On May 3, U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and Chair Ron Wyden (D-Oregon) released a legislative proposal to address ongoing economic problems leading to shortages of generic medicines—including chemotherapy drugs and ADHD medications.
A press release on the proposal says that “The proposal, released as a discussion draft, would establish a new program in Medicare for hospitals and physicians to incentivize transparent, reliable, and resilient purchasing practices across supply-chain participants, including by driving health care providers, intermediaries (such as group purchasing organizations, or GPOs) and drug manufacturers to meet ambitious, proactive standards in securing a sustainable, high-quality supply of essential medicines for patients from all walks of life.”
In February, we reported that 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.
Requirements for program participants to receive Medicare incentive payments, according to the release, include:
- Contracts with a minimum of three years with manufacturers for generic drugs that have high shortage risks
- Meaningful purchase volume commitments and stable pricing aimed to address market distortions that endanger patient access to life-saving treatments
- Requirements for contingency contracts with alternate manufacturers to support competition and prevent shortages originating from supply-chain disruptions
- Prohibitions against anticompetitive practices, such as exclusive contracting requirements for providers
- Transparency around manufacturer quality control issues to bolster supply-chain visibility and prevent potential shortfalls
“In order to ensure meaningful oversight and accountability across the program, the proposal includes numerous measures to enforce against participant violations of rules and requirements, including the potential for lockout from the new program for repeat or flagrant breaches,” the release adds. “These policies protect Medicare’s program integrity and guard against waste, fraud and abuse, ensuring that the shortage prevention and mitigation standards meet patients’ needs.”
