WebMD and Quintiles, unable to resolve their dispute over patient data, will now sever all ties.
WebMD has announced a settlement to its long-running dispute with pharmaceutical services organization Quintiles. The online healthcare firm will buy back 35 million shares of its common stock from Quintiles, terminating all data sharing and marketing agreements between the companies.
A federal ruling delivered in March 2000 required WebMD to supply Quintiles with medical data, including patient information. This ruling upheld a contract negotiated by WebMD’s former management team when the company purchased Quintiles’ data processing unit, Envoy. However, WebMD has been trying to overturn the ruling. It claimed that even though the companies agreed to improve patient privacy protection by hiding patient address and birth date information, the information still breaches patient privacy.
The new settlement will discontinue the flow of patient data as of March 1, 2002. All other data and marketing agreements will also be terminated. The settlement will cost WebMD $185 million in cash to buy back the 35 million shares of its common stock currently held by Quintiles.
WebMD’s continued pursuit of a resolution in its favor helps the company to convey an image of dedication to the protection of patient health information. This is important for the company’s future positioning. Not only does it ensure WebMD maintains legislative compliance; it should also help ensure that patients and physicians are secure in the belief that WebMD is a secure channel for processing data and health transactions.
