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DHL deal 'catastrophic' for UK medical devices industry

Published on 13/09/06 at 03:35pm

DHL's new contract to manage procurement across the NHS threatens the future of UK medical devices firms, according to manufacturers.

As part of their contract with the government, DHL and its US partner Novation have been set the target of saving one billion pounds over 10 years.

John Wilkinson, director general of the trade association the ABHI, said the deal would be a "catastrophic blow to the UK medical technology sector", fearing mandatory price reductions will hit the sector hard.

The ABHI says it is in favour of improving procurement in the NHS, but "not at any price" and says it would prefer a system of several competing purchasing bodies instead of the existing deal, which it says is a monopoly.

Wilkinson said the move would "in a single stroke ruin the hard work" of Gordon Brown and the DTI who have worked to support the sector over recent years, in particular regarding support for smaller companies.

"These small innovative companies are forging the latest medical breakthroughs for patients, yet the government's NHS policy is going to send many of them into bankruptcy."

He added: "Thousands of jobs are at stake and patients will miss out on the best available care."

The ABHI is also concerned with the involvement of Novation in the deal. The company is the largest group purchasing organisation in the US, where it works with hospitals to save money by pooling their buying power.

Novation's senior VP Jody Hatcher insisted: "Quality comes first. The ultimate goal is to help hospitals afford these essential, but expensive supplies."

Using Novation-negotiated supply contracts will be completely voluntary for hospitals in England, the company said.

Strongly opposed by unions, employees working for NHS Logistics are set to strike in protest against the deal.

Unison general secretary Dave Prentis said: "These are hardworking public service workers who have never taken strike action before and they are making a stand to protect their service and protect our NHS."

Industrial action will see emergency cover provided, but Unison said hospitals are likely to feel the effects very rapidly, especially in the supply of bulky items which are difficult to store.

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