Case Settles with Nothing Settled

ECRI, a not-for-profit information provider serving the healthcare industry, is often referred to as "the Consumer Reports of medical products." ECRI obtains and tests a broad range of medical products for quality, safety and efficacy and relays its results back to buyers of these products via written reports. Its influence in the industry is enormous.

As an offshoot of this core business activity, ECRI also publishes something called PriceGuide, an online service that shows actual prices paid for disposable and consumable medical products. ECRI gathers this information from hospitals, aggregates and standardizes the information, then sells it back to hospitals and other interested parties. It's a classic data publishing model.

PriceGuide was a good -- and quiet -- business for ECRI for more than ten years. Then, in 2006, it received a complaint from medical device manufacturer Boston Scientific, which claimed that all its hospital customers had signed confidentiality agreements that prohibited them from distributing this information to third-parties. ECRI took the stance that the information was accurate and voluntarily provided to it by these hospitals.

There are two important issues at play here: a) can companies keep their negotiated prices secret, and b) can a publisher be liable for violating a confidentiality agreement it never signed? Indeed, it's reasonable to ask why Boston Scientific didn't sue the hospitals that had disclosed this allegedly confidential data. According to some industry pundits, Boston Scientific wanted its pricing kept confidential but didn't want to offend its hospital customers, so it instead went after the publisher.

The stakes in this case were high. With product price data being viewed as "the final frontier" by many data publishers, any right of manufacturers to hold their pricing confidential would severely limit this area of opportunity. Further, can a data publisher be held liable for information it publishes that it received voluntarily and in good faith from an often large number of individual companies? A court ruling in the wrong direction could rattle the foundations of the data publishing industry.

But someone has blinked. With the December 3 trial date fast approaching, the New York Times reports that the two parties have settled, with no terms disclosed, and neither party is commenting. So now there will be far more eyes than usual scanning to see if Boston Scientific pricing appears in the next update to PriceGuide. And we should expect to see more cases like this in the future, as manufacturers become increasingly worried that the transparency of the web coupled with sophisticated data products give them less room to wheel and deal. While this case may be closed, the threat is still one our industry needs to keep an eye on because the underlying issues still remain.

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