

-35-
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' pocketbooks 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 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 histories 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 discerned 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, there is in this area "some room

for the exercise of legislative judgment," id. at 508. We are

-36-
duty bound to grant the New Hampshire legislature such elbow room

here.

To this we add that, as Justice Brandeis famously

observed, "[i]t 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

(1932) (Brandeis, J., dissenting). That is the case here — and we

must allow the state legislature some leeway to experiment with

different 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 deference 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 (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

-37-
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 Hampshire 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 detailers.

Given the contents of the legislative record, we believe that

deference is in order.

We need not probe this point more deeply. In the end,

we conclude that the state adequately demonstrated 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 containment. 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. More recently, the Court applied a gloss, stating

that "if the Government could achieve its interests in a manner

that does not restrict speech, or that restricts less speech, the

Government must do so." Thompson, 535 U.S. at 371.

-38-
 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 regulating speech must be

a last — not first — resort." Thompson, 535 U.S. at 373. This

does not mean, however, that a state must forgo legitimate

regulatory goals merely because an objector can hypothesize

alternative measures of doubtful efficacy that would leave speech

unencumbered.

In this instance, the district court 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 measure would target a

harm that the legislature never deemed central to its aims. Some

studies do indicate that detailers' gifts influence prescribing

-39-
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 Hampshire

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 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 marketplace of ideas.

See Posadas de P.R. Assocs. v. Tourism Co., 478 U.S. 328, 344

(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

-40-
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 prescription process. 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 prescribing 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 substitute for a brand-name drug because each drug

offers subtly different situation-specific advantages. The

physician must attend to the patient's individual symptoms, make

a diagnosis, and prescribe accordingly. 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

previously introduced into the physician's prescribing habits.

The New Hampshire legislature enacted the Prescription Information

-41-
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 necessary

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 implicate commercial speech, they do not violate the First

Amendment.

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.9

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

9
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).

-42-
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 penalties).

See Reno v. ACLU, 521 U.S. 844, 872 (1997).

We readily acknowledge that the Prescription Information

Law is not a model of legislative craftsmanship. 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

unconstitutionally vague. See Ridley v. Mass. Bay Transp. Auth.,

390 F.3d 65, 93 (1st Cir. 2004). That is the case here.

A federal court may interpret state law by using the

same method and approach that the state's highest court would use.

See Nat'l Pharms., Inc. v. Feliciano-de-Melecio, 221 F.3d 235,

241-42 (1st 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., 871 A.2d 18, 26 (N.H. 2005). The

objective is to construe a statute "in light of the legislature's

-43-
intent in enacting [it], and in light of the policy sought to be

advanced by the entire statutory scheme." Carlisle v. Frisbie

Mem. Hosp., 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 v. Plain Dealer Publ'g Co., 486

U.S. 750, 770 n.11 (1988) (internal quotation marks omitted); see

Stenberg v. Carhart, 530 U.S. 914, 944-45 (2000); R.I. 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 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 exemptions

include "pharmacy reimbursement; formulary 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.

-44-
 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 acknowledged 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 clinical

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 impermissible purpose.

After all, marketing and sales are the ultimate purposes for

virtually all research done by pharmaceutical companies. As long

as the companies do not undertake targeted detailing of New

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 Prescription

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, 128 S. Ct. 2759, 2770-71 (2008) (noting that in

facial challenges courts should "extend[] a measure of deference

-45-
to the judgment of the legislative body that enacted the law");

Wash. State Grange v. Wash. State Repub. Party, 128 S. Ct. 1184,

1194 (2008) (explaining that deference requires an inquiring court

to ask whether challenged law could possibly be implemented

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 Information 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 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.10

For these reasons, we reject the plaintiffs' contention

that the law is void for vagueness.

10
Because no pharmaceutical company is a party to this
litigation, we decline to address whether an action could be
maintained under the Prescription Information Law against a
pharmaceutical company that uses data properly acquired for one
purpose to target physicians for detailing.

-46-
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 (1st 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 statute.

See id. A law that purports to regulate conduct occurring wholly

outside the enacting state "outstrips the limits of the enacting

state's constitutional authority and, therefore, is per se

invalid." Id.; see Pharm. Research & Mfrs. of Am. v. Concannon,

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

-47-
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 benefits

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 Nat'l Pharms., 221 F.3d at 241-42.

An assertion that the Commerce Clause invalidates a

particular statutory scheme presents a facial challenge to that

statute. See generally United States v. Nascimento, 491 F.3d 25,

41 (1st Cir. 2007) (distinguishing facial and as-applied Commerce

Clause challenges to federal law), cert. denied, 128 S. Ct. 1738

(2008). "[I]n evaluating 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 (1989)). This same deference

-48-
obtains in the courts of New Hampshire. See In re Morgan, 742

A.2d 101, 109 (N.H. 1999) (counseling deference to administrative

interpretations of statutes unless such an interpretation is

"plainly incorrect").

Two additional principles of statutory interpretation

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, 78 A.2d 528, 530 (N.H.

1951). Second, statutes should be given a constitutional as

opposed to an arguably unconstitutional interpretation whenever

fairly possible. See Arizonans for Official English v. Arizona,

520 U.S. 43, 78 (1997); Nascimento, 491 F.3d at 38; see also

Sibson v. State, 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 reasonably 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 domestically." Appellant's Reply Br. at 13. This

narrowing construction is reasonable and accords with the tenet

that laws should not be presumed to have extraterritorial effect.

It also avoids any doubt about the law's constitutionality under

the dormant Commerce Clause. As the Seventh Circuit wisely

-49-
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 "necessarily requir[ing] out-of-state commerce to be

conducted 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 "negligible 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

-50-
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.11 But that does not make the Attorney

General's interpretation unreasonable. See Maguire, 386 at 58; In

re Morgan, 742 A.2d at 109. There is no rule that forbids a

legislature from enacting prophylactic 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 and vacate

the injunction against enforcement of the Prescription Information

Law.

Reversed.

- Concurring/Dissenting Opinion Follows -

11
The question remains, however, whether the purchasers could
subsequently make use of the aggregated data in New Hampshire.
That question is not before us.

-51-
 Volume II of II

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 transactions

– 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"),12 the New Hampshire Legislature

chose to regulate the upstream transactions 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, that avoidance is wasteful and

unwise, unsupported by principles of standing, and analytically

flawed.

12
The legislation did not include a formal title for the
statute; I have adopted a formulation that blends the district
court's and the parties' usage.

-52-
 Consequently, after examining the issue of standing, 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

(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 misguidedly

invoke standing to avoid explicitly resolving the

constitutionality of the Act's restriction on communications

between detailers and doctors, but they also accept the State's

justification for the restriction without allowing the plaintiffs

to establish the First Amendment values at stake. The majority's

use of standing principles is thus doubly wrong.

-53-
A. The Prudential Policies of Third Party Standing

In Craig v. Boren, 429 U.S. 190 (1976), the Supreme

Court considered whether a beer vendor could challenge on equal

protection grounds an Oklahoma statute that prohibited 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 noted that the plaintiff had the requisite "injury in

fact" to satisfy the constitutional standing requirement, id. at

194,13 leaving only a prudential concern about whether the

plaintiffs should be allowed to raise third-party constitutional

claims.

13
The Court stated there:

The legal duties created by the statutory
sections under challenge are addressed
directly to vendors such as appellant. She is
obliged either to heed the statutory
discrimination, thereby incurring a direct
economic injury through the constriction of
her buyers' market, or to disobey the
statutory command and suffer, in the words of
Oklahoma's Assistant Attorney General,
"sanctions and perhaps loss of license." This
Court repeatedly has recognized that such
injuries establish the threshold requirements
of a "case or controversy" mandated by Art.
III.

429 U.S. at 194.

-54-
 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." Id. at 193. However, in the circumstances before

the Court in Craig, such "prudential objectives" could not be

furthered because "the lower court already ha[d] entertained the

relevant constitutional challenge and the parties ha[d] sought or

at least ha[d] never resisted an authoritative constitutional

determination." The Court continued:

In such circumstances, a decision by us to
forgo consideration of the constitutional
merits in order to await the initiation of a
new challenge to the statute by injured third
parties would be impermissibly to foster
repetitive and time-consuming litigation under
the guise of caution and prudence. Moreover,
insofar as the applicable constitutional
questions 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 (citation omitted).

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

-55-
detailers from using prescriber 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' market." 429 U.S. at 194. 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 decision. 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 resolution of the action, it would

stay the case for thirty days to allow intervention by a

pharmaceutical company. The court explained:

-56-
 [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,
because 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. I
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
plaintiff 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
talking 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.

In these circumstances, as in Craig, "a decision . . .

to forgo consideration of the constitutional merits in order to

await the initiation of a new challenge to the statute by injured

third parties would be impermissibly to foster repetitive and

time-consuming litigation under the guise of caution and

prudence." 429 U.S. at 193-94. The prudence invoked by the

majority serves no purpose and it ignores the judgment of the

district court, based on its immersion in the details of the case,

-57-
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 majority 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 (2004); Powers v.

Ohio, 499 U.S. 400, 410-11 (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 circumstances.

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 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 (1984); see also Miller v.

Albright, 523 U.S. 420, 446 (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

-58-
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 rights'")

(citation omitted). The Supreme Court has recognized that the

"lessening" of these limitations may be justified where other

concerns, such as the danger of chilling free speech, are more

pressing, Munson, 467 U.S. at 956, 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 identified the context of the First

Amendment as one in which flexibility may be warranted. Tesmer,

543 U.S. at 130. 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

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

plaintiff's] interests in challenging the statute are 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. Thus,

notwithstanding the Court's more detailed articulation of the

third-party standing inquiry since Craig, see Miller, 523 U.S. at

447 (O'Connor, J., concurring), the pragmatic considerations

highlighted in that decision remain relevant.

-59-
 This case illustrates the importance of pragmatism.

There is no reason to reject the district court's decision to

proceed without a pharmaceutical company 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 adjudicate," Munson, 467 U.S. at 955 n.5. 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

vigorously 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 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 Hampshire's interest in

-60-
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 plaintiffs' 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 decision.

After making judgments about the nature of the detailing

transaction and how it increases the likelihood 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." (Emphasis added.) Here the

majority is characterizing the speech interest that is supposedly

beyond the scope of its opinion, and characterizing it

incorrectly. The very elimination of the detailers' ability to

use "a particular informational asset" restricts the message they

are allowed to disseminate and implicates the free speech concerns

of the First Amendment.

-61-
 Moreover, in discussing its alternative holding, which

treats the plaintiffs' upstream transactions as speech subject to

the First Amendment rather than conduct,14 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 conclusion that the Act does

not violate the First Amendment rests on a judgment about the

speech – i.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 often
than either their patients' health or their
patients' pocketbooks warranted.

The majority ultimately concludes that "the state adequately

demonstrated that the Prescription Information Law is reasonably

calculated to advance its substantial interest in reducing overall

health care costs within New Hampshire."

14
The majority never actually identifies the specific speech
component of the acquisition, aggregation and sale of information
from pharmacies to data miners and from data miners to
pharmaceutical companies.

-62-
 Thus, the majority does what it says standing doctrine

forbids: it evaluates the Act based on the law's impact on the

speech between detailers and prescribers. 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 holding

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 factoring 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 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 transactions as

-63-
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 overlap 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 important and

close, and I wish to fully explain why, in the end, I conclude

that the district court erred in declaring the Prescription Act

unconstitutional.

II.

In recounting the background of this case, I draw

heavily on the comprehensive and thoughtful recitation of the

facts set out by the district court. See IMS Health Inc. v.

Ayotte, 490 F. Supp. 2d 163, 165-74 (D.N.H. 2007). Those facts

are largely undisputed; the parties primarily contest their legal

significance.15

15
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
First Amendment cases, see Bose Corp. v. Consumers Union, 466 U.S.
485, 514 (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 145, 160 (4th Cir. 1993); Daily Herald Co.
v. Munro, 838 F.2d 380, 383 (9th Cir. 1988), while others exercise

-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.16 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, 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

independent review regardless of 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 In re PolyMedica Corp. Sec. Litig., 432 F.3d 1, 4 (1st Cir.
2005).
16
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 Indicators in the
Changing Health Care Marketplace, Kaiser Family Foundation,
http://www.kff.org/insurance/7031/print-sec1.cfm, at 20-21
[hereinafter Trends and Indicators].

-65-
prescribers.17 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.18 As 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

17
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 declaration 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 products 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 A1.
18
The companies also place advertisements in medical journals
and sponsor meetings in which physicians are recruited to speak to
their colleagues about medical conditions and therapies.

-66-
 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 information 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 pharmaceutical 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 from Health Strategies

Group). Whatever the frequency, it is undisputed that

pharmaceutical detailing 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

-67-
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 technique.19 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 biologically different generic medication

– that is at the heart of this case.20

19
Pharmaceutical manufacturers attempt in various 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.
20
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 drug the best approach. However, as I
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.

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 As I will discuss below, studies indicate that detailing

has "a significant effect on physician prescription 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 they are important

tools in pharmaceutical marketing. Doctors rely on receiving drug

samples that they can distribute to patients who are unable to

afford the high cost of some medications.21 Keeping office doors

21
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 medicines
and then they lose their job, don't qualify for any
insurance and I am carrying them to keep them stable.
That is, I'm giving them samples. I have to sign for the
samples every time I get them. So, when the drug reps
come in, I 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 Hampshire that I am giving free
samples to . . . .

-69-
open to detailers ensures that the doctors will have a continued

supply of samples, and some physicians 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 remedies

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 patients

otherwise may not have received. The cost of the samples

distributed annually by pharmaceutical representatives has been

estimated at more than $11 billion.22

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 supplies, free meals, and conference travel

funding – perks that are designed to encourage long-term

relationships with, and loyalty toward, the detailers.23 Studies

22
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.
23
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).

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have shown that these sorts of gifts can have a subtle effect on

physicians,24 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 themselves. The

Pharmaceutical Research and Manufacturers 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
inducement is primarily for the benefit of
patients, or the value of the inducement is
minimal and the inducement is directly related
to the provider's practice. For example, an
occasional gift of a stethoscope is acceptable

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 detailers 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!!"

Gardiner Harris & Robert Pear, Drug Maker's Efforts to Compete in
Lucrative Insulin Market are Under Scrutiny, N.Y. Times, Jan. 28,
2006.
24
Although studies show that physicians have a "mostly
negative" attitude toward gifting, the studies also report that
such gifts "induce reciprocal feelings among physicians."
Manchanda & 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).

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 under the Code because it is not deemed to be
of substantial value and the gift benefits
patients. In contrast, an unrestricted gift
certificate to a local bookstore may not be
offered under the Code regardless of its value
because it does not benefit patients and is
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).25

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 attempting to sell but also with

considerable knowledge about their audience. Much of that

prescriber information is supplied by the plaintiffs and similar

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

flirtation between pharmaceutical sales representatives and

25
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, NY 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).

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prescribers.26 These so-called "data mining" companies collect

and organize information about doctors and their prescribing

patterns, converting information gleaned from "thousands of

sources" into a commodity for which the pharmaceutical industry

pays substantial sums.27 From retail pharmacies and other

entities, such as insurers, that acquire the data as part of the

business they conduct, the data miners obtain information on every

pharmaceutical sale, including the form, strength 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 prescribers and

their specialities.28

The data mining companies weave the information together

to produce, among other databases, "prescriber profiles" –

individualized reports on the prescriptions being written by

26
The Stipulation of Facts states that plaintiffs IMS Health
Inc. and Verispan LLC "are the world's leading providers of
information, research and analysis to the pharmaceutical and
healthcare industries."
27
According to the Stipulation of Facts, these sources are:
pharmaceutical wholesalers, pharmacies, physicians, hospitals and
clinics.
28
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.

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particular doctors. The information is then sold to third parties

for various commercial uses, including pharmaceutical marketing,

and also is provided at no charge for nonprofit purposes, such as

academic and medical research.29 The data provide a historical

view of a physician's prescribing practices, allowing the

pharmaceutical 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 potential 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 provision of

free samples of the medication, encouraging what is initially a

"no-cost" switch to the more expensive drug. The companies also

use reports obtained shortly after detailing visits to assess

whether the sales calls had an effect on the targeted prescribers'

29
Pharmaceutical companies also have non-marketing uses for
the prescriber-identified data, including to "[d]etermine which
products to develop and license," to "[i]mplement prescription
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.

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drug choices. The detailer's compensation is sometimes tied to

the success of his or her efforts.

This use of prescriber-identified data has drawn sharp

criticism on many fronts, including among physicians who object

both to the disclosure of information 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 Restriction Program ("PDRP"), which allows

physicians to restrict access to their prescribing data by

pharmaceutical 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, "[c]ontinually reinforce 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 information 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

insufficient to offset the commercial incentives to use the

information. Some states, like New Hampshire, turned to

legislation to address the concerns.

B. New Hampshire's Statutory Response

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 The Prescription Act prohibits the transmission or use

of both patient-identifiable and prescriber-identifiable data for

certain commercial purposes.30 Violators are subject to both

criminal and civil penalties. N.H. Rev. Stat. Ann. § 318:55. In

pertinent part, the statute provides:

Records relative to prescription information
containing patient-identifiable and
prescriber-identifiable data shall not be
licensed, transferred, used, or sold by any
pharmacy benefits 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
reimbursement; formulary 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.
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 evaluate
the prescribing behavior of an individual
health care professional, or evaluate the
effectiveness of a professional pharmaceutical
detailing sales force.

In effect, the statute prohibits the use of prescriber-

identifiable data for all purposes related to detailing, but seeks

to preserve access to the data for other uses – including other

commercial purposes.31 I agree with the district court that the

30
Plaintiffs have not challenged the restrictions on patient-
identifiable data.
31
The Act also permits the continued use of aggregated
prescriber data, categorized by speciality, zip code and geographic

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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 171.32

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 privacy and it will save money for the state, for

consumers and businesses. It will accomplish these goals by

prohibiting the sale or use of individual patient or prescriber

identity for marketing brand name 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,

"[h]opefully reduce the prescription drug costs for patients,

employers & the State Medicaid program."

region, but without prescriber identification.
32
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.

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 About sixteen individuals testified at the hearing.33 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
activities ultimately drive up the cost of
prescription 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 medication.
In fact, I'm confident that, if you're a
doctor, that one of the best ways to get a
detailer 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 Medical Society, Dr. Seddon Savage, who

said the law "will deter marketing intended to manipulate the

practice of individual physicians that is intended to increase

market share for the individual companies, possibly at the expense

of appropriate decision making for the patients." He further

stated that "[n]umerous studies have shown that . . . [doctors']

decision making can be and sometimes is shaped by marketing

efforts."

33
An earlier, less comprehensive hearing was held before the
House Committee on Health, Human Services and the Environment.

-78-
 Savage's general testimony was reinforced by comments

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."

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 concerned 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

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"pharmaceutical 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 acknowledged beneficial uses of the data,

including medical research, would be compromised because the

information would no longer be readily available. Responding 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: "[W]e 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 everyone." The American Medical Association

also expressed opposition to the legislation, commenting in a

prepared statement that the PDRP would "provide[] physicians with

the tools they need to restrict information that they do not want

shared while avoiding legislatively-mandated restrictions that

could have unintended consequences."

2. Legislative Action and Legal Challenge

The Prescription Act was approved by the Legislature 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

-80-
overbreadth. They sought declaratory and injunctive 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 professor at Harvard Medical

School whose research focuses on the use of prescription drugs and

their outcomes, and who also works at Brigham and Women's Hospital

in the Division of Pharmacoepidemiology and Pharmacoeconomics.34

Through Avorn's testimony on the medical literature and the

testimony of practitioners who recounted specific experiences with

34
He explained those two fields as follows:

Pharmacoepidemiology is the study of the utilization of
drugs in large populations, as well as the consequences
of that use, whether a benefit or adverse event; and
pharmacoeconomics is the connection between drug use and
economics, what the drugs cost[], but also how they fit
into the health care system and what their benefits might
save the health care system.

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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 messages.35 The

Attorney General asserted that the Act advanced the State's

substantial interests in prescriber privacy, public health and

cost-containment.

On their behalf, the plaintiffs elicited considerable

testimony about the beneficial aspects of detailing and the use of

prescriber-identifiable data to target physicians. For example,

Dr. Thomas Wharton, Jr., director of cardiology at Exeter

Hospital, testified that discussions initiated by drug company

representatives provide "a very stimulating forum" for discussing

the treatment of coronary disease.36 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

35
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.
36
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,
presenting papers, some of which we know about and some of which we
don't. So it's a very educational, informational experience."

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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 announced regarding that drug." Plaintiffs also

emphasized 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 efficient detailing would

result, potentially increasing the pharmaceutical companies'

marketing costs and, in turn, increasing the cost of their

products.37

C. The District Court's Decision

On April 30, 2007, the district court ruled that the

Prescription Act impermissibly restricted commercial speech and

therefore violated the First Amendment. It rejected the Attorney

General's argument 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 prescriber-identifiable data. Having concluded that

37
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 revolutionary"
anti-smoking drug, despite the practice's substantial history of
prescribing other anti-smoking products.

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the Act restricted protected commercial speech, the court examined

whether the Attorney General had sufficiently 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 (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 governmental interest asserted,' and (3) 'is not more

extensive than is necessary to serve that interest.'" El Dia,

Inc. v. P.R. Dep't of Consumer Affairs, 413 F.3d 110, 113 (1st

Cir. 2005) (quoting Central Hudson, 447 U.S. at 566). The

district court considered the State's asserted interests in

protecting prescriber privacy, promoting public health, and

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 statute.

In addition, the court found a "fundamental flaw" in the

Attorney General's argument that the regulation was necessary

because "pharmaceutical companies manipulate health care providers

by using prescriber-identifiable data to enhance the effectiveness

of highly persuasive but truthful commercial speech." 490 F.

-84-
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 to make inadvisable prescribing

decisions, 'the remedy to be applied is more speech, not enforced

silence.'" Id. (quoting Whitney v. California, 274 U.S. 357, 377

(1927) (Brandeis, J., concurring)).

The court also addressed the third Central Hudson prong

and found that the State could advance its health and cost-

containment interests, and specifically 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 information about the advantages and

disadvantages of different drug choices, or adopt a Medicaid

pharmacy 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." Id. at 183. It

therefore granted the plaintiffs' request for declaratory relief

and a permanent injunction. It did not reach their vagueness or

Commerce Clause arguments.

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 III.

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 perspective, 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 trigger First Amendment scrutiny.38

Rather, the legislature made the "unusual" – 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 message.39

38
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.
39
The Attorney General wisely no longer contends that the
First Amendment is inapplicable to the Prescription Act because it

-86-
 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 explicitly prohibits any

"use" of prescriber-identifiable data,40 one of the Legislature's

desired outcomes is the modification of the marketing messages

communicated by pharmaceutical detailers. See, e.g., Defendant's

Memorandum of Law in Support of its Objection to Plaintiff's

Motion for Preliminary Injunction, at 30-31 ("By prohibiting the

license, transfer, use, or sale of prescriber-identifiable

prescription data for commercial purposes, the Act prevents

pharmaceutical companies from using that information to pressure

physicians into changing their prescriptions from less costly

medications to name brand drugs for reasons unrelated to the

targets only factual information. As the district court held, "the
transmission of truthful information concerning the prescribing
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
(1976) ("Purely factual matter of public interest may claim
protection."); Universal 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
customers. As I explain, this objective informs my assessment of
the regulation.
40
In addition to the catch-all prohibition on "use," the
statute, as previously noted, prohibits the licensing, transfer or
sale of the information.

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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

regulation of the commercial transaction itself, rather than 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 protected

commercial speech).

I recognize that there are three separate commercial

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

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the pharmaceutical companies; and, third, the marketing of drugs

to prescribers by detailers whose sales pitches make use of the

data. To serve its interests in protecting privacy, promoting

public health and containing health care costs, the Legislature

targeted the content of the message communicated in the third

transaction. The statute restricts that message indirectly by

imposing restrictions on the first two transactions.41 Because the

statute's purposes are linked to the third transaction, I

conclude – as did the district court – that the assessment of the

statute's impact must be similarly focused.42 See IMS Health, 490

F. Supp. 2d at 176 ("The law is . . . squarely aimed at speech

41
The Prescription Act expressly governs the first type of
transaction by restricting the conduct of "any pharmacy benefits
manager, insurance company, electronic transmission intermediary,
retail, mail order, or Internet pharmacy or other similar entity."
Whether the Legislature viewed the plaintiffs – the "middlemen" in
the data transfer process – as "electronic transmission
intermediar[ies]" or "other similar entit[ies]" is unclear, but I
think they are properly treated as such for purposes of our
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 detailers.
42
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.

-89-
that proposes a commercial transaction even though it does not

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

(1988) (noting that "[r]egulations 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 (2001),

between regulating the use of information – which she claims does

not implicate the First Amendment – and regulating its disclosure.

In Bartnicki, 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. Id. at 518. 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 prohibition against the

"disclosure" of such material "is fairly characterized as a

regulation of pure speech." Id. at 526-27. 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 prohibited "uses" listed by the Court in Bartnicki are

materially 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

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information about a business rival to create a competing product

or using illegally recorded information to trade in securities or

for extortion. Id. at 527 n.10. 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 (2002)

(quoting Va. State Bd. of Pharmacy, 425 U.S. at 763, for the

proposition "that a 'particular consumer's interest in the free

flow of commercial information . . . may be as keen, if not keener

by far, than his interest in the day's most urgent political

debate'").43

The multi-step nature of the statutory prohibition –

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

43
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 professional
. . . or the effectiveness of a professional pharmaceutical
detailing sales force." Such activities do not themselves
constitute protected commercial speech and are equivalent to the
"uses" identified in Bartnicki. They are not our concern here.

-91-
Grosjean v. Am. Press Co., 297 U.S. 233, 249 (1936) (invalidating

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 (1983) (holding unconstitutional a tax on newsprint

and ink used in the production of newspapers).44

By contrast, legislation whose purpose is to regulate

economic conduct, and which only incidentally affects speech,

typically does not raise First Amendment concerns. See generally

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

(2006) ("FAIR") ("'[I]t 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.'") (quoting Giboney v. Empire Storage & Ice Co., 336 U.S.

490, 502 (1949)). Our circuit considered this principle at some

length in two related decisions concerning a Rhode Island statute

44
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.

-92-
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

Amendment's scope, those cases support a contrary conclusion.

The regulation at issue in Wine & Spirits originally

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 within 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.45 Wine & Spirits had been operating as a

45
The statute provides, in part:

To promote the effective and reasonable control and

-93-
franchisor of independently owned liquor retailers and, among

other activities, provided marketing, advertising and 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

advertisements 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 regulation 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

implementation of Wine & Spirits' business model. We concluded

that "[t]he provision of advertising and licensing services is not

speech that proposes a commercial transaction and therefore does

not constitute commercial speech." Id. at 49. In the later case,

we observed that the prohibition on coordinated or common

regulation of the Rhode Island alcoholic beverage
industry 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).

-94-
advertisements "does not target speech; each individual liquor

licensee remains at liberty to disseminate 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 advertisements

resulting from pre-agreed commercial strategies. Such a ban is

not a ban on commercial speech." Id.

Thus, the Wine & Spirits prohibition was against an

acting-in-concert business approach – not against the message the

liquor stores were seeking to disseminate.46 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 advertisements 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.

Here, however, the Legislature did not simply prohibit

a business model or strategy. Instead, it restricted the

46
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.

-95-
substance of the messages being communicated 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 Liquormart, Inc. v. Rhode Island, 517

U.S. 484, 499 (1996) (noting that "the State retains less

regulatory authority when its commercial speech restrictions

strike at 'the substance of the information communicated' rather

than the 'commercial aspect of [it]'") (quoting Linmark Assocs.,

Inc. v. Willingboro, 431 U.S. 85, 96 (1977)); cf. City of

Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 429 (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 (1989); Clark v. Cmty. for Creative Non-Violence, 468 U.S.

288, 293 (1984)).47

47
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

-96-
 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.48 Although the State is concerned 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

Naser Jewelers, Inc. v. Concord, 513 F.3d 27, 33 (1st Cir. 2008)
("Central Hudson serves as an alternative 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 construed, the terms of the statute are
exceedingly narrow and that, so understood, the Act does not
impermissibly burden speech outside its scope.
48
The Supreme Court has treated as a threshold question under
the Central Hudson test "whether the commercial speech concerns
unlawful activity or is misleading." Thompson v. W. States Med.
Ctr., 535 U.S. 357, 367 (2002). "If so, then the speech is not
protected by the First Amendment." Id. My references to the
three-pronged Central Hudson inquiry do not include this
preliminary inquiry.

-97-
prescriber-identifiable data affects communications that are

truthful and otherwise lawful. As such, they may be limited only

with adequate justification.

To justify a commercial speech restriction, the State

bears the burden of proving the three elements 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; El Dia,

413 F.3d at 113; see also Thompson, 535 U.S. at 367. I consider

each prong in turn.

A. Substantial Government Interest

The Attorney General maintains that the Prescription Act

supports the State's substantial interests 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,

-98-
I 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 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 "patient-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 cognizable way

touch on the privacy of the examination room. Although the

statute bars disclosure of patient-identifiable information as

well as prescriber data, the plaintiffs do not challenge the

prohibition on the use of specific patient data. Thus, no patient

identifying information is at issue in this case. Any privacy

justification must therefore reside in the prescriber-identifiable

data. Rather than arguing that "the [prescriber-identifiable]

-99-
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:

[W]hat the Attorney General claims as a
distinct interest in protecting prescriber
privacy is nothing more than a restatement of
her contentions that the law can be justified
because it prevents pharmaceutical companies
from using prescriber-identifiable data in
ways that undermine public health and increase
health care costs.

Id. Accordingly, I join the district court in rejecting the

Attorney General's argument that the Prescription 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 Prescription 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

-100-
 health care providers for marketing and tailor
marketing messages in ways that make detailing
more persuasive. Next, it assumes that
because prescriber-identifiable data makes
detailing more persuasive, it inevitably leads
to more prescriptions for brand-name drugs
when compared with generic alternatives
because only branded drugs are detailed.
Finally, it assumes that any increase in the
number of prescriptions written for brand-name
drugs when compared to generic alternatives
harms the public 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. Accordingly, 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." Id. 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" of new drugs because

"the record does not establish either that early adopters are more

likely to be influenced by detailing than other health care

-101-
providers or that new drugs are generally more injurious to the

public health than existing medications." Id.

The court found the Attorney General's position on cost-

containment similarly deficient. It stated that "[n]on-

bioequivalent generic drugs are not always as effective as brand-

name alternatives," id., and found that the Attorney General had

not proven that any reductions in health care costs stemming from

reduced use of newer, more expensive medications "can be achieved

without compromising patient care." Id. at 181. It thus found

that none of the State's asserted interests was advanced by the

Prescription Act. Moreover, to the extent that the Attorney

General successfully drew a connection between truthful, non-

misleading detailing based on prescriber-identifiable data and

"inadvisable prescribing decisions," the district court opined

that more speech, not less, was the remedy required by the First

Amendment. Id.

I consider the State's showing on each of the two

interests in turn.

1. Interest in the Quality of Health Care

To validate the Prescription Act on the basis of its

impact on the quality of health care, the Attorney General needed

to show that detailing with prescriber-identifiable data

influences medical professionals to choose drugs that are less

safe or less appropriate to meet patients' needs than the non-

-102-
patented alternatives they would otherwise prescribe. I agree

with the district court that no evidence in the record supports

the proposition that newer, brand-name drugs are generally less

safe or effective than older, generic ones.

The record does contain evidence that, at times,

physicians are persuaded to prescribe new drugs that are less

effective for patients. Dr. Avorn testified that, in the wake of

extensive marketing for new hypertension medications, known as

calcium-channel blockers, many doctors switched from "better,

older, less-marketed products" to new products that gave patients

"less benefits in terms of preventing strokes or heart disease."

The record did not, however, support a conclusion that such

occurrences were the norm; rather, the Attorney General's evidence

primarily was directed toward showing that detailing routinely

persuades health care professionals to prescribe patented

medications when they offer no benefit over cheaper generic

alternatives. In other words, the Attorney General's focus was on

the unnecessarily high prices paid for functionally equivalent

drugs. That circumstance is pertinent to the cost-containment

interest I discuss in the next section, rather than to an interest

in safe and appropriate health care.

Other evidence relevant to the interest in quality

health care showed that detailers use prescriber-identifiable data

to target early adopters, who then prescribe promoted new drugs

-103-
that sometimes turn out to have harmful side effects. However,

the Attorney General's argument is not that a greater number of

physicians become early adopters because of targeted detailing; it

claims the pharmaceutical companies use the data to identify

physicians who already are inclined to adopt new drugs. In other

words, the targeted doctors would likely have been among the first

users of new drugs in any event. Thus, the possible adverse

effect on health care stemming from reliance on the prohibited

data would arise only from the possible difference in time between

an early adopter's alert from a detailer and the physician's

notice from another source. The record provides no basis for

concluding that, in the ordinary case, that difference in time

would have a significant health effect.49

However, the evidence did indicate that access to early

adopters was economically advantageous for the pharmaceutical

companies. By soliciting the earliest possible use of new

medications, the companies can maximize the financial advantage of

their exclusive rights while their high-priced drugs are patent-

protected. See, e.g., Day 3, PM Session, at 52 (Testimony of Dr.

49
It is worth noting that some patients inevitably must be
exposed to the risks of trying new drugs because it is through use
by patients, after more limited clinical testing, that side effects
and other problems are detected. In addition, the risks must be
weighed against the benefits of early adoption of drugs that prove
to be "breakthrough" developments in treatment. See, e.g., Day 4,
AM Session, at 100 (Testimony of Randolph Frankel); AM Session
(Part 2), at 15 (recording State counsel's observation that
"obviously sometimes a newer drug is better").

-104-
Avorn) ("[The drug companies] are very conscious that the patent

life is ticking away, and there's a tremendous impetus on the part

of the industry to be able to maximize their income as much as

possible the minute the drug is released on the market."). While

a few weeks or months delay in adoption of a new drug might make

a substantial financial difference, the Attorney General has not

shown that it would have material health consequences.

It is unsurprising that I find the Attorney General's

showing on the State's health care interest to be inadequate – or

at least undeveloped – given that justification's limited role in

both the legislative process and the trial. Promoting quality

health care was not one of the two purposes of the law identified

by the Act's sponsor when she introduced the legislation,50 and the

district court noted that the legislative history contained no

"substantial support for the view that it was promoted as a public

health measure, except to the extent that containing healthcare

costs itself has a positive public health benefit." Tr. of Status

Conference, April 11, 2006, at 44.51 In a colloquy with counsel

50
In addition to Representative Rosenwald's statement about
the purposes of the Act, the co-sponsor, Senator Foster, stated
during the Senate Floor Debate that "[t]o me what this legislation
is about is dollars and cents."
51
In reviewing the State's interests during a mid-trial oral
hearing, the district court stated: "I didn't see any discussion in
the legislative history that . . . targeted detailing was leading
to unhealthful prescription practices; that doctors were injuring
their patients by denying them therapies that they would benefit
from or by giving them drugs that would harm them. . . . This is a

-105-
toward the end of the trial, the court observed that it did not

see "one shred of evidence in this record, either in the

legislative history or in the trial" that prescription of higher-

priced drugs instead of generics "produces unhealthy or less

healthy outcomes for anybody in New Hampshire." Additionally, the

plaintiffs effectively countered the Attorney General's limited

showing on adverse health effects with evidence that targeted

detailing is just as likely to offer health benefits; it allows

drug companies to quickly alert prescribers when new drug side-

effects are discovered and provides early notification to

specialists of helpful new treatments for their patients.52 Thus,

I agree with the district court that the record fails to show that

the Prescription Act directly advances the State's interest in

safer or better medical care. See 44 Liquormart, 517 U.S. at 505

("[A] commercial speech regulation 'may not be sustained if it

provides only ineffective or remote support for the government's

purpose.'") (quoting Central Hudson, 447 U.S. at 564).

bill about costs. It's not a bill about safety." Day 4, AM
Session (Part 2), at 3-4.
52
In his declaration, Randolph B. Frankel, vice president of
public affairs at IMS, stated that early adopters' delayed
awareness of innovative drugs affects patients other than their own
because other prescribers deliberately wait for early adopters to
test the safety and effectiveness of the drugs. He commented:
"When new drugs that have been tested and approved are not adopted
or adopted very slowly this generally harms public health and may
increase the overall cost of public healthcare." Declaration, at
10.

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 2. Interest in Containing Prescription Drug Costs

To justify the statute as a cost-control measure, the

Attorney General has the burden of demonstrating that prescriber-

identifiable data plays a significant role in the decisions of

health care professionals to choose more expensive brand-name

drugs over comparably effective, but less expensive, generic

alternatives. See 44 Liquormart, 517 U.S. at 505 ("[T]he State

bears the burden of showing not merely that its regulation will

advance its interest, but also that it will do so 'to a material

degree.'") (quoting Edenfield v. Fane, 507 U.S. 761, 771 (1993)).

In other words, the Attorney General must show that (1) detailing

generally has a persuasive effect on physicians and that (2) the

use of prescriber-identifiable data magnifies that persuasive

effect, increasing the physicians' tendency to prescribe

unnecessary brand-name drugs.53

a. The evidence

The impact of detailing on prescriber drug choice was

amply documented by both empirical and anecdotal evidence. The

53
I note that targeted detailing is used not only to promote
patented, brand-name drugs over generic medicines, but also to
encourage prescribers to choose a particular brand-name drug over
a patented competitor. The latter situation is not the State's
primary concern because the cost difference between brand-name
drugs is less likely to be substantial. The State particularly
wants to prevent pharmaceutical sales representatives from unduly
influencing physicians and other health care professionals to
select more expensive brand-name drugs over considerably cheaper
generic options that provide essentially the same benefits.

-107-
following is a sampling of the evidence submitted to the

legislature or at trial:

!Dr. Savage, president-elect of the New Hampshire

Medical Society, testified at the Senate committee hearing that

"[n]umerous studies" have shown that doctors' prescribing

decisions "can be and sometimes [are] shaped by marketing

efforts."

!During the trial, Savage's predecessor as president of

the medical association, Dr. Sadowsky, related a particular

instance when one of his patients, at the suggestion of her

primary care doctor, asked for a brand-name drug that Sadowsky

considered no better than a less expensive generic. See supra

Section II.B.1. He attributed the request to detailing of the

primary care physician. Sadowsky also testified:

I believe that detailing has had an
[e]ffect on my prescribing. I think that just
looking back I think that when medicines have
gone off patent, I don't think that I thought
about this consciously, but I think that my
rate of prescriptions of those medicines
declined in preference to the medicines I was
being detailed about.

!The declaration submitted during the trial by Drs.

Avorn and Kesselheim reported from their research and others' work

that "[p]hysicians use of targeted prescriptions increases

substantially after visits with sales representatives,"

Declaration, at 6, and the same result was reported in an article

-108-
reviewing academic research on the effect and role of detailing.

The article concluded that, "not only is detailing an important

source of information, it affects physician prescription behavior

in a positive and significant manner." Manchanda & Honka, supra,

at 787. The article cites multiple studies in which doctors

acknowledged that detailing affected their prescribing behavior

and reported one study showing that family physicians who relied

least on sales representatives were most likely to prescribe

generic drugs, "while only 12% of those who said they relied 'a

great deal' on detailers prescribed generic drugs." Id. at 799.54

!In her article reviewing 29 surveys exploring the

relationship between physicians and pharmaceutical sales

representatives, Ashley Wazana reported that "[t]here was an

independent association between meetings with pharmaceutical

representatives and formulary addition requests for the drug of

54
Manchanda and Honka also noted that many studies report that
physicians believe that prescription behavior may be influenced by
detailing.

This opinion is supported by virtually all the studies
that have investigated the effect of detailing (either in
isolation or with other marketing instruments) using
behavioral data either at the market or individual
physician level. 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.

Id. at 809.

-109-
the representative's company."55 See Wazana, supra, at 375. Most

of the requested drugs, however, "presented little or no

therapeutic advantage over existing formulary drugs." Id.

!A CALPIRG "white paper" contained in the Legislative

History cited the finding of a Pennsylvania study that 40% of

patients in a state assistance program received hypertension drugs

different from those recommended by medical guidelines. According

to the paper, the study reported that,

[i]f doctors had prescribed according to those
guidelines, the state could have saved $11.6
million, or nearly 24% of the total money it
spent on hypertension medicine. The study
suggested that pharmaceutical promotion was
partly at fault for the variance between the
medicines that were recommended versus those
that were prescribed.

Emily Clayton, CALPIRG, 'Tis Always the Season for Giving: A white

paper on the practice and problems of pharmaceutical detailing

(2004), at 4-5.56

The Legislature was thus on solid ground in concluding

that pharmaceutical detailing influences prescriber drug choices.

55
A formulary is a list of drugs approved for use in a
particular setting, such as in a hospital or for a Medicaid
program.
56
Drs. Avorn and Kesselheim also noted the extensive campaigns
in favor of new hypertension medications, known as calcium-channel
blockers, "despite the fact that professional guidelines did not
consider them first-choice therapies for the treatment of
hypertension. . . . This distortion of practice away from the use
of drugs recommended in national guidelines was estimated to have
increased health care expenditures by around $3 billion dollars
[sic] in 1996 alone." Declaration, at 7.

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The added benefit to pharmaceutical companies of marketing with

access to prescriber-identifiable data, although less exhaustively

covered, also was the subject of considerable testimony by the

Attorney General's witnesses. Their testimony depicted targeted

detailing as more aggressive and persuasive, and thus more potent

than regular detailing in guiding prescriber behavior toward the

detailer's desired outcome – the decision to use the sales

representative's patented, brand-name drug. On the specific

impact of detailing with prescriber-identifiable information, the

evidence included the following:

!Dr. Gary Sobelson, a family practice physician,

testified at trial that he was unaware of scientific evidence

showing that the sale of prescriber-specific data increases drug

costs, but observed that such knowledge "puts me at a disadvantage

that I'm not comfortable being at." He told of being persuaded to

prescribe a brand-name drug, Zithromax, instead of an equivalent

generic Amoxicillin, based on an incorrect assumption that

Zithromax, which had the advantage of requiring a shorter course

of therapy, was minimally more expensive than the older

Amoxicillin. After discovering that Zithromax was five times more

expensive, he moved away from Zithromax because "I'm interested in

prescribing rationally for my patients in a way that both

maximizes their outcome but also helps maintain the lowest

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possible cost to both them individually and, frankly, to our

society at large."

!Sobelson also described how detailers use prescriber-

identifiable information when marketing to a physician who

typically prescribes a competitor's equivalent product, citing two

cholesterol-lowering medications, Lipitor and Zocor, in his

example:57

[W]hen a drug representative for Lipitor comes
to see me, . . . they are going to know to
present data that would focus me to why I
should prefer Lipitor over Zocor. It's a
very, very specific focus that particularly is
fueled if they happen to know that 80 percent
of my prescribing is Zocor. And so when the
Lipitor rep comes around, they are going to
have their targeted information provided by
their marketing department. This is how we've
learned from our study groups that you get
doctors to move from Zocor to Lipitor.

!Sobelson's experience on the receiving end of the

marketing dovetailed with the description provided by a former

detailer of his strategy when he had prescriber information.

Shahram Ahari testified that, when he knew a physician's patterns,

"I have a fair idea why, and so it becomes almost a cat and mouse

game when I get them to say their objections and for me to shift

57
The issue here is detailing aimed at promoting a brand-name
option over a non-bioequivalent – cheaper – alternative. However,
as noted earlier, detailing also is used to influence the choice
among competing brand-name drugs. Sobelson's testimony indicating
the influence of detailing in the brand-name setting supports an
inference that it is equally effective in the competition between
brand-name and generic drugs.

-112-
those objections or doubts and downplay or negate them

altogether." By contrast, without prescriber-specific

information,

it becomes less about the business and more
about knowing the science of my drug. . . .
[I]t puts the power of the detail more in the
physician's hands because I don't truly know
what his concerns are or what his perspectives
or biases are. . . . [I]t shifts the power of
the conversation to a more equal footing.

!A Boston Globe article included in the Legislative

History reported similar information; a sales representative told

of his understanding that, if he learned that a doctor was

prescribing a competitor's product, his presentation should focus

on undermining that product. Liz Kowalczyk, Drug Companies'

Secret Reports Outrage Doctors, Boston Globe, May 25, 2003, at A1.

!Plaintiff IMS has explained the benefits of data-mining

with a focus on prescriber-specific data: "By using a data-mining

solution, IMS can pinpoint prescribers who are switching from one

medication to another. A sales person can use this model to

target doctors who have switched from the drug they are selling

and to devise a specific message to counter that switching

behavior." Paul Kallukaran & Jerry Kagan, Data Mining at IMS

HEALTH: How We Turned a Mountain of Data into a Few Information-

rich Molehills, IMS Abstract.

!In both his testimony and declaration, Dr. Avorn

stated that detailing becomes less information-focused and a more

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powerful tool of persuasion when the sales representative is armed

with prescriber-specific information. In his joint declaration

with Dr. Kesselheim, he related the "counter-detailing" experience

of his research unit at Harvard Medical School, in which he and

his colleagues used prescriber-specific data obtained from

pharmacy records to choose physicians for educational visits by

clinical pharmacists, accompanied by mailed "unadvertisements."

He reported that these targeted interventions resulted in a 14

percent

reduction in inappropriate prescriptions,58 Declaration at 9, and

he saw significance in these results for commercial detailing:

Our educational programs (known as
"academic detailing") focused on improving
patient care through reducing excessive use of
inappropriate medications. But when these
techniques are used by companies whose main
goal is simply to increase product sales, the
impact on patients and on the health care
system are quite different. The studies we
have cited indicate that more physician-
specific detailing will lead to more
prescriptions of brand-name agents, often with
no additional patient benefit but at much
higher cost to patients and to state-based
insurance programs, which will continue to
drive up the cost of health care in New
Hampshire.

Id. at 10.

58
As discussed infra, the plaintiffs cite this success with
counter-detailing as evidence that the State could have achieved
its objective of cost-containment without suppressing speech. As
I explain, counter-detailing is not a comparable alternative.

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 Avorn echoed these observations at trial, explaining

that prescriber-identified data was important to the success of

his counter-detailing because "that's how we knew whom to visit,

and we also knew what to say to them because we knew what drugs

they were prescribing." In the declaration, he stated that

restricting access to prescriber-specific information, "[m]aking

it more difficult for manufacturers to tailor their marketing

strategies to . . . individual physicians[,] would actually

encourage detailers to present physicians with a more neutral

description of the product that would emphasize presentation of

information over promotion." Declaration, at 11; see also Day 3,

PM Session, at 140 (Avorn Testimony) ("[I]f the sales rep knows my

prescribing history, they will market to me or at me in a way that

goes well beyond just providing me with the data. It's not really

education at that point. It's not a level playing field.").

!An assumption that prescriber-identifiable detailing

impacts drug choice is reflected in the professional guidelines

cautioning against using the data aggressively. As noted above,

the AMA has adopted suggestive guidelines against the use of

"prescribing data to overtly pressure or coerce physicians to

prescribe a particular drug." Such indirect evidence supports the

State's view that eliminating access to the information will

decrease the likelihood that physicians will be swayed by targeted

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marketing to prescribe unnecessary – and more expensive – brand-

name drugs.

b. The district court's evaluation of the evidence

The district court concluded that, notwithstanding this

evidence, the State's showing was insufficient to establish a link

between the Prescription Act and cost-containment because other

evidence showed that more expensive brand-name drugs will, at

times, be the better therapeutic choice.59 The court acknowledged

that "substantial deference" must be given to a legislature's

59
The court explained its reasoning on the cost-containment
interest as follows:

I am also unconvinced by the Attorney General's
argument that the Prescription Information Law directly
promotes the State's interest in containing health care
costs. The 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. However, this
proposition is far from self-evident. Non-bioequivalent
generic drugs are not always as effective as brand-name
alternatives. Moreover, even in cases where non-
bioequivalent generic drugs will work as well or better
than a brand-name alternative for most patients, there
may be some patients who will benefit by taking the
branded medication. Yet, a ban on the use of prescriber-
identifiable data affects both helpful and harmful brand-
name prescribing practices in the same way. Because the
Attorney General has failed to prove that any reductions
in health care costs that may result from a ban on the
use of prescriber-identifiable data can be achieved
without compromising patient care, I am unable to endorse
her argument that the Prescription Information Law can be
justified as a cost containment measure.

490 F. Supp. 2d at 180-81.

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predictive judgments "[w]hen a quality record establishes that the

legislature conducted an extensive investigation, acquired

considerable expertise in the regulated area, and incorporated

express findings into the approved statute." 490 F. Supp. 2d at

177 n.12 (citing Turner Broad. Sys., Inc. v. FCC, 520 U.S. 180,

186 (1997)). However, the court questioned the extent of the

Legislature's investigation before adopting the initiative,

noting, inter alia, that it acted quickly after the bill was

introduced, made no express findings on the need for the

legislation, and "cited no evidence as to how effective the

restriction might prove to be." 490 F. Supp. 2d at 177.

I am mindful that regulations that suppress commercial

speech must be carefully evaluated. Nonetheless, the district

court held the Attorney General to a higher standard of proof than

is required by Supreme Court precedent. While a state legislature

"does not have the broad discretion to suppress truthful,

nonmisleading information for paternalistic purposes," 44

Liquormart, 517 U.S. at 510, the Court's commercial speech cases

"recognize some room for the exercise of legislative judgment."

Id. at 508. To earn that deference, the State must offer

probative evidence that suppressing speech is essential to

achieving its goal. However, a state legislature cannot

reasonably be expected to undertake an investigation of the scope

conducted by Congress in connection with the federal legislation

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at issue in Turner Broadcasting, the case cited by the district

court, to justify a limited restriction on commercial speech. See

Turner Broad. Sys., 520 U.S. at 187 (noting that the record

included "tens of thousands of pages” of materials acquired during

three years of Congressional preenactment hearings, as well as

additional expert submissions, sworn declarations, testimony, and

industry documents).

In Turner Broadcasting, the Court observed that, given

the exhaustive record, Congress's findings were entitled to

"deference in part because the institution is far better equipped

than the judiciary to amass and evaluate the vast amounts of data

bearing upon legislative questions." 520 U.S. at 195 (internal

quotation marks and citations deleted). Although the contexts are

different,60 the general principle of legislative deference also is

compatible with the Court's commercial speech precedent. The

question here, as there, is whether the government is able to

support its restriction on speech by "'adduc[ing] either empirical

support or at least sound reasoning on behalf of its measure[].'"

Turner Broad. Sys., 512 U.S. at 666 (quoting Century Commuc'ns

60
Turner Broadcasting addressed the "must-carry" provisions
of the Cable Television Consumer Protection and Competition Act of
1992. In its first decision in the case, the Court held that the
provisions imposed content-neutral restrictions on speech that were
subject to intermediate scrutiny. Turner Broad. Sys., Inc. v. FCC,
512 U.S. 622, 661-62 (1994). In its second decision, the Court
concluded that the provisions were consistent with the First
Amendment. 520 U.S. at 185.

-118-
Corp. v. FCC, 835 F.2d 292, 304 (D.C. Cir. 1987)); see Florida Bar

v. Went For It, Inc., 515 U.S. 618, 628 (1995) ("[W]e do not read

our case law to require that empirical data come to us accompanied

by a surfeit of background information. Indeed, in other First

Amendment contexts, we have permitted litigants to justify speech

restrictions by reference to studies and anecdotes pertaining to

different locales altogether, or even, in a case applying strict

scrutiny, to justify restrictions based solely on history,

consensus, and 'simple common sense.'") (citations omitted). If

the government makes the requisite showing, we defer to the

legislative judgment to adopt the challenged measure.

The Attorney General has no empirical data showing the

extent of the influence of prescriber-specific information on

physicians' decision-making; nor can she document how much money

the Prescription Act will save the State or consumers. The

regulation was the first of its kind in the country, and it had

been in effect for less than a year when the district court

invalidated it. It is unreasonable in these circumstances to

expect the Attorney General to provide extensive quantifiable data

that might only become available after the statute has been in

place for some time. I have described evidence here that

establishes a plausible cause-and-effect relationship between

targeted detailing and higher drug prices. What is missing is

hard evidence of the global extent of this relationship. Clearly,

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it will be important going forward for the State to try to measure

the cost-containment effect of its initiative, and it is possible

that this ongoing assessment will indicate that the measure is not

as effective as the State had hoped.

However, at this juncture, the Attorney General has

established a factual basis justifying the initiative. She has

adduced significant testimony based on relevant empirical research

concerning the impact of detailing generally, supplemented by the

personal experience of both prescribers and detailers, strongly

indicating that sales pitches based on specific prescribing

patterns have a particularly persuasive impact on drug choice.

The extent of this empirical and anecdotal evidence, particularly

in light of the Act's limited restriction on speech, distinguishes

this case from those in which the Supreme Court has found more

sweeping bans on commercial speech to be inadequately justified.

For example, the Court in Edenfield noted the absence of any

studies or anecdotal evidence to support a ban on in-person

solicitation by accountants. 507 U.S. at 771. In Shapero v.

Kentucky Bar Ass'n, 486 U.S. 466 (1988), which rejected a ban on

direct-mail solicitations by lawyers, the State "assembled no

evidence attempting to demonstrate any actual harm caused by

targeted direct mail," Florida Bar, 515 U.S. at 629. See also

U.S. West, Inc., 182 F.3d at 1237 (noting that the government had

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presented "no evidence" showing that the harm to either of its two

asserted interests "is real").

Moreover, as I have recounted, evidence from multiple

sources indicated that the expense of unnecessary brand-name

prescribing has in the past ranged into the billions of dollars

nationally.61 This substantial evidence of needless spending,

combined with evidence that detailing with prescriber-identifiable

data contributes to that outcome, is enough to show that the

Prescription Act "targets a concrete, nonspeculative harm,"

Florida Bar, 515 U.S. at 629, and that the Attorney General has

sufficiently demonstrated that the State's interest in cost-

containment would be furthered "to a material degree" by the

limitation on speech it seeks to achieve through the Prescription

Act.62 See, e.g., City of Los Angeles v. Alameda Books, Inc., 535

61
In summarizing the need for the legislation, Dr. Avorn
testified:

I think the problem we're concerned with – and I think the
legislation was designed to address – is that we have this
epidemic of over-priced drugs just eating the lunch of the
older drugs that are both cheaper and safer; and that's not an
opinion. That's simply looking at what's happened in the
field of hypertension treatment, what's happened with the
anti-platelet drug like Plavix. Now, Plavix is an okay drug,
and we recommend it in a number of settings but not for
everyone who sometimes feels their legs are heavy, like the
commercials say; and Plavix costs 160 times what aspirin
costs.
62
It is particularly difficult to predict the long-term impact
of eliminating targeted detailing from the pharmaceutical sales
representative's marketing tools. In a submission to the district
court, amici pointed to one potentially significant byproduct of

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U.S. 425, 426 (2002) ("[A] municipality may rely on any evidence

that is 'reasonably believed to be relevant' for demonstrating a

connection between speech and a substantial, independent

government interest."); cf. Turner Broad. Sys., 512 U.S. at 666

("[T]he obligation to exercise independent judgment when First

Amendment rights are implicated is not a license to reweigh the

evidence de novo, or to replace Congress' factual predictions with

our own. Rather, it is to assure that, in formulating its

judgments, Congress has drawn reasonable inferences based on

substantial evidence.").

Importantly, the district court made no finding that the

Attorney General had failed to establish a relationship between

detailers' use of prescriber-identifiable data and increased

health costs.63 Instead, the court concluded that the Attorney

General had failed to show that the Act advanced the State's

lowered prescription drug costs. They cited studies showing that
consumers, particularly older adults, sometimes forego filling or
renewing prescriptions because of their cost, leading to higher
long-term health care costs. See AARP Memorandum to Dist. Ct., at
13 ("'The consequences of cost-related medication underuse include
increased emergency department visits, psychiatric admissions and
nursing home admissions, as well as decreased health
status.'")(quoting John D. Piette, et al., Cost Related Medication
Underuse Among Chronically Ill Adults: the Treatments People
Forego, How Often, and Who is at Risk, 94 Am. J. Pub. Health 1782
(2004)). Although the extent of such behavior may not be readily
determined, such studies support the State's view that lowered drug
costs will favorably impact health care expenditures.
63
Indeed, as noted earlier, the court "accept[ed] her major
premise that pharmaceutical companies use prescriber-identifiable
data to make detailing more persuasive." 490 F. Supp. 2d at 180.

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interest because any cost savings might be offset by compromised

health care for patients who would in fact benefit from the use of

more expensive brand-name drugs.

It does not matter that detailing with prescriber-

identifiable data sometimes has positive effects. The Attorney

General's evidence indicated that the health care benefits of such

marketing described by plaintiffs are largely achievable in other

ways. News reports, for example, would highlight truly

groundbreaking new therapies in a timely way and, indeed,

pharmaceutical detailers with knowledge of physicians' medical

specialties presumably would not need access to prescribing

histories to effectively promote such innovations.64 Early

adopters could be expected to respond quickly with an interest in

trying the new medications – effectively identifying themselves to

the sales representatives.65 In addition, as I already have

64
Dr. Sadowsky of the New Hampshire Medical Society expressed
the view that alternative means existed for learning about new
drugs: "I think that the vast majority of physicians are aware
pretty quickly through the literature, through the medical
literature about any new miracle drugs." Dr. Sobelson agreed: "I
don't think I need a detailer at all to make me aware of [a
breakthrough drug]. . . . [Y]ou can read about it in the New York
Times, but I also certainly heard about it [a new drug for treating
Alzheimer's disease] at conferences, from colleagues, from the
sources of information that I really want to hear about." See also
Day 3, PM Session, at 57-58 (testimony of Dr. Avorn) (noting that,
for "the important new drugs, you don't really need to have this
big marketing push if it's a really meaningful clinical advance").
65
Randolph Frankel, a drug marketing specialist and IMS vice
president, acknowledged that "provider-level data is [not] the only
way to find things out, but it does add another and a significant

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observed, the statute does not bar drug companies from alerting

prescribers to newly discovered problems with their medications.

In other words, I see no message or interest of consequence that

is foreclosed by the regulation.66 Cf. Thompson, 535 U.S. at 376

(noting that "the amount of beneficial speech prohibited by the

[statute]" would be "enough to convince us that the . . .

advertising provisions were unconstitutional"); Greater New

Orleans Broad. Ass'n, Inc. v. United States, 527 U.S. 173, 194

(1999) (noting that the statute at issue "sacrifices an

intolerable amount of truthful speech about lawful conduct when

compared to all of the policies at stake").67 Thus, the fact that

level of efficiency or effectiveness in terms of how you do
it. . . . [I]f these data disappeared, pharmaceutical companies
would find some other way to approve how they allocate, how they
target, and how they message."
66
Plaintiffs suggest that the Act may result in prescriber-
identifiable data becoming completely unavailable, an outcome that
all parties would likely consider undesirable. Plaintiffs theorize
that the pharmaceutical companies would be unwilling to pay
substantial sums for information they cannot use in marketing,
eliminating the data miners' biggest customers – thereby cutting
off the commercial funding that subsidizes the research and other
non-commercial uses of the data. However, the statute allows many
commercial uses of the data and, even where reliance on specific
prescriber information is prohibited, the drug companies may rely
on permissible forms of aggregated data (by speciality and zip
code). Thus, the prospect that prescriber data will no longer be
available for any purpose is too speculative to undermine the
State's interest.
67
Dr. Avorn offered the following observation: "If they can't
make their argument on the basis of the data justifying the use of
their drug and it requires knowing the doctor's prescribing habits
to make that case, then I would say that's not a case that ought to
get made. It ought to be about the data and the merits of the

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detailing with prescriber-identifiable data may at times have a

positive effect on health care does not negate the Act's role in

advancing the State's interest in cost-containment.

C. Narrow Tailoring

In evaluating the narrow tailoring prong of the Central

Hudson inquiry, the Court typically has asked "whether the extent

of the restriction on protected speech is in reasonable proportion

to the interest served." Edenfield, 507 U.S. at 767; see also

Greater New Orleans Broad. Ass'n, 527 U.S. at 188 ("The Government

is not required to employ the least restrictive means conceivable,

but it must demonstrate narrow tailoring of the challenged

regulation to the asserted interest – 'a fit that is not

necessarily perfect, but reasonable' . . . .") (quoting Bd. of

Trustees of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989));

Florida Bar, 515 U.S. at 632 ("[T]he 'least restrictive means'

test has no role in the commercial speech context.").

This "reasonable fit" standard of intermediate scrutiny

has drawn criticism. See Thompson, 535 U.S. at 367-68 (noting

that "several Members of the Court have expressed doubts about the

Central Hudson analysis and whether it should apply in particular

cases"); Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 554-55

(2001) (same); Greater New Orleans Broad. Ass'n, 527 U.S. at 184

(recognizing the advocacy among judges, scholars and others for "a

product, not about my professional history."

-125-
more straightforward and stringent test for assessing the validity

of governmental restrictions on commercial speech").68 However,

the Court majority has adhered to the Central Hudson approach,

observing repeatedly that, in the particular case at issue, "there

is no need to break new ground" in assessing the validity of the

challenged governmental restrictions on commercial speech. See

Thompson, 535 U.S. at 368; Lorillard Tobacco Co., 533 U.S. at 554-

55; Greater New Orleans Broad. Ass'n, 527 U.S. at 184.

Nonetheless, the debate on Central Hudson's continuing

viability seems to have influenced the Court's application of its

framework. Multiple commentators have observed that intermediate

scrutiny under Central Hudson has "come to resemble closely the

'narrowly tailored' requirement of strict scrutiny." Troy L.

Booher, Scrutinizing Commercial Speech, 15 Geo. Mason U. Civ. Rts.

L.J. 69, 77 (2004); see also R. Michael Hoefges, Regulating

Professional Services Advertising: Current Constitutional

Parameters and Issues Under the First Amendment Commercial Speech

Doctrine, 24 Cardozo Arts & Ent. L.J. 953, 989 (2007) (noting that

recent precedent arguably "has pushed the fourth prong of the

Central Hudson analysis closer than ever before to the least-

68
Justice Thomas has been particularly adamant in contending
that no distinction should be drawn between commercial and
noncommercial speech: "I do not see a philosophical or historical
basis for asserting that 'commercial' speech is of 'lower value'
than 'noncommercial' speech. Indeed, some historical materials
suggest to the contrary." 44 Liquormart, 517 U.S. at 522 (Thomas,
J., concurring).

-126-
restrictive-means requirement of strict constitutional scrutiny");

Emily Erickson, Disfavored Advertising: Telemarketing, Junk Faxes

and the Commercial Speech Doctrine, 11 Comm. L. & Pol'y 589, 602

(2006) ("[T]he broader trend has been one of higher scrutiny for

commercial speech cases."); Elizabeth Spring, Sales Versus Safety:

The Loss of Balance in the Commercial Speech Standard in Thompson

v. Western States Medical Center, 37 U.C. Davis L. Rev. 1389, 1404

(2004) ("[T]he Court is now applying the Central Hudson test in a

manner approaching strict scrutiny review.").

Indeed, in Thompson, a 5 to 4 decision, Justice Breyer

in dissent chastises the majority for applying the commercial

speech doctrine "too strictly" in striking down a statute

prohibiting the advertising of compounded drugs. 535 U.S. at 388.

In finding that the regulation was not narrowly tailored, the

majority proposed a variety of non-speech alternatives that the

Government could have adopted to meet its objectives. The

justices observed that "[i]f the Government could achieve its

interests in a manner that does not restrict speech, or that

restricts less speech, the Government must do so." Id. at 371.

From Justice Breyer's perspective, however, the majority "too

readily assume[d] the existence of practical alternatives." Id.

at 388.

This case does not require us to decide if Thompson

represents a departure in the Court's application of the narrow

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tailoring prong of Central Hudson. As I shall explain, even as

applied by the majority in Thompson, Central Hudson's narrow

tailoring requirement is satisfied here. As an initial matter,

the restriction on speech imposed by the Prescription Act is

significantly more limited than similar restrictions on commercial

speech that have been considered by the Supreme Court. It is

neither a complete ban on the marketing or advertising of a

product or its price, see, e.g., Thompson, 535 U.S. at 360

(compounded drugs); 44 Liquormart, 517 U.S. at 489 (retail price

of alcoholic beverages), nor a blanket prohibition on in-person

solicitation, see, e.g., Edenfield, 507 U.S. at 763 (accountants);

Ohralik, 436 U.S. at 448-49 (attorneys). Pharmaceutical sales

representatives may continue to pitch their drugs directly to

doctors and other health care providers, and the only message

proscribed is one that incorporates an awareness of the doctor's

prescribing practices. The detailers also may continue to use

prescriber data provided by the plaintiffs for marketing, so long

as the data aggregates prescribing patterns by speciality and zip

code and not by individual provider. Thus, this case does not

trigger the "special concerns [that] arise from 'regulations that

entirely suppress commercial speech in order to pursue a

nonspeech-related policy,'" 44 Liquormart, 517 U.S. at 500

(quoting Central Hudson, 447 U.S. at 566 n.9).

-128-
 Despite the Act's limited scope, the plaintiffs maintain

that it is broader than necessary to serve the State's objective

and that it thus fails the narrow tailoring test. For multiple

reasons, I reject the plaintiffs' contention and conclude that the

State has met its burden of justifying the Prescription Act. The

inadequacy of alternatives to satisfy the State's interests, the

context of private communications, and the limited impact on the

message sought to be disseminated lead me to conclude that New

Hampshire has established "a 'reasonable fit' between its

abridgment of speech and its . . . goal," 44 Liquormart, 517 U.S.

at 507.

1. Inadequacy of Alternative Measures

The plaintiffs argue that the State's cost-containment

objective could have been achieved through measures that did not

impact protected speech at all. The district court agreed and

noted that, for example, the Legislature could have addressed the

issue by "properly implementing" a Medicaid Pharmacy Program that

takes into account the cost-effectiveness of brand-name drugs.

490 F. Supp. 2d at 182. The court pointed out that New

Hampshire's current program requires authorization for Medicaid

patients to obtain certain drugs and that state regulations allow

cost considerations to be taken into account when deciding which

drugs should be subject to the authorization. 490 F. Supp. 2d at

182. As a result, the court concluded that the State could

-129-
prevent unnecessary expenditures on brand-name drugs by denying

authorization requests for more expensive drugs that are no more

effective than cheaper alternatives. Id.

This proposal and the other non-speech alternatives

proposed by the parties and the district court lack equivalency

with the Prescription Act in accomplishing the State's cost-

containment goal. In response to the district court's suggestion

that legislative changes be made in the Medicaid program, the

Attorney General argues that such measures would not respond to

the State's broader concern that physicians' drug choices for all

patients are distorted by the detailers' access to prescriber-

identifiable data.69 In addition, the Attorney General maintains

that formularies also are affected by pharmaceutical detailing,

citing evidence that physicians request additions to such lists

even when the added drugs have "little or no therapeutic advantage

over existing formulary drugs." Wazana, supra, at 375.

The court's other suggestions – requiring the State "to

enter the intellectual marketplace" with its own information about

proper drug choices; mandating participation in continuing medical

education programs; or limiting the samples, meals and other

69
The plaintiffs elicited testimony that placing drugs on a
Medicaid formulary list has a spillover effect on "the cash market"
as well, Day 1, PM Session, at 29 (testimony of Hossam Sadek, IMS
senior vice president), but the State reasonably could conclude
that it could not rely on that secondary impact to achieve its
objective.

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ingratiating gifts provided by detailers to prescribers – are

similarly imperfect. The Attorney General argues that the State

lacks comparable resources to directly counter commercial

detailing – for which the pharmaceutical companies spend billions

of dollars70 – and the district court at trial noted Avorn's

testimony that relying on medical education programs would be

difficult because "it would be hard to find the right people and

. . . [t]here would be disputes over what the content is."71

I acknowledge that the suggestion that the State

prohibit courtesy samples and other gifts to prescribers is not as

easily dismissed. That prohibition could be implemented

unilaterally and without expense to the State. Like the

Prescription Act, such a ban would be directly aimed at

diminishing the persuasive force of the detailers' message. As

described above, the record contains evidence that the perks have

a subtle influence on physicians' decision-making, increasing

their affinity for particular sales representatives – and,

presumably, for those representatives' drugs. In fact, a number

of states have passed laws requiring that gifts to prescribers be

70
She further argues that "such a solution would simply treat
the symptom," while the statute "is an effort to treat the disease
itself." Brief at 43.
71
Avorn testified that the pharmaceutical industry funds about
65 percent of continuing medical education and that one challenge
of such an approach would be to decide "[w]ho gets to decide what
the right message is."

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publicly disclosed, and, as with the use of prescriber-

identifiable data, professional guidelines have been adopted to

reduce or eliminate such benefits.

While similar in intent, however, a ban on gifts and the

ban on the use of prescriber-identifiable data are not

interchangeable means of achieving the State's goal of cost-

containment. The samples and gifts are merely a preparatory step

in the marketing process; while they may increase the prescribers'

susceptibility to the sales pitch, the State reasonably concluded

that it is the sales pitch itself that has the most troubling

effect on the prescribers' drug choice – and is most urgently in

need of regulation. See Appellant's Brief at 42 (asserting that

pharmaceutical companies use prescriber-identifiable data "to

subtly manipulate physicians, in ways physicians are often

unaware, to change their prescriptions for reasons other than the

clinical needs of patients") (citing Avorn Declaration, at 9-11).72

Moreover, Avorn testified that the remedies proposed by

the district court "have been tried, not necessarily in New

Hampshire, in particular, but nationally in terms of trying to

restrict the freebies, trying to provide doctors with other means

72
I note, in addition, that the State reasonably could reject
a ban on samples because free medication allows many individuals to
receive more effective treatments than they otherwise could afford.
Although the evidence showed that not all doctors favor the
distribution of free samples, the benefits of sampling would allow
the State to conclude, on balance, that other cost-cutting measures
would be preferable.

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of learning, requiring that doctors take continuing ed courses."

Avorn opined that the Prescription Act

was not just a flippant, oh, let's see what
happens with this. It was more of a sense of
people have tried everything they can try and
we still have this massive distortion of what
doctors are prescribing and what the State,
and its citizens, are paying for drugs because
of the very heavily and very effective
promotional strategies that are going on out
there; and this seemed like – given that those
other avenues are probably not going to be
viable, that this seemed to be a way of
preserving the company's ability to give me
their best shot in their sales argument, but
not to do so with a kind of knowledge that
really shouldn't have anything to do with
teaching me something . . . .

I am thus satisfied that the State has eliminated the possibility

that "alternative forms of regulation that would not involve any

restriction on speech would be more likely to achieve the State's

goal," 44 Liquormart, 517 U.S. at 507 (emphasis added). To the

contrary, Avorn's summary of other initiatives indicates that the

State reasonably concluded that its legislation provided the only

effective approach for achieving its objective.

In responding to the proposed alternatives through

argument and evidence, the Attorney General in this case took

steps that the majority in Thompson found lacking in the

government's presentation there. The Court observed that

"[n]owhere in the legislative history of the [Act] or petitioners'

briefs is there any explanation of why the Government believed

forbidding advertising was a necessary as opposed to merely

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convenient means of achieving its interests." 535 U.S. at 373.

The Court commented that "there is no hint" that the government

had considered the alternatives proposed by the Court, or any

other strategies. Id. In this case, the State offered expert

evidence at trial and argued in its briefs on appeal in defense of

its view that alternative strategies would not suffice. Thus,

unlike in Thompson, the State has amply rebutted any impression

that regulating speech was the first, or only, strategy it thought

to try. Cf. id.

2. Focus on Private Communications

It is also significant that the Prescription Act

restricts only private communications between the pharmaceutical

detailer and prescribers, rather than a message disseminated to

the public at large. In evaluating whether the Prescription Act

advanced the State's cost-containment interest, the district court

noted the Supreme Court's rejection in Thompson of a government

interest "'in preventing the dissemination of truthful commercial

information in order to prevent members of the public from making

bad decisions with the information.'" 490 F. Supp. 2d at 181

(quoting Thompson, 535 U.S. at 374); see also 44 Liquormart, 517

U.S. at 503 ("The First Amendment directs us to be especially

skeptical of regulations that seek to keep people in the dark for

what the government perceives to be their own good.").

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 This case differs from those in which the Court has

rejected advertising bans that restrict the exchange of ideas in

the "commercial marketplace." The Prescription Act neither

"protects" the public from information about drugs nor prevents

truthful advocacy by pharmaceutical representatives. Instead, it

prevents sales representatives from crafting personal marketing

messages on the basis of data that credible evidence indicates has

been used to unduly influence prescribing choices. The Supreme

Court on multiple occasions has reviewed regulation of such direct

solicitations, upholding restrictions where the context raised

concerns about the impact of the marketing on the recipient. See

Edenfield, 507 U.S. at 765 ("There are, no doubt, detrimental

aspects to personal commercial solicitation in certain

circumstances. . . .").

Two such cases provide a helpful contrast and offer

guidance in this case. In Ohralik, the Court upheld a bar against

in-person solicitation of prospective clients by lawyers in

"'situation[s] that breed[] undue influence,'" 436 U.S. at 449

(quoting Bates v. State Bar of Ariz., 433 U.S. 350, 366 (1977)).

Ohralik involved two young victims of an automobile accident, one

who was approached while she was still hospitalized and the other

on the day she was released from the hospital. Id. at 450-51.

The Court found that the State's compelling interest in

"preventing those aspects of solicitation that involve fraud,

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undue influence, intimidation, overreaching, and other forms of

'vexatious conduct'" justified the limited restriction on speech.

Id. at 462. The Court further observed that "it hardly need be

said that the potential for overreaching is significantly greater

[than in the sale of ordinary consumer products] when a lawyer, a

professional trained in the art of persuasion, personally solicits

an unsophisticated, injured, or distressed lay person." Id. at

464-65.

By contrast, the Court concluded in Edenfield that a ban

on face-to-face solicitation by certified public accountants

("CPAs") did not survive First Amendment scrutiny. 507 U.S. at

765. Although noting that face-to-face commercial solicitation

may have "detrimental aspects," id., the Court also recognized

that, "[i]n the commercial context, solicitation may have

considerable value," id. at 766. Among the advantages listed by

the Court were "direct and spontaneous communication between buyer

and seller," "enabl[ing] the seller to direct his proposals toward

those consumers who he has reason to believe would be most

interested in what he has to sell," and providing buyers "an

opportunity to explore in detail the way in which a particular

product or service compares to its alternatives in the market."

Id. The Court ultimately found that the risks inherent in the

Ohralik context did not exist in the accountant setting:

Unlike a lawyer, a CPA is not "a professional
trained in the art of persuasion." A CPA's

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 training emphasizes independence and
objectivity, not advocacy. The typical client
of a CPA is far less susceptible to
manipulation than the young victim in Ohralik.
Fane's prospective clients are sophisticated
and experienced business executives who
understand well the services that a CPA
offers. In general, the prospective client
has an existing professional relation with an
accountant and so has an independent basis for
evaluating the claims of a new CPA seeking
professional work.

Id. at 775 (citations omitted). The Court thus concluded that

"the ends sought by the State are not advanced by the speech

restriction," and that the rule against in-person solicitation

"infringe[d] upon Fane's right to speak, as guaranteed by the

Constitution." Id. at 777.

In relevant respects, this case falls between Ohralik

and Edenfield. Although the recipients of the marketing messages

at issue here are, unlike in Ohralik, highly trained

professionals, the solicitor in question – the pharmaceutical

detailer – is schooled in the art of persuasion, like the lawyers

in Ohralik. Unlike in Edenfield, there is substantial evidence

that the detailer's persuasion has an impact and that confining

the marketing interaction in the manner required by the

Prescription Act would advance the State's interest. The detailer

often has knowledge of drug details that are not readily available

to the physician, and the evidence supports the State's view that

adding prescriber-identifiable data into the mix lends weight to

the detailer's message – and increases the likelihood that the

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targeted prescriber will choose the brand-name drug being promoted

by the detailer.

This is not to suggest that the detailer's message is

generally inaccurate or misleading. The advantage provided by

prescriber-identifiable data may only be to refocus the emphasis

of the presentation. But where the record shows a real risk that

"one-sided" presentations may give marketers "undue influence,"

the appropriateness of limiting speech veers much closer to

Ohralik than Edenfield. See 44 Liquormart, 517 U.S. at 498

(commenting that the State "may restrict some forms of aggressive

sales practices that have the potential to exert 'undue influence'

over consumers"); Ohralik, 436 U.S. at 462 (noting state's

legitimate interest in "preventing those aspects of solicitation

that involve fraud, undue influence, intimidation, overreaching,

and other forms of 'vexatious conduct'") (emphasis added).

3. Calculation of Costs and Benefits

I already have described the alternative ways in which

prescribers will have access to the helpful information that may

no longer be available to them from pharmaceutical detailers as a

result of the Prescription Act. See supra Section IV.B.2.b. The

statute therefore suppresses only a small amount of beneficial

speech. "On the whole, then, the challenged regulation . . .

indicate[s] that [the State] '"carefully calculated" the costs and

benefits associated with the burden on speech imposed by its

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prohibition.'" Greater New Orleans Broad. Ass'n, 527 U.S. at 188

(quoting Discovery Network, 507 U.S. at 417 (quoting Fox, 492 U.S.

at 480)); see also U.S. West, Inc., 182 F.3d at 1238.

In this context, I conclude that the State has met its

burden to justify the limited restraint on commercial speech

imposed by the Prescription Act.73

V.

There remains the plaintiffs' Commerce Clause challenge

to the Act. I part company with my colleagues on that challenge

because the majority's discussion of the issue, and its ready

acceptance of the Attorney General's statement about the scope of

the Act, further undermine the value of the majority's decision.

There is a puzzling disconnect between the Attorney General's

contention that the Act governs only transactions that take place

within New Hampshire and the plaintiffs' contention that all of

the conduct that the Act purports to regulate occurs outside the

State. On the record before us, we do not have an adequate

foundation for evaluating that disconnect and its implications for

the Commerce Clause analysis. I therefore would remand this case

73
I join the majority's discussion of the plaintiffs'
contention that the statute is unconstitutionally vague, other than
its statement in footnote 9 invoking standing doctrine.

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to the district court with instructions to address the Commerce

Clause issue in the first instance.74

Under the Attorney General's interpretation of the

statute – that the Act reaches only transactions that occur within

New Hampshire – no Commerce Clause problem would exist. See

Alliance of Auto. Mfrs. v. Gwadowsky, 430 F.3d 30, 35 (1st Cir.

2005) (explaining that, in evaluating whether a statute has

impermissible extraterritorial reach, courts are obliged to adopt

any reasonable construction consistent with the Constitution).

The majority summarily deems that narrowing construction

"reasonable," commenting that "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." Yet a literal

application of that narrowing construction would appear to leave

the Act with negligible impact – hardly a reasonable outcome.

It is undisputed that none of the plaintiffs'

transactions take place within New Hampshire. The district court

found that "IMS and Verispan obtain all of their prescription

information, including information on prescriptions filled in New

Hampshire, from computers that are located outside of New

Hampshire." 490 F. Supp. 2d at 166. At trial, the court

74
The district court's First Amendment ruling made it
unnecessary for it to evaluate the parties' legal arguments
concerning the vagueness and Commerce Clause challenges.

-140-
described the factual record on the Commerce Clause question as

follows:

It's undisputed that prescriptions are
generated in the state. It's undisputed that
the prescriptions are filled within the state.
It's undisputed that the pharmacies where
they're filled [are] based in the state. It's
undisputed that the pharmacy, as a part of its
routine practices, unassociated with the sale
of this information to pharmaceutical
companies or IMS, transfers the information in
the ordinary course of its business from a
data center in the state to data centers
outside the state. That the IMS software and
Verispan software is applied to it outside the
state. That it is then transferred from the
[pharmacy] to IMS or Verispan outside the
state, and it is thereafter sold to
pharmaceutical companies and other clients
outside the state.

The parties agreed that this summary, with some variations, was

accurate and also agreed with the court's understanding that "the

factual record that bears on the Commerce Clause question is

undisputed."

Given these undisputed facts, however, it is unclear how

much, if any, of the activity that the statute explicitly

proscribes occurs within New Hampshire. For example, the

"routine" transfer of prescriber-identifiable information from a

local New Hampshire pharmacy to the pharmacy's out-of-state

headquarters does not appear to be prohibited by the Act.

Arguably, that electronic transfer would not be for an

impermissible "commercial purpose" – involving, inter alia,

"advertising, marketing, promotion, or any activity that could be

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used to influence sales or market share of a pharmaceutical

product, influence or evaluate the prescribing behavior of an

individual health care professional, or evaluate the effectiveness

of a professional pharmaceutical detailing sales force."

Consequently, the data would be outside New Hampshire before any

transaction described by the Act occurs. The district court's

factual summary suggests that most prescriber-identifiable data

leaves New Hampshire in this permissible manner.

That understanding of the facts underlies the

plaintiffs' argument that the Act seeks to prohibit the licensing,

transfer, use, or sale of data identifying New Hampshire

prescribers wherever such activity occurs. Plaintiffs' counsel

explained their position during a colloquy with the court at

trial:

The State has said, this doesn't apply outside
of the state. . . . [O]ur reply to that has
been . . . if it doesn't prohibit these
transactions outside of the state, then the
statute really loses all of its force and
effectiveness. Because if Rite Aid's pharmacy
in New Hampshire can transfer to its parent in
Pennsylvania and its parent can transfer to
IMS or Verispan in Pennsylvania, that's not
prohibited. And then they can transfer it to
Pfizer, wherever Pfizer's headquarters are
outside of New Hampshire; and if Pfizer can
then use it outside of New Hampshire for all
of these various purposes that are prohibited,
then there's absolutely no force or effect to
this statute. And I think what the State is
really arguing is that . . . all these
transfers outside of the state, they are
prohibited.

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 This statement stops one step short of demonstrating the

most critical flaw in the Attorney General's narrowing

construction of the Act. If her view of the Act were correct, not

only could Pfizer buy and use New Hampshire data outside of New

Hampshire "for all these various purposes that are prohibited,"

but the Act also would pose no barrier to the use of such data by

detailers inside New Hampshire. This would be so because the Act

does not apply to detailers and, as noted above, the undisputed

facts suggest that the detailers routinely obtain the data from

entities whose acquisition of the information, according to the

Attorney General, was not restricted by the Act. Hence, the

detailers' use of prescriber-identifiable data in New Hampshire

doctors' offices would appear to involve no violation of the

Prescription Act. In taking an indirect route toward its goal of

regulating detailers' communications, presumably to avoid the

First Amendment concerns that would be triggered by a direct

restriction on speech, the Legislature may not have accomplished

what it intended.

Of course, the Attorney General may believe that her

concession that the Act does not apply to out-of-state

transactions is not problematic because of her view that the Act

bars detailers from using prescriber-identifiable data in their

communications with New Hampshire prescribers if that data

originated in New Hampshire, regardless of whether the

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pharmaceutical company purchased the information inside or outside

of the state. Indeed, that understanding of the Act's scope is

suggested by the Attorney General's comments during the parties'

colloquy with the district court:

The reality of the situation here is we have
. . . national chain pharmacies moving into
the State of New Hampshire, setting up their
own places of business, hiring pharmacists,
hiring managers, establishing a place of
business in the State of New Hampshire and
then obviously agreeing to abide by the laws
of the State of New Hampshire when they
establish a place of business in this state;
and then in the course of their business,
they're collecting . . . these data. They're
moving these data out of the state, for
whatever purpose, in full knowledge of . . .
the laws of the State of New Hampshire . . .
.

Under this view of the law, New Hampshire places an embargo on the

use of the prescriber-identifiable data before it is first

released by the pharmacies. The Attorney General apparently

contemplates that New Hampshire pharmacies and similar entities

would be permitted to license, transfer, use or sell the

information they accumulate only on the condition that the data

not be used downstream for the prohibited commercial purposes.

However, the disconnect that I described earlier

remains. The explicit language of the Act does not appear to

impose such a restriction on the original transfers of data by New

Hampshire pharmacies to entities outside the state. The Act

proscribes only the transfer of prescriber-identifiable data for

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the specified commercial purposes. The transfer of data by New

Hampshire pharmacies beyond New Hampshire's borders typically may

not implicate those prohibitions. Transactions involving those

commercial purposes occur farther downstream, and, so far as the

record shows, primarily outside the state. Frankly, I am not sure

that the Attorney General understood the import of her statement

that the Act regulates only in-state transactions. Nor, given the

state of the record, do I understand the majority's statement

that, when the Act is interpreted as the Attorney General

proposes, it "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." To the contrary, the statute's impact in

New Hampshire appears negligible if it truly governs only

transactions that occur within the state.

Although the Attorney General's concession was an

attempt to sidestep the plaintiffs' Commerce Clause challenge,

there may be an argument that such a step was unnecessary. When

a state statute regulates commerce "wholly beyond the boundaries

of the enacting state," it usually is invalid per se. Alliance of

Auto. Mfrs., 430 F.3d at 35. Yet not every impact on interstate

commerce is prohibited. "[T]he dormant Commerce Clause[] is not

absolute and in the absence of conflicting legislation by

Congress, 'the States retain authority under their general police

powers to regulate matters of legitimate local concern, even

-145-
though interstate commerce may be affected.'" Pharm. Care Mgmt.

Ass'n v. Rowe, 429 F.3d 294, 311 (1st Cir. 2005) (quoting Maine v.

Taylor, 477 U.S. 131, 138 (1986)). Moreover, whether

extraterritoriality is impermissible in every instance, or whether

it transgresses the dormant Commerce Clause only when the

challenged statute is discriminatory or protectionist in nature,

appears to be another relevant consideration. See Peter C.

Felmly, Comment, Beyond the Reach of States: The Dormant Commerce

Clause, Extraterritorial State Regulation, and the Concerns of

Federalism, 55 Me. L. Rev. 467, 491 (2003) (noting that recent

Supreme Court cases considering the dormant Commerce Clause

suggest an increased "focus on the territorial reach of state

legislation . . . in stark contrast to the long-established

concentration on state regulations that are discriminatory or

protectionist in nature").

I have said enough to demonstrate the complexity of the

Commerce Clause issue and the inadequacy of the record. There are

missing details about how the prescriber-identifiable data

generated by New Hampshire pharmacies flows to corporate offices

out of state and the purpose of that information flow. The

parties appear to have different assumptions about those details

and their legal significance. Moreover, the plaintiffs' argument

on the Commerce Clause spans only two and one-half pages in their

sixty-page brief. The Attorney General's response is equally

-146-
terse. I think it unwise to address the Commerce Clause issue

based on a cursory briefing that provides neither legal analysis

nor developed application of the law to the limited facts of

record. Although the parties agreed at trial that the facts on

the Commerce Clause claim were undisputed and that no further

evidence was needed to resolve it, the plaintiffs do not address

that evidence in any meaningful way in their briefs and the

Attorney General does not address the evidence at all. The

district court did not reach the claim.

Our comment about a similarly bare Commerce Clause claim

in Wine & Spirits II also should guide us here: "This

sophisticated area of law requires developed argumentation, with

evidentiary support." 481 F.3d at 15 (noting that the Supreme

Court had "label[ed] as a 'critical consideration' regarding

extraterritorial reach claims the 'overall effect of the statute

on both local and interstate commerce'" (quoting Healy v. Beer

Inst., Inc., 491 U.S. 324, 337 n.14 (1989))). I therefore would

remand this case to the district court on the Commerce Clause

issue.

VI.

I summarize my conclusions:

1. The prudential standing doctrine is inapplicable

in the circumstances of this case, where the core First Amendment

issue was vigorously litigated and comprehensively considered by

-147-
the district court, and where the Prescription Information Act's

constitutionality cannot be assessed without addressing its impact

on the communications between detailers and prescribers;

2. The Act restricts commercial speech that is

protected by the First Amendment, and the Attorney General

therefore bears the burden of demonstrating that the statute

satisfies the Central Hudson test;

3. Although the State has failed to prove that the Act

is justified by substantial interests in privacy and quality

health care, it has met its burden to show that the Act directly

advances its interest in containing the cost of prescription drugs

and is not more extensive than necessary to accomplish that

objective.

4. Like the majority, I find the Prescription Act

sufficiently clear to withstand plaintiffs' vagueness challenge

when construed narrowly, consistent with its legislative history

and applicable precedent.

5. The plaintiffs' contention that the Act violates the

dormant Commerce Clause should be considered by the district court

in the first instance. We should remand the case for that

purpose.

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