BUSINESS NEWS
When the ECRI Institute (Plymouth Meeting, PA) brought suit against then Guidant Corp., now a wholly owned business unit of Boston Scientific Corp. (Natick, MA), many medtech industry observers saw the case as a potential forum on medical device pricing transparency. At issue was ECRI's right to continue publishing the prices paid by hospitals for a number of medtech products, notably, in the dispute with Guidant, cardiac rhythm management devices such as pacemakers and implantable cardioverter-defibrillators (ICDs).
The case was scheduled to go to trial on December 3, but several weeks earlier, on November 19, the two parties announced that they had reached a settlement.
Under terms agreed to by ECRI and Boston Scientific, details of the agreement could not be disclosed. However, Jeffrey C. Lerner, PhD, president and CEO of ECRI, said that the firm would continue to publish the PriceGuide, including information about Boston Scientific's Guidant brand of CRM devices.
Lerner says that ECRI will continue to obtain, benchmark, and publish medtech pricing information that is voluntarily supplied, so long as that information does not violate confidentiality agreements between hospitals and medtech manufacturers. Despite the Guidant lawsuit, he says ECRI does not consider its relationship with the medtech manufacturing community to be an adversarial one.
The out-of-court settlement, which was largely unexpected, disappointed many medtech analysts, hospital administrators, and healthcare policymakers. Many such stakeholders viewed the prospect of a trial as providing a more definitive venue for exploring the intricacies of the medical device pricing issue, which continues to gain traction on several fronts.
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Grassley
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Asked to comment on the case, Senator Arlen Specter (R–PA) issued a statement that the ECRI–Boston Scientific dispute was not the impetus for the proposed Transparency in Medical Device Pricing Act, which he cointroduced on October 23 with Senator Charles Grassley (R–IA). If the bill becomes law, it would require medtech manufacturers seeking payment under Medicare and related programs to issue quarterly reports on the average and median sales prices for all of their implantable medical devices used in inpatient and outpatient procedures. Manufacturers that misrepresent or fail to report pricing data would be subject to fines up to $100,000.
"Both parties to a transaction need information in order for the free market to properly work," said Grassley. "If only one party has information, the market does not properly function because you have a one-sided negotiation. The purpose of this legislation is to bring transparency to medical device pricing so that there will be sufficient information available for market forces to truly work."
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Leahey
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Nevertheless, leading medtech trade organizations take a dim view of the proposed legislation. Mark Leahey, executive director of the Medical Device Manufacturers Association (Washington, DC), says, "Medical devices represent—at most—about 4–6% of healthcare costs. The proposed legislation no doubt has populist appeal, particularly in the upcoming election year, but if the concern is truly about healthcare costs, then we need to look at Medicare and private insurance funding."
