WebMD, Quintiles Reach Agreement to ‘Terminate’ Business Ties

WebMD Corp. agreed last Friday to repurchase 35 million shares of stock from Quintiles Transnational Corp. for $185 million in a settlement that "terminates all business ties" between the companies, the Wall Street Journal reports (Brannigan, Wall Street Journal, 10/15). The settlement resolves a dispute between the two companies that began in February when WebMD stopped sending Quintiles information about medical claims it processes for providers, pharmacies and managed care organizations. Under a deal reached last year, WebMD had agreed to provide the information to Quintiles, which packages and sells the data to drug companies. Though the data doesn't identify individual patients, WebMD halted the practice after company officials concluded that it violated state privacy laws (California Healthline, 10/11). In March, Quintiles won a court order from a California federal judge that forced WebMD to resume the information transfer. Under the settlement reached last week, WebMD will provide the information to Quintiles until Feb. 28 (AP/Sacramento Bee, 10/13). WebMD will not share operating income or fund product development with Quintiles. In addition, Quintiles would "under certain conditions" receive a "contingent payment if WebMD or its Envoy Corp. unit are sold" before June 30, 2004. Quintiles received the 35 million shares of WebMD, a 9.7% stake, when it sold the Envoy unit to WebMD for $840 million last year. WebMD spokesperson Jennifer Meyer called the settlement "mutually beneficial" to both companies (Wall Street Journal, 10/15).