The Federal Trade Commission (FTC) and the U.S. Department of Health and Human Services (HHS) have jointly requested a Request for Information (RFI) regarding how two types of pharmaceutical drug middlemen groups – group purchasing organizations (GPOs) and drug wholesalers – contribute to generic drug shortages.
The FTC and HHS are specifically “seeking public comment regarding market concentration among large health care GPOs and drug wholesalers, as well as information detailing their contracting practices.” The RFI seeks to understand “how both GPOs and drug wholesalers impact the overall generic pharmaceutical market, including how both entities may influence the pricing and availability of pharmaceutical drugs. The joint RFI is asking these questions to help uncover the root causes and potential solutions to drug shortages.”
FTC Chair Lina M. Khan states that their inquiry “requests information on the factors driving [drug] shortages and scrutinizes the practices of opaque drug middlemen” in an attempt to determine how to best address chronic drug shortages and “promote a resilient drug supply chain.” Secretary of HHS Xavier Becerra laments the “devastating reality” that many Americans face when important medications for “ADHD, cancer, and other conditions” are out of stock. The announcement of this RFI, according to Becerra, aims to “tackle health care monopolies and lessen the impact on vulnerable patients who bear the brunt of this lack of competition.”
GPOs “serve as intermediaries in the pharmaceutical industry by negotiating deals for generic drugs and other medical supplies between health care providers…and manufacturers, distributors, and others who sell to health care providers.”
The joint RFI marks an effort by the FTC and HHS to “promote competition in pharmaceutical markets to ensure that every consumer has access to high-quality, affordable care.” The RFI is requesting “public input via comments, documents, and data” in an attempt to determine the potential causes of generic drug shortages. The topics they are seeking public input on include how drug manufacturers, GPOs, and drug wholesalers are complying with certain legal obligations under different acts and statutes. In addition, the RFI hopes to determine to what extent market concentration among GPOs and drug wholesalers impact smaller health care providers and incentives for suppliers to compete in generic drug markets. It also wishes to investigate the impact of the “prevailing GPO compensation model,” which may involve the transfer of rebates from manufacturers and suppliers “in exchange for favorable treatment.”
The FTC’s website has the release.
