Federal Officials Expand Investigation of Hospital Supply Purchasing Group’s Business Practices
HHS has expanded an investigation into "how hospitals buy drugs, medical devices and other products," issuing subpoenas to hospital supply purchasing group Premier Inc. and three of its contractors, the New York Times reports. The HHS Inspector General sent one subpoena to Premier -- one of the country's largest hospital purchasing groups -- seeking records for company contracts with suppliers "that then granted Premier executives stock options or other securities" (Williams Walsh, New York Times, 8/15). Premier recently came under fire when it was revealed that the company received payments from some of the medical supply companies it was supposed to be "objectively" evaluating, and that some executives also received stock or options from supply companies. A Senate oversight committee expressed concern about Premier's business practices and said Congress would take actions if the company failed to make reforms. Last week, the company agreed to "sweeping changes" in an attempt to encourage competition by contracting with more companies, halting its investments in medical suppliers and limiting the amount of money it receives from companies that get Premier contracts (California Healthline, 8/6).
The inspector general also issued a subpoena to pharmacy benefits manager Express Scripts for information on stock options given to Richard Norling, a former Express Scripts board member, and Premier's CEO. Georgia-based medical device maker Horizon Medical Products and generic drug company American Pharmaceutical Partners also received subpoenas. The inspector general's office and Premier yesterday would not comment on the subpoenas, although Premier officials said that the company had "done nothing wrong," according to the Times. Premier already is facing investigations by the Federal Trade Commission and the General Accounting Office. The FTC is examining whether Premier and Novation, another large purchasing group, have too much market control for hospital supplies, while the GAO has issued a "preliminary report" finding that purchasing groups such as Premier may not actually save hospitals money. Express Scripts said in a press release that it would "cooperate fully with the [inspector general's] investigation," adding that it "is confident that its relationship with Premier and Norling were appropriate" (New York Times, 8/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.