IMS Health, Inc. v. Rowe

United States Court of Appeals
For the First Circuit
No. 08-1248
IMS HEALTH INCORPORATED, VERISPAN, LLC, and SOURCE HEALTHCARE
ANALYTICS, INC., a subsidiary of WOLTERS KLUWER HEALTH, INC.,
Plaintiffs, Appellees,
v.
JANET T. MILLS, as Attorney General for the State of Maine,
Defendant, Appellant.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. John A. Woodcock, Jr., U.S. District Judge]
Before
Lynch, Chief Judge,
Lipez and Howard, Circuit Judges.
Thomas A. Knowlton, Assistant Attorney General, with whom
Janet T. Mills, Attorney General of the State of Maine, Paul Stern,
Deputy Attorney General, Nancy Macirowski, Assistant Attorney
General, and Thomas C. Bradley, Assistant Attorney General, were on
brief for appellants.
Thomas C. Goldstein, with whom Thomas R. Julin, Jamie Z.
Isani, Patricia Acosta, Hunton & Williams LLP, Jack H. Montgomery,
Bernstein, Shur, Sawyer & Nelson, P.A., Mark A. Ash, and Smith
Anderson Blount Dorsett Mitchell & Jernigan LLP, were on brief for
appellees.
August 4, 2010
LYNCH, Chief Judge. This case involves constitutional
challenges to a Maine statute enacted to reduce health care costs
and protect prescribers' data privacy. In Maine and elsewhere,
each time a prescription from a physician or other licensed
prescriber is given to a pharmacy, the pharmacy obtains a number of
facts that identify the prescriber. Data put together from
multiple transactions involving the same prescriber reveal certain
patterns and preferences, including her prescribing history, her
choice of particular brand-name drugs versus their generic
equivalents, and the likelihood she will adopt new brand-name
drugs.
Plaintiffs challenge the constitutionality of 22 Me. Rev.
Stat. Ann. tit. 22, § 1711-E(2-A), which allows prescribers
licensed in Maine to choose not to make this identifying
information available for use in marketing prescription drugs to
them. Section 1711-E(2-A) does not directly prohibit any marketing
practices. Rather, it prohibits certain entities from licensing,
using, selling, transferring, or exchanging this information for a
marketing purpose if the prescriber has opted to protect the
confidentiality of her prescribing data. Me. Rev. Stat. Ann. tit.
22, § 1711-E(2-A).
Plaintiffs, companies that collect vast amounts of
identifying data about individual prescribers and aggregate the
data into reports and databases for use when marketing
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pharmaceutical products, are covered in the text of the law, as are
others. See id. § 1711-E(1)(A)(I). Immediately after section
1711-E(2-A)'s enactment in 2008, and before its enforcement,
plaintiffs sued Maine's attorney general in the federal district
court of Maine under 42 U.S.C. § 1983, claiming that section 1711-
E(2-A)'s restrictions on the licensing, use, sale, transfer, or
exchange of Maine prescribers' identifying data for a marketing
purpose are unconstitutional limitations on protected speech under
the First Amendment; that these restrictions are unconstitutionally
vague and overbroad under the First and Fourteenth Amendments; and
that the law also regulates transactions outside of Maine in
violation of the dormant Commerce Clause. On December 21, 2007,
the district court granted plaintiffs a preliminary injunction and
prohibited Maine from enforcing section 1711-E(2-A) on the basis of
plaintiffs' First Amendment claims. See IMS Health Corp. v. Rowe,
532 F. Supp. 2d 153, 183 (D. Me. 2007).1
This case comes to us in an unusual posture. Maine is
not the only state to have restricted plaintiffs' use of
prescriber-identifying data, and this is not the first time
plaintiffs have made these constitutional claims. On November 18,
2008, after the district court granted plaintiffs a preliminary
injunction in this case, this court upheld a similar, but not
1
The district court also enjoined Maine from enforcing
parts of section 1711-E implementing section 1171-E(2-A). See
Rowe, 532 F. Supp. 2d at 183.
-3-
identical, New Hampshire statute against plaintiffs' constitutional
challenges, a ruling that binds this panel. See IMS Health Inc. v.
Ayotte, 550 F.3d 42 (1st Cir. 2008), cert. denied, 129 S. Ct. 2864(2009). In the meantime, the district court's injunction has
remained in effect during this appeal, and Maine has never
implemented section 1711-E(2-A).
We reject all of plaintiffs' constitutional challenges to
section 1711-E(2-A). Plaintiffs' First Amendment challenges fail
for the reasons stated in Ayotte: the statute regulates conduct,
not speech, and even if it regulates commercial speech, that
regulation satisfies constitutional standards. They also fail for
reasons not present in Ayotte. The Maine statute constitutionally
protects Maine prescribers' choice to opt in to confidentiality
protection to avoid being subjected to unwanted solicitations based
on their identifying data. We also reject the argument that the
statute is void for vagueness.
Plaintiffs' argument that section 1711-E(2-A) is
unconstitutional under the dormant Commerce Clause if applied to
plaintiffs' out-of-state use or sale of opted-in Maine prescribers'
identifying data also fails. We interpret the Maine statute using
Maine's principles of statutory construction and hold that section
1711-E(2-A) regulates prescription drug information intermediaries'
out-of-state use or sale of opted-in Maine prescribers' data. We
hold that this interpretation does not raise constitutional
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concerns under the dormant Commerce Clause, which might necessitate
a narrower reading of the statute under the doctrine of
constitutional avoidance.
The Supreme Court's current dormant Commerce Clause
jurisprudence does not leave Maine powerless to protect Maine
prescribers who have sought to prevent the use of their identifying
data in transactions that also cause substantial in-state harms,
including increased health care costs. The statute
constitutionally reaches plaintiffs' out-of-state transactions as
a necessary incident of Maine's strong interest in protecting
opted-in Maine prescribers from unwanted solicitations, a policy
that Maine also rationally believes will lower its health care
costs. Nor, we hold, would section 1711-E(2-A)'s regulation of
prescription drug information intermediaries' out-of-state use or
sale of opted-in Maine prescribers' identifying data raise
constitutional concerns as a disproportionate burden on interstate
commerce under Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).
I. Factual Background
The relevant facts are undisputed.2
Prescriber-identifying data is used for many purposes,
but this case concerns restrictions on only one of those uses:
2
These facts rely in part on this court's discussion of
the same industry, and plaintiffs' role in that industry, in our
2008 Ayotte opinion. The parties have relied heavily on those
facts and the record from Ayotte.
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pharmaceutical manufacturers' use of the data to send their
pharmaceutical sales representatives to personally market
particular drugs to particular prescribers, a practice known as
"detailing." Section 1711-E defines "detailing" as "one-to-one
contact with a prescriber or employees or agents of a prescriber
for the purpose of increasing or reinforcing the prescribing of a
certain drug by the prescriber." Me. Rev. Stat. Ann. tit. 22,
§ 1711-E(1)(A-2).
Detailing is a massive and expensive undertaking for
pharmaceutical manufacturers, which spend billions of dollars a
year to have some 90,000 pharmaceutical sales representatives make
weekly or monthly one-on-one visits to prescribers nationwide.
Stephanie Saul, Doctors Object as Drug Makers Learn Who's
Prescribing What, N.Y. Times, May 4, 2006, at A1. Each
pharmaceutical manufacturer's detailers market particular
pharmaceutical products in particular regions. A single prescriber
is visited by an average of twenty-eight detailers a week; an
average of fourteen detailers a week call on a single specialist.
Prescriber-identifying data is a valuable tool in a
detailer's arsenal of sales techniques. With it, pharmaceutical
manufacturers can pinpoint the prescribing habits of individual
prescribers in a region and target prescribers who might be
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persuaded to switch brands or prescribe more of a detailer's brand
of products.3 See Saul, supra, at A1.
During their one-on-one visits to prescribers, detailers
distribute upwards of $1 million worth of free product samples per
year, along with branded promotional materials and pamphlets about
the different conditions their particular products can be used to
treat. Detailers use prescriber-identifying data to do these
things more effectively; every sales pitch can be tailored to what
the detailer knows of the prescriber based on her prescribing
history. The central objective is to get prescribers to adopt the
pharmaceutical product the detailer is marketing and to build brand
loyalty. This goal is not only explicit; it is how detailers earn
bonuses. See Saul, supra, at A1.
Some prescribers, in Maine and elsewhere, welcome these
interactions. Detailers, they say, provide them with studies
relevant to their practices, useful free samples, and targeted data
about how widely certain new drugs have been prescribed by others.
They find that detailers provide helpful comparisons of competing
drugs used to treat the same conditions and information about new
3
When Merck marketed Vioxx, for example, it used a wealth
of prescriber-identifying data to create monthly reports on
individual prescribers in each detailer's assigned territory. The
reports showed how many Merck versus non-Merck drugs the prescriber
prescribed and estimated how many of these prescriptions could be
substituted for Merck products. Merck then tracked its detailers'
progress in converting prescribers in their territories to the
Merck brand and gave detailers bonuses based on Merck's sales
volume and market share in the detailer's territory.
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drugs or more effective alternatives to the prescriptions they
currently prescribe. These prescribers say they are immune to
detailers' influence and see no conflict of interest.
Significantly, though, other prescribers have strenuously
objected that detailing intrudes into their prescribing decisions.
Detailers, these prescribers insist, should not be able to use
their prescribing histories to target them for unwelcome marketing
calls. An article by a senior vice president of the American
Medical Association (AMA) and an executive of plaintiff IMS Health
noted that physicians "complain bitterly" about detailers "who wave
data in their faces" and challenge them with their own prescribing
histories when they fail to prescribe more of the product the
detailer has been advertising. R. A. Musacchio & R. J. Hunkler,
More Than a Game of Keep-Away, Pharmaceutical Executive, May 2006.
The head of California's state medical association has reported
that prescribers have been "outraged that people came into their
office and talked to them about how many times they prescribed a
particular drug." Saul, supra, at A1. Aggregated survey data
confirms that physicians have a predominantly negative view of
detailing. See P. Manchanda & E. 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, 788-91
(2005).
-8-
Many Maine prescribers have openly objected to detailing.
A survey by the Maine Medical Association in 2006 revealed that a
majority of Maine physicians did not want pharmaceutical
manufacturers to be able to use their individual prescribing
histories for marketing purposes. One Maine prescriber explained
that she felt that "it intrudes upon my privacy and my work life
for drug companies to buy my information, without my permission,
for marketing purposes." She has "ask[ed] to be removed from
mailing lists and telephone call lists" and "would like to have the
similar option of not allowing my professional information to be
sold to drug companies for marketing purposes."
Detailers' use of prescriber-identifying data, however,
is only the final step in a series of transactions that begin with
the acquisition and aggregation of massive amounts of individual
prescribers' identifying data. Pharmaceutical manufacturers lack
direct access to prescriber-identifying data. That fact has fueled
an enormously profitable, multilayered market for acquiring,
aggregating, packaging, and selling these data primarily for
detailing. Plaintiffs are the middlemen of this market.
When filling prescriptions, individual pharmacies
accumulate data about the prescriptions individual prescribers have
made, usually for insurance reimbursement. Pharmacies that are
part of national chains normally transfer these data to the chain's
central data warehouse. Each pharmacy, and even each pharmacy
-9-
chain, is only one piece of a bigger picture; individual
prescribers, or their patients, may make prescriptions at many
different pharmacy locations.
This is where plaintiffs come in. Plaintiff companies
are prescription drug information intermediaries that mine
specialized data. They contract with numerous pharmacies and, to
a lesser degree, insurance companies and other carriers, to buy
their raw data. Under those contracts, the pharmacy's computer
software collects data it sends to plaintiffs. The software
encrypts patient-identifying data so that plaintiffs cannot
identify individual patients by name, but it captures information
directly identifying prescribers by name and address and shows
details about the particular drugs prescribed.
Plaintiffs receive and aggregate data from these various
sources and then compile reports and databases. They assemble a
complete picture of individual prescribers' prescribing histories
by cross-referencing prescriber names with publicly available
databases, including the AMA's database of medical doctors'
specialties. See Saul, supra, at A1. Plaintiffs admit that most
of their reports and databases are destined--and designed--for
pharmaceutical manufacturers to instruct detailers where to focus
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their efforts, identify which prescribers to target, and assess
detailers' effectiveness.4
Plaintiffs then license or sell these specialized
databases and reports to pharmaceutical manufacturers, a lucrative
business that yielded revenues of $1.75 billion for plaintiff IMS
Health alone in 2005.5 Id. Plaintiffs' products are the building
blocks of the reports pharmaceutical manufacturers generate for
individual detailers, who use them to target prescribers in their
assigned areas.
II. The Maine Law
To date, Maine appears to be one of only three states
that have limited detailers' access to prescribers' identifying
data. See Me. Rev. Stat. Ann. tit. 22, § 1711-E(2-A); N.H. Rev.
Stat. Ann. § 318:47-f; Vt. Stat. Ann. tit. 18, § 4631(d). Like its
counterparts in New Hampshire and Vermont, the Maine law, section
1711-E(2-A), does so indirectly: in relevant part, it states that
"a carrier, pharmacy or prescription drug information
intermediary," as defined in the statute, "may not license, use,
sell, transfer or exchange for value, for any marketing purpose,
4
Plaintiffs also sell or license other databases and
reports to other clients, including governments, nonprofit
organizations, and research institutions.
5
Pharmaceutical manufacturers may also use plaintiffs'
data for other purposes, like to send out alerts about particular
drugs to prescribers who have been prescribing it or for research
and development.
-11-
prescription drug information that identifies a prescriber who has
filed for confidentiality protection."6 Me. Rev. Stat. Ann. tit.
22, § 1711-E(2-A). Maine's law regulates the different layers of
the market for prescriber-identifying information, but it does not
prohibit detailing, nor does it purport to prohibit speech by
detailers to prescribers.
Unlike similar laws in New Hampshire and Vermont, the
central feature of the Maine law is to limit detailers' access to
an individual prescriber's identifying data only if the prescriber
has affirmatively opted for this protection.7 See id.6
"Marketing" includes "[a]dvertising, publicizing,
promoting or selling a prescription drug;" "activities undertaken
for the purpose of influencing the market share of a prescription
drug or the prescribing patterns of a prescriber, a detailing visit
or a personal appearance;" "[a]ctivities undertaken to evaluate or
improve the effectiveness of a professional detailing sales force;"
or "[a] brochure, media advertisement or announcement, poster or
free sample of a prescription drug." Id. § 1711-E(1)(F-1).
"'Marketing' does not include pharmacy reimbursement,
formulary compliance, pharmacy file transfers in response to a
patient request or as a result of the sale or purchase of a
pharmacy, patient care management, utilization review by a health
care provider or agent of a health care provider or the patient's
health plan or an agent of the patient's health plan, and health
care research." Id.
7
This circuit upheld New Hampshire's statute, which
categorically prohibits certain entities, including plaintiffs,
from licensing, transferring, using, or selling any prescriber-
identifying data for a commercial purpose. N.H. Rev. Stat. Ann.
§ 318:47-f; Ayotte, 550 F.3d at 47. The Vermont statute instead
prohibits certain entities from selling, licensing, exchanging, or
permitting the use of records containing prescriber-identifying
data when marketing or promoting prescription drugs unless the
prescriber has affirmatively consented to such uses. See Vt. Stat.
Ann. tit. 18, § 4631(d); IMS Health Inc. v. Sorrell, 631 F. Supp.
2d 434, 443-44 (D. Vt. 2009).
-12-
A "prescriber" is "a person who is licensed, registered
or otherwise authorized in the appropriate jurisdiction to
prescribe and administer drugs in the course of professional
practice." Me. Rev. Stat. Ann. tit. 22, § 1711-E(1)(G-1). As
other sections of § 1711-E make clear, the "appropriate
jurisdiction" means prescribers licensed and located in Maine: the
provision is designed to protect only "prescribers in the health
care system of this state." Id. § 1711-E(1-B). Only these Maine
prescribers can opt in, and even opted-in prescribers' identifying
data can be used for any purpose other than detailing. See id.
Maine enacted section 1711-E(2-A) to achieve three stated
"compelling state interests: to improve the public health, to limit
annual increases in the cost of health care and to protect the
privacy of . . . prescribers in the health care system of this
State."8 Id. § 1711-E(1-A). The Maine legislature found that
"[p]atients and prescribers have requested that the legislature
provide a mechanism for protecting the confidentiality of
identifying prescription drug information from use for marketing
purposes." Id. § 1711-E(1-A)(B). "Across the nation," the
legislature further found, "data companies purchase for marketing
purposes computerized prescription drug records from pharmacies and
insurers that identify prescribers," and they sell these records
8
The Maine law contains a separate provision protecting
patient-identifiable data, which plaintiffs do not challenge. See
Me. Rev. Stat. Ann. tit. 22, § 1711-E(2).
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"to prescription drug manufacturers that use personally identifying
prescriber information to attempt to influence prescribers to
prescribe higher priced drugs," resulting in higher health care
costs. Id. § 1711-E(1-A)(C). "Restricting the use of prescriber
identifying information," the Maine legislature found, "will act to
decrease drug detailing that targets the prescriber, thus
increasing decisions to prescribe lower priced drugs and decisions
made on the basis of medical and scientific knowledge and driving
down the cost of health care." Id. § 1711-E(1-A)(D).
Section 1711-E(2-A) operates as follows. In its first
step, Maine prescribers who object to being targeted by
pharmaceutical detailers may register for confidentiality
protection.9 See Me. Rev. Stat. Ann. tit. 22, § 1711-E(4). Maine
prescribers can opt in for confidentiality protection in
application materials with the relevant Maine licensing board. Id.§ 1711-E(4)(A). Those materials must inform Maine prescribers that
"prescription drug information that identifies the prescriber is
used for marketing purposes by carriers, pharmacies and
prescription drug information intermediaries" and must give
prescribers the option of protecting the confidentiality of their
9
Plaintiffs' fleeting assertion that section 1711-E's
definition of a "prescriber" encompasses any prescriber anywhere is
flatly contradicted by section 1711-E's statement of purpose, which
states that the statutes' goals include "to protect the privacy of
. . . prescribers in the health care system of this State." Me.
Rev. Stat. Ann. tit. 22, § 1711-E(1-B).
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identifying information through one of three methods.10 Id. § 1711-
E(4)(A)(1). When a prescriber opts in, the relevant Maine
licensing board must place the individual's name on a list that is
submitted every month to the Maine Health Data Organization, an
independent state executive agency.11 Id. § 1711-E(4)(A)(2).
When patients of an opted-in Maine prescriber fill their
prescriptions, the pharmacy still collects the prescriber's
identifying data and may transfer it to a central data center. The
law does not, by its terms, affect this transaction.
Section 1711-E(2-A) does regulate transactions between
those pharmacies (or pharmacy data centers) and prescription drug
information intermediaries like plaintiffs. Section 1711-E(2-A)
prohibits pharmacies from selling, transferring, or licensing
opted-in Maine prescribers' identifying data for a marketing
purpose, unless the prescriber revokes the protection. See id.
§ 1711-E(2-A),(4)(A)(3).
Once plaintiffs obtain prescriber-identifying data from
pharmacies, plaintiffs generate certain databases and reports
10
Those methods are (1) by signing and submitting an
enclosed form to the Maine Health Data Organization; (2) by
manually or electronically checking a box on the form; or (3) by
linking to the Maine Health Data Organization website and filling
out an electronic form. Id. § 1711-E(4)(A)(1).
11
The Maine Health Data Organization maintains a health
information database to benefit Maine citizens and develops data
collection policies. Me. Rev. Stat. Ann. tit. 22, § 8703(1); id.§ 8704(1)(A).
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designed to facilitate detailing. If plaintiffs include opted-in
Maine prescribers' identifying data in these products, they have
"used" the data for a marketing purpose, in violation of section
1711-E(2-A). See id. § 1711-E(2-A). Section 1711-E(2-A) also
prohibits plaintiffs from selling or licensing (to pharmaceutical
manufacturers) only the portion of these databases and reports
containing opted-in Maine prescribers' identifying data. See id.
Once pharmaceutical manufacturers obtain these detailing-
oriented databases and reports, they generate individualized
reports for detailers, who then use individual prescribers' data to
target prescribers in Maine. Section 1711-E(2-A) does not
explicitly limit detailers' use of prescriber-identifying data, but
the earlier stages of regulation are meant to prevent this
information from getting to detailers for use in marketing.
A violation of section 1711-E(2-A)'s prohibitions is a
violation of the Maine Unfair Trade Practices Act, id. § 1711-E(3),
and, under that act, the Maine Attorney General can enjoin the
practice and levy civil penalties of $10,000 per violation, Me.
Rev. Stat. Ann. tit. 5, § 209.12 The law is not subject to criminal
enforcement.
12
Though neither party has addressed who may enforce the
Maine Unfair Trade Practices Act, it is undisputed that the
attorney general can enforce section 1711-E on behalf of
individuals through section 209 of the act.
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Section 1711-E(2-A) was to go into effect on January 1,
2008, id. § 1711-E(2-A), but because plaintiffs obtained a
preliminary injunction before then, Maine has been prevented from
enforcing it. See Rowe, 532 F. Supp. 2d at 157. As of September
2009, notwithstanding the injunction, 259 Maine prescribers have
opted in for confidentiality protection.
III. First Amendment
We reject plaintiffs' First Amendment challenge to the
Maine law. Plaintiffs' claims fail for the same reasons we
rejected their nearly identical First Amendment challenge to New
Hampshire's similar statute in Ayotte. Plaintiffs' arguments here
fail for another, independent reason. Maine has set up an opt-in
scheme for prescribers licensed in Maine. Even assuming arguendo
that the Maine law restricts protected commercial speech and not
conduct, we hold that it directly advances the substantial purpose
of protecting opted-in prescribers from having their identifying
data used in unwanted solicitations by detailers, and thus Maine's
interests in lowering health care costs.
A.
In Ayotte, this circuit held that New Hampshire's
restrictions on plaintiffs' licensing, use, sale, transfer or
exchange of all New Hampshire prescribers' identifying data
regulate conduct, not speech, and thus the First Amendment does not
protect plaintiffs' conduct. 550 F.3d at 51-54.
-17-
Ayotte alternately held that even if the New Hampshire law
regulates speech, plaintiffs are at best engaged in commercial
speech and the law survives intermediate scrutiny under Central
Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S.
557 (1980). Id. at 54-60. Ayotte also held that reducing health
care costs is a substantial government interest; the court did not
reach New Hampshire's two other asserted interests, protecting
citizens' health and protecting the confidentiality of patients'
and prescribers' identifying data. Id. at 55. The New Hampshire
law directly advances health care cost reduction given record
evidence showing that detailing increases prescription drug costs,
that detailers' effectiveness is bound up with their use of
individual prescribers' histories, and that reducing detailers'
access to prescribers' data would make prescribers less responsive
to detailers' efforts to market costly brand-name drugs. Id. at
55-58. Finally, Ayotte found that New Hampshire's law is no more
restrictive than necessary to advance the state's interest in
containing costs, though its prohibitions extend to all New
Hampshire prescribers' identifying data. Id. at 58-60.
Maine's law, which was modeled in part on New
Hampshire's, regulates the same kind of conduct for the same three
purposes: reducing health care costs in Maine, protecting Maine
patients' health, and protecting Maine patients' and prescribers'
identifying data from unwanted uses in Maine. Me. Stat. Rev. Ann.
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tit. 22, § 1711-E(A-1). Indeed, section 1711-E(2-A) differs from
the New Hampshire law only in ways that weaken plaintiffs' First
Amendment and other challenges. Unlike New Hampshire's law, the
Maine law only prohibits plaintiffs from licensing, using, selling,
transferring or exchanging data identifying prescribers licensed in
Maine who have opted-in for confidentiality protection. See id.
§ 1711-E(2-A). Unlike New Hampshire's legislature, the Maine
legislature included specific findings that limiting detailers' use
of Maine prescribers' identifying data would reduce health care
costs, ensure Maine prescribers' decisions were based on unbiased
medical and scientific evidence, and protect Maine prescribers from
unwanted detailing visits. Compare id. § 1711-E (1-A), with N.H.
Rev. Stat. Ann. § 318:47-f. Maine also introduced evidence into
the record to show how section 1711-E advances Maine's three
asserted interests.
Plaintiffs concede that Ayotte forecloses their First
Amendment challenge and that the district court's injunction, which
was granted based on their First Amendment claims before Ayotte was
decided, cannot be affirmed on those grounds. Plaintiffs
nonetheless reiterate shorthand versions of the same arguments this
court rejected in Ayotte: that their use, sale, and licensing of
prescriber-identifying information is speech, not conduct, and that
it is protected speech warranting strict scrutiny, not merely
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commercial speech.13 Their alternate claim, that the Maine law
cannot survive intermediate scrutiny as commercial speech because
Maine has not introduced any evidence that the law will actually
reduce health care costs, is contradicted by Ayotte's reasoning,
and the record in this case supports Ayotte's conclusion. See 550
F.3d at 55-58. There is no basis for considering these arguments
anew.
We reject plaintiffs' contention that United States v.
Stevens, 130 S. Ct. 1577 (2010), undermines Ayotte's holding.
Stevens held that speech in the form of video depictions of animal
fighting is not categorically unprotected by the First Amendment,
see id. 1585-87. By contrast, Ayotte's initial holding was that
the New Hampshire law primarily regulated conduct, not speech. 550
F.3d at 51-54. Ayotte did suggest that any speech regulated was of
such minimal value that it likely fell outside of First Amendment
protections. Id. at 51-52. That suggestion, though, was in
service of Ayotte's holding that the New Hampshire statute
regulated conduct, not speech, an argument not at issue in Stevens.
13
Plaintiffs' overbreadth argument, not addressed by the
district court, consists of the bare assertion that the Maine law
is overbroad because it prohibits the use of prescriber-identifying
data when marketing all prescription drugs, not just those drugs
without any obvious financial or health benefit to patients. That
argument is at best an assertion that section 1711-E(2-A) is not
narrowly tailored enough to serve Maine's interest in reducing
health care costs. We rejected an analogous claim in Ayotte, see
550 F.3d at 59-60, and the argument has no relevance to our
alternate holding in Part III.B.
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Further, Ayotte's alternate holding was that the New Hampshire law
would be upheld even if it regulated protected speech. Id. at 54-
60.
B.
We reject plaintiffs' First Amendment challenge to the
Maine law for a further reason particular to the Maine statute and
independent of Ayotte. Even if the Maine law regulates protected
speech, section 1711-E(2-A) directly serves Maine's substantial
interest in vindicating Maine prescribers' rights to avoid unwanted
targeting by detailers in Maine on the basis of their individual
prescribing histories.
This purpose is not solely about protecting prescribers'
expectation that their identifying data will remain categorically
private. See Rowe, 532 F. Supp. 2d. at 170-72. Prescribers' also
have a privacy interest in avoiding unwanted solicitations from
detailers who have used their individual prescribing data to
identify and target them. Maine's stated interest, in turn, is in
shielding those Maine-licensed prescribers who object to this
invasive use of their identifying information and who have opted in
to a system of protection the state provides. Me. Rev. Stat. Ann.
tit. 22, § 1711-E(1-A)(B),(1-B),(B). Like laws implementing "do
not call" lists, Maine advances this interest by allowing its
prescribers to join a list to stop their data from being licensed,
used, sold, transferred or exchanged for this unwelcome purpose.
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If section 1711-E(2-A) regulates protected speech at all,
it regulates commercial speech, which the Supreme Court has defined
to include "expression related solely to the economic interests of
the speaker and its audience." Central Hudson, 447 U.S. at 561.
This circuit and others continue to apply this definition. See
Ayotte, 550 F.3d at 54; see also United States v. Philip Morris USA
Inc., 566 F.3d 1095, 1143 (D.C. Cir. 2009); BellSouth Telecomms.,
Inc. v. Farris, 542 F.3d 499, 504 (6th Cir. 2008); Procter & Gamble
Co. v. Amway Corp., 242 F.3d 539, 552 (5th Cir. 2001).
Plaintiffs' purported regulated "speech" consists of data
contained in databases and reports that plaintiffs have designed to
facilitate detailing. This is economically motivated content
tailored to a commercial use, namely, to help pharmaceutical
manufacturers better market brand-name prescription drugs to
particular prescribers. Cf. Bolger v. Youngs Drug Prods. Corp.,
463 U.S. 60, 66-68 (1983) (suggesting that use for an advertising
purpose and the speaker's economic motivations are relevant indicia
of commercial speech). Plaintiffs' collections of prescriber-
identifying data, if speech at all, would be commercial speech:
their purpose is to "facilitate the marketing of . . . services to
individual customers." U.S. W. Inc. v. FCC, 182 F.3d 1224, 1233
n.4 (10th Cir. 1999).14
14
Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472
U.S. 749 (1985), held that a consumer credit report made available
by a reporting agency to particular subscribers received less First
-22-
Under the Central Hudson framework, commercial speech is
protected if it is "neither misleading nor related to unlawful
activity." 447 U.S. at 564. That is not at issue here. Still,
protected commercial speech can be restricted if the "asserted
governmental interest is substantial," "the regulation directly
advances the governmental interest asserted," and the restriction
"is not more extensive than necessary to serve that interest." Id.
at 566; see also Ayotte, 550 F.3d at 55.
Assuming the opt-in statute regulates protected
commercial speech, Maine meets the test for restricting that
speech. Maine has a substantial interest in protecting its
prescribers from unwanted solicitations by detailers in Maine based
on their prescribing histories. "The unwilling listener's interest
in avoiding unwanted communication," the Supreme Court has held,
"has been repeatedly identified in our cases," and it is "an aspect
of the broader 'right to be let alone' that one of our wisest
Amendment protection because it was "solely in the individual
interest of the speaker and its specific business audience." Id.
at 762. Though not explicitly labeled commercial speech, the
Supreme Court nonetheless concluded that "many of the same concerns
that argue in favor of reduced constitutional protection in those
areas apply here as well." Id. at 762 n.8.
Applying these principles in an analogous context, the D.C.
Circuit held that a blanket prohibition on an intermediary's sale
of targeted marketing lists identifying particular consumers with
desired characteristics was subject to lesser scrutiny. See Trans
Union Corp. v. FTC, 245 F.3d 809, 818 (D.C. Cir. 2001). The
reports and databases plaintiffs prepare to facilitate detailing
are indistinguishable from these cases for First Amendment
purposes. Still, we use the Central Hudson framework.
-23-
Justices characterized as 'the most comprehensive of rights and the
right most valued by civilized men.'" Hill v. Colorado, 530 U.S.
703, 716-17 (2000) (quoting Olmstead v. United States, 277 U.S.
438, 478 (1928) (Brandeis, J., dissenting)).
Maine has a substantial interest in vindicating this
right by allowing Maine-licensed prescribers to avoid being
subjected to unwelcome advertisements and solicitations. The
Supreme Court has recognized this interest in the context of "do
not mail" lists.15 See Rowan v. U.S. Post Office Dep't, 397 U.S.
728, 736-38 (1970) (holding that a federal "do not mail" list
served "the very basic right to be free from sights, sounds, and
tangible matter we do not want"); see also FTC v. Mainstream Mktg.
Servs., Inc., 345 F.3d 850, 854-55 (10th Cir. 2003) (recognizing
the government's "substantial interest" in protecting individual
privacy through the federal "do not call" list). It undoubtedly
extends to protecting Maine prescribers who do not want their data
used to facilitate unwanted solicitations. See Trans Union Corp.
v. FTC, 245 F.3d 809, 818 (D.C. Cir. 2001) (recognizing the
government's "substantial interest" in "protecting the privacy of
15
Though many of these unwanted solicitations invade
individuals' right to be left alone in their homes, a location
accorded special protection, Hill formulated this right as one that
applies more broadly, with special but not exclusive force in the
home. Hill, 530 U.S. at 717.
-24-
consumer credit information" by preventing its use in targeted
marketing lists).16
Section 1711-E(2-A) advances this interest directly.
Both the record evidence and common sense show that "the harms
[Maine] recites are real" and that the law "will in fact alleviate
them to a material degree." Ayotte, 550 F.3d at 55 (quoting
Edenfield v. Fane, 507 U.S. 761, 770-71 (1993)). Time and again,
the record establishes, Maine prescribers have not merely
complained about being subjected to detailing; they have identified
detailers' use of their personal prescribing histories as a
singularly objectionable practice. Maine's legislature found that
many prescribers had demanded legislative action to protect their
identifying data from this unwanted use. § 1711-E(1-A)(B).
Section 1711-E(2-A) does not, and need not, directly or
categorically prohibit detailing to address this harm. Rather,
Maine provides exactly the protections that Maine prescribers have
requested and allows prescribers to choose whether to invoke them.
Maine's opt-in confidentiality mechanism is also a less
restrictive means of vindicating prescribers' interests in not
having their information used in detailing. See Ayotte, 550 F.3d
16This reasoning also disposes of plaintiffs' assertion
that section 1711-E(2-A) is a prior restraint on their speech
because it allows prescribers to prevent plaintiffs from
transferring or using their data. That argument rests on the
mistaken assumption that plaintiffs have an absolute right to
obtain prescriber-identifying data and to use it to facilitate
unwelcome detailing practices.
-25-
at 59. Targeted prohibitions are by definition less restrictive
than a categorical ban. See United States v. Playboy Entm't.
Group, Inc., 529 U.S. 803, 815 (2000); see also Mainstream Mktg.
Servs., Inc. v. FTC, 358 F.3d 1228, 1242-43 (10th Cir. 2004). Opt-
in mechanisms like the "do not call" list are narrowly tailored by
nature: they "restrict only calls that are targeted at unwilling
recipients." Mainstream Mktg. Servs., 358 F.3d at 1242; see also
Fraternal Ord. of Police v. Stenehjem, 431 F.3d 591, 599 (8th Cir.
2005); Nat'l Fed'n of the Blind v. FTC, 420 F.3d 331, 342 (4th Cir.
2005); Bland v. Fessler, 88 F.3d 729, 733 (9th Cir. 1996). Opt-in
mechanisms also avoid concerns about state paternalism in the First
Amendment context. They regulate speech (if speech at all) only
when private individuals choose not to be subject to certain kinds
of communications, not simply because the state has identified
particular communications as harmful. Bland, 88 F.3d at 733.
Plaintiffs cursorily assert that Maine could have
regulated detailers' free samples to prescribers, educated doctors,
or implemented formulary controls as alternatives to section 1711-
E(2-A). Ayotte rejected these alternatives as ineffective ways to
advance a state's interest in health care costs. 550 F.3d at 59-
60. These alternatives do virtually nothing to advance Maine's
interest in protecting opted-in Maine prescribers' identifying data
-26-
from use in detailing.17 Our analysis also disposes of plaintiffs'
assertion that section 1711-E violates the Fourteenth Amendment as
an economic constraint unrelated to legitimate state interests.
IV. Vagueness
Plaintiffs also argue that section 1711-E(2-A)'s
prohibition on the use, transfer, licensing, sale, or exchange of
opted-in prescriber-identifying data "for any marketing purpose" is
unconstitutionally vague. Plaintiffs' brief claims that they
"simply sell the information" to pharmaceutical manufacturers, and
they have no intent to market or advertise pharmaceutical products
to prescribers themselves. Plaintiffs assert that the law is
unconstitutionally vague because they cannot know whether "any
marketing purpose" refers to their motivation in selling or
licensing the information or to pharmaceutical manufacturers'
ultimate purpose in obtaining the data.
Even if there were possible ambiguity in section 1711-
E(2-A)'s terms, the law is still not void for vagueness. Statutory
ambiguity is a regular byproduct of legislative drafting, but the
17
Plaintiffs also introduced evidence on an AMA initiative
that allows medical doctors to signal that they do not want their
prescribing data used in detailing. But the AMA has no real power
to limit plaintiffs' and other intermediaries' use of this data;
compliance is monitored only through complaints to the AMA, and
enforcement depends on plaintiffs and other intermediaries'
goodwill prevailing over the strong financial incentives to use
this data. Moreover, the AMA scheme does not cover a host of
prescribers like nurse practitioners or osteopathic physicians, who
might want to protect their prescribing data but are ineligible for
the AMA scheme.
-27-
vagueness doctrine invalidates only statutes whose terms are "so
uncertain that persons of average intelligence would have no choice
but to guess at [their] meaning and modes of application." United
States v. Nieves-Castaño, 480 F.3d 597, 603 (1st Cir. 2007)
(quoting United States v. Councilman, 418 F.3d 67, 84 (1st Cir.
2005) (en banc)) (internal quotation marks omitted); see also
Ridley v. Mass. Bay Transp. Auth., 390 F.3d 65, 93 (1st Cir. 2004).
Whatever ambiguity lurks in the phrase "any marketing purpose," the
law's lengthy definition of the term "marketing," see supra note 6,
surely provides enough of a benchmark to satisfy due process.
Further, this purported ambiguity does not exist on the
facts: plaintiffs, at minimum, intend for their databases and
reports to facilitate detailing. Plaintiffs portray themselves as
unwitting middlemen that sell prescriber-identifying information to
their clients with no knowledge or control of its ultimate use.
Plaintiffs' depositions and statements at oral argument reveal
instead that they are well aware that the primary and intended use
of their reports and databases is in detailing.
V. Dormant Commerce Clause
Plaintiffs' final constitutional challenge is that
section 1711-E(2-A), "as it is applied to the transactions in which
they engage out of the state and are shown by the record evidence,"
-28-
violates the dormant Commerce Clause.18 Because plaintiffs obtained
an injunction before section 1711-E(2-A) went into effect, however,
the state has not promulgated regulations under this section, there
is no state decisional law, and the law has never been applied.19
18
The Commerce Clause, which gives Congress the authority
to "regulate Commerce . . . among the several States," U.S. Const.
art I, § 8, cl. 3, also carries negative or implicit consequences
for states' authority to regulate interstate commerce, referred to
as the "dormant Commerce Clause." There is no claim that Congress
has acted and that Maine's statute must fail on that basis.
19
In recent years, the Supreme Court has sharply
distinguished between facial and as-applied challenges, stringently
limiting the availability of the former. See, e.g., Wash. State
Grange v. Wash. State Republican Party, 552 U.S. 442, 450-51
(2008); see also G.E. Metzger, Facial Challenges and Federalism,
105 Colum. L. Rev. 873, 878-80 (2005) (questioning whether the
Supreme Court follows this doctrinal position in practice).
We did not address this distinction in Ayotte: plaintiffs'
dormant Commerce Clause challenge to the New Hampshire statute
there was plainly identified as a facial challenge. See Ayotte,
550 F.3d at 63.
Here, plaintiffs say they are not making any facial challenge.
There is some question as to whether plaintiffs' pre-enforcement
challenge can be properly characterized as an as-applied challenge.
Plaintiffs have introduced record evidence showing that their use
or sale of opted-in Maine prescribers' identifying data occurs
outside Maine and that they are "prescription drug information
intermediaries" and thus potentially subject to regulation under
section 1711-E(2-A). But plaintiffs argue that the law applies to
their transactions only based on their statutory construction.
We accept plaintiffs' characterization of their argument as a
challenge only to section 1711-E(2-A) as it applies to plaintiffs,
as prescription drug information intermediaries, and not as to
pharmacies and other entities. See Milavetz, Gallop & Milavetz,
P.A. v. United States, 130 S. Ct. 1324, 1339 & n.7 (2010). We also
assume arguendo that plaintiffs' challenge is not subject to the
restrictions on facial challenges. But we cannot accept
plaintiffs' assertion that section 1711-E(2-A) applies to their
out-of-state transactions without engaging in our own statutory
analysis. Here, the issue is not whether plaintiffs belong to a
class of entities that section 1711-E(2-A) plainly regulates
extraterritorially; it is how to interpret section 1711-E(2-A)'s
-29-
Plaintiffs assert that they are "prescription drug information
intermediaries" as defined in section 1711-E, and Maine does not
dispute this. Cf. Milavetz, Gallop & Milavetz, P.A. v. United
States, 130 S. Ct. 1324, 1339 & n.7 (2010).
Plaintiffs' challenge presents questions of whether
section 1711-E(2-A) would be interpreted under Maine law to apply
to plaintiffs' out-of-state use or sale of opted-in Maine
prescribers' identifying data, including whether the rule of
constitutional avoidance requires the statute to be interpreted not
to apply to plaintiffs' out-of-state transactions.20 As a matter
of law, we hold that the statute applies to plaintiffs' out-of-
state use or sale of opted-in Maine prescribers' identifying data
and that the statute does so constitutionally. We also reject
plaintiffs' claim at oral argument that we should leave the
district court's injunction in place and remand this claim for
further proceedings.
Plaintiffs interpret section 1711-E(2-A) to apply to
their out-of-state transactions based on their construction of its
text. They claim that the regulation violates the so-called
"extraterritoriality" branch of the dormant Commerce Clause, which
intended scope. Cf. id. at 1339.
20
We do not decide whether section 1711-E(2-A) applies to
pharmacies' or pharmaceutical manufacturers' out-of-state
transactions involving opted-in Maine prescribers. There is no
indication that these entities cannot effectively assert their own
rights insofar as they are affected by section 1711-E(2-A).
-30-
they say prohibits direct regulation of interstate commerce that
occurs wholly outside a state's borders. In the alternative,
plaintiffs assert, this regulation violates the Pike balancing test
"because it does nothing to advance in-state interests and imposes
a heavy burden on interstate activity."
We reject plaintiffs' arguments. We interpret section
1711-E(2-A)'s scope by applying the rules of statutory construction
that the state's highest court would follow. Ayotte, 550 F.3d at
61; see also Adar v. Smith, 597 F.3d 697, 714 (5th Cir. 2010). We
hold, based on the text and legislative backdrop of section 1711-
E(2-A) and Maine's canons of statutory construction, that section
1711-E(2-A) regulates plaintiffs' out-of-state use or sale of
opted-in Maine prescribers' identifying data.
We further hold that this interpretation of the statute
does not raise constitutional concerns under the dormant Commerce
Clause. The Supreme Court's current dormant Commerce Clause
jurisprudence is concerned with preventing economic protectionism
and inconsistent regulation, not with enforcing geographical limits
on states' exercise of their police power that necessarily regulate
commerce. Even under the extraterritoriality branch of the dormant
Commerce Clause, the Supreme Court has not barred states from
regulating any commercial transactions beyond their borders that
involve their own citizens and create in-state harms. Nor does the
Maine law create constitutional concerns under the Pike balancing
-31-
test. Plaintiffs have not shown any disproportionate burden on
interstate commerce, and the law creates substantial in-state
benefits for those Maine prescribers who have affirmatively asked
Maine to protect their identifying data and for Maine in its
efforts to lower health care costs.
A. Section 1711-E(2-A)'s Text and Setting
The text of the statute shows section 1711-E(2-A) was
intended to apply to plaintiffs' out-of-state use or sale of opted-
in Maine prescribers' identifying data. The statutory text shows
that section 1711-E(2-A) was designed to address a significant
problem occurring in Maine, whose solution has some cross-border
implications. The law is concerned only with "prescribers in the
health care system of [Maine]," Me. Rev. Stat. Ann. tit. 22,
§ 1711-E(1-B), not prescribers anywhere in the United States, and
specifically those prescribers who have opted in to Maine's
"mechanism for protecting the confidentiality of identifying
prescription drug information from use for marketing purposes," id.§ 1711-E(1-A)(B). The statute further recognizes that these
marketing uses occur "[a]cross the nation" when "data companies
purchase for marketing purposes computerized prescription drug
records from pharmacies and insurers that identify prescribers."
Id. § 1711-E(1-A)(C). The statutory text also identifies specific
harms arising from these transactions--invasions of prescribers'
-32-
privacy, increased health care costs, and harms to public health--
as occurring in Maine. See § 1711-E(1-B).
Section 1711-E(2-A)'s context confirms that the Maine
Legislature intended to reach plaintiffs' out-of-state conduct
because of its substantial connections to Maine and because it
causes harms exclusively in Maine. Section 1711-E(2-A) targets a
series of underlying transactions that cause these harms, which
start and end in Maine, even if all the transactions covered in
order to effectuate the statute's purposes do not occur in Maine.
Maine prescribers' prescriptions are primarily, if not exclusively,
filled at Maine pharmacies. Data from those Maine pharmacies are
ultimately transferred to prescription drug information
intermediaries like plaintiffs through contractual arrangements.
Plaintiffs' subsequent use and sale of Maine prescribers'
identifying data to generate detailing-oriented databases and
reports may occur outside Maine, but those activities are bound up
with pharmaceutical manufacturers' ultimate use of the information
in detailing that targets Maine prescribers in Maine.
The law also takes effect only if Maine prescribers
affirmatively indicate that they want Maine to protect the
confidentiality of their identifying information. See id. § 1711-
E(1)(G-1), (2-A), (4). Every intermediate step is limited to
transactions involving these prescribers' identifying data. See
id. § 1711-E(2-A). The law's ultimate effect is to prevent
-33-
detailers with Maine routes from targeting Maine prescribers with
their own prescribing histories. Id. § 1711-E(1-A), (1-B).
B. Presumption against Extraterritoriality
Our interpretation of section 1711-E(2-A) also comports
with Maine's canons of statutory construction. Maine, like other
states, generally presumes its statutes do not apply
extraterritorially in the absence of contrary indications of
legislative intent. See Holbrook v. Libby, 94 A. 482, 483 (Me.
1915); see also 73 Am. Jur. 2d Statutes § 250 (2010). That
presumption is overcome here: the Maine Legislature plainly
intended section 1711-E(2-A) to regulate plaintiffs' out-of-state
use or sale of opted-in Maine prescribers' identifying data.21
Maine's presumption against extraterritoriality reflects
inherent limitations on the scope of states' sovereign regulatory
powers. See Stavis Ipswich Clam Co. v. Green, 236 A.2d 708, 712
(Me. 1968). This presumption is not a per se rule because those
state powers are not mechanically limited to conduct occurring
within a state's physical borders. As one learned commentator has
noted, "[i]n practice, states exert regulatory control over each
other all the time . . . . [A] state's geographic territory does
not mark the outer limit of its legitimate regulatory concern."
21
In Ayotte, this court held that the presumption against
construing New Hampshire's statute to apply extraterritorially had
not been overcome, not least because the New Hampshire Attorney
General insisted that New Hampshire only sought to regulate conduct
within its borders. 550 F.3d at 63-64.
-34-
G.E. Metzger, Congress, Article IV, and Interstate Relations, 120
Harv. L. Rev. 1468, 1521-22 (2007). Indeed, an entire body of
conflict of laws cases apply state laws to extraterritorial
conduct. See K. Florey, State Courts, State Territory, State
Power: Reflections on the Extraterritoriality Principle in Choice
of Law and Legislation, 84 Notre Dame L. Rev. 1057, 1073-74 (2009).
Maine, like other states, has construed its laws to apply
to extraterritorial conduct with a substantial impact in or
connection to Maine's residents or licensees. See, e.g., State v.
Hayes, 603 A.2d 869, 870 (Me. 1992) (upholding the extraterritorial
enforcement of Maine's lobster laws to vessels registered in
Maine); Dissell v. Trans World Airlines, 511 A.2d 441, 444-45 (Me.
1986) (applying Maine's worker's compensation statute to require an
out-of-state airline to further compensate a flight attendant
stationed and injured out of state but residing in Maine because of
sufficient contacts with Maine).22 Section 1711-E(2-A)'s
application to plaintiffs is within Maine's sovereign authority.
22
Other states have similarly recognized that "a state may
have the power to legislate concerning the rights and obligations
of its citizens with regard to transactions occurring beyond its
boundaries." N. Alaska Salmon Co. v. Pillsbury, 162 P. 93 (Cal.
1916); see also Sexton v. Ryder Truck Rental, Inc., 320 N.W.2d 843,
854 (Mich. 1982); 73 Am. Jur. 2d Statutes § 250 (2010). Numerous
types of state statutes have extraterritorial effect. See, e.g.,
State v. Flores, 188 P.3d 706, 710 (Ariz. Ct. App. 2008) (criminal
laws); Boca Petroco, Inc. v. Petroleum Realty II, LLC, 678 S.E.2d
330, 333-34 (Ga. 2009) (lis pendens statutes); Heath Consultants,
Inc. v. Precision Instruments, Inc., 527 N.W.2d 596, 607 (Neb.
1995) (antitrust law).
-35-
C. Constitutional Avoidance and the Dormant Commerce Clause
Finally, we reject the argument that section 1711-E(2-
A)'s application to prescription drug information intermediaries'
out-of-state use or sale of opted-in Maine prescribers' identifying
data would raise constitutional concerns under the dormant Commerce
Clause.23 Under Maine and federal law, we must "avoid an
unconstitutional construction of a statute if a reasonable
interpretation of the statute would satisfy constitutional
requirements." Anderson v. Town of Durham, 895 A.2d 944, 951 (Me.
2006) (quoting Bagley v. Raymond Sch. Dep't, 728 A.2d 127, 133 (Me.
1999)) (internal quotation marks omitted). There is no need for
constitutional avoidance here.
We begin with the Supreme Court's current dormant
Commerce Clause jurisprudence, which provides no foundation for
plaintiffs' contention that Maine's regulation of their out-of-
state use or sale of opted-in Maine prescribers' data would raise
constitutional concerns. The dormant Commerce Clause sets two
complementary boundaries for states' regulatory powers over
23
The Maine Attorney General has argued that the law
regulates persons or entities over whom Maine can exercise personal
jurisdiction. That interpretation states a limitation on any
extraterritorial application of a statute: it must comport with the
requirements of the Due Process and Full Faith and Credit Clauses.
Allstate Ins. Co. v. Hague, 449 U.S. 302, 308 (1981). Plaintiffs
have not argued that section 1711-E(2-A)'s application to their
out-of-state transactions would violate those provisions. But that
does not by definition alleviate constitutional concerns under the
dormant Commerce Clause, which serves different purposes. Quill
Corp. v. North Dakota, 504 U.S. 298, 312-13 (1992).
-36-
commerce. On one hand, states cannot interfere with Congress's
constitutional authority over interstate commerce by enacting laws
that seriously impede interstate commerce, even when Congress has
not acted. See Dep't of Revenue v. Davis, 553 U.S. 328, 337-38
(2008).24 On the other hand, states "retain authority under their
general police powers to regulate matters of legitimate local
concern, even though interstate commerce may be affected." Maine
v. Taylor, 477 U.S. 131, 138 (1986) (quoting Lewis v. BT Inv.
Managers, Inc., 447 U.S. 27, 36 (1980)) (internal quotation marks
omitted). Further, in fields traditionally subject to state
regulation, federal courts "should be particularly hesitant to
interfere with [states'] efforts under the guise of the Commerce
Clause." United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste
Mgmt. Auth., 550 U.S. 330, 344 (2007) (alterations in original).
As to the first of these boundaries, "the dormant
Commerce Clause is driven by concern about 'economic protectionism-
-that is, regulatory measures designed to benefit in-state economic
interests by burdening out-of-state competitors." Davis, 553 U.S.
at 337-38 (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269,
24
This limitation on states' powers is grounded in the
historical origins of the Commerce Clause, which gives Congress the
power to "regulate Commerce . . . among the several States." U.S.
Const. Art I, § 8, cl. 3. The Framers saw this as an essential
element of the Constitution to avoid the "economic Balkanization"
that had prevailed under the Articles of Confederation, under which
states had enacted rampant tariffs and other trade barriers at the
price of national economic unity. See Davis, 553 U.S. at 337-38;
Granholm v. Heald, 544 U.S. 460, 472 (2005).
-37-
273) (1988)). Similar concerns about hidden protectionism and
excessive barriers to interstate trade arise when states enact laws
likely to subject entities engaged in interstate commerce to
incompatible cross-state regulatory regimes, see CTS Corp. v.
Dynamics Corp. of Am., 481 U.S. 69, 88-89 (1987); S. Pac. Co. v.
Ariz. ex rel. Sullivan, 325 U.S. 761, 767-68 (1945), or laws with
minimal in-state benefits and a disproportionate impact on
interstate commerce, see Pike, 397 U.S. at 142.
These concerns are central to the way the Supreme Court
has framed the dormant Commerce Clause in its recent opinions. The
Maine law implicates none of them. Maine's regulation of
prescription drug information intermediaries' out-of-state use or
sale of opted-in Maine prescribers' data does not discriminate
against out-of-state entities in favor of in-state competitors, nor
do plaintiffs so argue. Maine's law does not risk imposing
regulatory obligations inconsistent with those of other states. No
other states have erected competing regulations, much less opposing
regulations requiring the transfer of Maine prescribers' data.25
This is simply not an example of a state engaged in economic
protectionism. Cf. Davis, 553 U.S. at 337-39.26
25
Though New Hampshire and Vermont's laws differ somewhat
from Maine's, neither purports to regulate any prescriber anywhere.
26
Nor, as we discuss below, would this interpretation of
section 1711-E(2-A) result in excessive burdens on interstate
commerce relative to in-state benefits.
-38-
Maine's interests, on the other hand, are precisely the
kind of traditional state concerns that the Supreme Court has
identified as falling outside the reach of the dormant Commerce
Clause. See Davis, 553 U.S. at 342; United Haulers, 550 U.S. at
344-45. States are "vested with the responsibility of protecting
the health, safety, and welfare of [their] citizens." United
Haulers, 550 U.S. at 342. To serve those interests, states
exercise the kind of local autonomy essential to federalism. "The
essence of our federal system is that within the realm of authority
left open to them under the Constitution, the States must be
equally free to engage in any activity that their citizens choose
for the common weal." Davis, 553 U.S. at 338 (quoting Garcia v.
San Antonio Metro. Transit Auth., 469 U.S. 528, 546 (1985))
(internal quotation marks omitted).
Maine has a uniquely strong interest in protecting Maine
prescribers who have invoked Maine's regulatory authority through
the opt-in scheme. Cf. CTS, 481 U.S. at 89. Maine has done so
because these commercial transactions also harm the public health
and increase Maine's health care costs. In advancing these
interests, Maine has regulated in a traditional area of state
concern without undercutting other states' regulatory schemes or
encroaching on their interests. Maine's choice must be respected.
The Maine statute falls outside the central concerns of
the Court's dormant Commerce Clause jurisprudence for another
-39-
reason. Maine has not shifted the costs of regulation to other
states whose voters cannot affect its legislative choices, nor does
the Maine law "hand local businesses a victory they could not
obtain through the political process." United Haulers, 550 U.S. at
345. Maine's political processes produced this statute, and Maine
voters can, if they disagree, reverse this policy.
Plaintiffs ignore these foundational principles; indeed,
plaintiffs ignore virtually every Supreme Court dormant Commerce
Clause case after 1989. Instead, plaintiffs say section 1711-E(2-
A)'s application to their conduct would violate an infrequently
applied strand of the dormant Commerce Clause loosely labeled
extraterritoriality.27 Its central premise is that "a statute that
directly controls commerce occurring wholly outside the boundaries
of a State exceeds the inherent limits of the enacting State's
authority and is invalid regardless of whether the statute's
extraterritorial reach was intended by the legislature." Healy v.
Beer Inst., Inc., 491 U.S. 324, 336 (1989) (emphasis added); see
27
Extraterritoriality has been the dormant branch of the
dormant Commerce Clause. Despite a host of subsequent dormant
Commerce Clause cases, see, e.g., Davis, 553 U.S. 328; United
Haulers, 550 U.S. 330; Am. Trucking Ass'ns, Inc. v. Mich. Pub.
Serv. Comm'n, 545 U.S. 429 (2005); Granholm, 544 U.S. 460, the
Supreme Court last mentioned the doctrine in a paragraph of a 2003
decision to reject its applicability. The Court pointedly referred
to it as "[t]he rule that was applied in Baldwin and Healy," cases
decided in 1935 and 1989. Pharm. Research & Mfrs. of Am. v. Walsh,
538 U.S. 644, 669 (2003) (citing Healy, 491 U.S. 324; Baldwin v.
G.A.F. Seelig, Inc., 294 U.S. 511 (1935)). We nonetheless assume
this doctrine remains viable. See State Oil Co. v. Khan, 522 U.S.
3, 20 (1997). Even so, plaintiffs' challenge fails.
-40-
also Alliance of Auto Mfrs. v. Gwadowsky, 430 F.3d 30, 35 (1st Cir.
2005). Plaintiffs further suggest that this doctrine applies not
to the Maine law as applied to prescription drug information
intermediaries but to their atomized transactions only. Plaintiffs
make no attempt to square these principles with the Court's current
dormant Commerce Clause jurisprudence or to explain how these
principles fit with its central concerns. In any event, this
doctrine is inapplicable.
Whatever the present scope of the extraterritoriality
doctrine, it clearly does not require per se invalidation of all
extraterritorial applications contained within state statutes
regulating commerce.28 Section 1711-E(2-A) does not regulate wholly
extraterritorial commercial transactions. Its regulation of
plaintiffs' use or sale of opted-in Maine prescribers' data affects
only Maine prescribers and regulates transactions that impact
Maine, with incidental effects elsewhere. It is instead one of "an
infinite variety of cases in which regulation of local matters may
28
Some circuits have simply framed the doctrine in terms of
concerns with preventing economic protectionism or inconsistent
regulatory regimes, see, e.g., Cloverland-Green Spring Dairies,
Inc. v. Penn. Milk Mktg. Bd., 462 F.3d 249, 262-63 (3d Cir. 2006);
Pharm. Research & Mfrs. of Am. v. Concannon, 249 F.3d 66, 81-83
(1st Cir. 2001), aff'd sub nom. Pharm. Research & Mfrs. of Am., 538
U.S. 644, or have suggested that the Court's cases do not dictate
"the notion that direct and facial regulation of extraterritorial
transactions is absolutely banned," Alliant Energy Corp. v. Bie,
336 F. 3d 545, 547-50 (7th Cir. 2003); see also J. Goldsmith & A.
Sykes, The Internet and the Dormant Commerce Clause, 110 Yale L.J.
785, 789-90 & n.26 (2001).
-41-
also operate as a regulation of commerce," requiring "appraisal and
accommodation of the competing demands of the state and national
interests involved." S. Pac. Co., 325 U.S. at 768-69.29
The Supreme Court has applied the so-called
extraterritoriality doctrine sparingly, and in ways that only
reinforce the conclusion that Maine can regulate plaintiffs' out-
of-state use and sale of Maine prescribers' identifying data. The
Court has only struck down two related types of statutes on
extraterritoriality grounds. The first are price-affirmation
statutes that force regulated entities to certify that the in-state
price they charge for a good is no higher than the price they
29
Limitations on states' regulation of extraterritorial
commerce have been justified because "one State's power to impose
burdens on the interstate market . . . is also constrained by the
need to respect the interests of other States." BMW of N. Am. v.
Gore, 517 U.S. 559, 571 (1996) (internal citation omitted); see
also Healy, 491 U.S. at 336-37.
That has never meant that states are powerless to regulate all
transactions beyond their borders, including transactions involving
their citizens. States' interests may justify extraterritorial
regulation in contexts ranging from taxation under the dormant
Commerce Clause, see, e.g., MeadWestvaco Corp. ex rel. Mead Corp.
v. Ill. Dep't of Revenue, 553 U.S. 16, 24-25 (2008), to the
enforcement of criminal and tort law, see, e.g., Young v. Masci,
289 U.S. 253, 259 (1933); Strassheim v. Daily, 221 U.S. 280, 285
(1911) (Holmes, J.); see also Bigelow v. Virginia, 421 U.S. 809,
834-35 & 834 n.2 (1975) (Rehnquist, J., dissenting).
The Edgar v. MITE plurality reasoned that "[t]he limits on a
State's power to enact substantive legislation are similar to the
limits on the jurisdiction of state courts." 457 U.S. at 643
(plurality opinion). But the expansion of personal jurisdiction
beyond the rigid geographical rules of Pennoyer v. Neff, 95 U.S.
714 (1877), to the nexus-oriented approach of International Shoe
Co. v. Washington, 326 U.S. 310 (1945), only reinforces the fact
that states' jurisdiction--whether legislative or adjudicatory--is
not categorically limited to their territory in any context.
-42-
charge out of state. See Healy, 491 U.S. at 337-40; Brown-Forman,
476 U.S. at 582-84; Baldwin, 294 U.S. at 521-22. The second are
statutes that "force an out-of-state merchant to seek regulatory
approval in one State before undertaking a transaction in another."
Healy, 491 U.S. at 337; see also Edgar v. MITE Corp., 457 U.S. at
627, 642-43 (plurality opinion). Even these statutes are not
invariably struck down. See CTS, 481 U.S. at 88-89 (upholding a
statute regulating takeovers of corporations with a strong in-state
nexus by limiting the acquisition of control shares).
The Maine law is easily distinguishable from the
invalidated statutes. Those state statutes--unlike section 1711-
E(2-A)--raised independent concerns about protectionism under
established strands of the dormant Commerce Clause.30 Moreover,
unlike the Maine law, none of the invalidated statutes dealt with
harms caused exclusively inside the regulating state. Nor were the
invalidated statutes limited to regulating transactions with a
significant inherent connection to the regulating state, and
involving its own professional licensees. Those differences, and
30
The challenged price-affirmation laws were also deemed
unconstitutional because they discriminated against out-of-state
entities in favor of in-state competitors, see Healy, 491 U.S. at
340-41; Baldwin, 294 U.S. at 522, or because of their protectionist
effects for consumers, Brown-Forman, 476 U.S. at 580. Likewise,
only a plurality in Edgar v. MITE would have invalidated on
extraterritoriality grounds the challenged Illinois law, which
required companies to obtain regulatory approval for takeover bids
of corporations with no real relation to Illinois. See 451 U.S. at
641 (plurality opinion). The majority only invalidated the law as
an excessive burden on interstate commerce under Pike. Id. at 644.
-43-
not the mere fact that those statutes directly regulated
out-of-state transactions, explain why the Supreme Court deemed
those statutes wholly extraterritorial.31
Plaintiffs' attempt to analogize the Maine law to these
cases fails. The Supreme Court has previously distinguished and
upheld a state statute that regulated out-of-state commercial
transactions with a clear in-state nexus and impact. See CTS, 481
U.S. at 93.32 Other circuits have upheld similar laws on this
31
Baldwin involved a New York price affirmation statute
that required out-of-state milk buyers to certify that they paid
out-of-state milk producers no more than what New York producers
received. See 294 U.S. at 519. The Court deemed the law an
impermissible attempt to project New York's pricing regime on other
states because it had no "direct and certain" relationship to New
York's asserted interest in ensuring a supply of sanitary milk, id.
at 524, and the asserted purpose of protecting local farmers'
economic welfare was impermissibly protectionist, id. at 523.
In Edgar v. MITE, the plurality found the Illinois corporate
takeover bid law had a "sweeping extraterritorial effect" because
it would "regulate a tender offer which would not affect a single
Illinois shareholder" and thus reached conduct in which Illinois
had no conceivable interest. 457 U.S. at 642 (plurality opinion).
Likewise, the price affirmation statutes in Healy and
Brown-Forman were not limited to transactions involving the
regulating state; they made in-state prices that out-of-state
shippers charged for alcohol contingent on the price those shippers
charged elsewhere. See Healy, 491 U.S. at 326-27; Brown-Forman,
476 U.S. at 576. The only in-state interest served by such laws,
the Court suggested, was to illegitimately protect local interests.
See Healy, 491 U.S. at 340-41; Brown-Forman, 476 U.S. at 580.
32
In CTS, the Supreme Court rejected an extraterritoriality
challenge to an Indiana statute limiting out-of-state tender
offerors' acquisition of control shares in certain corporations.
The Court reasoned that the law was limited "only to corporations
incorporated in Indiana" with substantial numbers of shareholders
in Indiana, and therefore "every application of the Indiana Act
will affect a substantial number of Indiana residents, whom Indiana
indisputably has an interest in protecting." 481 U.S. at 93.
-44-
basis. See, e.g., Quik Payday, Inc. v. Stork, 549 F.3d 1302, 1308-
09 (10th Cir. 2008); S. Union Co. v. Mo. Pub. Serv. Comm'n, 289
F.3d 503, 507-08 (8th Cir. 2002); Baltimore Gas & Elec. Co. v.
Heintz, 760 F.2d 1408, 1421-27 (4th Cir. 1985); cf. Am. Booksellers
Found. v. Dean, 342 F.3d 96, 103-04 (2d Cir. 2003). That
reasoning, not the broad rule plaintiffs try to derive from Healy
and its antecedents, governs here.33 Under these circumstances, we
hold that section 1711-E(2-A)'s regulation of plaintiffs' conduct
does not raise constitutional concerns under the
extraterritoriality branch of the dormant Commerce Clause.
Finally, we reject plaintiffs' alternate contention that
section 1711-E(2-A) would raise constitutional concerns under Pike
if applied to plaintiffs' out-of-state transactions.34 Plaintiffs
33
This holding does not put our circuit at odds with a
recent panel opinion of the Seventh Circuit. Midwest Title Loans,
Inc. v. Mills invalidated on extraterritoriality grounds a
provision of an Indiana statute that forbade lenders that solicited
or advertised their lending services in Indiana from making title
loans to Indiana residents, unless they obtained a license from
Indiana (and thereby agreed to be bound by Indiana's restrictions
on the kind of loans permitted). See 593 F.3d 660, 662, 669 (7th
Cir. 2010). Midwest Title reasoned that states should not be
allowed to control interstate commerce to prevent their citizens
from engaging in out-of-state conduct that the regulating state
(but not the citizens themselves) deems harmful. See id. at 663-
65, 666, 669.
The Maine law does not raise similar concerns. It regulates
only data from those Maine prescribers who have asked Maine to
protect their data. It does not force other states to apply the
regulating state's paternalistic regulatory choices even when its
residents want to engage in prohibited conduct elsewhere.
34
We need not decide whether the Pike balancing test
requires courts to look to the relative benefits and burdens of the
-45-
did not make this argument to the district court; their brief on
appeal cursorily asserts that the law has no in-state benefits and
only out-of-state costs. That is waiver. See Mass. Museum of
Contemporary Art Found. v. Büchel, 593 F.3d 38, 65 (1st Cir. 2010).
This claim is also meritless. "State laws frequently
survive this Pike scrutiny," Davis, 553 U.S. at 339, and section
1711-E(2-A) is no exception. To date, 259 Maine prescribers out of
Maine's 7,500 total prescribers have opted in to Maine's
confidentiality protections. Section 1711-E(2-A)'s regulation of
plaintiffs' transactions would confer clear in-state benefits by
enabling those prescribers to avoid unwanted targeting in Maine.
Nothing suggests that the costs to interstate commerce
would be disproportionate in relation to these benefits. The loss
of several hundred data points in Maine, out of some 7,500 total
Maine prescribers and 1.5 million prescribers nationwide, is
unlikely to seriously impact the marketability of plaintiffs'
products. Nor have plaintiffs shown that the costs of complying
with section 1711-E(2-A)'s protections meaningfully burden
interstate commerce. There is no obvious reason why cross-
statute as a whole or only to its effect on prescription drug
information intermediaries. Plaintiffs have provided no data about
range of prescription drug information intermediaries subject to
section 1711-E(2-A) or the relative proportion of overall business
transacted in Maine versus outside it. Plaintiffs' Pike challenge
arguably fails on that basis alone; the Pike balancing test is
about burdens on the interstate market as a whole, not about
burdens on particular firms. Even looking only to the law's impact
on plaintiffs' out-of-state transactions, the argument fails.
-46-
referencing the Maine Health Data Organization's list of opted-in
Maine prescribers to avoid using or selling this data would prove
particularly costly or difficult, let alone enough to warrant
invalidation of a state law. We also heed the cautionary note the
Court sounded in Davis: federal courts have less institutional
competence than states in measuring the costs and benefits of
particular state regulatory schemes. See 553 U.S. at 355-57.
VI.
The judgment of the district court is reversed, and the
case is remanded with instructions to dismiss the case with
prejudice. Costs are awarded to the defendant.
-Concurring Opinion Follows-
1
-47-
LIPEZ, Circuit Judge, concurring in the judgment. The
Maine statute at issue here, like the New Hampshire law we
considered in IMS Health Inc. v. Ayotte, 550 F.3d 42 (1st Cir.
2008), is a creative effort to meet escalating concerns about the
high cost of prescription drugs and the way they are marketed.
Other states have passed or considered similar legislation. See,
e.g., IMS Health Inc. v. Sorrell, 631 F. Supp. 2d 434, 446 (D. Vt.
2009) (addressing a Vermont statute);35 IMS Health Corp. v. Rowe,
532 F. Supp. 2d 153, 180 n.41 (D. Me. 2008) (noting initiatives in
other states); Michael Heesters, Comment, An Assault on the
Business of Pharmaceutical Data Mining, 11 U. Pa. J. Bus. L. 789,
791 (2009) (same). The two statutes that we have reviewed, along
with Vermont's, are aimed at restricting the messages that may be
presented by pharmaceutical detailers to prescribers. Because
these provisions have the purpose and effect of regulating the
content of speech, their compatibility with the First Amendment is
a challenging issue that inevitably will be considered by the
Supreme Court.
The statutes specifically seek to prevent pharmaceutical
detailers from using the prescribing histories of individual health
care professionals in their marketing approach to prescribers. In
the view of the States, these individualized sales pitches result
35
The decision in Sorrell has been appealed to the Second
Circuit, and oral argument in the case (No. 09-1913) was heard on
October 13, 2009.
-48-
in the over-prescription of high-priced, brand-name drugs, thereby
needlessly increasing public expenditures on prescription drugs
and, at times, harming patient health.36 In an effort to minimize
the First Amendment implications of their content-based goal, Maine
and New Hampshire attempted to cut off access to the prescribing
information at its source. Hence, the statutes prohibit the sale,
transfer or other dissemination of prescriber-identifiable
information among pharmacies and other data-collecting entities for
marketing purposes, but impose no direct limitation on the drug
companies or sales people who do the actual marketing.37 The States
insist that the laws thus regulate conduct, not protected speech.
As I explained in Ayotte, it begs reality to
characterize these laws as regulations of conduct. Maine's
statute, like New Hampshire's, must be judged for what it is – a
36
Each statute operates slightly differently. The New
Hampshire law imposes an outright prohibition on the sale or use of
prescriber-identifiable data for marketing purposes. N.H. Rev.
Stat. Ann. §§ 318:47-f, 318:47-g, 318-B:12(IV) (2006). Maine's
statute imposes such a prohibition only for prescribers who choose
to prevent their prescribing information from being used to market
prescription drugs to them – the so-called "opt-out" approach. Me.
Rev. Stat. Ann. tit. 22, § 1711-E(2-A). Vermont's law has an "opt-
in" feature, prohibiting certain entities from selling or using
prescriber-identifiable data for marketing or promoting
prescription drugs unless the prescriber consents. Vt. Stat. Ann.
tit. 18, § 4631.
37
The Vermont statute limits the exchange of prescriber-
identifiable information among the same entities as the New
Hampshire and Maine provisions, but it also bars pharmaceutical
manufacturers and marketers from using the information for
marketing or promoting a prescription drug unless the prescriber
consents. See Vt. Stat. Ann. tit. 18, § 4631(d).
-49-
restriction on protected speech subject to the demands of the First
Amendment. That view has been validated by the Supreme Court's
recent decision in United States v. Stevens, 130 S. Ct. 1577(2010). See infra Section II. However, as construed by the State,
Maine's law also has a substantial ripple effect beyond Maine's
borders that requires review under the dormant Commerce Clause. By
shifting the statute's focus away from the activity considered
harmful – the detailers' interactions with prescribers in Maine –
to the earlier sales of the data, the Legislature in practical
effect targeted transactions that occur primarily outside the
State.
I agree with the majority that this out-of-state reach is
not fatal. I write separately, however, to highlight the unusual
relationship between the First Amendment and Commerce Clause
issues. Indeed, after examining the law's impact on interstate
commerce, I conclude that the First Amendment is the appropriate
battleground for constitutional analysis as these cases move
through the courts.
I. The First Amendment-Commerce Clause Dance
As a reflection of the analytic difficulties posed by New
Hampshire's and Maine's laws on the use, sale and other
dissemination of prescriber-identifiable data, their provisions are
baffling even to their proponents. New Hampshire's Attorney
General asserted in Ayotte that the law should be construed to
-50-
govern only in-state transactions, see 550 F.3d at 63-64, an
interpretation that renders the statute largely irrelevant because
the transfers of data the statute purports to restrict occur almost
entirely out-of-state. Maine, by contrast, concedes that its
similarly worded provision reaches out-of-state activity. At oral
argument, however, when pressed about the statute's reach, the
State's counsel asserted that section 1711-E(2-A) would cover the
pharmaceutical detailers' use in Maine of the prescriber-
identifiable data – even though the law appears to have been
designed precisely to avoid directly restricting the detailers'
speech to prescribers.
Counsel noted, for example, that "use in Maine is what
the statute is directed at and that would be proscribed regardless
of whether or not [an out-of-state] transaction before that was
subject to the Act." Counsel also stated that, "[i]f the
assumption is that the transaction between IMS or one of the other
plaintiffs and the drug companies occur[s] totally outside the
State, then what the statute covers is the subsequent use in Maine
by the detailer." That explanation is at odds with my previous
understanding of the State's construction of the statute, which
explicitly applies to "a carrier, pharmacy or prescription drug
information intermediary" ["PDII"] – not to pharmaceutical
companies and their employees. That explanation is also at odds
with the district court's reading of the law. See Rowe, 532 F.
-51-
Supp. 2d at 169 ("The Law does not make illegal a drug company's
use of opt-out prescriber information for marketing purposes. . .
. The Law forbids the PDIIs from selling opt-out data for
marketing, but it does not prohibit the pharmaceutical companies
from using the data for marketing.").38
Although the plaintiffs also state in their brief that
drug companies fall within the statute's definition of a PDII, that
construction departs from plain language and ordinary usage. It
may be, as plaintiffs' counsel explained at oral argument, that a
drug manufacturer could be treated as a PDII when it transacts
directly with pharmacies or other sources of prescription data. As
a general matter, however, drug companies are not PDIIs, and
classifying them as such when they are not acting in that capacity
is not a defensible reading of the statute. Thus, my assumption
throughout is that the statute does not directly regulate drug
manufacturers and their employees, including detailers, unless the
drug manufacturer acts as its own PDII.
The confusion over how the statutes operate arises from
the States' attempts to achieve indirectly its ultimate objective
– limiting the content of the detailers' messages. By restricting
the dissemination of prescriber-identifiable data rather than the
38
The majority in this case makes the same assumption:
"Section 1711-E(2-A) does not explicitly limit detailers' use of
prescriber-identifying data, but the earlier stages of regulation
are meant to prevent this information from getting to detailers for
use in marketing."
-52-
detailers' messages themselves, the States hoped their laws would
be evaluated as restrictions on conduct rather than speech. The
First Amendment consequences of regulating the content of speech do
not disappear, however, simply because the regulation operates
indirectly. See infra. In this instance, the indirection has only
made the constitutional inquiry more complex.
In particular, the States' approach magnified the
Commerce Clause implications of the legislation because the
targeted transfers of prescriber-identifiable data for marketing
purposes occur primarily outside of both New Hampshire and Maine.
Evidently feeling caught in a constitutional bind, the New
Hampshire Attorney General construed her state's statute to govern
only in-state transactions – effectively stripping the law of any
impact. Although Maine has rejected such a narrow construction, it
is still scrambling to define the reach of its legislation.
In my view, the States should have confronted directly
the First Amendment challenges of what they sought to do. Their
indirect approach has not avoided First Amendment scrutiny, yet
they have generated the Commerce Clause complications that we must
address here. Those complications might have been avoided with
more straightforward laws addressing the States' concerns about
pharmaceutical detailing.
-53-
II. The First Amendment
I recognize that the majority decision in Ayotte is
binding precedent for the proposition that the statute at issue
here, like the statute in Ayotte, regulates conduct, not speech.
See United States v. Rodríguez, 527 F.3d 221, 224 (1st Cir. 2008)
("As a general rule, newly constituted panels in a multi-panel
circuit are bound by prior panel decisions closely on point."). I
must re-emphasize, however, my strong disagreement with the Ayotte
majority's conclusion that statutes such as those of New Hampshire
and Maine regulate conduct, rather than constitutionally protected
speech. The purpose of both laws is to restrict truthful – but,
in the States' view, undesirable – messages communicated by
pharmaceutical detailers to prescribing health care professionals.
The State of Maine admits that restricting such speech is precisely
its objective. Cf. Sorrell, 631 F. Supp. 2d at 446 ("Plainly, the
whole point of [Vermont's statute] is to control detailers'
commercial message to prescribers."). The laws achieve this
purpose by regulating the transfer of factual information. It
cannot reasonably be argued that these laws, with this ultimate
purpose, do not constitute restrictions on speech. See Ayotte, 550
F.3d at 81-82 (Lipez, J., concurring and dissenting) (citing
cases); Sorrell, 631 F. Supp. 2d at 446 ("The mere fact that
[Vermont's similar provision] regulates protected speech indirectly
does not sweep it from the First Amendment's purview."); Laurence
-54-
H. Tribe, Legal Backgrounder, The Fatal First Amendment Flaw in
Prescription Restraint Statutes (Wash. Leg. Found., Washington,
D.C.), Dec. 11, 2009, available at
http://www.wlf.org/publishing/publication_detail.asp?id=2125
(noting that the Supreme Court has "recognized that obstructing
access to the informational building blocks of speech is every bit
as pernicious an abuse of governmental power over the free flow of
information and ideas as is restricting the resulting speech
itself").
In reaching its conclusion in Ayotte that laws such as
these are "outside the ambit of the First Amendment," 550 F.3d at
52, the majority equated transfers of prescriber-identifiable
information with the limited categories of speech, such as
obscenity and fighting words, that lie "outside the compass of the
Free Speech Clause by virtue of longstanding tradition." Id. at
51-52. In making that comparison, the majority repeatedly
discounted the value of the expression that it acknowledged the New
Hampshire statute might regulate, describing such "putative speech"
as "items of nugatory informational value" and "of scant societal
value." Id. at 52.
However, in a recent decision considering a challenge to
a law criminalizing depictions of animal cruelty, the Supreme Court
firmly rejected the notion that the First Amendment's guarantee of
free speech "extend[s] only to categories of speech that survive an
-55-
ad hoc balancing of relative social costs and benefits." Stevens,
130 S. Ct. at 1585. The Court explained that the exclusion of
categories of speech from the protection of the First Amendment has
occurred only in "special case[s]." Id. at 1586; id. at 1584
(listing the "few limited areas" where "the First Amendment has
permitted restrictions upon the content of speech" (quotation marks
and citation omitted)). Although observing that other categories
of speech may yet be identified as unprotected based on historical
practice, the Court stated that its prior decisions "cannot be
taken as establishing a freewheeling authority to declare new
categories of speech outside the scope of the First Amendment."
Id. at 1586.
These prescriber-information cases involve the right to
disseminate truthful information – a classic form of protectible
speech activity, even when done for a fee – and the right to use
that information in crafting a marketing message. Stevens confirms
that such speech may not be excluded from First Amendment
protection "on the basis that [it] is not worth it," 130 S. Ct. at
1585, and labeling speech as conduct does not make that exclusion
any more permissible.
Hence, while Ayotte governs the First Amendment analysis
in this case, I adhere to my view that what is at stake is
protectible speech, not conduct. The relevant First Amendment
question is thus whether Maine, like New Hampshire, has adequately
-56-
justified the limited restraint on commercial speech imposed by its
statute. Here, as in Ayotte, I conclude that the State has done
so.
Maine asserts three "compelling state interests" in
support of section 1711-E(2-A): "to improve public health, to limit
annual increases in the cost of health care and to protect the
privacy of patients and prescribers" in the State's health care
system. Me. Rev. Stat. Ann. tit. 22, § 1711-E(1-B). Although I
agree that these interests are substantial in theory, I doubt that
the record supports the State's contention that the challenged
statute in fact advances all of them. I am particularly skeptical
of the privacy interest.
The Maine law neither prohibits the practice of
pharmaceutical detailing nor prevents the widespread use of any
prescriber's prescribing histories. See Rowe, 532 F. Supp. 2d at
170 ("The Attorney General's expert [prescriber] witnesses
acknowledged that insurance companies, governmental agencies,
quality assurance committees, utilization reviewers, and others
have the right and responsibility to assess their prescribing
patterns."); id. at 173 ("[T]he new Law does not prevent the
pharmacies from transferring exactly the same information to the
PDIIs, so long as the information is not ultimately used for
marketing."). Detailers may continue to devise marketing
strategies based on the prescribing patterns of prescribers who do
-57-
not choose to bar the marketing use of their information, meaning
that the one-on-one meeting with a prescriber who has invoked the
law's protection may include references to the histories of
colleagues within the same town or even the same practice. See id.
at 171.
Given the wide, permissible dissemination of the
prescribing information, and the continued allowance of targeted
one-on-one detailing, prescriber privacy does not appear to be
meaningfully advanced by this statute. Accord Rowe, 532 F. Supp.
2d at 173 ("The Law only marginally advances the governmental
interest in prescriber privacy."). I therefore disagree with the
majority's analysis of the State's "interest in preventing its
prescribers from being subjected to unwanted solicitations by
detailers in Maine on the basis of their prescribing histories."
The statute does not protect a "right to be let alone"; it merely
protects prescribers who consent to interactions with detailers
from exposure to one type of message. The prescribers may have
particular distaste for sales pitches based on their own
prescribing histories, but that discomfort – whether or not
properly labeled an issue of "privacy" – seems inadequate to
justify a content-based restriction on truthful speech of public
concern. See Rowe, 532 F. Supp. 2d at 170 ("Prescribers'
prescribing patterns are . . . a matter of public concern.").
-58-
In any event, the State's brief gives short shrift to
both the privacy and public health interests, and I find it
unnecessary to closely examine the record on those two interests
because the State's substantial interest in reducing health care
costs in Maine is sufficient to justify the statute within the
commercial speech framework. Cf. Ayotte, 550 F.3d 88-96; Sorrell,
631 F. Supp. 2d at 449-454 (finding that Vermont's statute advances
the State's interests in both cost containment and protecting
public health). Relying on evidence similar to that introduced in
Ayotte, the State argues that detailing is "significantly more
successful when detailers use prescriber-identifiable data," and
that reduced access to physicians' prescribing histories will
reduce the likelihood that prescribers in Maine will prescribe
"unnecessary and more expensive brand-name drugs." I will not
rehearse in detail the nature of the evidence presented on this
issue at the Maine legislative hearings or before the district
court. It suffices to say that the record "establishes a plausible
cause-and-effect relationship between targeted detailing and higher
drug prices," Ayotte, 550 F.3d at 93, and that "the Attorney
General has [thus] 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
[section 1711-E(2-A)]," id. at 94.
-59-
To satisfy the First Amendment, the statute also must
meet the narrow tailoring prong of the Central Hudson inquiry. See
Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S.
557, 566 (1980). Without the benefit of our decision in Ayotte,
the district court concluded that the Maine law "substantially
fails" the narrow tailoring requirement. Rowe, 532 F. Supp. 2d at
176. That judgment is wrong largely for the same reasons that it
was wrong in Ayotte.
In concluding that the law is more extensive than
necessary to serve the State's interest in decreasing the influence
of drug company representatives, the district court emphasized that
the State did not address the concern that detailers
"inappropriately influenc[e] Maine prescribers by showering them
with gifts in implicit exchange for prescriptions." Id. It also
pointed out that prescribers are "[t]rained as professionals" "to
perform a sophisticated and critical public health function." Id.
at 177. It stated that these trained professionals "have access to
a broad range of sources to evaluate whether to prescribe a drug
for a particular patient." Id. Therefore, the law unnecessarily
protects them "from being influenced by their own practice
patterns." Id. Specifically on the cost issue, the district court
observed that "some branded drugs end up being more cost effective
to the system as a whole than their generic or branded
counterparts." Id. at 178. In that sense, the court stated, the
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Maine law fails to "discriminate between beneficial detailing and
harmful detailing." Id. (quotation marks and citation omitted).
The court thus concluded that "ban[ning] truthful information about
opt-out prescribers' prescription patterns is to overreach and
restrict more speech than is necessary to address the problem of
harmful detailing." Id.The district court's narrow tailoring assessment does not
adequately take into account the premise from which it must
proceed, i.e., that the State has shown that restricting the use of
prescriber-identifiable data advances at least one of its asserted
interests – controlling the spiraling cost of prescription drugs.
The court seems to assume that the alternatives it describes will
be just as effective in advancing that goal.
As I have explained, the State's evidence in both Ayotte
and here supports the view that, despite the expertise of medical
professionals, detailers are able to influence prescribing
decisions. I also explained in Ayotte why the State could properly
conclude that alternative methods for achieving its cost-
containment objective that would not burden speech, including
restricting courtesy samples and other gifts, were not equivalent.
As I noted there, "[t]he 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
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most troubling effect on the prescribers' drug choice – and is most
urgently in need of regulation." 550 F.3d at 99.39
The fact that detailing at times has beneficial effects
does not undermine the State's conclusion that, on balance, its
harms outweigh its benefits – particularly where the State
reasonably could find that the benefits of the messages about
prescription drugs that are disseminated by detailers are "largely
achievable in other ways." 550 F.3d at 95-9640; see also Rowe, 532
F. Supp. 2d at 177. Notably, the State's restriction on speech is
39
Moreover, Dr. Jerry Avorn, who also served as an expert in
this case, testified in Ayotte that other approaches had been tried
"nationally in terms of trying to restrict the freebies, trying to
provide doctors with other means of learning, requiring that
doctors take continuing ed courses," but that these strategies did
not eliminate "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." 500 F.3d at 99.
40
I described in Ayotte some of the ways in which such
messages would continue to reach prescribers:
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. Early adopters could be expected to respond
quickly with an interest in trying the new medications –
effectively identifying themselves to the sales
representatives. In addition, . . . the statute does not
bar drug companies from alerting prescribers to newly
discovered problems with their medications.
550 F.3d at 95 (footnotes omitted). Doctors also testified that
they learned about new drugs from medical literature, conferences,
and colleagues. Id. at 95 n.64
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significantly more restrained than other marketing or advertising
bans that have been considered by the Supreme Court. See Ayotte,
550 F.3d at 97 (citing cases involving more comprehensive
restrictions). As I described in Ayotte, the private setting of
the targeted messages also is relevant to the narrow tailoring
inquiry:
This case differs from those in which the
Court has rejected advertising bans that
restrict the exchange of ideas in the
"commercial marketplace." The [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.
550 F.3d at 100.
Indeed, the narrow tailoring element of the Central
Hudson test is arguably more easily satisfied here than in Ayotte
because the statute bars the marketing use of prescribing histories
only for prescribers who affirmatively choose not to have their
data used for marketing purposes – narrowing the impact on
protected speech. Although the State's cost-containment objective
would have modest success, at best, if few Maine prescribers choose
to restrict the use of their prescribing data, the restriction on
protected speech also would be modest in that situation. I see no
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constitutional barrier to the State's judgment that restricting the
use of prescriber-identifiable data in the detailing messages of
only some of its prescribers would be beneficial.41
In sum, the considerations I addressed in Ayotte to
evaluate "'whether the extent of the restriction on protected
speech is in reasonable proportion to the interest served,'" 550
F.3d at 96 (quoting Edenfield v. Fane, 507 U.S. 761, 767 (1993)),
apply here as well: "[t]he 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." 550
F.3d at 98. My review of these factors leads me to the same
conclusion: the State "has established a 'reasonable fit' between
its abridgement of speech and its . . . goal." Id. at 98
(quotation marks and citation omitted); see also Sorell, 631 F.
Supp. 2d at 455 (finding the Vermont statute to be "in reasonable
proportion to the State's interests").
Hence, like New Hampshire, Maine has met its burden to
justify the limited restraint on commercial speech imposed by
section 1711-E(2-A).
41
The district court noted that, because the Maine statute
gives prescribers the option to allow use of their information,
the pharmaceutical companies might provide incentives to
prescribers in an attempt to persuade them not to opt out –
creating an even more troubling relationship between prescribers
and drug manufacturers. Rowe, 532 F. Supp. 2d at 174 n.31; id. at
176 n.35. In my view, such a scenario is too speculative to factor
into the analysis.
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III. The Commerce Clause
This case confirms the view I expressed in Ayotte that
the plaintiffs' Commerce Clause challenge raised a serious issue
that should not have been addressed in that case on the basis of
the limited record and the parties' cursory briefing. Maine
distances itself from the nonsensical construction of the New
Hampshire statute that was advanced by the New Hampshire Attorney
General and accepted by the Ayotte majority,42 admitting that its
statute inevitably reaches out of state to regulate sales of data
about prescriptions written in Maine. Indeed, the activity
restricted by the Maine statute, logically construed, occurs almost
entirely beyond the State's borders.43
A. The Activities Regulated by the Statute
Understanding the sequence of events implicated by
section 1711-E(2-A) is crucial to understanding the statute's legal
status. To begin with the end, the statute is designed to prevent
pharmaceutical detailers working in Maine from using information
42
The New Hampshire Attorney General urged the court to read
the act to "'relate only to activity that takes place
domestically,'" and the panel majority adopted that view despite
recognizing that, so construed, the law "may not accomplish very
much." Ayotte, 550 F.3d at 63, 64.
43
Although the Attorney General at oral argument attempted
to avoid committing to any specific extraterritorial reach for the
statute, I agree with the majority that "[t]he text of the statute
by its terms shows section 1711-E(2-A) was intended to apply to
plaintiffs' out of state use or sale of opted-in Maine prescribers'
identifying data."
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about the prescribing habits of Maine prescribers to present
targeted, and therefore more persuasive, sales pitches to those
prescribers. The statute does not, however, regulate the
detailers' interactions with the prescribers. Instead, the State
seeks to achieve its objective indirectly by, in effect, placing a
red flag on information about prescriptions written by Maine
prescribers who opt into the statute's protection. The red-flagged
information may not be used, sold or transferred "for any marketing
purpose" by pharmacies, insurers and other entities that acquire it
in the course of their business.44
In practical effect, that prohibition rarely limits any
commercial transactions in Maine. This is so because local Maine
pharmacies routinely transfer their prescription information
electronically to their out-of-state headquarters.45 Although the
red flag is attached to the information when those transfers are
made, the statutory prohibition does not affect this first movement
of the data because it is not "for any marketing purpose." Most
prescriber-identifiable data leaves the State in this permissible
manner. The data is next transferred from the out-of-state
44
The statute also prohibits licensing or exchanging the
information for value. For the sake of simplicity, I will refer
primarily to the prohibitions on the sale or transfer of the data.
45
The record indicates that, other than the data from one
small supplier in Maine, the prescriber-identifiable information
obtained by the plaintiffs is transferred in the ordinary course of
business from retail stores located in Maine to the pharmacy
chains' out-of-state headquarters.
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pharmacy headquarters to the data mining companies – the plaintiffs
in this case – who also are located outside of Maine.46 The red
flag imposes a significant restriction on those out-of-state
transactions. Although data miners use prescription information
for other reasons, including to generate reports for government and
other nonprofit recipients, the most lucrative aspect of their
business is to aggregate the information into reports that can be
sold to pharmaceutical companies for use in marketing.47
Hence, the pharmacies and data miners, although not
themselves using the prescriber-identifiable data to market drugs,
presumably must impose a contractual obligation on their customers
not to use the information for that purpose in order to fulfill
their obligations under section 1711-E(2-A). See Rowe, 532 F.
Supp. 2d at 169 n.18 ("[T]he PDIIs are assigned the responsibility
to limit the pharmaceutical companies' use of the opt-out
prescriber data."). How the State would enforce the statute if a
pharmaceutical manufacturer does not abide by such a contract with
46
An IMS senior vice president testified that the company
contracts with Rite Aid at its headquarters in Pennsylvania and
with CVS at its headquarters in Rhode Island. IMS is based in
Plymouth Meeting, Pennsylvania.
47
Drug companies also have non-marketing uses for prescriber-
identified data, including determining the need for new drugs and
implementing prescription recall programs. Ayotte, 550 F.3d at 74
n.29. Still, at oral argument, plaintiffs' counsel stated that
"[n]inety-five percent of what we do in selling to a pharmaceutical
manufacturer is so that it can use the information for marketing
and detail."
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a data miner is unclear. Perhaps the data miners would be deemed
liable for failing to enforce the obligation unless they took
action against the offending drug company; such action might
include a refusal to continue selling the information to the
company.48
Whatever the specific mechanism for enforcement of the
statute's prohibition, the statute's objective is to prevent the
use of any prescriber-identifiable data obtained by the drug
companies in sales pitches by the detailers in Maine who are the
statute's real target.49 As my description of the process reveals,
however, achieving that objective involves raising the red flag in
transactions that almost all occur beyond Maine's borders. Nearly
all of the transfers between the information possessors – the
48
The district court described the "burden on pharmacies and
PDIIs to police their customers" as follows:
They can still sell the opt-out information, but they
cannot do so if their customers, the pharmaceutical
companies, are going to use the information for a purpose
that the Law prohibits. If the PDIIs successfully police
their contracts with the pharmaceutical companies, as the
Law contemplates, the pharmaceutical companies will not
be able to include opt-out prescriber information in
marketing their products. If they do not, then they, not
the pharmaceutical companies, are subject to sanction.
532 F. Supp. 2d at 169.
49
The State argues that the record contains no evidence about
the transactions between the plaintiff data miners and the drug
manufacturers. IMS, however, asserts in its brief that none of its
subscribers are located in Maine, and it cites the testimony of
Hossam Sadek, a senior vice president of the company, who stated
that he knew of no IMS customers in the State.
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pharmacies and data miners – and the information recipients – the
data miners and pharmaceutical companies – are made out of state.
So too are any contractual promises by the recipients to abide by
the statute's limitation.
The plaintiffs complain that this significant
extraterritorial effect is impermissible under the dormant Commerce
Clause. The State, however, maintains that the statute has only a
"spillover effect" beyond its borders, and it argues that the law
applies only to "entities either located in Maine or having nexus
with Maine," i.e., those sufficiently connected to the State to
meet the requirements for personal jurisdiction. The State asserts
that it is "irrelevant" that the main computers of the large retail
pharmacy chains are located outside Maine because Maine is the
source of the restricted information, and the electronic
prescription data is initially entered into in-state computers.
The State further emphasizes that the prescriptions are written by
prescribers licensed by Maine and filled almost exclusively by
State-licensed pharmacies, giving Maine a substantial interest in
governing the dissemination and use of the prescription data.
The difficulty of evaluating the parties' competing
depictions of section 1711-E(2-A) begins with the choice of an
appropriate framework for analysis.
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B. Identifying the Correct Analytical Approach
The Supreme Court has articulated various "protocol[s]
for dormant Commerce Clause analysis," Dep't of Revenue of Ky. v.
Davis, 553 U.S. 328, 338 (2008), none of which seems fully apt
here. This is plainly not an instance of discriminatory purpose or
treatment in which the statute should be deemed per se invalid
because it favors in-state over out-of-state interests. See, e.g.,
Alliance of Auto. Mfrs. v. Gwadowsky, 430 F.3d 30, 35-36 (1st Cir.
2005) (noting that the "core purpose" of the dormant Commerce
Clause is "to prevent states and their political subdivisions from
promulgating protectionist policies" (quotation marks and citation
omitted)). The law imposes the same burden on every competitor,
and out-of-state entities would gain no advantage by relocating to
Maine.50
Plaintiffs, unsurprisingly, have relied primarily on the
extraterritoriality doctrine, and the proposition that a statute
may be deemed per se invalid if it "directly controls commerce
occurring wholly outside the boundaries of a State." Healy v. Beer
Inst., Inc. 491 U.S. 324, 336 (1989); see also Wine & Spirits
50
Price controls that favor in-state businesses, assessments
that function as protective tariffs, and regulations that cap in-
state prices for goods produced out of state are classic examples
of measures that run afoul of this aspect of the dormant Commerce
Clause. See, e.g., Pharm. Research & Mfrs. of Am. v. Walsh, 538
U.S. 644, 669-70 (2003); Or. Waste Sys., Inc. v. Dep't of Envtl.
Quality, 511 U.S. 93, 99 (1994); Healy v. Beer Inst., Inc., 491
U.S. 324, 336 (1989).
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Retailers, Inc. v. Rhode Island ["Wine & Spirits II"], 481 F.3d 1,
15 (1st Cir. 2007); Pharm. Research & Mfrs. of Am. v. Concannon
["PhRMA"], 249 F.3d 66, 79-80 (1st Cir. 2001), aff'd sub nom.
Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644 (2003). Such
laws may subject activities to more than one state's regulations,
leading to the possibility of conflicting obligations. See, e.g.,
Healy, 491 U.S. at 336-37; CTS Corp. v. Dynamics Corp. of Am., 481
U.S. 69, 88-89 (1987); 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, 509
(2003) (observing that the extraterritoriality "principle ensures
that a state will not overstep its bounds and unreasonably trample
upon the authority of another sovereign"). Plaintiffs also invoke
the so-called Pike balancing test, which is applied to laws that
regulate evenhandedly and have only "incidental" effects on
interstate commerce. See Pike v. Bruce Church, Inc., 397 U.S. 137,
142 (1970);51 see also United Haulers Ass'n, Inc. v. Oneida-Herkimer
Solid Waste Mgmt. Auth., 550 U.S. 330, 346 (2007).52
51
The Court in Pike held that, when a statute regulates
evenhandedly to effectuate a legitimate local purpose, and has only
incidental effects on interstate commerce, "it will be upheld
unless the burden imposed on such commerce is clearly excessive in
relation to the putative local benefits." 397 U.S. at 142.
52
I disagree with the majority's assertion that the plaintiffs
have waived any Pike balancing argument. Given the similarity of
the inquiries under the different strands of the dormant Commerce
Clause, I see no reason to disregard the argument here.
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Neither of these latter alternatives is a good fit for
the present circumstances. The per se extraterritoriality analysis
may appear literally applicable, given that the statute's red flag
has a direct impact almost exclusively on out-of-state commerce.
Yet, as I observed in Ayotte, "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 [a]
relevant consideration." 550 F.3d at 105 (citing Felmly, supra, at
491). The Maine law does not by its terms impose restraints on
non-domestic businesses, and the imbalance between in-state and
out-of-state effect is a matter of happenstance not design. The
statute does not seek to achieve conformity between in-state and
out-of-state commerce.53 Additionally, there is no risk of conflict
53
The pursuit of such consistency is a feature of the most
prominent Supreme Court extraterritoriality precedents. In Healy,
491 U.S. at 335, the challenged Connecticut statute expressly
required out-of-state shippers to affirm that their Connecticut
prices were no higher than the prices being charged in bordering
states, and the New York statute at issue in Brown-Forman
Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573,
579 (1986), required liquor producers and distillers doing business
in the State to affirm comparable in-state and out-of-state
pricing. In Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935),
the Court struck down the New York Milk Control Act, which
prescribed minimum prices for milk that had the effect of setting
out-of-state milk prices. Id. at 524. In line with those cases,
the Seventh Circuit recently struck down an Indiana law that
subjected out-of-state loans entered into by Indiana residents to
the requirements of Indiana's consumer law if the out-of-state
creditor had advertised or solicited sales in Indiana. Midwest
Title Loans, Inc. v. Mills, 593 F.3d 660, 662, 667-68 (7th Cir.
2010).
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with other states' regimes. No other State has a stake in the use
of prescriber-identifiable data in Maine or any obvious interest in
the use of Maine prescriber information in their own locales.
Indeed, it is arguable that, despite the statute's impact
on commercial transactions that occur almost entirely out of state,
the commerce it controls is not "wholly outside [Maine's]
boundaries." Healy, 491 U.S. at 336. The subject matter of the
law is data that both originates in Maine and is intended for
marketing use in Maine. Maine's aim is to regulate on a matter of
public welfare only within Maine. Cf. Midwest Title Loans, Inc. v.
Mills, 593 F.3d 660, 667-68 (7th Cir. 2010) (invalidating Indiana
statute that sought to protect Indiana residents from predatory
lending practices by businesses located in other states). On the
other hand, it is difficult to characterize the statute's effect on
out-of-state commerce as "incidental" when its prohibition in fact
has its primary impact outside the State. See, e.g., Healy, 491
U.S. at 336 ("The critical inquiry is whether the practical effect
of the regulation is to control conduct beyond the boundaries of
the State.").
The various labels ordinarily are invoked because they
are associated with different levels of scrutiny. We have observed
that a statute that regulates evenhandedly "engenders a lower level
of scrutiny," Wine and Spirits II, 481 U.S. at 11 (quotation marks
and citation omitted), while "[a] statute is per se invalid if it
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regulates commerce wholly outside the state's borders," id. at 15.
Identifying the appropriate label should not distract us, however,
or bog us down at the threshold of analysis. Despite the different
protocols for dormant Commerce Clause inquiry, the Supreme Court
has observed that "there is no clear line separating" the various
types of state regulation and that the same "critical
consideration" applies to each category: "the overall effect of the
statute on both local and interstate activity." Brown-Forman
Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579
(1986) (referring to regulations that are "virtually per se invalid
under the Commerce Clause, and the category subject to the Pike v.
Bruce Church balancing approach"); see also Healy, 491 U.S. at 337
n.14 (noting the same "critical consideration" in determining
"whether the extraterritorial reach of a statute violates the
Commerce Clause"); Am. Booksellers Found. v. Dean, 342 F.3d 96, 102
(2d Cir. 2003).
This dual concern is an inevitable byproduct of our
system of federalism. The Court has often remarked in its dormant
Commerce Clause cases that States "retain authority under their
general police powers to regulate matters of legitimate local
concern, even though interstate commerce may be affected." Maine
v. Taylor, 477 U.S. 131, 138 (1986) (quotation marks and citation
omitted); see also, e.g., Davis, 553 U.S. at 338; cf. Garcia v. San
Antonio Metro. Transit Auth., 469 U.S. 528, 546 (1985). Hence, in
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reviewing a statute challenged under the dormant Commerce Clause,
we are always guided by "the Constitution's special concern both
with the maintenance of a national economic union unfettered by
state-imposed limitations on interstate commerce and with the
autonomy of the individual States within their respective spheres."
Healy, 491 U.S. at 335-36 (footnote omitted).
Indeed, even the "rigorous form of review" applicable to
discriminatory legislation allows exemption for a statute that
"furthers a legitimate local objective that cannot be served by
reasonable non-discriminatory means." Wine and Spirits II, 481
F.3d at 11. Local needs also must qualify the "near-fatal rule of
per se invalidity" for statutes that regulate extraterritorially.
See Felmy, supra, at 492; id. at 488 (observing that "[o]ne may
infer" from language in CTS Corp., 481 U.S. at 93, that "where a
state has a significant interest in regulating a particular aspect
of interstate commerce, it may do so, regardless of the
extraterritorial effect of the legislation, if the regulation also
affects a substantial number of in-state residents").
I thus see the most relevant and appropriate question as
simply whether Maine's interests are sufficiently weighty to
justify any burdens its law imposes on interstate commerce.
Whatever the label and however we describe the level of scrutiny,
the outcome here is the same.
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C. Assessing the Local Interest and the Burden on Interstate
Commerce
As discussed in Section II above, I agree that the State
has a substantial interest in reducing the cost of prescription
drugs for its residents and that the State could reasonably
conclude that section 1711-E(2-A) advances that interest by
regulating the dissemination of information revealing the
prescribing histories of Maine's licensed health care providers.
Cf. Ayotte, 550 F.3d at 94-95. The statute's importance to the
State is no different in the context of a Commerce Clause inquiry
than in the First Amendment setting.
The other side of the balance is not the same, however.
The conclusion that the statute is "narrowly tailored" under the
Central Hudson test for commercial speech, see 447 U.S. at 566,
does not tell us whether the provision impermissibly burdens
interstate commerce. As I have described, the statute does in fact
regulate specific activities that occur mostly out of state. The
impact on the plaintiffs is not merely "spillover" from a
prohibition directed at others; they are among the categories of
entities – PDIIs – affected directly by the statute.
Moreover, the statute's impact on PDIIs is potentially
enormous. Sales of prescriber-identifiable data are the bread-and-
butter of the medical data mining business, producing $1.75 billion
in revenue for plaintiff IMS Health alone in 2005. Although only
three states have thus far enacted laws designed to limit
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detailers' access to prescribers' identifying information, they are
at the front of a wave of similar legislation. See Rowe, 532 F.
Supp. 2d at 180 n.41 (noting testimony that seventeen to twenty
other states were considering similar laws); Heesters, supra, at
791 (stating that "numerous other states have [bills] that
similarly restrict the sale of prescription drug data that are
currently pending in legislative committees").
Hence, a conclusion that section 1711-E(2-A) comports
with the dormant Commerce Clause could eventually lead to
elimination of any market for prescriber-identifiable data, which
the plaintiffs have argued would jeopardize the viability of their
businesses. See Ayotte, 550 F.3d at 95 n.66 ("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.").54 Plaintiff IMS asserts that
it will cost hundreds of thousands of dollars for it to adjust its
systems to comply with the statute's restrictions; plaintiff Source
Healthcare estimated that it would spend 10,000 employee hours to
comply with Maine's and Vermont's laws.
54
The fact that only 259 of Maine's 7,500 prescribers opted
into the statute's confidentiality protection during the period in
which it has been suspended by the preliminary injunction tells us
little about the law's likely impact. More activity presumably
will occur once the injunction is lifted.
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The "possible effects on the profits of the individual
manufacturers" is not, however, the concern of the dormant Commerce
Clause. PhRMA, 249 F.3d at 84. Our court previously has observed
that "the Commerce Clause . . . 'protects the interstate market,
not particular interstate firms, from prohibitive or burdensome
regulations.'" Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 313
(1st Cir. 2005) (quoting Exxon Corp. v. Gov. of Md., 437 U.S. 117,
127-28 (1978)); see also PhRMA, 249 F.3d at 84 ("[T]he fact that a
law may have devastating economic consequences on a particular
interstate firm is not sufficient to rise to a Commerce Clause
burden." (quotation marks and citations omitted)). Even if the
statute meant the demise of the data-mining industry as a whole –
an outcome I doubt, see infra note 22 – any ill-effects from that
result would "relate[] to the wisdom of the statute, not to its
burden on commerce." Exxon Corp., 437 U.S. at 128. The point is
perhaps more easily understood in a different context. If, for
example, every state decided to ban the use of firecrackers because
of the risk of injury, the dormant Commerce Clause would not trump
the legislative safety concerns and insulate the fireworks industry
from extinction.
Neither national uniformity nor any of the other
traditional concerns underlying the dormant Commerce Clause are
implicated here. The law does not "erect barriers against
interstate trade," Lewis v. BT. Inv. Managers, Inc., 447 U.S. 27,
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35 (1980), and its target is not "interstate commerce" as such.
Rather, the transactions governed by the statute are restricted
only because they are subsidiary steps in the regulation of in-
state activity.55 Indeed, the law's effect on individual businesses
would be no different if every PDII were based in Maine. Nor does
Maine's decision to restrict the use of certain prescriber-
identifiable data make similar legislation more or less appropriate
or necessary in other states. There is nothing in Maine's statute
that affects other states' choices about whether, or how, to
regulate prescriber-identifiable data within their own borders. As
the Supreme Court observed in Exxon Corp., "[t]he evil that
appellants perceive in this litigation is not that the several
States will enact differing regulations, but rather that they will
all conclude that [similar] provisions are warranted." 437 U.S. at
128. However, "[i]n the absence of a relevant congressional
declaration of policy, or a showing of a specific discrimination
against, or burdening of, interstate commerce, we cannot conclude
that the States are without power to regulate in this area." Id.
at 128-29.
55
The "subsidiary" nature of the out-of-state transactions is,
of course, a function of the statute's purpose to restrict speech
in Maine. Although that in-state speech objective strengthens the
State's Commerce Clause position, the indirect regulatory strategy
– as I have explained – creates the First Amendment-Commerce Clause
dance and unnecessarily complicates the constitutional analysis.
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Nor do I see a way in which Maine could have promoted its
interest "'with a lesser impact on interstate activities,'"
Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471 (1981)
(quoting Pike, 397 U.S. at 142) – a factor that is considered in
Pike balancing. See, e.g., U & I Sanitation v. Columbus, 205 F.3d
1063, 1070-71 (8th Cir. 2000). If Maine had regulated only in-
state activity – directly barring detailers working in Maine from
using the opted-out prescribers' data in their sales pitches – the
impact on data miners would be the same. In such a regime, the
out-of-state data miners would not be prohibited from selling the
prescriber-identifiable data for marketing purposes, but the
pharmaceutical companies would have no reason to buy it.56
In sum, I conclude that section 1711-E(2-A) survives
dormant Commerce Clause scrutiny even though in practical effect it
regulates activity that occurs primarily beyond Maine's borders.
56
The actual impact on the plaintiffs of legislation
regulating the use of prescriber-identifiable data remains to be
seen. As the district court noted, the law "does not prevent the
pharmaceutical companies from marketing their products and the
companies may resort to more general, less tailored marketing."
Rowe, 532 F. Supp. 2d at 174. It thus may be that the demand for
aggregated data about prescribing trends will change, but not dry
up. For example, the statute appears to permit detailers to use
aggregated data based on specialities or zip codes. See Ayotte,
550 F.3d at 95 n.66. Moreover, if empirical data gathered in the
future on the statute's impact shows that less particularized, less
efficient detailing is negating the cost savings Maine hopes to
achieve, the State may be persuaded to change its approach to the
problem. Cf. Clover Leaf Creamery Co., 449 U.S. at 473 n.17 ("The
existence of major in-state interests adversely affected by [a law]
is a powerful safeguard against legislative abuse.").
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The burden on interstate commerce (the reduction in the value of a
particular type of business) is not the kind of burden that raises
constitutional concerns. To the extent that burden is relevant to
the Commerce Clause analysis, it is easily outweighed by the
State's substantial interest in bringing the cost of prescription
drugs – and health care expenses in general – under control. Cf.
Pharm. Care Mgmt. Ass'n, 429 F.3d at 312 (describing a law aimed at
"reduc[ing] the costs of, and increas[ing] the public's access to,
prescription drugs" as "designed to deal with 'one of the serious
problems of our time'").
I therefore agree that the judgment of the district court
should be reversed.
IV. The Focus of Future Litigation
This case has allowed us to put to rest the Commerce
Clause challenge that was not properly teed up in Ayotte. In
addition, in the period between our reviews of New Hampshire's and
Maine's similar statutes, Stevens has reinforced my view that laws
regulating the messages of pharmaceutical detailers restrict
protectible speech, not conduct. Thus, as more of these cases
evolve across the country, the legal argument and factual
development should be framed by the Supreme Court's commercial
speech doctrine under the First Amendment.
That doctrine is the subject of ongoing debate among
commentators and in the courts, including within the Supreme Court.
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Much of the ferment focuses on the narrow tailoring prong of the
Central Hudson inquiry and how close the fit must be in any
commercial speech case between the State's interest and the
challenged restriction on speech. See Greater New Orleans Broad.
Ass'n, Inc. v. United States, 527 U.S. 173, 184 (1999) (recognizing
the advocacy among judges, scholars and others for "a more
straightforward and stringent test for assessing the validity of
government restrictions on commercial speech"); see also Thompson
v. W. States Med. Ctr., 535 U.S. 357, 388 (2002) (Breyer, J.,
dissenting) (chastising the majority for applying the commercial
speech doctrine "too strictly" in finding that a statute
prohibiting the advertising of compounded drugs was not narrowly
tailored); Ayotte, 550 F.3d at 96-97 (discussing "the debate on
Central Hudson's continuing viability"); Elizabeth Spring, Note,
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.").
In addition, there is a claim by some that these
particular laws should not be assessed as regulations of commercial
speech, with the lesser scrutiny that attends such measures, but
rather as content-based regulations of truthful speech "on matters
of profound public importance." Tribe, supra; see also Rowe, 532
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F. Supp. 2d at 167 n.14 (describing as a "thorny question" whether
Maine's content-based regulation should be given intermediate or
strict scrutiny and raising the possibility that "the speech here
is not purely commercial speech and is subject to strict scrutiny"
because it is "a matter of public concern"); cf. Tribe, supra
("Even if the prescription restraint laws were subject to the more
forgiving standard applicable to regulations of purely commercial
speech, however, they would still be unconstitutional because they
violate the core principle that the government may not restrict
even commercial communication merely to block the dissemination of
truth."). Although in Ayotte I found no merit in the argument that
New Hampshire's statute should be analyzed as a content-based
restriction on speech subject to strict scrutiny, see Ayotte, 550
F.3d at 83 n.47; accord Sorrell, 631 F. Supp. 2d at 447-48,57 the
contrary view has worthy proponents and undoubtedly deserves close
consideration.
Yet another source of difficulty is the quality of the
record a state legislature must amass to prove that a statute
advances its interest and extends no more broadly than necessary to
achieve its objectives. I concluded in Ayotte that the district
court had held the Attorney General to an overly demanding standard
57
The district court in Sorrell observed that, "[b]y
definition, the 'Supreme Court's commercial speech doctrine . . .
creates a category of speech defined by content but afforded only
qualified protection.'" 631 F. Supp. 2d at 447-48 (quoting Trans
Union Corp. v. FTC, 267 F.3d 1138, 1141-42 (D.C. Cir. 2001)).
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of proof. Here, too, the court underestimated the strength of the
State's showing. As I explained in Ayotte, a state legislature's
investigation cannot reasonably be expected to match the exhaustive
investigation Congress conducts in connection with complex federal
legislation. See 550 F.3d at 92-93 (referring to the "'tens of
thousands of pages' of materials" acquired during three years of
Congressional hearings on provisions of the Cable Television
Consumer Protection and Competition Act of 1992).
Although the extent of the required proof may differ, the
question in both federal and state contexts is the same: "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[].'" Id. at 93 (quoting Turner Broad. Sys.,
Inc. v. FCC, 512 U.S. 622, 666 (1994)). A further complexity,
however, is whether "the general principle of legislative
deference" should operate the same way in both settings, despite
differences in the scope of the underlying record. Id. In Turner
Broadcasting, the Supreme Court observed that 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." Turner Broad.
Sys., Inc. v. FCC, 520 U.S. 180, 195 (1997) (quotation marks and
citation omitted).
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The district court in this case puzzled over the
appropriate level of deference for the legislature's findings,
noting the subtle "distinction between judicial deference and
judicial respect to a legislature in a First Amendment case." 532
F. Supp. 2d at 178. It noted the Ayotte trial court's conclusion
that the legislature's "predictive judgments" were "entitled to
respect, but not deference, because there was nothing in the record
'to support a conclusion that the legislature had established
expertise in the regulation of prescriber-identifiable data.'" Id.(quoting IMS Health Inc. v. Ayotte, 490 F. Supp. 2d 163, 177 n.12
(D.N.H. 2007)).58 Yet the court also cited the Supreme Court's
statement in Turner Broadcasting that "the 'obligation to exercise
independent judgment when First Amendment rights are implicated is
not a license to reweigh the evidence de novo, or to replace
[legislative] factual predictions with our own.'" Id. at 178-79.
Indeed, the Supreme Court has "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.'" Florida Bar v.
Went For It, Inc., 515 U.S. 618, 628 (1995) (citations omitted).
58
The district court in Vermont also was faced with competing
arguments about "the nature and amount of deference" that should be
afforded to "the predictive judgments and factual findings of the
Legislature." Sorrell, 631 F. Supp. 2d at 448-49.
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The legislative records in New Hampshire and Maine were
necessarily limited. Given the novelty of their statutes, neither
State could offer "empirical data showing the extent of the
influence of prescriber-specific information on physicians'
decision-making" or proving the cost-cutting impact of their
provisions. 550 F.3d at 93. Both States, however, adduced
evidence of the impact of detailing generally and presented
anecdotal evidence "strongly indicating that sales pitches based on
specific prescribing patterns have a particularly persuasive impact
on drug choice." Id. at 94; Rowe, 532 F. Supp. 2d at 172. New
Hampshire offered expert evidence in defense of its view that
alternative strategies, less burdensome on speech, would not
suffice. Ayotte, 550 F.2d at 100. At this point in time, such
evidence was sufficient in each case to "establish[] a factual
basis justifying the initiative." Id. at 94. Equivalent evidence
may not be enough to support the adoption of similar legislation in
other states, however, if more extensive quantifiable data becomes
available. Cf. Ayotte, 550 F.3d at 93-94 ("[I]t 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.").
Without a doubt, the States must have flexibility to
experiment with measures that will help them address the serious
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problem of spiraling drug costs. At the same time, the restriction
of speech based on its content is a serious constitutional matter.
The tension between those principles in laws such as those enacted
in New Hampshire, Maine and Vermont presents a challenge to the
Supreme Court's commercial speech jurisprudence that warrants the
Court's attention and guidance.
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