GPOs Tout Reforms, but Concerns Remain

Originally Published MDDI October 2003

NEWSTRENDS

Erik Swain

Group purchasing organizations (GPOs) say they are committed to long-term changes in the way they do business that would allow small medical device manufacturers to have a fairer shot at getting contracts. But small manufacturers remain skeptical as to whether the changes will take hold permanently. 

This difference of opinion was apparent at a Senate hearing on July 16, 2003. The antitrust subcommittee of the Judiciary Committee heard GPO representatives discuss a code of conduct that they have implemented, and heard small manufacturers question whether true reform could be accomplished through self-regulation. An industry trade group, the Health Industry Group Purchasing Association (HIGPA; Arlington, VA), established the code for its members. 

GPO practices have come under scrutiny since a New York Times feature in March 2002. That article detailed cases of small manufacturers being shut out of GPO contracts despite offering products that were shown to be cheaper and/or more effective than those of competitors. July's hearing was the Senate's second on the subject.

Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA; Washington, DC), which has made GPO reform one of its top issues, said after the hearing that while improvements have been made, many issues remain unresolved.

“The jury's still out on true lasting reform,” he said. “I think the hearings highlighted problems that continue to exist in the marketplace. Still, the issue of bundling has not been addressed. There are still sole-source contracts that have not been addressed by some in the industry. The code of conduct is a good step, but GPOs need to do more to commit to true reform.”

In particular, he said, MDMA members are concerned that reforms will slip away, and that small firms that have received contracts since the outcry began will lose them once publicity on the issue dies down. 

HIGPA's president and chief executive officer, Robert Betz, PhD, said, however, that there is plenty of evidence that the commitment to reform is real. “We have the only enforceable code of conduct in the [healthcare] industry, and every one of our members is in compliance,” he said. “No other trade association in our industry can say that. If what I hear from our members is true, the industry is changing and becoming more transparent.”

But, he noted, small firms should not mistake receiving a GPO contract for automatic success—they will still have to prove to the marketplace that their products are best.

GPO practices were to be revisited on September 26, 2003, at a Federal Trade Commission hearing, part of a series on the healthcare marketplace.

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