DAVE GRAM

Associated Press

MONTPELER -- The state of Vermont must pay a medical data mining company $2.4 million in legal fees in a case in which the firm successfully argued a state law trying to restrict its activities violated the First Amendment.

IMS Health Inc. sued the state over a law that required it to get doctors' permission before selling data on their prescription writing habits to drug makers. The drug companies use the data to tailor drug sales pitches.

The U.S. Supreme Court ruled for the company last year. IMS then asked the U.S. District Court in Vermont for $4.2 million in legal fees and costs in bringing its suit, with rates as high as $875 per hour.

The court scaled that request back to $4.2 million.

In the underlying case, the state argued that information on doctors' prescribing patterns was being used by some drug companies to boost the sales of their brand-name drugs, rather than their generic equivalents, and that the result was unnecessarily increased health care costs.

IMS argued that it had a free-speech right to collect the information and sell it to its clients, a right it said was violated by a state law requiring it to first get a doctor's permission before gathering and using her or his prescription data.

In its June 2011 decision, the Supreme Court said Vermont appeared to be trying to win the debate over health care costs in part by violating the data mining and pharmaceutical companies' free-speech rights.

Justice Anthony Kennedy, writing for the court, said "the state cannot engage in content-based discrimination to advance its own side of a debate."

The IMS victory set off a second battle over legal fees.

After Tuesday's court ruling setting the total that IMS' lawyers would get from the state, the office of Attorney General William Sorrell issued a statement saying it had argued that both the hourly rates demanded and the number of hours reported as having been worked by IMS' legal team were excessive.

The state said legal fees should be reduced to $1.48 million.

Vermont had previously paid the Pharmaceutical Research Manufacturers Association $1.7 million for its legal fees and expenses, bringing the total amount the state will pay in connection with this case to approximately $4 million. IMS Health was joined in the suit by SDI Health and Source Healthcare Analytics.

Similar laws passed by New Hampshire and Maine also have been ruled unconstitutional, IMS said in a statement.

The company said it was pleased with the awarding of legal fees by Judge J. Garvan Murtha. It said the rulings by the Supreme Court and by Murtha "make it clear and unmistakable that laws seeking to improperly restrict access to information do nothing to improve healthcare, reduce costs or protect privacy as proponents have claimed."