Not long ago the word “cancer” was a death sentence. Just since the mid 1990's, the survival rate for all types of cancer has increased and given people hope against this deadly disease. Technologically sound innovations have been the driving force behind early detection and specific therapeutics in improving the outcome and improving the quality of life for cancer patients.

I can remember talking about the convergence of the pharmaceutical and medical-device markets and how they would provide new ways to administer medication. We discussed new procedures and how medications would be administered. One idea was the drive-in flu shot, given by a nurse or a pharmacist all while you stay in your car.

The rapid pace of change is, in part, an effort to address cost issues facing all of us. We read about it everyday: companies drop healthcare coverage for their employees and others have no healthcare at all. And yet, the 2006 Medicare budget increased tens of billions of dollars over 2005 spending, a huge sum of money to burden the government and taxpayers. Most health benefit plans increased 10 to 20% this past year while inflation was just over 3% for the same period.

Where does it all stop? The government has proposed several different ways to curtail the escalation of healthcare costs: DRG's in the 1980's, the growth of hospital group purchasing organizations (GPOs) in the 1990's, and a new, troubling scheme called gainsharing. (Visit www.medicaldevices.org/public/issues/gainsharing.asp to learn more.)

GPOs were established to help hospitals aggregate their volume and ultimately lower healthcare costs. However, various reports, congressional hearings, and government investigations have shown that GPOs often harm patient care, stifle innovation, and frequently increase the cost of care as a result of exclusionary and anticompetitive practices. GPOs attempt to cut costs by entering into long term contracts with a select group of full-line suppliers. In exchange for the exclusive contracts, manufacturers pay the GPOs tens of millions of dollars in “fees.” Under normal circumstances, these payments would be considered kickbacks, but GPOs operate within a “safe harbor” created by Congress twenty years ago.

Thankfully, Congress is attempting to address the problems within the GPO industry. On March 15, 2006, the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights held its fourth hearing on the GPO issue. The hearing considered legislative solutions to ensure competition in the hospital marketplace. Mark Leahey, Executive Director of the Medical Device Manufacturers Association (MDMA) testified on behalf of the medical-device industry and called for an end to the GPO “safe harbor” kickbacks. Leahey said “so long as GPOs are allowed to sell restricted access to our nation's hospitals by collecting payments from the largest vendors, patients, hospitals,and taxpayers all will lose out.” To read MDMA's oral statement visit: www.medicaldevices.org/public/documents/MarkLeaheyOralTestimony1_000.pdf

Dr. Prakash Sethi, President of the International Center for Corporate Accountability (ICCA) and Distinguished Professor of Management at Baruch College (CUNY) testified that the GPO industry's attempts to self police have not worked. Connecticut Attorney General, Richard Blumenthal, submitted testimony for the record and stated, “my investigation of GPO abuses and irregularities was spurred by credible and now well-documented reports of GPO misuse of their purchasing power and the members hospitals' failures to accurately account for GPO revenues. Evidence from my investigation supports aggressive Congressional action addressing such anti-competitive abuses.”

Chairman Mike DeWine (R-OH) and Senator Herb Kohl (D-WI) will now have to determine what additional steps must be taken to ensure the markets are operating in an open and transparent manner. Both have expressed disappointment that no GPO executive accepted the committee's invitation to testify and stated they would be submitting questions for the record that GPOs would need to answer. The device industry is confident that real and lasting reforms will be implemented soon.

Market dynamics change as technology moves forward. Companies, corporations, and countries continually adjust their approach to their population's needs. This places a tremendous amount of pressure and influence on our political leaders, providers, and the general public regarding the future of healthcare and keeping costs down.

These critical issues are exactly why the medical-outsourcing industry needs to become members of the MDMA and support the various positions the board of directors and staff members have established as priorities. If your customer has problems, you have problems. The supply chain and brain trusts, who supply services and products to the life sciences and healthcare industries, must show their support and lend their voice. We cannot let a few large companies that bundle products block access to new innovation for the general public. By becoming actively involved with the Medical Device Manufacturers Association, you are showing vision and expressing concern over the future healthcare of our country and your own families.

The Medical Device Manufacturers Association has been looking out for the medical device marketers and innovators for decades, but market dynamics have added new challenges to their vigilance over government and major conglomerates. Get involved and join the MDMA today and make a difference for the future of our industry. If you don't, growth and innovation could stop in the near future, while government, insurance companies, and major healthcare suppliers will influence your future.