The Federal Trade Commission and the Department of Health and Human Services are working together to investigate whether the practices of pharmaceutical middlemen are contributing to generic drug shortages across the healthcare sector.
“When you’re prescribed an important medication by your doctor and you learn the drug is out of stock, your heart sinks,” HHS Secretary Xavier Becerra said. “Today’s initiative is just one more action by HHS to best address shortages of generic drugs.”
The FTC and HHS filed a joint request for information regarding the practices of group purchasing organizations and drug wholesalers.
GPOs serve the supply chain needs of healthcare providers by negotiating contracts with suppliers, such as medical device companies and drug manufacturers. Drug wholesalers also serve as an intermediary group by purchasing drugs directly from manufacturers and selling them to healthcare providers.
The joint effort aims to assess how both types of entities influence the pricing and availability of pharmaceuticals.
“For years, Americans have faced acute shortages of critical drugs, from chemotherapy to antibiotics, endangering patients,” FTC Chairwoman Lina Khan said. “Our inquiry requests information on the factors driving these shortages and scrutinizes the practices of opaque drug middlemen.”
Generic antibiotics, including penicillin, pain medication, cancer drugs, and cardiac medications, all experienced shortages in 2023. The generic versions of Adderall, Vyvanse, and Concerta, used to treat ADHD, are the latest in 2024 to face critical supply deficits.
Critical medical supplies for hospitals and other inpatient facilities, such as sodium chloride for IV fluids and dextrose for blood sugar stabilization, also faced supply shortages in recent months.
This summer, governors from 11 states sent a letter to leaders in Congress demanding bipartisan action to tackle the shortages of various drugs and medical supplies.
Following the governors’ letter, there have been several efforts toward reining in the costs of prescription drugs by proposing regulations for pharmaceutical benefits managers, which work almost exclusively with large pharmacy chains.
Whereas GPOs are organized independently on behalf of hospitals and independent pharmacies alike, PBMs are typically owned by third parties, including insurance companies. PBMs are often accused of unfairly manipulating prices by over-relying on vertical integration.
The idea of stiffening regulations for PBMs has received bipartisan support.
Other pieces of Republican-backed legislation on addressing the drug shortage crisis have included efforts to strengthen the Food and Drug Administration’s oversight capability on future supply chain problems and allowing pharmacists to produce compounded medications directly in the pharmacy in the event of a shortage.
The FTC and HHS request for information is seeking public comment on the extent to which GPOs and drug wholesalers are complying with legal obligations under anti-monopoly statutes and whether the concentration of these middlemen has disincentivized competition.
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“Today’s announcement is part of the Biden-Harris Administration’s work to tackle healthcare monopolies and lessen the impact on vulnerable patients who bear the brunt of this lack of competition,” Becerra said.
The public comment period is open for the next 60 days.