What’s next for GPOs? The eyes of GPO executives and interested manufacturers are on Wisconsin Democrat Herbert Kohl in the wake of the November elections. New member. Carestream Medical in Coquitlam, British Columbia, hopes IMDA can help it keep growing. Mercury sells physician business. When opportunity presents itself, business owners respond. That’s what Stan Tangalakis did when he sold Mercury Medical’s 19-year-old Physician Supply Division. Temporary reprieve on pedigree rule. A group of small drug wholesalers prevailed in their fight against the federal government and national wholesalers when a federal judge put the skids – at least temporarily – on a rule that would have required the smaller companies to produce a pedigree on all the drugs they sell. Red flag for reps in clinical settings. Sales reps must exercise caution and common sense when calling on clinicians in the clinical setting, lest they face lawsuits involving common-law privacy interests, lack of informed consent, or even the unauthorized practice of medicine. FDA strengthens program to monitor medical device safety. Unique numerical identifiers for medical devices, and increased usage of an existing hospital reporting network are two of the ways the U.S. Food and Drug Administration proposes to improve the way it monitors the safety of medical devices after they reach the market. FDA posts online consumer information. FDA's Center for Devices and Radiological Health posted online consumer information about three recently approved medical devices. Second life for implants. What happens to your pacemaker or implantable defibrillator when you die? It’s a question most patients don’t think about – until now. Venture capitalists smile on medical technology. Biotech companies may get the press, but medical technology has quietly positioned itself as a stable engine of innovation and economic growth. Death by PowerPoint. Most PowerPoint presentations are like corporate karaoke, says one executive. “We all applaud each other even though we know how bad it stinks.”
The eyes of GPO executives and interested manufacturers are on Wisconsin Democratic Senator Herbert Kohl. As a result of the November elections, which gave Democrats control of the House and Senate, Kohl stands to emerge as chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, which has been investigating group purchasing organizations for the past four years. No stranger to GPOs, Kohl has served as the ranking Democrat of the Antitrust Subcommittee. But given the new makeup of the Senate, not to mention the fact that subcommittee Chairman Mike DeWine lost his seat in Ohio, Kohl will call the shots. Could be tough Kohl has taken a tough stance against GPOs in the past. “There is evidence that suggests GPO business practices reduce competition and innovation in health care and narrow the ability of physicians to choose the best treatment for their patients,” he writes on his website. “Although [Kohl] will have a full plate, I don’t believe he’s through with [the group purchasing] issue,” says Robert Betz, a health policy analyst and president of Robert Betz Associates, Arlington, Va. “I believe the chances are dramatically improved for legislation.” In fact, in 2004, after conducting several hearings on Capitol Hill, Kohl and DeWine introduced the Medical Device Competition Act. (The Act failed to come to a vote before Congress adjourned that year.) The bill would have restricted the amount of fees paid to purchasing personnel or GPOs to 3 percent of the purchase price of goods or services provided by contract vendors. It also would have restricted fees to include “only those reasonable costs associated with the procurement of products and the administration of valid contracts” and would not include “marketing costs, any extraneous fees or any other payment intended to unduly or improperly influence the award of a contract based on factors other then the cost, quality, safety or efficacy of the product.” “Senator Kohl has really demonstrated a keen understanding of the GPO industry and the problems that continue to exist in the market place,” says Mark Leahey, executive director of the Medical Device Manufacturers Association, which has lobbied against GPO’s right to collect administrative fees from vendors. “We look forward to working with both Republicans and Democrats in the House and Senate to complete the work that has been done to date, and to really work to have permanent, lasting reform in place, so that all efforts thus far will not have been wasted.” GPOs try to head off legislation Meanwhile, the group purchasing industry continues to try to head off legislation, an effort it launched in 2002, soon after the consumer press began publicizing the excesses of certain GPOs. In July of that year, the Health Industry Group Purchasing Association devised a Code of Conduct for its members to follow. Subsequently, all of the major GPOs drew up their own codes to supplement that of the trade association. Three years later, GPOs developed the Healthcare Group Purchasing Industry Initiative. Patterned after a similar effort by defense contractors, the GPO initiative is designed to “encourage and sustain best ethical and business conduct practices in the group purchasing industry,” said Darrel Weatherford, president of HIGPA and chief operating officer of Consorta. Speaking to a group of manufacturers’ sales and marketing executives at the HMMC Fall Conference in Chicago in October 2006, Weatherford said that the Initiative calls for signatory companies to pledge to six core ethical principles, report annually on their adherence to those principles, and participate in an annual Best Practices Forum to discuss best ethical and business conduct practices. “I…firmly believe in the imperative of organizational self-governance as the right model to encourage and promote ethical business conduct,” says Initiative Coordinator Richard Bednar, senior counsel with the Washington, D.C.-based law firm Crowell & Moring LLP. “The industry does not need more rules.” Bednar is also coordinator of the Defense Industry Initiative, established in 1986 by 32 major defense contractors following highly publicized misdeeds in that sector. At press time, Bednar was reviewing GPO responses to the Initiative’s annual “Public Accountability Questionnaire,” whose results were to be presented at its Best Practices Forum in January. Changes for HIGPA Also at press time, HIGPA was preparing to roll out fundamental changes in its organizational structure, designed to remove any appearance of a conflict of interest within its ranks. Historically, the association has been comprised of both GPO executives and manufacturers. With dues coming from both groups, HIGPA had a difficult time countering claims that its GPO members were too tight with vendors. So, in 2006, the association changed the status of suppliers – temporarily -- to that of affiliate members, reserving full member status to GPO members only. In addition, suppliers were removed from the HIGPA board. Effective Jan. 1, manufacturers will no longer be considered affiliate members of HIGPA. Instead, they will be free to become part of a new entity, the Supply Chain Institute, which will provide education and training for the entire industry. Its board will comprise suppliers, GPOs and IDN executives. Meanwhile, in October, HIGPA hired Curtis Rooney to be its new president. Previously senior associate director and counsel of federal relations for the American Hospital Association, Rooney was expected to serve as HIGPA’s spokesman on healthcare issues.
Mo Shariff, owner of Carestream Medical, IMDA’s newest member, has a world of experience. Born in East Africa, he was raised in England for 15 years; and then emigrated with his family to British Columbia about 24 years ago. He has plenty of medical industry experience as well. Trained as a respiratory therapist in Edmondton, he worked in hospitals for a couple of years before becoming a salesman for a manufacturer of respiratory products. Five years later, in 1993, he became a partner with a national company selling cardiac, neurosurgery, EEG and respiratory products. In 1998, he started Carestream. Based in Coquitlam, B.C., about 30 miles from Vancouver, Carestream has from its inception focused primarily on anesthesia and respiratory products. Until about four years ago, the company limited its geographical coverage to Western Canada. Today, it has nine field reps across the country -- one in the Maritime Provinces, two in Ontario, two in Quebec, two in British Columbia, one in Alberta, and one in Saskatchewan and Manitoba. Shariff plans to take on another rep in the West soon. Last year, the company experienced 60 percent growth, and this year, it is on track for an additional 50 percent growth. Carestream’s biomedical engineers service virtually everything the company sells. Some manufacturers source the company for repair services only. Several years ago, Carestream took itself in a new direction by launching a home care business. Operated as a stand-alone unit, the home care operation services patients in British Columbia. Shariff joined IMDA to find profitable lines and to network with and learn from peers. Welcome him to the association by calling (604) 552-5486, or e-mail him at mshariff@carestream.com.
When opportunity presents itself, business owners respond. That’s what Stan Tangalakis did when he sold Mercury Medical’s 19-year-old Physician Supply Division to Jacksonville, Fla.-based Blue Medical Supply Inc. in November. “It was a beautiful opportunity to sell,” he says. The reasons were twofold. First, Mercury’s physician supply business had attracted the attention of companies in the physician market. Blue Medical – co-founded by PSS founder Pat Kelly – is looking for acquisition candidates. “Mercury Medical Physician Supply has a strong reputation and presence in West Florida, which will enable us to increase our customer service and marketing while executing our strategy to establish a robust sales and distribution network in the Southeast,” said Todd LeVelle, CEO and president of Blue Medical. Second, and perhaps most important, Mercury itself is heading in some new directions. At the American Society of Anesthesiologists Annual Meeting in Chicago in October, the company launched its newest product – AirQ, a disposable intubating laryngeal airway. “This is a 90-some-million-dollar market and growing,” says Tangalakis. “And we have the best product out there.” Don Silk will join Blue Medical as a general manager of Blue Medical St. Petersburg, and will also assist in the company’s regional sales, marketing, recruitment and future acquisitions.
A group of small drug wholesalers prevailed in their fight against the federal government and national wholesalers when a federal judge put the skids – at least temporarily – on a rule that would have required the smaller companies to produce a pedigree on all the drugs they sell. The rule was to have gone into effect Dec. 1, but was temporarily put on ice while its constitutional implications are examined. (See “Pedigree issue dogs distributors,” October 2006 IMDA Update.) A pedigree is a record of who made a pharmaceutical (and when and where), and from whom it was bought and to whom it was sold -- all the way until its consumption by the patient. By documenting the path that drugs take throughout the supply chain, pedigrees are designed to cut out counterfeiting and other unsafe practices. The small wholesalers – led by Port Washington, N.Y.-based RxUSA – objected to the Dec. 1 rule because it would have required so-called secondary distributors (that is, those who buy pharmaceuticals from other wholesalers, not manufacturers) to produce pedigrees, but it would have exempted the so-called authorized distributors (that is, those who purchase directly from manufacturer) from the same requirement. In his request for an injunction, RxUSA President Bob Drucker argued that the rule could put his company and approximately 4,000 other secondary distributors out of business. Many drug manufacturers refuse to sell directly to small wholesalers, forcing companies such as RxUSA to buy products from the manufacturers’ authorized distributors. But the national wholesalers are not bound by law to pass on pedigree statements to the secondary distributors. (One wholesaler, Chesterbrook, Pa.-based AmerisourceBergen, has begun making pedigrees available to secondary distributors for a monthly fee of $5,000.) Instead, authorized distributors are only “encouraged” to provide pedigrees and information to trading partners for each sale, transfer or trade of prescription drugs. That puts the secondary distributors at the mercy of the big companies, says Drucker. In her Nov. 30 decision, U.S. Magistrate Judge A. Kathleen Tomlinson of the U.S. District Court of the Eastern District of New York ruled that the small wholesalers had raised enough questions about the constitutionality of the rule to justify a preliminary injunction prohibiting the Food and Drug Administration from enforcing the pedigree requirement on Dec. 1. (Tomlinson’s decision was affirmed by U.S. District Judge Joanna Seybert.) “I find that Plaintiffs have demonstrated a substantial likelihood of success [in their request for an injunction] on the merits on their claim that when read in conjunction with the Rule promulgated by the FDA, the provision of the [Prescription Drug Marketing Act of 1987, and subsequent amendments] exempting authorized distributors from the pedigree requirement is not rationally related to the purposes of the PDMA, and, therefore, there is a substantial likelihood that the classification resulting in the disparate treatment of authorized and unauthorized wholesale distributors may be found unconstitutional,” wrote Tomlinson. The FDA argued against the injunction on the basis of Congress’ intent when drawing up the law. “The Oversight Subcommittee’s investigation found that most of the drugs that were counterfeits, stolen, expired, or obtained through fraud were handled by secondary wholesalers, who were not authorized to distribute that manufacturer’s product,” wrote U.S. Attorney Roslynn Mauskopf, quoting the Congressional record. “Thus, the requirement…that wholesale distributors must inform their wholesale customers of all previous sales of the product applies only to wholesale distributors who are not authorized distributors for that product.” The issue caught the attention of some IMDA members, such as Mercury Medical CEO Stan Tangalakis, who sell pharmaceuticals or products with pharmaceuticals in them, such as surgical kits and trays. The pedigree requirement will be in effect until the court comes to a final decision, most likely, following a trial. Editor’s note: In the October 2006 edition of IMDA Update, we neglected to note that the AmerisourceBergen fee for its pedigree service to secondary distributors is $5,000 a month. Update had only said the fee was $5,000.
IMDA members know that selling innovative medical technologies often demands calling on clinicians where they work – in the clinical setting. Sales reps should exercise caution and common sense when doing so, lest they face lawsuits involving common-law privacy interests, lack of informed consent, or even the unauthorized practice of medicine. Law.com recently posted an article by Carrie Lowe, partner, and Trisha Lewis, associate, in the Atlanta office of Carlock Copeland Semler & Stair, in which they discuss the liability risks that medical sales reps face when present in the clinical settings. The authors point out that case law tends to revere the patient’s right to privacy (and hence, frown on unauthorized personnel witnessing examinations or procedures), and come down hard on sales reps who get involved in a procedure. Lowe and Lewis suggest that sales reps review professional guidelines regarding sales-rep protocol drawn up by the American Medical Association, American College of Surgeons and American Association of Perioperative Registered Nurses. Some words of advice:
To read the article, “Medical Company Salespeople's Presence in Clinical Settings Raises Liability Risks,” click here.
Unique numerical identifiers for medical devices, and increased usage of an existing hospital reporting network are two of the ways the U.S. Food and Drug Administration proposes to improve the way it monitors the safety of medical devices after they reach the market. The agency’s post-market surveillance process has come under fire in recent years following some high-profile events in the drug industry, including the September 2004 withdrawal from the market of the painkiller Vioxx. Those events have drawn attention to the device side as well. "Many of today's medical devices are smaller and more complex than ever, offering new medical opportunities that have benefited literally millions of people," said Scott Gottlieb, M.D., deputy commissioner for medical and scientific Affairs, FDA. "But this technical sophistication sometimes means that the margin for error with device manufacturing shrinks, and so we need to be working even harder, after devices and engineering changes are approved, to monitor for potential safety problems." In 2005, the agency’s Center for Devices and Radiological Health completed a comprehensive assessment of the tools used to monitor the safety of medical devices after the agency has approved them for marketing. That assessment led in January 2006 to the creation of a Postmarket Transformation Leadership Team, which was charged with developing a plan to improve the process. That plan, delivered Nov. 9, includes the following action items:
To read a copy of the "Postmarket Transformation Leadership Team: Strengthening FDA's Postmarket Program for Medical Devices" report and the January 2006 "Medical Device Postmarket Safety Program – Synopsis and Recommendations,” click here.
FDA's Center for Devices and Radiological Health posted online consumer information about three recently approved medical devices:
What happens to your pacemaker or implantable defibrillator when you die? It’s a question most patients don’t consider. But the author of a study published in the New England Journal of Medicine believes they should, according to a recent article in the Chicago Sun-Times. (Click here to read “Used pacemaker could keep someone else ticking,” Sun-Times, Nov. 27, 2006.) A University of Chicago survey of 100 Chicago-area funeral homes found that pacemakers and defibrillators are almost always buried with patients. When patients are cremated, however, the devices are removed, so they don’t blow up. In cremations, 44 percent of funeral homes said they throw the devices away, 18 percent donate them to developing countries, 10 percent give them to the families, and 8 percent keep them onsite. A few funeral homes reported they return the devices to the manufacturer or hospital, or donate them to veterinary schools. In a followup study of 150 heart patients, 87 percent said they had no idea what would happen to their pacemakers and defibrillators after they died, but 79 percent said they would be willing to return the devices. For that reason, lead study author James Kirkpatrick, M.D., now at the University of Pennsylvania, is developing an advance directive for pacemakers and defibrillators, and plans to test it in Chicago, Pennsylvania and Ohio.
Biotech companies may get the press, but medical technology has quietly positioned itself as a stable engine of innovation and economic growth, according to a recent article in MX: Business Strategies for Medical Technology Executives. The promise of emerging breakthroughs and healthy returns that accompany the successful commercialization of new medical devices have fostered a strong investment following by the venture capital community—a trend expected to continue for the foreseeable future. Click here to read the article, “Funding Medtech Ventures: Medical technology hubs are leading the way in venture capital investment.”
Most PowerPoint presentations are like corporate karaoke, says software developer Larry Chung, quoted in a recent Wall Street Journal article. “We all applaud each other even though we know how bad it stinks.” (“Tips for PowerPoint: Go Easy on the Text, Please Spare Us,” Nov. 14, 2006.) In fact, the phrase “Death by PowerPoint” is common corporate parlance, according to the article. Around the world, an estimated 30 million PowerPoint presentations are delivered every day, a fact that begs the question, “If so many people dread them, why do we still see so many?” The big answer: They make speaking easy. People who tend to clam up on the dais can refer to their bullet points to help get them through. But that doesn’t help the audience. One observer says that PowerPoint users sacrifice thought and analysis for their own convenience. PowerPoint proponents believe that the software doesn’t bore people; people bore people. But since polite audience members seldom tell a speaker that his or her speech was a yawner, speakers may never catch on…and PowerPoints will just keep on growing. Advertising vice president Mark Glackin offers these words to the wise: “If you are going to just read the slides, e-mail them and don’t make everyone come to a meeting.” And please, lose the flying text.
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