St. Jude Takes Over Terminated Medtronic Contract

The Upper Midwest Consolidated Services Center announced that is has awarded a one-year contract to St. Jude-a deal that replaces an agreement that Medtronic terminated earlier this year.

Little Canada-based St. Jude Medical, Inc., was awarded a one-year contract to supply cardiac rhythm management (CRM) products to the Upper Midwest Consolidated Services Center (UMCSC).

The organization said that the deal with St. Jude replaces a previous agreement between the UMCSC and Fridley-based Medtronic, Inc., and it also complements an existing and separate two-year CRM agreement with Boston Scientific Corporation, which started in June 2010.

Earlier this year, Medtronic canceled several contracts with two group-purchasing organizations (GPOs), including the UMCSC's health-care supply contracting company Novation.

GPOs work with hospitals and other health-care organizations to save them money by negotiating discounts with medical device manufacturers, suppliers, and distributors though the purchase of a large volume of products or devices for all of its members.

Medtronic's decision to stop working with UMCSC sparked an investigation from Congress, which sent a letter seeking information about the company's move.

Senate Finance Committee Chairman Max Baucus, a Democrat from Montana, said at the time that Medtronic's decision to terminate the contracts “could considerably undermine our efforts to reduce health care costs and increase transparency for consumers and taxpayers.”

Baucus cited a Wall Street Journal article that said Medtronic's decision “could escalate a battle between device makers trying to protect product prices and their leverage in negotiations and GPOs trying to cut cost-saving deals for hospitals.”

The UMCSC-which is based in Irving, Texas-has 33 member organizations, including hospitals and health-care organizations, that collectively spend more than $110 million each year on CRM devices, including pacemakers, implantable cardioverter defibrillators, heart failure devices, leads, and related accessories.

“We welcome the opportunity to work closely with the members of the UMCSC as our cardiac rhythm management products aid their continued efforts to provide value-based, successful outcomes for their patients,” Mike Rousseau, group president of St. Jude Medical, said in a statement. “We are pleased that UMCSC has chosen to use St. Jude Medical technology in their efforts to create and maintain supply chain efficiencies.”

St. Jude is among Minnesota's 20-largest public companies based on revenue, which totaled almost $5.2 billion in the fiscal year that ended in January.