ECRI Sues Guidant to Keep Prices of Medical Devices Public

The Philadelphia Inquirer published a story about a legal dispute between Guidant, which is now part of Boston Scientific, and ECRI Inc.

We have posted quite a lot about Guidant, most recently here. As per a previous New York Times article, "the Guidant Corporation came under scrutiny last spring for not telling doctors about potentially fatal defects in its heart devices."

ECRI Inc is a Philadelphia area not-for-profit organization that publishes a "PriceGuide" which lists the average and lowest regional prices paid by hospitals for medical devices. According to the Inquirer, "Guidant wants to stop ECRI Inc., a Plymouth Meeting nonprofit group that examines the safety, efficacy and cost of medical equipment, from publishing actual prices paid by hospitals for the company's devices." In response, "ECRI filed suit in federal court here last week seeking permission to 'continue to publish truthful information that hospitals voluntarily provide to it concerning the prices that they pay for medical devices."

Starting two years ago, Guidant lawyers began objecting to the inclusion of its products in the database, saying that 'price information was subject to confidentiality agreements between Guidant and its customers,' according to ECRI's federal complaint.
Guidant has argued that confidentiality clauses in its contracts with hospitals prevent sharing of actual cost information with third parties, such as ECRI or group purchasing organizations.
A Guidant spokesman referred questions about the matter yesterday to Boston Scientific Corp., which completed its $27 billion acquisition of the company last month.
Paul Donovan, a spokesman for Boston Scientific, said pricing confidentiality has long been the standard practice in the heart-device industry and serves customers and manufacturers well.
'It's a fairness issue,' Donovan said. 'We simply don't want the price negotiated privately with one hospital based on one set of circumstances used against us in negotiations with another hospital.' In February, a federal judge in Minnesota ruled that a health-care consulting firm was not allowed to share Guidant prices it obtained from one hospital client with other institutions.

The Inquirer reported support for ECRI's arguments,

The suit 'is about the public interest in making health care affordable and available,' said Joyce S. Meyers, a lawyer at Montgomery, McCracken, Walker & Rhoads L.L.P. in Philadelphia, representing ECRI.
The more information available on the quality and price of equipment and devices, the better for patients, said John J. Kelly, chief medical officer of Abington Memorial Hospital.
In a financially difficult environment for hospitals, ECRI serves as 'the Consumer Reports of health care,' he said.
If Guidant prevails, other medical-product manufacturers are likely to follow, said Michael J. McShane, a spokesman for the Health Industry Group Purchasing Organization, which represents companies that buy goods for large groups of hospitals.
'Ultimately, the cost will be passed on to the insurance companies and Medicare, and then right back to the consumers in higher premium rates and higher taxes,' McShane said.
Paul Alan Levy, a lawyer with the consumer advocacy group Public Citizen, which is also representing ECRI in the suit, said price, safety and effectiveness are necessary elements for hospitals to know when buying a product.
He said: If Guidant gets away with this, maybe others will try to do the same thing, and the marketplace would be the poorer for it.'

In my humble opinion, the arguments made on behalf of ECRI's stance are good ones. If we are going to rely on the market to reduce health care costs, that market must have available clear information about the price of health care goods and services. Furthermore, as Transparency International's 2006 report on corruption in health care, uncertainty and assymetrical information make corrupt practices easier.
Finally, in health care, where decisions affect peoples' health and safety, patients and physicians ought to seek to use products and services for which there is good evidence suggesting that benefits outweigh the risks. Patients and physicians may justifiably hesitate to use products and services from organizations with reputations for obscuring data about their products and services. Thus, I urge the leaders of Guidant (now Boston Scientific) to embrace transparency as a good business practice likely to improve their fortunes in the long run.