The Federal Trade Commission (FTC) announced on Wednesday its initiative to investigate the involvement of drug wholesalers and purchasing entities in the shortage of generic drugs, which constitute the majority of prescriptions in the United States healthcare system.
This action comes in response to a significant depletion of essential medications, including injectable cancer treatments and generic drugs, experienced over the past year, leading to drug rationing among hospitals and patients.
Factors contributing to these shortages range from issues in manufacturing quality control to spikes in demand.
However, the Biden administration is shifting its focus towards examining other participants in the pharmaceutical supply chain to identify the underlying causes and potential remedies for ongoing shortages.
FTC and HHS Call for Public Input on Healthcare Middlemen
In a joint effort, the FTC and the Department of Health and Human Services (HHS) have issued a request for information, inviting public feedback on the contracting practices, market concentration, and compensation structures of two key intermediary entities.
These entities include group purchasing organizations, which facilitate drug purchases for healthcare providers, and drug wholesalers, responsible for procuring medications from manufacturers and distributing them to providers.
The inquiry aims to assess whether these intermediaries have utilized their market influence in a manner that depresses the prices of generic drugs to an extent where manufacturers are unable to maintain profitability, leading to cessation of production.
Additionally, it seeks to ascertain if such practices deter rival suppliers from entering and competing in the generic drug market.
Leading Suppliers in Hospital Drug Supply
The FTC and HHS refrained from specifying particular companies; however, notable group purchasing organizations for hospitals include Vizient, Premier, and HealthTrust, while Cencora,
Cardinal Health, and McKesson dominate approximately 90% of prescription drug distribution in the United States.
Individuals will have a 60-day window to submit comments via Regulations.gov, as stated by the FTC.
Despite the increasing focus on reducing exorbitant drug prices among lawmakers, group purchasing organizations and wholesalers have received limited attention on Capitol Hill.
In efforts to mitigate medication expenses, lawmakers have sought enhanced transparency from pharmacy benefit managers, who negotiate drug discounts on behalf of insurance companies and other payers, regarding their operational methods.