Group purchasing giant Premier appeared ready to reach a separate peace with the Senate Judiciary Committee's antitrust subcommittee on the months-long scrutiny of its controversial business practices. But for Novation, the other giant of the industry, the grueling negotiations continued.
A congressional source said the subcommittee was ready to sign off on an individualized document with "a major organization" and that it would make the information public Aug. 5. Industry insiders said Premier had reached the agreement. Meanwhile, Novation was working on its own individualized document, but the negotiations were moving at a glacial pace.
"Our philosophy is that we want to offer up things that address the Senate staff's concerns, but we don't want to do anything that would be detrimental to the value we deliver to our members," said Jody Hatcher, spokesman for Irving, Texas-based Novation.
San Diego-based Premier appeared ready to concede to a bevy of principles addressing contracting tools-such as bundling, sole-source agreements and purchasing commitment levels-that infuriate small medical device manufacturers. Discussions also reportedly centered on administrative fees charged to suppliers, which constitute group purchasing organizations' main source of revenue. The GPOs insist those tools help them leverage big savings to hospitals.
Earlier in the week, the group purchasing industry yielded some market power in issuing a code of conduct that, among other provisions, would require greater discretion over the use of controversial contracting tools.
But the concessions didn't go far enough for Sen. Herbert Kohl (D-Wis.), who as chairman of the Senate Judiciary antitrust subcommittee convened hearings on the industry, in particular the influence of Premier and Novation. The subcommittee's concerns center on the ability of innovative medical technologies to reach hospitals.
A spokeswoman for Kohl said early in the week he was "disappointed" in the industry's proposed code.