MDMA Goes Elephant Hunting

Originally Published MDDI July 2003

FROM THE EDITORS

The consensus at this year's annual meeting of the device association is that GPOs are good—as long as they don't get too big.

The Medical Device Manufacturers Association (MDMA) has always suffered from a reputation as a one-issue group. Once, it was known for its staunch opposition to FDA user fees. More recently, its reputation has been linked to similarly fierce resistance to group purchasing organizations, or GPOs. This perception is understandable. But as attendees at the group's annual meeting last June 5–6 learned, it's also inaccurate.

MDMA announced at the beginning of 2001 that one of its four goals for the year would be to fight to end what it perceived as anticompetitive practices by GPOs. But only in March 2002 did the issue, and MDMA with it, take off in the public eye. In that month, the New York Times published the first of a series of articles on alleged abuses by GPOs.

The focus of that first article was Joe E. Kiani, founder and CEO of Masimo Corp. (Irvine, CA), and an MDMA member. The article persuasively described how GPOs prevented Kiani from getting his company's pulse oximeter to potential buyers.

The Times article was followed by Senate hearings in which Kiani and MDMA were star witnesses. Once Congress brought some closure to the user fee issue by passing the Medical Device User Fee and Modernization Act (MDUFMA) in mid-2002, GPO abuses appeared to be not just a key issue for MDMA, but the only issue.

Given this history, the MDMA speakers last June were at pains to clarify their positions on GPOs. These groups, all agreed, are good. It's only when they cross certain boundaries that MDMA objects. Even Kiani emphasized that "MDMA is not anti-GPO, but pro-GPO. We're just against anticompetitive practices."

Another speaker at MDMA, Robert Simpson, put it in simpler terms. Simpson is president and CEO of LeeSar and Cooperative Services of Florida Inc. (Lehigh Acres, FL). A former device-company executive, he is now involved in procurement for hospitals. As Simpson sees it, GPOs are a fine idea in principle. The problem, though, is that they have become too big. "We've got some elephants out there," he said, "and we've got to go hunting."

Like MDMA representatives, congressional speakers at the meeting agreed with this general view. One such speaker was Seth Bloom, Counsel for the Senate Judiciary Antitrust Subcommittee. Bloom stressed that the Senate is "not on a crusade to abolish GPOs." Rather, he said, the approach being taken is "to mend it, not end it." Much progress has been made through voluntary agreements, he noted, though not all GPOs have gone equally far to end unfair business practices. Whether enough progress has been made will be the subject of new Senate hearings in July.

Though primarily an advocate for small device companies, MDMA is not necessarily opposed to bigness. Rather, it favors tempering the power of bigness with the virtues of smallness. It reminds us that healthcare is always local and personal. As Robert Simpson noted, "healthcare is a neighborhood business—it's time to bring it back to the neighborhoods."

The Editors

Copyright ©2003 Medical Device & Diagnostic Industry