Lagging behind fellow group purchasing giant Premier by a few days, Novation announced it reached an accord with the Senate Judiciary antitrust subcommittee over a set of operating principles.
The operating principles of both GPOs address administrative fees from vendors and contracting practices such as product bundling and sole-source agreements that have drawn complaints from smaller suppliers concerned about limited market access. The principles are more specific than an industrywide code of conduct released last week by the Health Industry Group Purchasing Association, which both Premier and Novation endorsed.
Novation's six-page document is devoted almost exclusively to how it will handle physician preference items, generally the most expensive and technologically sophisticated products. The GPO said it would try to offer more than one choice for high-preference items but reserved the right to award exclusive contracts in cases where no viable alternative exists. Short of eliminating its private-label line, Novation said it would limit the line to commodity items.
Like Premier, it agreed to cap administrative fees at 3%--but only for high-preference products.
Making an additional pledge to appease smaller devicemakers, Novation said it would develop a more comprehensive and defined process for evaluating innovative technology.
The document drew a lukewarm response from the Senate subcommittee, which earlier this week greeted Premier's promises with more satisfaction. In a joint statement, subcommittee Chairman Herb Kohl (D-Wis.) and ranking Republican Mike DeWine, of Ohio, said, "Novation's pledge does have its shortcomings." But they added that they "believe Novation's desire to improve its practices is sincere."
After an April 30 hearing focused largely on Novation and Premier, the subcommittee gave the industry 90 days to address its concerns. Premier reached an agreement with the committee Aug. 5.