Biotech
Thursday, February 15th, 2024 4:18 pm EDT
Key Points
- The Federal Trade Commission (FTC) is investigating the involvement of drug wholesalers and purchasing companies in the shortage of generic drugs, which are vital for most American prescriptions.
- The Biden administration, responding to a significant scarcity of essential medicines over the past year, is focusing on understanding and addressing the root causes of ongoing shortages within the drug supply chain.
- Through a joint request for information with the Department of Health and Human Services (HHS), the FTC aims to gather public input on the practices and market influence of group purchasing organizations and drug wholesalers, particularly examining whether their actions have led to pricing pressures that affect manufacturers’ ability to profit and discourage competition in the generic drug market.
The Federal Trade Commission (FTC) has announced an investigation into the involvement of drug wholesalers and purchasing companies in the United States healthcare system regarding shortages of generic drugs, which are crucial for the majority of Americans’ prescriptions. This initiative comes in response to a significant shortfall in essential medicines over the past year, ranging from injectable cancer treatments to generic drugs, leading to drug rationing by hospitals and patients. Various factors such as manufacturing quality control issues and demand spikes contribute to these supply problems. However, the Biden administration aims to identify the underlying causes of these shortages by scrutinizing other entities in the drug supply chain. In collaboration with the Department of Health and Human Services (HHS), the FTC is soliciting public feedback on the contracting practices, market concentration, and compensation of group purchasing organizations and drug wholesalers. These middlemen play a pivotal role in facilitating drug purchases for healthcare providers and distributing medicines from manufacturers. The inquiry will explore whether these intermediaries have abused their market power to drive down generic drug prices to unsustainable levels, thereby dissuading manufacturers and competitors from participating in the generic drug market. Doug Farrar, director of the FTC’s Office of Public Affairs, highlighted the disparity between patients’ willingness to pay high prices for necessary drugs and manufacturers’ inability to profitably produce them. Notable group purchasing organizations include Vizient, Premier, and HealthTrust, while major drug wholesalers include Cencora, Cardinal Health, and McKesson. The FTC and HHS have not named specific companies but have invited public comments on the matter for a 60-day period. Despite the focus on drug manufacturers and pharmacy benefit managers in efforts to address high drug costs, the role of group purchasing organizations and wholesalers has received relatively little attention on Capitol Hill. Lawmakers are increasingly pushing for transparency from pharmacy benefit managers regarding their business practices, amid debates over the factors driving up drug prices.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/14/ftc-hhs-examining-cause-of-generic-drug-shortages.html
