A variety of generic pills and capsules.
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The Federal Trade Commission said Wednesday that it is examining the role that drug wholesalers and companies that buy drugs for U.S. health care providers play in the shortage of generic drugs, which account for the majority of Americans' prescriptions.
The move comes after unprecedented shortages of crucial drugs ranging from injectable cancer therapies to generics, or cheaper versions of brand-name drugs, over the past year, which has forced hospitals and patients to ration drugs. Issues ranging from manufacturing quality control to surges in demand can lead to supply problems.
But the Biden administration is focusing on other players in the drug supply chain to uncover the “root causes and potential solutions” to the current shortages.
In a joint request for information, the FTC and the Department of Health and Human Services are seeking public comment on the contracting practices, market concentration, and compensation of two types of intermediaries. These are collective purchasing organizations, which broker the purchase of medicines for hospitals and other healthcare providers, and medicine wholesalers, who buy medicines from manufacturers and distribute them to suppliers.
The request for information will examine whether these intermediaries have misused their market power to drive down generic drug prices to the point that manufacturers cannot make a profit and have to stop production, and rival suppliers are deterred. to compete in the generic drug market.
“The FTC is interested in looking at this market because, on one side of the market, there are patients who are desperate for the right drug and would pay a high price for that drug if they could. And on the other side of the market, there are manufacturers that they can't get more than a few dollars per dose of the same drug,” Doug Farrar, director of the FTC's Office of Public Affairs, told CNBC.
“So that negative outcome for patients is what made the FTC want to study this market,” he added.
The FTC and HHS did not name specific companies. But Vizient, Premier and HealthTrust are among the largest group purchasing organizations for hospitals, while cencora, Cardinal Health and McKesson They are responsible for approximately 90% of prescription drug distribution in the US.
The public will have 60 days to submit comments on Regulations.gov, the FTC said.
Group purchasing organizations and wholesalers have received limited attention on Capitol Hill, even as reining in high drug costs has become a key priority among lawmakers in both chambers.
As part of the effort to reduce drug costs, lawmakers have sought greater transparency from pharmacy benefit managers, who negotiate drug discounts on behalf of insurance companies and other payers, about their business practices.
PBMs maintain that manufacturers are responsible for high drug prices, while drug makers say the discounts and fees charged by those middlemen force them to raise the list prices of products.
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