The Biden administration is taking a look at how group purchasing organizations (GPOs) and drug wholesalers are playing a role in generic drug shortages.
In a Request for Information jointly issued Wednesday, the Federal Trade Commission (FTC) and the Department of Health and Human Services (HHS) said they want to learn more about the organizations’ market concentration, contracting practices and regulatory exemptions.
The government said it is looking for any evidence that competing drug suppliers are being disincentivized from competing in generic markets; how a lack of competition between GPOs and drug wholesalers is impacting patients, pharmacies and providers, in particular those that are smaller or rural; or other potential causes for “chronic” generic drug shortages.
“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 in a release. “This devastating reality is the case for too many Americans who need generic drugs for ADHD, cancer and other conditions. 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.”
GPOs and drug wholesalers both serve as intermediaries between providers and suppliers. GPOs negotiate deals between the parties while drug wholesalers purchase the products directly from manufacturers for delivery to providers.
The FTC and HHS’ 17-bullet Request for Information (PDF) gives the public 60 days to submit written comments, documents and other data.
Advocacy groups have highlighted the substantial negotiating leverage of these groups resulting from consolidation and regulatory exemptions. They’ve also pushed the government to review GPOs’ sole-source agreements with members that prevent providers from tapping other sources of supplies, which could contribute to care disruptions and higher prices alike.
“For years Americans have faced acute shortages of critical drugs, from chemotherapy to antibiotics, endangering patients,” FTC Chair Lina M. Khan said in a statement. “Our inquiry requests information on the factors driving these shortages and scrutinizes the practices of opaque drug middlemen. We look forward to public input as we assess how enforcers and policymakers can best address chronic drug shortages and promote a resilient drug supply chain.”
The federal government has lately also been probing another type of intermediary, pharmacy benefit managers, which critics have accused of contributing to higher drug prices.
The drug shortages being described by HHS and the FTC are no surprise to providers. Health system pharmacists near-unanimously reported being affected by drug shortages last year with a third describing the issue as “critically impactful.” The American Society of Health-System Pharmacists, at the time, called on policymakers to take a hard look at “larger healthcare marketplace trends that have placed intense economic pressure on the overall cost of generic drugs.”
An October survey from ECRI found that frequent drug shortages were compromising care with delayed treatments or non-optimal regimens. Just last week, the American Hospital Association highlighted chronic drug shortages to the House of Representatives’ Ways and Means Committee—though the group’s recommendations to lawmakers largely focused on creating new manufacturing incentives for older generic drugs, supply chain resiliency and other manufacturer-focused reforms.