Australian agency used drug firm guilty of breaches

08 Oct 2010

 Source:  The Australian

The Defence Department has spent more than $500,000 on medical supplies from a company that misused its market power in contracts. The Defence Materiel Organisation has used direct procurement to buy "medical consumables" worth $506,874 from Baxter Healthcare over the past three years. The most recent of the 19 contracts were $50,929 for medical supplies in June and $49,938 in March.

Baxter Healthcare was recently fined $4.9m in the Federal Court for breaching the Trade Practices Act. The court ruled that Baxter had misused its market power by bundling the supply of sterile fluids with peritoneal dialysis products used by people with kidney failure. The case related to Baxter's contracts with the health departments of Western Australia, South Australia, NSW and Queensland from 1998 to 2001.

In his judgment in August this year, judge John Mansfield found that each of the states' procurement agencies "generally were of the view that sole supply arrangements were in their interest, and each was a willing party to the bundled tender contract". The Defence Department has not yet responded as to why it had chosen to procure medical supplies directly from Baxter.

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