The health care industry is comprised of a multitude of different types of entities in the supply chain, from manufacturers to distributors to those health care providers who use medical products, equipment and devices in their provision of health care services to patients.
All entities involved in the supply chain in the health care industry must comply with applicable federal and state laws governing their activities. Benkoff Health Law advises supply chain clients as to the applicability of federal and state laws and provides practical business solutions.
Purchasing, Manufacturing and Distribution
Manufacturers, importers, and distributors are generally subject to a myriad of federal and state manufacturing and distribution laws. From a federal standpoint, the U.S. Food & Drug Administration (“FDA”) administers and enforces the federal Food, Drug, and Cosmetic Act, which imposes requirement relating to medical device manufacturing, importing, distributing labeling, and adverse events, among other requirements.
In addition to FDA statutes and regulations, the federal Anti-Kickback Statute and state anti-kickback laws may apply to relationships between individuals and entities within the supply chain as well as to those entities’ relationships with health care providers. It is imperative to determine whether federal and/or state anti-kickback laws apply to a supply chain relationship or arrangement.
If physicians are involved in any supply chain relationships, Stark and state self-referral laws must be considered and, if applicable, complied with. Additional considerations exist when physicians wish to be involved in owning or contracting with entities in the supply chain. For example, physician-owned distributorships and physician consulting relationships must be structured to comply with applicable state and federal laws.
State laws also govern purchasing, manufacturing, importing and distribution of medical devices, products and equipment. Individuals and entities involved in supply chain activities must ensure that they are structuring their businesses and activities to comply with state laws.
In addition to federal and state laws, there exists relevant industry guidance pertaining to certain supply chain activities. For example, the AdvaMed Code provides guidance for medical technology companies regarding their interactions with health care providers.
Benkoff Health Law has substantial knowledge and experience in counseling and advising manufacturers, importers, distributors, health care providers, and others in the health care industry involved in supply chain activities and relationships with respect to compliance with state and federal laws and industry guidance. Further, we have extensive experience in drafting compliant policies and procedures, distribution agreements, supply chain vendor agreements, equipment lease agreements, product and device purchase agreements.
Supply Chain Agreements
Benkoff Health Law has substantial experience in drafting and negotiating legally compliant supply chain agreements. We have several years of industry experience in representing health systems and hospitals in coordinating, streamlining, and standardizing their purchasing contracts and purchasing efforts. Furthermore, we regularly draft and negotiate contracts on behalf of equipment lessors and device manufacturers, importers and distributors. Benkoff Health Law understands the challenges that health care providers and medical product, device and equipment manufacturers, suppliers and distributors face. We are well-versed in standard contractual terminology relating to the supply chain industry with respect to both the legal issues and business issues involved in supply chain transactions.
GPO and PO/PHO Membership and Other Agreements
Group purchasing organizations or “GPOs” are entities that have various types of health care providers as their members and that leverage their members’ aggregate volume-based purchasing power to achieve savings for their members. GPOs may contract with vendors to provide their members with a limited or wide variety of products, devices, and equipment. Similarly, GPO membership may be comprised of a wide variety of health care providers or a limited type of specialty providers. GPOs generally implicate the federal Anti-Kickback Statute if the vendors are providing items that are reimbursable by federal health care programs, and they may also implicate state anti-kickback and distribution laws.
Physician Organizations or “POs” and Physician-Hospital Organizations or “PHOs” are generally entities formed by physicians or physicians and hospitals, but may include other provider types as well. POs and PHOs are created so that the providers can leverage their cumulative purchasing power to negotiate favorable contracting and pricing terms. Often times, POs and PHOs negotiate contracts with third party payors, but these entities may also provide administrative services to their members or function similarly to GPOs and negotiate for the purchase of items. The activities of POs and PHOs may implicate federal and state antitrust laws; thus, they must be structured to comply with such laws.
Benkoff Health Law is highly experienced in advising GPOs, POs and PHOs with respect to federal and state law compliance. Furthermore, we regularly draft both vendor contracts and membership agreements, we well as negotiate payor contracts for our GPO, PO and PHO clients. We are also skilled in advising clients with respect to structuring GPOs, POs and PHOs and creating corporate documents for such entities.
Durable Medical Equipment and Prosthetics, Orthotics, and Supplies (“DMEPOS”) suppliers face numerous challenges with respect to their organizational structures, operations, and relationships with health care providers. For example, DMEPOS suppliers may need to engage in a competitive bidding process for Medicare and other payors, depending on the products they sell and location of their sales. Also, in order to participate in the Medicare program, DMEPOS suppliers must comply with numerous supplier standards.
DMEPOS suppliers must also ensure that the relationships and arrangements that they have with health care providers are structured in a manner to comply with applicable federal and state laws which, depending on the arrangement, may including Stark, the federal Anti-Kickback Statute, and state self-referral and anti-kickback laws. DMEPOS suppliers must also comply with applicable federal FDA regulations and state laws.
Benkoff Health Law offers substantial expertise in advising DMEPOS suppliers with respect to federal and state laws applicable to their organizational structures and activities. Furthermore, we successfully assist our DMEPOS supplier clients in drafting corporate documents, policies and procedures, and other relevant agreements. We regularly draft and negotiate purchase and sale agreements for DMEPOS suppliers. Benkoff Health Law also assists DMEPOS supplier clients in compliance with third-party payor requirements.
For more information about the federal Food, Drug, and Cosmetic Act, please see the FDA’s Federal Food, Drug, and Cosmetic Act page.
For more information about the FDA’s regulation of medical devices, please see the FDA’s Medical Devices page.
For more information about CMS’s regulation of DMEPOS suppliers, please see CMS’s page. Durable Medical Equipment page.