Group purchasing organizations' practice of requiring manufacturers "pay to play," or pay fees to have their products featured in supply catalogs, is among the factors driving up the cost of healthcare, a trio of Johns Hopkins University professors argue in a new paper.
Professors argue GPOs' 'pay to play' fees drive up healthcare costs
GPOs have become the vehicle most health systems use to get supplies, medications and devices instead of going to different manufacturers for each item. While this week's commentary in the Journal of the American Medical Association acknowledged GPOs' benefits—they save providers the work and expense of negotiating contracts with hundreds of manufacturers—the professors said the way they do business may be contributing to higher prices, drug shortages and could be stifling innovation in medicine.
GPOs are exempt from a federal law that bans kickbacks or rebates in return for furnishing items or services. That means GPOs ask manufacturers to pay a fee to have their products featured in their catalogs, or even a premium fee to become a sole supplier. That could drive up the cost of supplies if manufacturers pass on those fees to hospitals, the professors said.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.