- Investigating generic drug shortages
- Factors causing shortages explored
- Public input sought
Persistent shortages of generic medications, which dangerously ‘endanger’ patients’ lives, will be investigated by the US government.
The inquiry, led by the US Department of Health and Human Services and the Federal Trade Commission, aims to “understand the potential contribution of two categories of pharmaceutical drug intermediaries—drug wholesalers and group purchasing organisations (GPOs)—to shortages of generic drugs.
Pharmaceutical Purchasing Organisations (GPOs) mediate drug price disputes between manufacturers and physicians or institutions without acquiring products themselves. By increasing the volume purchased by healthcare providers, these organisations aim to reduce costs and lower drug prices.
Drug wholesalers buy pharmaceuticals directly from manufacturers and resell them to providers, ensuring the distribution of a specific quantity of generic drugs produced by a manufacturer to reduce their prices.
A record number of drugs are currently experiencing shortages, forcing those with cancer and chronic illnesses to choose between waiting over a year for essential medications or spending thousands on substitutes.
Physicians have reported having to ration chemotherapy drugs and make critical life-or-death decisions about which patients should receive potentially curative therapy first.
Experts attribute the shortages to various factors: increased reliance on foreign manufacturers, manufacturing quality issues, supply chain disruptions due to raw material scarcities and natural disasters, and the preference for more expensive branded drugs over generics. These factors contribute to a race-to-the-bottom effect in the pharmaceutical industry.
Generic medications, which constitute 90 percent of the drugs consumed by Americans and are offered by multiple corporations at a lower cost, are not regulated by the government.
Consequently, generics are often discontinued by manufacturers in favour of their patented and branded versions, which generate significantly more revenue.
This practice allows pharmaceutical companies to establish a monopoly on the drug, forcing consumers to pay thousands for a product not offered by alternative manufacturers.
Investigating Generic Drug Shortages
The FTC and HHS investigation aims to determine how GPOs and wholesalers impact the availability and, consequently, the cost of some of the most commonly used medications in the country.
FTC Chair Lina Khan stated that severe shortages of essential medications, including antibiotics and chemotherapy, have jeopardized patients in the US for years.
“Our inquiry seeks information on the underlying causes of these shortages and explores the operations of secretive drug intermediaries.” We look forward to public feedback as we assess the best ways for policymakers and enforcement agencies to address persistent drug shortages and ensure a robust drug supply chain.
In the US, the number of medications in limited supply increased by nearly 30 percent between 2021 and 2022, reaching a five-year high of 295, according to government data.
A Senate report from the previous year revealed that over fifteen of these medications have been in short supply for more than a decade, in contrast to the average duration of shortages, which is 1.5 years.
Additionally, a survey by the American Cancer Society found that one in ten patients has had to use substitute medications or postpone treatment due to shortages.
Most medications in short supply are generic alternatives, significantly cheaper for both the patient and insurer than their brand-name counterparts.
Officials hope their efforts will promote competition in the pharmaceutical sector, making life-saving medications more available and affordable.
The agencies are seeking public input on various topics related to generic drug markets and potential factors contributing to the shortages, including the extent to which GPOs and wholesalers comply with their legal obligations, the impact of market concentration among GPOs and wholesalers on smaller healthcare providers and rural hospitals, and whether these entities discourage competition in the generic market.
Addressing America’s Drug Shortage Crisis
The drug shortage crisis, more acute in the US than in other Western nations, has drawn the attention of American politicians.
In December, the US Senate Committee on Finance held a hearing on the issue, where physicians instrumental in addressing the crisis provided distressing testimonies.
Dr. Jason Westin, Director of the Lymphoma Clinical Research programme at M.D. Anderson Cancer Center in Houston, stated, “The absence of generic and inexpensive drugs like fludarabine, used to treat blood cancer, can be a matter of life and death.”
Patients with aggressive blood cancers often have a limited window to receive life-saving medications and cannot afford to wait for drugs in short supply, according to Westin.
He said, “My colleagues have been forced to make unthinkable decisions, such as determining which patients will receive potentially curative therapy first in line for priority.”
Cancer treatment is achievable, but shortages force untenable choices between life-saving medications and life-threatening shortages.
Experts point to the US government’s lack of regulation over profit-driven pharmaceutical companies, unlike other countries, as a significant factor.
The federal government does not oversee pharmaceutical manufacturing processes overseas or the basic materials used in them, allowing companies to attribute shortages to supply chain issues when they may have discontinued medicines due to lower profitability.
Furthermore, the Food and Drug Administration (FDA) has indicated that discontinuations of older, generic medications by companies seeking more lucrative brand-name alternatives also contribute to shortages.
Challenges in Drug Manufacturing and Supply
The FDA cannot force a company to continue manufacturing a drug it wishes to discontinue, leading to discontinuations of older medications in favor of more profitable, newer alternatives.
Generally, newer branded medications are more profitable than their generic counterparts, which make up 90% of the medication regimen in the US.
This is because patents for new, more expensive drugs are valid for years, limiting production to a single company at a single price.
The expiration of patents on older medications allows for the production of generic alternatives by multiple companies, reducing the cost.
Additionally, the US’s reliance on critical components from China and India for 95% of emergency care medications exacerbates the issue.
Between 2010 and 2015, the number of foreign manufacturers registered with the FDA more than doubled, adding complexity to the FDA’s already limited supervision over drug manufacturing abroad.
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The US lacks insight into supply chain and manufacturing quality issues occurring overseas, further complicating the situation.
Last month, the FDA authorized Florida to be the first state to import less expensive medications from Canada, aiming to increase access. This policy change could offer Americans cheaper alternatives to expensive medicines.
Although direct purchases from Canada are allowed for US citizens, this decision makes Florida the first state to permit volume purchases of cheaper medications from Canadian wholesalers.
