A commentary in Forbes Magazine Online this week offers a unique insight into the misaligned incentives of group purchasing organizations. The author, a former executive with a large GPO, comments on how the supplier-funded model of GPOs ultimately inflates costs to the health care system. In addition, he notes that the suppler-funded model results in excess Medicare reimbursements for hospitals, ultimately at the taxpayers’ and insurers’ expense. MDMA continues to press Congress on the need...
GPO Reform
08/14/2009
Senator Chuck Grassley, Ranking Member of the Senate Finance Committee, Senator Herb Kohl, Chairman of the Senate Aging Committee, and Senator Bill Nelson, a member of the Finance Committee, sent a joint letter to seven group purchasing organizations (GPOs) to inquire about their contracting practices. In the letter, among other requests, the Senators asked for specific information and documentation relating to the GPOs sole-source contracting practices, specific criteria used in determining...
05/28/2009
The Massachusetts Department of Public Health (MDPH) issued guidance on the recently implemented pharmaceutical and medical device manufacturer conduct regulations. MDMA is pleased that MDPH clarified that the regulations do not apply to pre-commercial companies. Furthermore, companies without disclosure filings do not have to pay the required $2,000 fee. However, they do require any company interacting with a Massachusetts licensed health care practitioners...
09/18/2008
MDMA testified before the House Committee on Small Business this week to describe the anticompetitive problems associated with the supplier-funded GPO model and certain dominant firm conduct. Representing MDMA was Said Hilal, CEO of Applied Medical Resources Group. The purpose of the hearing was to examine the lack of oversight and enforcement by DOJ and FTC of anticompetitive practices across a broad spectrum of industries. Hilal accurately highlighted two...
03/12/2008
Medical Devices Law & Industry
Within the past three years, investigation and enforcement activity under the federal False Claims Act1 (FCA) and the federal Anti-Kickback Statute2 (AKS) relating to payments made by medical device companies to their customers, typically physicians, has increased dramatically. The September 2007 highly-publicized orthopedic implant case, involving $311 million in total civil settlements, is just one example of investigations and prosecutions in the medical device industry (1 MELR 436, 10/10...
11/18/2007
The New York Times reported on Cynthia Fitzgerald, the former Novation employee who filed a qui tam claim against the GPO. The article focuses on Ms. Fitzgerald’s current litigation and explores her complaints against Novation in depth. Ms. Fitzgerald's case highlights some of the broad based problems in the current GPO system, including how hospitals inaccurately report GPO incentives and rebates in their cost reports to Medicare.
10/04/2007
The Fort Worth Weekly reported on the recently unsealed qui tam action against Novation, the nation’s largest GPO. The article highlights the case of Cynthia Fitzgerald, a whistleblower and relator in the action against Novation. Ms. Fitzgerald contends that Novation illegally received additional payments and kickbacks from vendors to contract with the GPO. Ms. Fitzgerald was eventually terminated from bringing these claims to her superiors. The article also provides a brief overview of the...
12/19/2006
Recently, several news sources have written stories highlighting the controversy over an announcement that Premier Inc, a GPO, was the recipient of the prestigious Malcolm Baldrige award. It has been reported that Premier’s CEO, Richard Norling was on the board of trustees of the foundation and that a Premier staffer served on the review committee. An article in USA Today highlighted MDMA’s...
07/21/2006
The scrutiny of hospital group purchasing organizations continues. The New York Times ran a front-page article on Monday about how certain hospital executives confidentially advise companies on how best to sell their pharmaceuticals, medical devices and financial services to hospitals. These executives all belong to an organization called the Healthcare Research and Development Institute (HRDI), a for-profit company that is owned by three dozen hospital executives, but underwritten by 40 or so...
07/20/2006
An in-depth analysis of the activities of certain large hospital group purchasing organizations (GPOs) recommends they be stripped of their longstanding protections from federal anti-kickback penalties and antitrust safety zone because of operating practices that have "an adverse impact on the financial health of this nation’s hospitals, nursing homes, and other healthcare organizations."
In a new study,...
