The U.S. District Court for the District of New Jersey recently became the latest body to examine and affirm the group buying model. On December 20, 2012, the court issued an interim ruling in Castro v. Sanofi Pasteur Inc., a case that considered the competitiveness and conduct of a Physician Buying Group (PBG). PBGs function like GPOs. They do not themselves purchase, receive, resell, or directly handle medical products or services, but instead coordinate and aggregate member purchases in order to negotiate better contract terms for their members. While GPOs generally serve groups of hospitals and clinics, PBGs generally serve family practices, pediatricians, and other independent medical practices.
William Kolasky, partner at Wilmer Cutler Pickering Hale and Dorr LLP and former chair of the firm's Antitrust and Competition Practice Group, recently provided his expert analysis identifying how the findings in Castro v. Sanofi Pasteur case supports the case for GPOs.
“In agreeing to dismiss an antitrust claim against medical practices using PBGs to purchase medical supplies, the court held that it was “apparent” that PBGs create efficiencies for their members and are not, therefore, presumptively anticompetitive. The court also held that Sanofi could not show that a PBG had market power — meaning the power to control prices or exclude competition — simply by alleging that it was able to negotiate discounts with suppliers.
While this decision involved PBGs, the court’s reasoning is fully applicable to Group Purchasing Organizations (“GPOs”) as well. This decision should, therefore, be helpful to any GPO faced with a claim that its mere existence is anticompetitive.
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To read more from Castro v. Sanofi Pasteur Inc.: An Important Win for GPOs, click here.
