Hospitals Could Save Nearly $5 Billion Through GPO Reform, Study Shows
Leaders of FDA, CMS Featured Speakers at MDMA Annual Meeting
Washington, DC, June 15 – The nation’s hospitals collectively could save nearly five billion dollars if hospital Group Purchasing Organizations (GPOs) lost their safe harbor protection under the Medicare anti-kickback statute, according to a new study released during the first day of the 12th annual meeting of the Medical Device Manufacturers Association (MDMA).
Hal Singer, Ph.D., president of the economic consulting firm Criterion Economics, developed the study. He told MDMA that if GPOs – which purport to save the health care system money through volume purchasing on behalf of groups of hospitals – no longer were permitted to collect fees from dominant suppliers in exchange for market exclusivity, Medicare could save $2.5 billion annually.
The report is available on MDMA’s website: www.medicaldevices.org
The safe harbor, which was enacted by Congress in the 1980s, exempts GPOs from criminal penalties for accepting kickbacks from health care suppliers. The Senate Judiciary Antitrust Subcommittee has been investigating allegations of anticompetitive conduct and conflicts of interest by GPOs and is contemplating legislation, including repeal of the safe harbor.
MDMA Executive Director Mark Leahey commented: “The study demonstrates that GPOs cannot serve two masters. If the GPOs are to save money for hospitals and the health care system, and help assure delivery of high quality medical technologies to patients, they cannot be compensated by their suppliers.”
FDA Acting Commissioner and Medical Device Regulatory Chief Address MDMA
FDA Acting Commissioner Andrew von Eschenbach, M.D., pledged that the agency will “facilitate, not simply regulate” medical innovation. The FDA chief told MDMA attendees his agency is “strategically placed between the world of discovery and the world of delivery -- to not simply alleviate disease but also to improve overall health.”
Von Eschenbach was one of one of more than 25 policymakers, policy experts, and product supply and distribution specialists addressing the association’s annual meeting at the Mandarin Oriental hotel.
FDA Center for Devices and Radiological Health Director Daniel Schultz, M.D., told conference attendees that publishing FDA’s long-awaited guidance on premarket approval supplements is “first on my to-do list.” He also said the agency wants to “work with our foreign counterparts to advance joint inspections and streamline standards.”
MDMA Explores Critical Issues of Gainsharing, MDUFMA, Market Competition
The MDMA annual meeting also focused sharply on the most pressing issues affecting patient care, regulation, innovation, and marketplace competition. Today’s sessions included three issue-oriented discussions: an in-depth panel review of FDA matters; an update on “gainsharing,” and a progress report on the positive results of the association’s advocacy for fair competition in the hospital supply chain.
Senior staff members of the Senate Health, Education Labor and Pensions Committee explored the implications of funding shortages on FDA’s ability to reliably implement the Medical Device User Fee & Modernization Act (MDUFMA). A Democratic staffer and a Republican staffer both cautioned MDMA attendees that budget constraints likely preclude additional funding for the program.
The Centers for Medicare and Medicaid Services previewed its emerging pilot program to examine the impact of gainsharing, in which hospitals and physicians share the savings generated by reducing the costs of delivering health care. Mark Wynn, Ph.D., director of CMS’ Payment Policy Demonstrations Division told MDMA that his agency will soon issue “requests for proposals” to conduct the pilot program. Andrew Imparato, president of the American Association of People with Disabilities, warned of gainsharing’s potentially serious consequences for disabled patients and urged CMS to “proceed cautiously.”
MDMA’s Leahey said the association strongly will oppose any CMS pilot that encourages the standardization of products. “There is no such thing as a one-size-fits-all approach to medicine,” Leahey said. In response, Wynn assured the MDMA audience that the agency’s focus is not on a gainsharing structure that offers incentives to physicians in exchange for using a specific brand or product.
Technology Innovators Have a Strong Voice: MDMA Chair
MDMA Chair Nancy Briefs, CEO of Percardia, Inc., reminded attendees of MDMA’s advocacy successes. “This organization began with just a small handful of entrepreneurial companies and a common mission: to advocate for innovation to improve patient care.
Today, we are a strong voice in Washington.” Briefs noted that MDMA’s efforts resulted in reduced cost burdens to innovators through the Medical Device User Fee Stabilization Act, and the association’s persistent criticism of the anticompetitive behavior by certain large GPOs, has forced important changes in the hospital supply chain. “We believe that physicians should not be forced to make patient care decisions solely on the economics,” she asserted.
Sen. Enzi is Honored for His Support of Innovation
MDMA presented its annual “Chairman’s Award” for dedication to improved health care through innovation to U.S. Senator Michael B. Enzi (Wyoming). Enzi, chairman of the Senate Health, Education, Labor and Pensions Committee, received the award for his long-time support of innovative entrepreneurial medical technology companies. MDMA’s Leahey said: “MDMA is delighted to honor Chairman Enzi for his leadership in pro-innovation, pro-small business policymaking that has enabled MDMA member companies to better serve patients and caregivers in the US and abroad.”
During the two-day meeting, MDMA members – who collectively represent the innovative, R&D-focused sector of the medical device industry – also visited their respective Members of Congress to discuss important issues.
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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 numerous dues-paying members who develop and manufacture medical devices, diagnostic products, and health care information systems.