Monday, May 20

US agencies launch investigation into generic drug shortage

The Federal Trade Commission and the Department of Health and Human Services said Wednesday they will examine the causes of generic drug shortages and the practices of “power intermediaries” involved in the supply chain.

The federal agencies’ investigation targets collective purchasing organizations and drug distributors that have been in the spotlight in recent months as drug shortages hit a 10-year high. The agencies want to examine the companies’ influence on how drugs are sold to hospitals and other health care facilities, assessing whether intermediaries exert pricing and production pressures that have led to failures.

During congressional hearings over the past year, oncology experts have testified about the effects of the shortage, describing difficult decisions that forced them to ration key chemotherapy drugs. They detailed month by month, sometimes week by week, gaps in supplies that posed fatal risks to some patients.

“For years, Americans have faced severe shortages of critical drugs, from chemotherapy to antibiotics, endangering patients,” Lina Khan, chairwoman of the FTC, said in a statement. “Our investigation seeks information on the factors driving these shortages and carefully examines the practices of opaque drug intermediaries.”

In previous interviews with the Times, generic drug industry executives expressed growing concerns about their reliance on three major group purchasing organizations for contracts to sell drugs to hospitals and health center customers. General managers complained that their companies sometimes offered below-market prices to win large contracts, a strategy that had eroded industry stability, especially among makers of sterile injectable products often used in surgical and medical care. cancer.

Lawmakers echoed the concerns. Late last year, Senator Ron Wyden, Democrat of Oregon and chairman of the Senate Finance Committee, criticized “very powerful healthcare intermediaries” in the generic drug industry. Last month, he and Senator Mike Crapo, Republican of Idaho, outlined ways to limit drug shortages, focusing in part on proposed changes to Medicare payments for sterile injectable drugs.

Dr. Robert Califf, commissioner of the Food and Drug Administration, testified to 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 industry of generic drugs.

The chemotherapy drug shortage has become news to lawmakers and the pharmaceutical industry. Cancer specialists were forced to write treatment guidelines that recommended giving low doses to those patients who had a chance of a cure – and withholding them from patients with metastatic disease who wanted to live longer.

The key chemotherapy drugs that have been in shortage, cisplatin and carboplatin, are crucial for treating lung, breast, testicular, ovarian and head and neck cancers. In recent years, prices for both drugs have fallen to about $15 to $20 per dose, even as Intas Pharmaceuticals, an India-based pharmaceutical company, has gained market share.

Intas halted production of the drugs amid quality concerns raised by a surprise FDA inspection in late 2022. That led to larger shortages, which generic drug industry executives pointed to as an example of how the decline pricing and winner-takes-all contracts have increased dependence on fewer drugs. drug manufacturers.

The FTC investigation announced Wednesday focuses on whether concentration among pharmaceutical industry intermediaries “has disincentivised suppliers from competing in generic drug markets.” The agency is accepting public comments as part of its investigation into the deficiencies.

The Association for Accessible Medicines, a trade group for the generic drug industry, praised the FTC for trying to address the issue. David Gaugh, the group’s interim president, said in a statement that it was important for the agency to consider lower generic drug prices, concentration among middleman companies and the decline of manufacturing sites.

“As a result of all this, the risk of drug shortages will only increase without actions to strengthen the long-term sustainability of generic drug manufacturing,” Gaugh said in a statement.

The federal investigation is expected to examine 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 the group’s buyers, said the companies provide competitive prices to hospitals and other health care providers as well as a reliable supply of drugs.

“GPOs help stabilize the generic drug market by working with manufacturers on contracts that provide the certainty and predictable demand they need to stay on the market,” 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 current drug shortage crisis.”

The Healthcare Distributors Alliance, which represents major companies such as McKesson, Cardinal Health and AmerisourceBergen that assess the fees paid to generic drug makers for shipping their drugs, also did not respond to requests for comment.