Requiring Disclosure of Gifts and Payments to Physicians: State Efforts and a Legal Analysis of Potential Federal Action
Requiring Disclosure of Gifts and Payments to
Physicians: State Efforts and a Legal Analysis of
Potential Federal Action
July 18, 2007
American Law Division
Requiring Disclosure of Gifts and Payments to
Physicians: State Efforts and a Legal Analysis
of Potential Federal Action
A recent Senate hearing, state efforts, and media attention have brought the
issue of pharmaceutical companies’ gifts and payments to physicians into focus.
Pharmaceutical companies sometimes give gifts or make payments to doctors as part
of their marketing efforts. Senator Herb Kohl has expressed interest in introducing
a federal bill that would mandate disclosure of such gifts and payments. This report
briefly outlines the arguments for and against a federal disclosure measure. Next, it
describes the state disclosure laws already in effect. Finally, it analyzes potential legal
hurdles to a federal disclosure requirement.
Proponents of disclosure express concern that gifts and payments from
pharmaceutical companies increase prescription drug costs and create incentives for
physicians that obscure patients’ best interests; they argue that disclosure would
alleviate those problems by providing transparency. Opponents of disclosure
emphasize the educational benefits that marketing provides; in addition, they argue
that disclosure is unnecessary because existing professional codes, such as American
Medical Association guidelines, discourage pharmaceutical representatives and
physicians from engaging in unethical behavior.
Several states and the District of Columbia have enacted legislation requiring
pharmaceutical companies to disclose gifts and payments made to physicians. The
state laws require disclosure to the states of such gifts and payments on an annual
basis. Certain categories of gifts and payments are exempted from reporting
requirements under most of the state laws. For example, nearly all of the laws exempt
product samples intended for free distribution to patients and gifts worth less than a
certain amount. The state laws also provide for dissemination to the public or state
legislatures of information disclosed pursuant to the laws.
If a federal disclosure requirement was enacted and subsequently challenged, it
appears likely to survive judicial scrutiny on First Amendment grounds. If
pharmaceutical companies challenged a federal disclosure measure, they would likely
argue that it violates their First Amendment rights of freedom of speech or
association. However, governmental interests, for example in transparency or patient
protection, might be sufficient to survive the applicable tests under compelled
speech, restricted speech, and private association precedents.
In troduction ......................................................1
A Federal Disclosure Requirement: Supporting and
Existing AMA Guidelines.......................................3
State Disclosure Measures.......................................4
District of Columbia.......................................7
Legal Analysis of a Federal Disclosure Requirement..................9
Requiring Disclosure of Gifts and Payments
to Physicians: State Efforts and a Legal
Analysis of Potential Federal Action
State measures, media attention, and a recent Senate committee hearing have
brought attention to the issue of pharmaceutical companies’ gifts and payments to
physicians.2 Examples of gifts and payments mentioned in media reports and at the
Senate hearing include meals, honoraria for speaking engagements, and travel
expenses for conferences.
This report first discusses the arguments for and against a federal requirement
that pharmaceutical companies disclose gifts and payments. Next, it briefly outlines
the existing American Medical Association (AMA) guidelines to which the
requirement’s potential opponents refer. It then describes state disclosure laws
already in effect. Finally, it analyzes potential legal hurdles to a federal disclosure
A Federal Disclosure Requirement:
Supporting and Opposing Views
The Senate Special Committee on Aging recently held a hearing to explore ties
between pharmaceutical companies and physicians.3 Committee Chairman Herb Kohl
explained that the hearing was prompted by evidence that “financial ties between
doctors and drug companies are ... deepening.”4
1 This report was prepared under the general supervision of Vanessa K. Burrows and Henry
Cohen, Legislative Attorneys, American Law Division.
2 Medical entities and professionals other than physicians, e.g., hospitals and pharmacists,
receive gifts and payments from pharmaceutical companies. However, in the context of its
discussion of a federal disclosure requirement, this report refers only to payments made to
physicians because the scope of discussion at the recent Senate hearing was similarly
3 Paid to Prescribe? Exploring the Relationship Between Doctors and the Drug Industry:
Hearing Before the Senate Special Committee on Aging, 110th Cong. (June 27, 2007),
[http://agi ng.senate.gov/ hearing_detail.cfm?id=277848&].
4 Id. (statement of Senator Kohl).
At the hearing, Senator Kohl announced his plan to “propose a national registry
to require disclosure of payments and gifts.”5 It would appear that any proposal
would likely require pharmaceutical companies to disclose gifts and payments made
Groups opposing a federal disclosure provision argue that disclosure is
unnecessary because existing guidelines within the medical and pharmaceutical-
marketing professions discourage unethical behavior.6 They also argue that gifts and
payments often benefit patients, as physicians receive product samples, attend
educational seminars, and receive detailed information about particular medications.7
At the Senate hearing, a representative from the pharmaceutical company trade
association Pharmaceutical Research and Manufacturers of America (PhRMA)
refuted the suggestion that unethical ties between pharmaceutical representatives and
physicians are prevalent.8 She stated that pharmaceutical representatives associated
with PhRMA adhere to a strict ethical code, one that “starts with the fundamental
principle that a healthcare professional’s care of patients should be based, and should
be perceived as being based, solely on each patient’s medical needs and the
healthcare professional’s medical knowledge and experience.”9 A representative from
the American Medical Association (AMA) similarly highlighted the ethical codes
already in place within the medical profession, discussed below, which he believes
discourage improper conduct.10 He also stated that pharmaceutical company
representatives provide physicians with the “necessary tools to make the right
prescribing decisions” and stressed that physicians depend on close relationships with
pharmaceutical industry representatives in order to receive “valid scientific
Supporters of a federal disclosure provision emphasize concern about the effects
of gifts and payments on both the cost of prescription medication and on health care
quality. They point to recent data showing that payments from pharmaceutical
companies influence some physicians’ decisions to prescribe certain medications,
occasionally resulting in over-prescribing of the most expensive medications or even
causing unnecessary health risks for patients.12 They also argue that the ethical
6 Id. (statement of Marjorie E. Powell, Senior Assistant General Counsel, Pharmaceutical
Research and Manufacturers of America).
10 Id. (statement of Robert Sade, Chair, AMA’s Council on Ethical and Judicial Affairs).
12 See, e.g., Gardiner Harris, Psychiatrists Top List in Drug Maker Gifts, N.Y. Times, June
27, 2007, at A14 (reporting that “the more psychiatrists have earned from drug makers, the
more they have prescribed a new class of powerful medicines known as atypical
antipsychotics to children, for whom the drugs are especially risky and mostly
guidelines such as the AMA rules discussed below are insufficient deterrents because
they “are not being followed.”13
At the Senate hearing, Senator McCaskill argued that the same concerns that
prompted federal limits on gifts from lobbyists to politicians apply to pharmaceutical
company-physician relationships.14 Also at the hearing, a medical school professor
testified that “the medical profession has become excessively dependent on the
largesse of [the pharmaceutical] industry.”15 He further asserted that such dependence
has a “negative influence on the quality and cost of patient care.”16 Similarly, a
researcher testified that although most physicians deny any such influence, research
shows that contact between physicians and pharmaceutical representatives often
influences prescribing habits.17 Regarding disclosure as the specific mechanism for
addressing these issues, Senator Kohl stated that disclosure would provide needed
“transparency,”18 perhaps by creating a public record of financial ties between
pharmaceutical companies and prescribing physicians.
Existing AMA Guidelines
Two sets of AMA guidelines provide ethical guidance to practicing physicians.
First, AMA’s Principles of Medical Ethics provide “standards of conduct which
define the essentials of honorable behavior” for physicians.19 Second, the AMA Code
of Medical Ethics “serves as the primary compendium of medical professional ethical
statements in the United States.”20
unapproved”); Gardiner Harris and Janet Roberts, A State’s Files Put Doctors Ties to Drug
Makers on Close View, N.Y. Times, March 21, 2007, at A1 (“Research shows that doctors
who have close relationships with drug makers tend to prescribe more, newer and pricier
13 Paid to Prescribe? Exploring the Relationship Between Doctors and the Drug Industry:
Hearing Before the Senate Special Committee on Aging, 110th Cong. (June 27, 2007),
[http://aging.senate.gov/hearing_detail.cfm?id=277848&] (statement of Senator Herb Kohl).
14 Id. (statement of Senator McCaskill).
15 Id. (statement of Jerome P. Kassirer, Professor, Tufts University School of Medicine).
17 Id. (statement of Peter Lurie, Deputy Director, Public Citizen’s Health Research Group)
(citing N. Lurie, E.C. Rich, and D.E. Simpson, et. al., Pharmaceutical Representatives in
Medical Centers: Interaction with Faculty and Housestaff, 5 J. of Int’l. Med., 240-43
18 Id. (opening statement of Senator Herb Kohl).
19 Paid to Prescribe? Exploring the Relationship Between Doctors and the Drug Industry:
Hearing Before the Senate Special Committee on Aging, 110th Cong. (June 27, 2007),
[http://aging.senate.gov/hearing_detail.cfm?id=277848&] (statement of Robert Sade, Chair,
AMA’s Council on Ethical and Judicial Affairs).
The Principles, last revised in 2001 by AMA’s House of Delegates,21 are nine
“ethical statements.”22 Perhaps the two most relevant of these statements are the
statement requiring physicians to uphold “standards of professionalism” and the
statement that physicians shall “regard responsibility to the patient as paramount.”23
AMA’s Council on Ethical and Judicial Affairs regularly updates the AMA
Code.24 In the most relevant section, the Code states that “physicians may not accept
any kind of payment or compensation from a drug company or device manufacturer
for prescribing its products.”25 The same section requires that physicians make
decisions regarding prescriptions based “solely on medical considerations and patient
need and reasonable expectations of the effectiveness of the drug.”26
State Disclosure Measures
Legislation requiring pharmaceutical companies to disclose gifts and payments
to physicians is already in effect in Maine, Minnesota, Vermont, West Virginia, and
the District of Columbia. Minnesota enacted the first disclosure law more than ten
years ago. The other disclosure laws were enacted relatively recently. The state laws
are fairly similar; they all require disclosure on an annual basis and exempt certain
categories of gifts and payments. Also, although the methods differ, all states provide
for dissemination of the disclosed information to the public or to state legislatures.27
As authority for the disclosure requirements, states have invoked their
responsibilities as regulators and as protectors of public welfare. They have also
expressed concern with the rising cost of prescription medication and noted their role
in reimbursing such medication through their Medicaid programs. For example,
Maine’s asserted purpose in its disclosure legislation focuses on the state’s roles as
“guardian of the public interest” and “administrator of prescription drug programs.”28
21 American Medical Association, History of the Principles of Medical Ethics (2005),
[ ht t p: / / www.ama-assn.or g/ ama/ pub/ cat e gor y/ 4256.ht ml ] .
22 American Medical Association, Principles of Medical Ethics (2001),
[ ht t p: / / www.ama-assn.or g/ ama/ upl oad/ mm/ 369/ 2001_pr i nci pl es.pdf ] .
24 AMA Code of Medical Ethics (2006), [http://www.ama-assn.org/ama/pub/category/
25 American Medical Association, Code of Medical Ethics, § E-8.06 - Prescribing Drugs and
27 For an analysis of the difference between the states’ laws, see Paid to Prescribe?
Exploring the Relationship Between Doctors and the Drug Industry: Hearing Before the
Senate Special Committee on Aging, 110th Cong. (June 27, 2007), [http://aging.senate.gov/
hearing_detail.cfm?id=277848&] (statement of Peter Lurie, Deputy Director, Public
Citizen’s Health Research Group).
28 Me. Rev. Stat. Ann. tit. 22, §2698-A(1) (2004 & Supp. 2007).
In addition to the states highlighted below, California and New Hampshire have
enacted measures to address pharmaceutical representative-physician relationships.
However, neither state requires disclosure. California’s law requires pharmaceutical
companies to adopt a Comprehensive Compliance Program in accordance with the
U.S. Department of Health and Human Services Office of Inspector General April
2003 publication “Compliance Program Guidance for Pharmaceutical
Manufacturers.”29 New Hampshire enacted a law prohibiting pharmacists from
releasing information regarding prescriptions to data companies, whose major clients
are pharmaceutical companies. However, the New Hampshire law was invalidated
on First Amendment grounds by a U.S. District Court.30
In addition to states that have already enacted disclosure legislation, many other
states are considering or have recently considered legislation to regulate the
relationship between pharmaceutical companies and physicians.31 As the number of
state measures increases, at least one expert has suggested that some state efforts risk
federal preemption claims by regulating areas usually left to the federal government.32
Minnesota. In 1993, Minnesota became the first state to require
pharmaceutical companies to disclose gifts and payments to physicians. Minnesota
requires each “wholesale drug distributor”33 to submit an annual report to the state
detailing: (1) payments to sponsors of medical conferences, (2) honoraria and
payments of expenses for practitioners who serve on faculties of professional or
educational meetings, (3) compensation of practitioners in connection with research
projects, and (4) “the nature and value of any payments totaling $100 or more, to a34
particular practitioner during the year.”
The Minnesota law exempts several categories of gifts and payments from its
reporting requirements. Specifically, it exempts drug samples intended for free
29 Cal. Health & Safety Code §§119400-119402.
30 IMS Health Inc. v. Ayotte, No. 06-cv-280-PB, 2007 WL 1244077, 1 (D.N.H., April 30,
31 National Conference of State Legislatures, 2007 Prescription Drug State Legislation, at
2, [http://www.ncsl.org/programs/health/drugbill07.htm]. See also Jennifer Medina, Drug
Lobbying Kills Gift Disclosure Bill, N.Y. Times, June 29 2006, at B5.
32 See Christopher D. Zalesky, Pharmaceutical Marketing Practices: Balancing Public
Health and Law Enforcement Interests: Moving Beyond Regulation-Through-Litigation, 39
J. Health L. 235 (2006) (citing Pac. Gas & Elec. Co. v. State Energy Resources
Conservation & Dev. Comm’n, 461 U.S. 190, 212-13 (1983) (“When the federal government
completely occupies a given field or an identifiable portion of it… the test of preemption
is whether ‘the matter on which the State asserts the right to act is in any way regulated by
the Federal act’” (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 236 (1947))).
33 Under the Minnesota statute, a “wholesale drug distributor” is “anyone engaged in
wholesale drug distribution” and includes manufacturers, drug warehouses, and others.
Minn. Stat. §151.44(b). The definition does not include a “medical device manufacturer that
distributes drugs as an incidental part of its device business.” Minn. Stat. §151.461 (2005
& Supp. 2007).
34 Minn. Stat. §151.47(f).
distribution to patients, items with a “total combined retail value, in any calendar
year, of not more than $50,” educational materials, and salaries and benefits given to
the pharmaceutical companies’ own representatives.35 Minnesota’s requirement is a
licensing requirement; therefore, a penalty for non-compliance might be not receiving
a wholesale drug distributor license in the state.
In contrast to the other states, Minnesota does not require that an annual
summary report be provided to its state legislature. However, Minnesota is unique
in providing that information submitted pursuant to its disclosure requirement is
Recent reports have summarized data collected pursuant to Minnesota’s
requirement. For example, one recent article reported that between 1997 and 2005,
“drug makers paid more than 5,500 doctors, nurses and other health care workers in
the state at least $57 million.”37 Reports also suggest that Minnesota’s data collection
process has encountered problems, including difficulties with ensuring
pharmaceutical companies’ compliance with the reporting provisions.38
Vermont. Vermont enacted disclosure legislation in 2003. Its disclosure law
applies to “pharmaceutical manufacturing companies.”39 Vermont requires such
companies to disclose, on an annual basis, the “value, nature, and purpose of any gift,
fee, payment, subsidy, or other economic benefit provided in connection with
detailing, promotional, or other marketing activities by the company ... to any
physician ... or any other person in Vermont authorized to prescribe, dispense, or40
purchase prescription drugs.”
Like Minnesota, Vermont exempts several categories of gifts and payments
from its reporting requirements. Exemptions under the Vermont law include gifts and
payments with a value of less than $25; free product samples intended for
distribution to patients; prescription drug rebates or discounts; scholarships for
medical students, residents, or fellows to attend “significant” educational, scientific,
or policy-making conferences; unrestricted grants for continuing medical education;41
and “reasonable compensation” for clinical trials. The state Attorney General may
sue violators for civil penalties not to exceed $10,000, plus attorneys’ fees.42
35 Id. See also §151.461(1).
36 Minn. Stat. §151.47(f).
37 Gardiner Harris and Janet Roberts, A State’s Files Put Doctors Ties to Drug Makers on
Close View, N.Y. Times, March 21, 2007, at A1.
39 Vt. Stat. Ann. tit. 33 §2005(a)(1) (Supp. 2005).
Under the statute, the Vermont Attorney General’s office must “report annually
on the disclosures made under this section to the general assembly and the
governor.”43 Vermont’s law provides that “the office of the attorney general shall
keep confidential all trade secret information.”44 At least one researcher has noted
that this trade secret restriction limits access to the data by researchers and the
Recent articles have highlighted early results from Vermont’s disclosure
requirement. For example, one article reported that of physicians with the highest
earnings from pharmaceutical companies in 2006, psychiatrists received a larger
average amount of gifts and payments during the year than other types of Vermont
physi ci ans.46
District of Columbia. The District of Columbia enacted a disclosure law in
2004. The law applies to every “manufacturer or labeler of prescription drugs
dispensed in the District that employs, directs, or utilizes marketing representatives47
in the District.”
The District of Columbia requires each pharmaceutical manufacturer or labeler
to report, on an annual basis, expenses associated with: (1) educational or
informational programs or materials, (2) food, entertainment, and gifts, (3) trips and
travel, and (4) product samples.48 Furthermore, each report must provide the “value,49
nature, purpose, and recipient” of each expense. However, like Minnesota and
Vermont, the District exempts certain categories. Namely, it exempts expenses worth
less than $25, “reasonable reimbursement” for clinical trials, product samples if they
will be distributed to patients for free, and scholarships for attending “significant”50
conferences if the attendee is chosen by the association sponsoring the conference.
Violators can be sued for a fine of $1,000 plus attorneys’ fees.51 The District of
44 §2005(a)(3). See also Vt. Stat. Ann. tit. 1 §317(c)(9) (2003 and 2006 Supp.) (defining
45 Paid to Prescribe? Exploring the Relationship Between Doctors and the Drug Industry:
Hearing Before the Senate Special Committee on Aging, 110th Cong. (June 27, 2007),
[http://aging.senate.gov/hearing_detail.cfm?id=277848&] (statement of Peter Lurie, Deputy
Director, Public Citizen’s Health Research Group).
46 Gardiner Harris, Psychiatrists Top List in Drug Maker Gifts, N.Y. Times, June 27, 2007,
47 D.C. Code §48-833.01 (Supp. 2006).
Columbia requires the D.C. Department of Health to compile an annual report
presenting the disclosed information in “aggregate form.”52
The District of Columbia’s disclosure requirement is broader than Minnesota
and Vermont’s requirements. In addition to the provisions relating to physicians, it
mandates disclosure of expenses associated with advertising to the public at large,
including through television advertisements, “as they pertain to District residents.”53
Maine. The first reports pursuant to Maine’s disclosure law were due from
pharmaceutical companies on July 1, 2007.54 Maine’s law applies to every
“manufacturer or labeler of prescription drugs dispensed in the State that employs,
directs, or utilizes marketing representatives in [the] State.”55
Maine’s law is virtually identical to the District of Columbia requirement.
Namely, pharmaceutical manufacturers and labelers must disclose all expenses
associated with: (1) educational or informational programs or materials, (2) food,56
entertainment, and gifts, (3) trips and travel, and (4) product samples. Maine’s law
also exempts expenses worth less than $25, reasonable reimbursement for clinical
trials, product samples if they will be distributed to patients for free, and scholarships
for attending “significant” conferences if the attendee is chosen by the association57
sponsoring the conference. As in the District of Columbia, violators can be sued for
a fine of $1,000 plus attorneys’ fees.58 The Maine disclosure statute also resembles
the District of Columbia’s law in that it contains a broad reporting requirement that
extends to expenses associated with marketing to the general public.59
Maine requires that a report summarizing the aggregate data and a report
providing analysis be provided to the Maine Attorney General’s office and the state
legislature each year by November 30th and January 1st, respectively.60 The first61
reports pursuant to this provision will be due in November 2007 and January 2008.
West Virginia. Several years ago, West Virginia created a Pharmaceutical
Cost Management Council, to which pharmaceutical manufacturers and labelers must
54 Me. Rev. Stat. Ann. tit. 22 §2698-A(3) (2004 & Supp. 2006).
report advertising costs based on “aggregate national data.”62 West Virginia’s law is
generally broader and weaker than the other states’ laws. It does not specify any
exemptions, nor does it require disclosure of individual payments or data regarding
receiving physicians. In addition, in contrast to other states’ laws, which authorize
civil or other penalties for non-complying companies,63 West Virginia’s law does not
contain any mechanism for enforcement.
Legal Analysis of a Federal Disclosure Requirement
If Congress were to enact a federal disclosure requirement, it would likely
survive judicial scrutiny. A preliminary question when considering the
constitutionality of any federal statute is whether any power enumerated in the
Constitution authorizes Congress to take such action. A disclosure requirement
would likely pass that preliminary threshold. Congress has broad authority to
regulate activities under its commerce clause64 power, including the authority to
regulate wholly intrastate activities as long as they “substantially affect” interstate
com m erce. 65
The second question in determining the constitutionality of a federal statute is
whether the statute violates any constitutional provision. The First Amendment is one
plausible basis for a constitutional challenge to a disclosure provision. Specifically,
pharmaceutical companies might argue that mandatory disclosure of gifts and
payments to physicians violates their First Amendment freedoms of speech and
Pharmaceutical companies might identify two different manifestations of
“speech” implicated by a federal disclosure provision. First, they might argue that the
disclosure of information regarding gifts and payments is unconstitutionally
compelled speech. Second, they might argue that the gifts and payments are,
themselves, speech that the law unconstitutionally restricts.
A federal provision would likely survive a compelled speech challenge. The
First Amendment generally prohibits the government from compelling speech.66
However, two case law trends suggest that a court would uphold a federal provision
compelling disclosure of gifts and payments made to physicians. First, a court might
analyze the disclosure by pharmaceutical companies in the context of compelled
commercial speech.67 Commercial speech is “speech that proposes a commercial
62 W. Va. Code §5A-3C-13 (2006).
63 See, e.g., D.C. Code §48-833.06 (Supp. 2006) (providing that the District of Columbia
disclosure law can be enforced in a civil action).
64 U.S. Const. art. II, §8, cl. 3.
65 See Gonzalez v. Raich, 545 U.S. 1, 17 (2005).
66 See Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781, 797
67 Most commercial compelled speech cases have addressed mandatory disclosures in
transaction.”68 Although the disclosures would not themselves propose commercial
transactions, they report transactions made for the purpose of increasing business.
In the compelled commercial speech category, under applicable case law, the
government’s interest need only be “reasonably related” to the disclosure
requirements to survive judicial scrutiny.69 Mandatory disclosure of gifts and
payments to physicians appears reasonably related to potential governmental
interests, such as transparency and patient protection. Second, even if the compelled
speech at issue is viewed as non-commercial, a court would likely uphold the
provision. Although the Court has invalidated nearly all laws it has reviewed in the
non-commercial compelled speech category,70 most of the Court’s non-commercial
compelled speech cases addressed political speech, which garners a greater level of
constitutional protection than other types of speech.71 In contrast, the speech
implicated here, if not commercial, is medical rather than political. Therefore, a
federal disclosure provision would likely survive a compelled speech challenge under
the First Amendment.
A mandatory disclosure provision would likewise probably survive a restricted
speech challenge. Such a challenge would allege that the provision unconstitutionally
restricts pharmaceutical companies’ gifts and payments to physicians. As a threshold
matter, it is not clear that gifts and payments made to physicians are “speech.” The
Supreme Court has treated monetary transactions as “speech” in the past, most
notably in the area of campaign finance.72 However, the payments at issue here are
arguably distinct from campaign contributions because they are not “political
expression” or “discussion of governmental affairs” as were the transactions in the
advertising. See, e.g., Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985)
(upheld a state law mandating disclosure of specific payment information in lawyers’
advertisements for contingency fee services). The disclosure at issue here would seem to
differ from advertising disclosures because it involves direct disclosure to the government
rather than to consumers. However, a court might analyze the disclosure involved here in
the commercial context despite this difference because it, like advertising disclosures, would
compel information regarding business transactions, with one potential purpose being to
disseminate the disclosed information to a public audience.
68 Bd. of Trustees of the State Univ. of N.Y. v. Fox, 492 U.S. 469, 482 (1989) (emphasis in
69 Zauderer, 471 U.S. at 651.
70 One exception is Meese v. Keene, in which the Court upheld a law mandating disclosure
of associations with foreign governments by distributors of political propaganda, finding
that such disclosures did not “prohibit, edit, or restrain the distribution of advocacy
materials.” 481 U.S. 465, 480 (1987).
71 See, e.g., Wooley v. Maynard, 430 U.S. 705 (1977) (invalidating a New Hampshire law
making it a misdemeanor to not display the slogan “Live Free or Die” on one’s license
plate); West Virginia State Bd of Ed. v. Barnette, 319 U.S. 624 (1943) (invalidating a state
law requiring school children to recite the Pledge of Allegiance).
72 See McConnell v. FEC, 540 U.S. 93, 120 (2003) (citing Buckley v. Valeo, 424 U.S. 1, 14-
campaign finance arena.73 If the gifts and payments are not speech, then they fall
outside of First Amendment protection.
If they are “speech,” then such transactions are likely commercial speech, or
“speech that proposes a commercial transaction,”74 because the likely message
conveyed by the gifts and payments is that doctors should prescribe the promoted
drugs. Commercial speech garners less constitutional protection than political or
other types of speech.75 The applicable test for determining the constitutionality of
commercial speech is the four-part Central Hudson test.76 Under the Central Hudson
framework, the preliminary questions are: (1) whether the speech is protected by the
First Amendment (i.e., is not unlawful or misleading), and (2) whether the
government’s asserted interest in regulation is “substantial.”77 If the regulation
satisfies both preliminary questions, the third and forth prongs then apply: (3)
whether the regulation directly advances the government’s asserted interest and (4)
if so, whether the regulation is no more extensive than is necessary to serve that
Assuming that the gifts and payments made to physicians are not unlawful or
misleading, a court would find that the first Central Hudson prong is satisfied. A
court would also likely find that a federal disclosure requirement satisfies the second
prong. In Rubin v. Coors Brewing Co., the Supreme Court found “substantial” the
government’s interest in deterring efforts by beer companies to advertise the most
potent beer.79 Here, the government’s potential interests — for example,
transparency, reduced drug costs, and patient protection — would seem likely to be
at least as “substantial” as the interest asserted in Rubin.
The third and fourth Central Hudson prongs could be closer issues but would
still likely result in a finding of constitutionality. When applying the third prong, the
Supreme Court has indicated that courts should consider the effect of the regulation
in its general application, rather than as applied to the particular group challenging
73 Buckley, 424 U.S. at 14.
74 Bd. of Trustees of the State Univ. of N.Y. v. Fox, 492 U.S. 469, 482 (1989) (emphasis in
75 U.S. v. Edge Broadcasting Co., 509 U.S. 418 (1993). For more information on treatment
of commercial speech, see CRS Report 95-815, Freedom of Speech and Press: Exceptions
to the First Amendment, by Henry Cohen.
76 Central Hudson Gas & Electric Corp. v. Public Service Comm’n, 447 U.S. 557, 566
(1980). Note, however, that in the most recent Supreme Court commercial speech case, the
Court noted that some justices “have expressed doubts” about the Central Hudson test’s
applicability in certain circumstances. Thompson v. Western States Medical Center, 535
U.S. 357, 367 (2002).
77 Central Hudson, 447 U.S. at 566.
79 514 U.S. 476 (1995).
the law.80 In a case invalidating a law on the basis of the third prong, the Supreme
Court stated that the government must “demonstrate that the harms it recites are real
and that its restriction will in fact alleviate them to a material degree.”81 Although it
seems likely that the government could identify a real harm caused by gifts and
payments to physicians, some question exists as to whether mandatory disclosure of
such gifts and payments would “materially alleviate” that harm. The Court noted in
the above case that the government offered “no studies” giving evidence of the
asserted harm and failed to present even “anecdotal” evidence that the law would
address the harm identified.82 Thus, the question might be whether the government
can present sufficient studies and anecdotal evidence to show that the disclosure
would alleviate any identified harm created by gifts and payments to physicians.
Regarding the fourth Central Hudson prong, the Supreme Court has clarified
that “no more extensive than necessary” should not be interpreted strictly to require
the government to use the “least restrictive means” of all available alternatives to
accomplish its purpose; rather, the fourth prong merely requires a reasonable “fit”
between the legislature’s ends and the means chosen to accomplish those ends.83
Thus, a court need only find a reasonable fit between a disclosure rule and the
government’s asserted interest in order to uphold the government action. For laws
affecting political speech, in contrast, the more onerous “least restrictive means” test
applies. Nonetheless, in a disclosure case involving political speech in the context of
campaign finance, the Court stated that disclosure is generally the “least restrictive
means” of addressing corruption in government.84 Since the fourth Central Hudson
prong is less onerous than the “least restrictive means” test, it is likely that disclosure
would survive First Amendment scrutiny in the commercial speech arena.
A federal disclosure requirement would likely also survive a freedom of
association challenge. The Supreme Court has stated that “compelled disclosure, in
itself, can seriously infringe on privacy of association and belief.”85 To be
constitutional, a disclosure law must have a “relevant correlation” or “substantial
relation” to the asserted government interest.86 It is unclear whether the right of
association would extend to an “association” between a pharmaceutical company and
a physician, since the Supreme Court cases to date have generally invalidated laws
on freedom of association grounds only when political or membership associations
were at issue.87
80 Edge Broadcasting, 509 U.S. at 501-502.
81 Edenfield v. Fane, 507 U.S. 761, 771 (1993).
83 Bd. of Trustees of the State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989).
84 Buckley v. Valeo, 424 U.S. 1, 68 (1976).
85 Id. at 64.
87 See, e.g., Rumsfeld v. Forum for Academic and Inst. Rights, Inc., 547 U.S. 47 (2006)
(finding no violation of plaintiffs’ associational rights where the “association” mandated by
the law did not involve membership).
Even if a court found that the pharmaceutical company-physician relationship
constituted an “association” such that it triggered right of association claims under
the First Amendment, it is unlikely that a court would find that a disclosure law
violated privacy of association rights because the Court has upheld disclosure laws
against freedom of association challenges in other contexts. For example, in Buckley
v. Valeo, the Supreme Court upheld federal laws mandating disclosure of certain
campaign finance activities, holding that the government’s interest in regulation
outweighed the private association concerns raised by the requirements.88 It seems
likely that government interests asserted here would similarly outweigh the
pharmaceutical companies’ freedom of association concerns.
Finally, it is telling in assessing a federal disclosure requirement’s
constitutionality that the state disclosure laws now in effect have faced no significant
legal challenges. Although a U.S. district court recently invalidated on First
Amendment grounds a New Hampshire law regulating prescription information, that
law was distinct from the possible federal requirement discussed here because it
prohibited disclosure of prescription information.89
In sum, state efforts, media attention, and a recent Senate committee hearing
have highlighted the issue of the relationship between physicians and pharmaceutical
companies. Senator Herb Kohl and others have indicated support for the introduction
of federal legislation that would require pharmaceutical companies to disclose gifts
and payments made to physicians, arguing that such a measure is necessary in order
to prevent a negative result for health care cost and quality. Opponents argue that
such a measure is unnecessary because existing guidelines such as AMA’s Principles
of Medical Ethics and the AMA Code of Medical Ethics discourage unethical
Several states have already enacted legislation requiring pharmaceutical
companies to disclose gifts and payments to physicians. The state laws require
pharmaceutical companies to submit annual reports detailing gifts and payments.
Most state laws exempt certain categories of gifts from the reporting requirements,
including product samples intended for free distribution to patients and gifts worth
less than a specified amount.
A federal disclosure requirement would likely survive a legal challenge.
Pharmaceutical companies might challenge the provision on First Amendment
grounds. However, it appears likely that it would survive judicial scrutiny under the
various applicable tests of constitutionality.
88 Buckley, 424 U.S. at 61.
89 IMS Health Inc. v. Ayotte, No. 06-cv-280-PB, 2007 WL 1244077 (D.N.H., April 30,