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108th CONGRESS
2d Session
S. 2880
To amend title XI of the Social Security Act to ensure full and free
competition in the medical device and hospital supply industries.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 1, 2004
Mr. Kohl (for himself and Mr. DeWine) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title XI of the Social Security Act to ensure full and free
competition in the medical device and hospital supply industries.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medical Device Competition Act of
2004''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Given the increasing costs of health care in the United
States, there is a compelling public interest in ensuring that
there is full and free competition in the medical device and
hospital supply industries so that the best and safest products
are available to physicians and patients at a competitive
price.
(2) By aggregating purchases, hospital group purchasing can
reduce the cost of acquiring medical equipment and hospital
supplies so long as such purchasing is done in a manner
consistent with antitrust law and free competition.
(3) Some practices engaged in by certain hospital group
purchasing organizations have had the effect of reducing
competition in the medical device and hospital supply
industries by denying some suppliers and device makers access
to the hospital marketplace.
(4) There is a compelling public interest in having the
Secretary of Health and Human Services, in consultation with
the Attorney General and Federal Trade Commission, engage in
oversight and supervision of the current Federal health care
program anti-kickback exemption (also known as the safe harbor)
provided to group purchasing organizations under subparagraphs
(C) and (E) of section 1128B(b)(3) of the Social Security Act
(42 U.S.C. 1320a-7b(b)(3)). This oversight and supervision
should ensure that the safe harbor does not shield conduct that
harms competition in the hospital supply and medical device
industries.
SEC. 3. ENSURING FULL AND FREE COMPETITION.
(a) In General.--Section 1128B(b)(3)(C) of the Social Security Act
(42 U.S.C. 1320a-7b(b)(3)(C)) is amended--
(1) in clause (i), by striking ``, and'' at the end and
inserting a semicolon; and
(2) by adding at the end the following new clauses:
``(iii) the contracting, business, and
ethical practices of the person are not
inconsistent with regulations promulgated by
the Secretary pursuant to subsection (g)(1);
``(iv) the person has been certified by the
Secretary under subsection (g)(2) to be in
compliance with the regulations promulgated
pursuant to subsection (g)(1); and
``(v) the amount to be paid the person does
not exceed a total of 3 percent of the purchase
price of the goods or services provided by that
vendor;''.
(b) Regulations.--Section 1128B of the Social Security Act (42
U.S.C. 1320a-7b) is amended by adding at the end the following new
subsection:
``(g)(1)(A) The Secretary, in consultation with the Attorney
General and the Federal Trade Commission, shall, not later than 1 year
after the date of enactment of the Medical Device Competition Act of
2004, issue proposed regulations, and shall, not later than 2 years
after such date of enactment, promulgate final regulations, specifying
contracting, business, and ethical practices of persons described in
paragraph (4) that are contrary to antitrust law and competitive
principles, to ethical standards, or to the goal of ensuring that
products necessary for proper patient care or worker safety are readily
available to physicians, health care workers, and patients.
``(B) In issuing and promulgating regulations under subparagraph
(A), the Secretary shall take into account--
``(i) the compelling public policy goals of--
``(I) encouraging competition and innovation in the
hospital supply and medical device markets; and
``(II) reducing the cost of health care as a result
of aggregating buying power;
``(ii) the potentially detrimental impact of certain
anticompetitive contracting practices; and
``(iii) the need to avoid conflicts of interests and other
unethical practices by persons described in paragraph (4).
``(2) The Secretary, in consultation with the Attorney General and
the Federal Trade Commission, shall establish procedures for annually
certifying that persons described in paragraph (4) are in compliance
with the final regulations promulgated pursuant to paragraph (1).
``(3) The Secretary, in consultation with the Attorney General and
Federal Trade Commission, shall, not less than 6 months after the date
of enactment of the Medical Device Competition Act of 2004, issue
proposed regulations, and shall, not later than 1 year after such date
of enactment, promulgate final regulations, to clarify its regulations
promulgated pursuant to section 14(a) of the Medicare and Medicaid
Patient and Program Protection Act of 1987 to specify that the
definition of `remuneration' under this section with respect to persons
described in paragraph (4)--
``(A) includes only those reasonable costs associated with
the procurement of products and the administration of valid
contracts; and
``(B) does 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 than
the cost, quality, safety, or efficacy of the product.
``(4) A person described in this paragraph is a person authorized
to act as a purchasing agent for a group of individuals or entities who
are furnishing services reimbursable under a Federal health care
program.''.
(c) Definition of Purchasing Agent.--Section 1128B of the Social
Security Act (42 U.S.C. 1320a-7b), as amended by subsection (b), is
amended by adding at the end the following new subsection:
``(h) For purposes of this section, the term `purchasing agent'
means any individual, organization, or other entity that negotiates and
implements contracts to purchase hospital supplies or medical
equipment, devices, products, or goods or services of any kind for any
group of individuals or entities who are furnishing services
reimbursable under a Federal health care program, including
organizations commonly known as `group purchasing organizations'.''.
(d) Effective Date.--Clause (v) of section 1128B(b)(3)(C) of the
Social Security Act (42 U.S.C. 1320a-7b(b)(3)(C)), as added by
subsection (a), shall take effect 1 year after the date of enactment of
this Act.
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