Hospitals Have Trade Secrets Too

Originally published by Peggy Keene.

Can the Healthcare Industry Claim Pricing as Trade Secret Information to Avoid Disclosure?

As the COVID-19 pandemic continues to wreak havoc across the globe, increased scrutiny has fallen on the national healthcare system.  In the United States, the federal government has passed a number of new policies aimed at making the healthcare system more transparent about its pricing, but such initiatives have hospitals and healthcare providers balking at the possibility of having to share pricing information, as they consider pricing as a trade secret.

What’s The Price of Healthcare, Really? Government Pushing for Transparency

In the United States, it is common practice for patients seeking treatment or undergoing surgery to rarely know the cost of the treatment provided by medical staff until after the services are provided.  From ambulance rides to major surgery, the prices from hospital or healthcare provider often vary from city to city and hospital to hospital.  With these new initiatives, the federal government has been looking to change that.

Touting new initiatives as much-needed efforts to make the healthcare system more transparent, the federal government has asked healthcare providers and hospitals to publish the prices of their services.  These new measures, the government argues, could help erase the gap between prices that vary widely.  For example, according to some studies, common preliminary screenings may cost approximately $11 in one area while reaching a price of over $1,000 in others.  Similarly, studies have noted that coronavirus tests have also varied from prices set at $27 in one area to costing $2,315 in others.  As such, experts argue that publication of pricing would not only lead to more predictable prices in an industry that has become more vital than ever, but such publication would likely lead to a more uniform pricing model across the country.

Healthcare Industry Claims Pricing as Trade Secret Information to Avoid Disclosure

Despite this, hospitals and healthcare providers have pushed back, arguing a violation of intellectual property rights, claiming pricing as trade secrets, and contending such publication would undermine important negotiations that must happen between providers.

In response to the new initiatives, the American Hospital Association has sued, arguing that the federal government does not have the necessary legal authority to require hospitals and health services to publish their prices.  Countering the government’s suggestions, the American Hospital Association argues that the publication of prices would actually lead to a more negative outcome, stating that having to publish pricing for every service, which often changes, would put more pressure and burden on an industry that is already under immense stress.  Moreover, the American Hospital Association argues that such requirements would increase operating costs, which would ultimately be passed down to the patient, which defeats the ultimate goal of lowering prices for patients.

A Call for Pharmaceutical Pricing Transparency Meets Claims of Pricing as Trade Secret Protected Information

Interestingly, the federal government has attempted to also require transparency in pricing from the pharmaceutical industry.  Specifically, the government is looking to require pharmaceutical companies to publish the pricing of the prescription drugs that they are advertising within the advertisement itself.  And similarly, and perhaps unsurprisingly, pharmaceutical companies have pushed back, making similar arguments about price modeling as trade secret information as well.

In the end, it would behoove attorneys in the respective fields to follow this case as it winds its way through the courts, especially to see if the courts find that such pricing information does qualify as trade secrets.

Key Takeaways for Healthcare Industry Claiming Pricing as Trade Secrets

New initiatives by the federal government aim at making the healthcare industry’s pricing models more transparent.  However, healthcare providers and hospitals have pushed back against such efforts arguing that:

• such pricing information qualifies as trade secrets;

• publication of prices would put unnecessary hardship on healthcare providers and hospitals;

• such rules will not have the intended effect of saving money for patients; and

• such requirements may ultimately make health care services more expensive in the long run.

For more insights on Trade Secret Protection, see our Technology & Data Law Overview and Industry Focused Legal Solutions pages.

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