24 November 2008
Novation, the US healthcare contractor that also provides procurement services to the NHS, has vetoed any further price increase requests from suppliers.
The contracting firm has taken the unusual step of publicly declaring it will not consider appeals from vendors to raise prices, unless there is specific language in the contract opposing this or unusual circumstances.
The company said the decision was a "line in the sand", would apply to all vendors worldwide and was taken to support members it buys goods and services for.
Dan Morgan, senior vice-president, contract and program services, said dramatic falls in the costs of commodities like rubber, oil and latex led to the decision.
"The current economic conditions, including a dramatic decrease in the cost of commodities used in supply manufacturing, have dictated that price increases are no longer necessary."
Meanwhile, Mike Arenth, VP and general manager EMEA at Ariba, said rapid price falls had created buyers' markets.