The
piece below was originally featured in Roll
Call on October 4, 2013.
Critical
prescription drug shortages continue to plague American hospitals and health
care providers and jeopardize patient access to many essential medicines.
Although Congress, the Food and Drug Administration and the private sector have
made progress toward a solution, shortages persist.
Drug
shortages are a complex problem with many root causes, including manufacturing
problems, quality issues and barriers to getting new suppliers on line when
supply is disrupted. This is an element of a broader challenge in a changing
and stressed health care system, and central to the solution will be group
purchasing organizations, a little-known sector of the health care supply
chain.
GPOs are
the sourcing and purchasing partners to virtually all of the 5,000-plus
hospitals in this country. Hospitals use GPOs to aggregate their purchasing
power and use the power of competition to deliver cost savings on everything
from cotton swabs and hospital food to prescription drugs and MRI machines.
Health
care providers have relied on group purchasing organizations for more than a
century to negotiate discounts with manufacturers, distributors and vendors —
reducing costs in all areas of the health care supply chain.
In 2002,
executives from the major GPOs formed a self-regulatory, independent ethics and
best practices organization called the Healthcare Group Purchasing Industry
Initiative. The HGPII is dedicated to ensuring that group purchasing
organizations follow the most up-to-date ethics and business practices.
GPO
signatories of HGPII are required to be transparent with the public regarding
their business practices, submit responses to an annual public accountability
questionnaire, and attend an annual best practices forum in Washington, D.C.,
to recommit themselves to strenuous industry standards.
In 2011,
we at Arent Fox LLP took over the comprehensive annual independent review of
GPO business practices, including extensive GPO surveys, interviews with
employees and site visits.
It’s our
conclusion that, despite these reforms, GPOs have been the focus of outlandish
accusations, including the farfetched idea that GPOs are to blame for drug
shortages.
That
claim is categorically false. GPOs are currently working collaboratively with
manufacturers, distributors, the FDA and the Department of Health and Human
Services to ensure that hospitals and patients have access to the life-saving
drugs they need. They are also taking a variety of innovative steps to mitigate
the impact of drug shortages.
Besides,
all GPO purchasing contracts are voluntary — that is, hospitals can purchase
products or services though their GPOs but are also free to purchase
“off-contract” outside of the GPO arrangement.
The
HGPII review determined that the GPO industry has every incentive to ensure
that patients get the medications they need when they need them. If there is no
product — or if manufacturers leave the market — there is no role for the GPO.
GPOs
don’t have the ability — nor would it be in their interest — to force
manufacturers into contracts that undermine their ability to deliver product.
And it’s important to remember that the GPOs don’t actually stock goods; they
simply facilitate bulk purchasing between health care providers and
manufacturers to save consumers money.
Our
review further determined that GPOs had developed and implemented policies that
facilitate and promote the availability of new, innovative technologies for
health care; improved transparency in the bidding and awards process; and
created internal safeguards and enforcement mechanisms to prevent conflicts of
interest in the contract process.
As the
health care supply chain continues to search for solutions to the global health
crisis of drug shortages, the GPOs will continue to perform a vital service for
hospitals and the patients they serve, just as they have in the wake of other
recent crises such as Superstorm Sandy. Indeed, although the cost efficiencies
of the group-buying model have made GPOs virtually ubiquitous across many
industries, it’s difficult to think of another industry where GPOs are more
necessary.
Former Rep. Phil
English, R-Pa., and former Sens. Byron Dorgan, D-N.D., and Robert Bennett,
R-Utah, are senior advisers at Arent Fox LLP and the co-coordinators of the
Healthcare Group Purchasing Industry Initiative.