May 8, 2006

Medical Device Company Cannot Stop Research Organization From Distributing Price Information, Public Citizen Tells Court

Pricing Publication Does Not Interfere with Guidant’s Contracts with Others

 WASHINGTON, D.C. – A Pennsylvania non-profit organization should be allowed to publish information about the prices of medical devices made by Guidant Corporation despite the company’s demands to keep its prices secret, Public Citizen said in a lawsuit filed in a Pennsylvania federal court on behalf of the organization.

 The lawsuit, filed late last week in the U.S. District Court for the Eastern District of Pennsylvania, seeks to guarantee ECRI (Emergency Care Research Institute), the nation’s leading independent medical product testing organization, the right to publish information about Guidant’s medical devices. ECRI’s guide is intended to assist hospitals, health care consultants, group purchasing organizations, health plans and government agencies with decisions about the cost-effectiveness of various competing medical devices that they are considering.  

  Hospitals typically track their purchases through information systems. ECRI obtains price data when hospitals voluntarily send the data in electronic format from those systems. ECRI organizes the data by standardizing the vendor names and item descriptions and then places the data into a database so that subscribers can review it. ECRI’s system, PriceGuide, has been in operation since 1996. 

 Guidant recently developed a business model purportedly requiring all of its customers to keep the prices it charges for its products confidential. Despite the fact that ECRI and other members of the public did not know of this new business model or consent to be bound by confidentiality clauses in Guidant’s contracts with its customers, Guidant claims that the public is bound to obey its contracts with customers and therefore ECRI should not be allowed to publish Guidant’s product prices.

 Guidant’s claims of contract interference are unfounded because ECRI has not used unlawful means to obtain information about the prices that hospitals pay for Guidant’s medical devices and because the First Amendment and the Due Process Clause prohibit Guidant from binding third parties to conditions they never agreed to, the suit says. Moreover, Guidant’s attempt to suppress publication of product prices also contravenes the strong public policy favoring price transparency. Under Guidant’s business model, even pacemaker patients and implanting physicians are forbidden from knowing the price of the device.

The exclusion of the data from ECRI’s publication puts consumers at a disadvantage and is a detriment to the healthcare system, the suit says.

 According to Paul Levy, an attorney with Public Citizen, which is representing ECRI, Guidant’s tort claims pose a serious problem for public policy.

“Many companies insert form confidentiality clauses into their contracts with employees and with customers. If a company can then use those clauses to threaten tort liability whenever some third party publishes information that the company claims should have been kept secret, the implications for free speech are chilling indeed.”

 Joyce S. Meyers and Michael D. Epstein, of the firm Montgomery, McCracken, Walker & Rhoads, LLP in Philadelphia, Pa., also serve on the legal team for ECRI. To view the lawsuit, click here.

 

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