Feb 15, 2024 - Health

FTC probing middlemen's role in drug shortages

Illustration of an hourglass-shaped pill bottle with a small number of pills falling through

Illustration: Sarah Grillo/Axios

The Federal Trade Commission is exploring how drug distributors and group-purchasing organizations may be contributing to ongoing shortages of generic drugs at health care facilities.

Why it matters: It's the latest effort to untangle a complex web of factors driving high levels of shortages in the United States, which have affected cancer drugs and antibiotics, among others.

What's happening: The FTC and HHS on Wednesday issued a request for information about the companies' market concentration and contracting practices.

  • Officials are also asking how they affect the generic pharmaceutical market more broadly, including the pricing and availability of drugs.
  • Critics say the high concentration of the middlemen in the drug supply chain has pushed down the prices of generics so low that they've made it hard for manufacturers to maintain production.
  • That's made the U.S. more reliant on countries like China and India for imported products.

The other side: Healthcare Supply Chain Association president and CEO Todd Ebert in a statement said group purchasing organizations are "critical partners" to hospitals and health care providers that help them prevent and mitigate drug shortages.

  • "GPOs take a comprehensive approach to sourcing and contracting that not only accounts for the competitive price offered, but also the reliability and stability of supply," Ebert said.

What we're watching: The FTC also hopes "in the coming months" to share results from its inquiry into pharmacy benefit managers, which was launched in June 2022, agency chair Lina Khan told the American Medical Association conference on Wednesday.

Go deeper: Cancer drug shortages highlight supply chain vulnerabilities

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