GPO Oversight Legislation “Essential” to Innovation, Competition, Patient Care

Senate Panel Contemplates New Authority for HHS Inspector General

Washington, D.C., September 15, 2004 -- A legislative mandate for continuous oversight of the Group Purchasing Organization (GPO) industry is “essential” if patients and caregivers are to have access to innovative medical technologies, the Medical Device Manufacturers Association told a Senate hearing into anticompetitive practices in the hospital supply industry.

“Although progress has been made in some areas, the GPOs have not adequately addressed the anticompetitive contracting practices that have denied patients access to cost-effective technologies,” said Joe Kiani, president and CEO of Masimo Corporation, testifying on behalf of MDMA. Kiani told the Senate Antitrust Subcommittee that absent legislation to provide “the authority and oversight for permanent, comprehensive and verifiable reforms, the GPOs likely will revert back to their old ways once the Senate spotlight has faded.”

Subcommittee Chairman Mike DeWine (R-Ohio) said he remains concerned about the possibility that some GPOs may be subject to “backsliding” away from important reforms unless Congress acts to authorize continuous oversight. Subcommittee Ranking Member Herb Kohl (D-Wis.), said he will urge the Senate to consider “how we can ensure that the gains made over the past two years [in terms of GPO reforms] are maintained over the long term.”

Tuesday’s hearing was the third conducted by the Senate antitrust subcommittee. The GPO issue has been under review by the Subcommittee – and also has been the subject of an ongoing investigation by The New York Times – since 2001, when MDMA asserted that the contracting practices of certain GPOs were effectively locking innovative products out of the hospital marketplace.

“We are grateful to the subcommittee, and especially to Senators DeWine and Kohl, for their persistence and leadership on this critical issue,” said MDMA Executive Director Mark Leahey. “MDMA stands ready to assist them in ensuring that hospital supply markets stay open, so that competition is restored, costs are reduced, and patients and caregivers get the products they need.”

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The Medical Device Manufacturers Association (MDMA) seeks to improve the quality of patient care by encouraging the development of new medical technology and fostering the availability of innovative products in the marketplace. A national trade association based in Washington, D.C., MDMA represents thousands of innovators and entrepreneurs in the medical device community, including over 200 members who develop and manufacture medical devices, diagnostic products, and health care information systems.