Lawsuit Could Emerge as Forum on Pricing Transparency 4058

Originally Published MX July/August 2006

BUSINESS NEWS

As if the marketing practices and pricing policies of medical device manufacturers weren't already under enough scrutiny—from hospitals, healthcare economists, regulatory agencies, and federal attorneys—now the field is facing new legal challenges on constitutional grounds.

The battle began in May, when Guidant, now a business unit of Boston Scientific Corp. (Natick, MA), sought to prevent the medical products testing organization ECRI (Plymouth Meeting, PA) from publishing the prices paid by hospitals for the company's cardiac rhythm management (CRM) devices. In turn, ECRI filed a lawsuit with a federal district court in Pennsylvania, alleging that Guidant's action would violate ECRI's first-amendment rights. Guidant countersued with a court filing in Minnesota.

It's no secret that prices for certain devices—particularly in the orthopedics and cardiovascular sectors—vary widely from facility to facility even within the same geographic area. To get a better assessment of current prices, many hospitals subscribe to ECRI's PriceGuide, a service that publishes the prices paid for specific single-use devices, including disposables, implants, and consumables.

"No matter where you sit on the political spectrum, you know that the ability to compare products-whether it is cars or lifesaving technologies—is fundamental to an efficient marketplace," said ECRI president and CEO Jeffrey C. Lerner, PhD. "Simply put, ECRI believes that patients, along with their implanting physicians, have the right to know the cost of the pacemakers that are implanted in their chests."

For their part, Boston Scientific officials assert that pricing confidentiality has long been standard practice in the CRM industry. "Our CRM customers overwhelmingly prefer negotiated prices to fixed ones, and our ability to offer negotiated prices depends on confidentiality," said Paul Donovan, Boston Scientific's senior vice president of corporate communications. The legal proceedings are in the very early stages with no hint of a settlement and no court date set as of this printing.

Copyright ©2006 MX