A Medical Device Daily

A Pennsylvania non-profit organization should be allowed to publish information about the prices of medical devices made by Guidant (Indianapolis) – recently acquired by Boston Scientific (Natick, Massachusetts) – despite the company's demands to keep its prices secret, the public interest watchdog group, Public Citizen (Washington), 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 the Emergency Care Research Institute (ECRI), an independent medical product testing organization, the right to publish information about Guidant's medical devices.

ECRI's guide is intended to assist hospitals, healthcare 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.

Public Citizen said that 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,” said Levy. “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.”

In other court-related news:

The U.S. District Court for the Northern District of California found in favor of SourceCF (Huntsville, Alabama), and SourceCF Clinical Research and Development, in a patent infringement suit brought by Chiron (Emeryville, California)

The case involved a patent claiming a “method of treating” an endobronchial infection by administering a nebulized dose of the antibiotic tobramycin using an inhalation device.

The court ruled last week, a year after the filing of this second lawsuit, that the concentrations of tobramycin remaining in dispute – 50mg/ml and 40mg/ml – did not infringe the '907 patent under any of Chiron's claims.

“We are very pleased with the court's findings,” said Mike Walters, president and CEO of SourceCF. “We find comfort in the fact that patients prescribed tobramycin for use in eFlow at these concentrations can continue to realize its benefits.”

On May 10, 2005, Chiron was issued the '907 patent. That same day, without any notice or advance warning, according to SourceCF, Chiron filed suit against the SourceCF companies and the Respiratory Disease Network Pharmacies.

The suit alleged that after May 10, 2005, SourceCF could not, in response to a physician's prescription, dispense the eFlow SCF nebulizer and that, separately, the eFlow SCF nebulizer could not be prescribed for use with the concentration of tobramycin the RDN Pharmacies had, prior to issuance of the '907 patent, been filling physicians' prescriptions.

This is the second lawsuit against SourceCF, by Chiron, directed to the eFlow nebulizer. The first lawsuit was settled.

“Patients, family members and prescribing physicians served an important role over the last 12 months, as their support and feedback gave us the strength to honor our mission – to serve the CF Community. This ruling enables us to continue to do that through eFlow,” said Walters.

A Hyannis, Massachusetts, doctor has paid $1.9 million to resolve claims by the government that he submitted fraudulent billings to the Medicare program.

U.S. Attorney Michael Sullivan and Joseph Moraski, special agent in charge of the Department of Health and Human Services, Office of Inspector General, Office of Investigations, reported that the U.S. has settled civil claims against Philip Chiotellis MD, and Cardiac Rehabilitation under the False Claims Act.

Based on its investigation, the U.S. alleged that Chiotellis had overbilled Medicare from 1995 through 2001 for thousands of cardiac rehabilitation services that were performed, but billed to the Medicare program as cardiovascular stress tests. Reimbursement rates for cardiovascular stress tests are significantly higher than rates for cardiac rehabilitation services. As a Medicare provider, Chiotellis has “a legal duty to familiarize himself with Medicare's coding and reimbursement rules,” the U.S. said.

“This case demonstrates our continued commitment to the preservation of the Medicare Trust Fund,” said U.S. Attorney Michael Sullivan. “We will continue to hold accountable all unscrupulous healthcare providers who enrich themselves at the expense of government health care programs,” he concluded.

Chiotellis has also entered into an Integrity Agreement with the HHS OIG in order that, among other things, his compliance with the Medicare billing guidelines can be monitored.

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