US agencies open investigation into generic drug shortages
The Federal Trade Commission and the Department of Health and Human Services said Wednesday they would investigate the causes of generic drug shortages and the practices of “powerful middlemen” involved in the supply chain.
The federal agencies' investigation focuses on the purchasing organizations and drug distributors that have been in the spotlight in recent months as drug shortages hit a decade-high. The agencies want to examine the companies' influence over how the drugs are sold to hospitals and other health care facilities, and assess whether the middlemen are putting pressure on prices and production that have led to disruptions.
During congressional hearings over the past year, oncology experts have testified about the impact of the shortages, describing difficult decisions that forced them to ration key chemotherapy drugs. They detailed month-to-month, sometimes week-to-week, supply shortages that posed deadly risks to some patients.
“For years, Americans have faced acute shortages of critical medicines, from chemotherapy to antibiotics, putting patients at risk,” Lina Khan, chair of the FTC, said in a statement. “Our investigation calls for information on the factors causing these shortages and examines the practices of opaque drug intermediaries.”
In previous interviews with The Times, generic drug industry executives had expressed growing concerns about their dependence on three major purchasing organizations for contracts to sell drugs to hospitals and health center customers. The generic managers complained that their companies sometimes offered below-market prices to win big contracts, a strategy that had eroded stability in the industry, especially among makers of sterile injectable products often used in surgical and cancer care.
Lawmakers have echoed the concerns. Late last year, Senator Ron Wyden, an Oregon Democrat and chairman of the Senate Finance Committee, criticized “very powerful health care middlemen” in the generic drug industry. Last month, he and Sen. Mike Crapo, an Idaho Republican, outlined ways to limit drug shortages, focusing in part on proposed changes to Medicare payments for sterile injectable drugs.
Dr. Robert Califf, the commissioner of the Food and Drug Administration, testified in Congress last year about the limits of the agency's ability to manage drug shortages, pointing to market dynamics — such as low and declining prices — in the generic drug industry.
Shortages of chemotherapy drugs have become headline news for lawmakers and the drug industry. Cancer specialists have been forced to create treatment guidelines recommending giving scarce doses to patients who had a chance of cure – and denying them to patients with metastatic disease who wanted to live longer.
The major chemotherapy drugs in short supply, cisplatin and carboplatin, are critical for treating lung, breast, testicular, ovarian, and head and neck cancers. In recent years, prices for both drugs fell to about $15 to $20 per dose, even as Intas Pharmaceuticals, a drugmaker headquartered in India, gained market share.
Intas stopped making the drugs due to quality issues raised by a surprise FDA inspection in late 2022. That resulted in the broader shortages, which generic drug industry executives cited as an example of how falling prices and winner-take-all contracts increased dependence on fewer resources. drug manufacturers.
The FTC investigation announced Wednesday focuses on whether concentration among pharmaceutical industry middlemen has “discouraged suppliers from competing in generic drug markets.” The agency accepts public comments as part of its investigation into the shortages.
The Association for Accessable Medicines, a trade group for the generic drug industry, praised the FTC for its efforts to address the problem. David Gaugh, the group's interim president, said in a statement that it was important for the agency to look at lower generic drug prices, concentration among intermediate companies and the decline of manufacturing sites.
“As a result of all this, the risk of drug shortages will only increase if no action is taken to strengthen the long-term sustainability of generic drug production,” Mr Gaugh said in a statement.
The federal investigation is expected to focus on the three major group purchasing organizations that contract with generic drug makers to supply drugs to hundreds of customers. Todd Ebert, president of the Healthcare Supply Chain Association, which represents group buyers, said the companies offer competitive prices to hospitals and other health care providers — as well as a reliable drug supply.
“GPOs help stabilize the generic drug market by working with manufacturers on contracts that provide the certainty and predictable demand they need to stay in the market,” Mr. Ebert said in a statement. He added that the organization “looks forward to sharing more with the FTC about the critical role of GPOs in addressing the ongoing drug shortage crisis.”
The Healthcare Distributors Alliance, which represents major companies such as McKesson, Cardinal Health and AmerisourceBergen that charge fees to generic drug makers to transport their drugs, also did not respond to requests for comment.