Sorrell and the Supreme Court’s New Approach to Commercial Speech

Will All Pharmaceutical Regulation Now Be Subject to Heightened Scrutiny?

Early this summer, in Sorrell v. IMS Health, Inc., -- U.S. --, 131 S. Ct. 2653 (2011), the Supreme Court invalidated a Vermont law that prohibited pharmaceutical marketers from using prescriber-identified information, absent the prescriber’s consent, to market drugs to physicians. Because the law did not prohibit other groups—such as research facilities—from using the same information, the Court found that the law imposed both content-based and speaker-based burdens on protected expression. Most notably, the Court expanded the category of what kinds of speech count for the purposes of heightened scrutiny under the First Amendment to include marketing activities, or commercial speech. And, given the application of heightened scrutiny, the Court narrowed the kind of content-based restrictions that might be permissible to curtail commercial speech. The court noted, for example, that the government may have a legitimate interest in protecting consumers from “commercial harms.” Id. at 2672. Specifically, the Court acknowledged that government regulation of commercial speech would be legitimate where the regulations are meant to curtail fraud or the risk of fraud. Id.

As Justice Breyer pointed out in his dissent, this expansion of First Amendment protections to commercial speech (which prior to Sorrell was understood to only be deserving of at most intermediate scrutiny) may undermine many of the regulatory schemes that have been in place for years, including FDA regulation:

The ease with which one can point to actual or hypothetical examples with potentially adverse speech-related effects at least roughly comparable to those at issue here indicates the danger of applying a “heightened” or “intermediate” standard of First Amendment review where typical regulatory actions affect commercial speech.  . . . If the Court means to create constitutional barriers to regulatory rules that might affect the content of a commercial message, it has embarked upon an unprecedented task—a task that threatens significant judicial interference with widely accepted regulatory activity.

Id. at 2676-77, 2678.

Does Sorrell mean that the government cannot put restrictions on off-label marketing? Such restrictions are clearly content-based and speaker-based, since as Justice Breyer points out, the regulatory scheme seeks to regulate the sale of drugs, but not furniture. Id. at 2677. And what about the use of kickbacks? On the one hand, the payment of kickbacks cannot be said to be “speech” and the regulation of kickbacks surely falls within the legitimate interest identified by the Sorrell majority to curtail fraud or the risk of fraud. But one commentator has already suggested that Sorrell means that government cannot interfere with kickbacks that are paid to marketers, since this is content-based interference with speech. How far will the Sorrell case be taken, and how will it affect False Claims Act cases based on off-label and anti-kickback theories? That will remain to be seen. For now, those of us who litigate these cases can only take comfort in the fraud exception laid out by the Sorrell majority, and be willing and able to show that the regulations that underlie the off-label and kickback cases fall within this category of acceptable government regulation.

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Loren Jacobson is a partner at Waters & Kraus, LLP, in the firm’s Dallas office. Her practice focuses on qui tam (whistleblower) cases and appellate matters.