The U.S. Food and Drug Administration said that shortages are impacting patients in need of critical drugs such as chemotherapeutics, but while the House Subcommittee on Health acknowledges it’s a nuanced problem to solve, they disagree on the best ways to tackle the issue.
Drug shortages cost hospitals $559 million each year in labor costs and face significant supply chain disruptions, according to a memo produced by the Committee on Energy and Commerce Majority Staff. These shortages primarily affect low-cost generics, comprising 90% of retail prescriptions and two-thirds of shortages.
A recent survey of American Society Health-System Pharmacists members found that 99% of respondents were struggling with drug shortages every day in hospitals and health systems, with 57% saying chemotherapeutics drug shortages were canceling or delaying treatment altogether, according to Michael Ganio, senior director of pharmacy practice and quality at ASHP, during the hearing. He said most often shortages are caused by manufacturing delays, in addition to raw material availability and natural disasters.
“Shortages now must be understood as a built in and permanent outcome of the current system,” said Allan Coukell, senior vice president of public policy for Civica, during his opening remarks. “The root cause is widely acknowledged to be low prices. With a vial of medicine often costing much less than a cup of coffee, this reduces the incentive and the ability for manufacturers to invest in quality or newer manufacturing facilities, and low prices push production offshore to low wage markets where quality problems proliferate.”
He added that if a drug company leaves the market or goes out of business, a void lingers for a long time since it takes time to ramp up pharma development.
Five different pieces of legislation were discussed during the hearing. Notable aspects to the bills included: Suspending additional inflationary rebates for certain sterile injectable drugs at risk of shortage; phasing out the rebate reduction in Medicare Part B and Part D; requiring the Center for Medicare and Medicaid Innovation to launch a market-based pricing reimbursement policy; implementing disclosure requirements for group purchasing organizations; awarding market exclusivity for drugs submitting shelf-life extension studies; expanding drug shortage notification requirements and expanding existing active pharmaceutical ingredients (APIs) reporting requirements.
“The discussion draft focuses primarily on generic sterile and injectable drugs for a serious disease or condition and getting these drugs out from under mandatory 340B rebates and inflation penalties,” said chair Cathy Rodgers (R-WA).
Committee Democrats said during Thursday’s hearing that Republicans, who brushed off the claims, failed to act on this issue for months before finally bringing it up for discussion. Democrats also sounded the alarm that some of the proposed aspects of the bills would make the problem worse, not better.
“I believe this proposal mostly studies the problem with more reports,” said Rep. Anna Eshoo, D-California, in her opening remarks during the hearing, referring to chair Rodgers’ Stop Drug Shortages Act. “Where the proposal has actionable policy, I think it’s a grab bag of talking points that weakens the 340B program and chips away at the Inflation Reduction Act, excluding certain manufacturers from the inflation rebate. Many of the chemotherapy shortages were caused by manufacturers choosing to drop their prices in an unsustainable attempt to gain market share.”
“Unfortunately, many of the proposals in the Republican discussion draft may actually lead to more drug shortages and increased profits for the pharmaceutical industry, while raising costs for consumers,” said Rep. Frank Pallone, D-N.J.
Melissa Barber, postdoctoral fellow at the Yale School of Medicine, said she agrees with Pallone’s belief that under the plan, drug companies would have an incentive to keep drugs in shortage or near shortage for longer periods of time to raise drug prices for the average person.
And President and CEO of Healthcare Distribution Alliance Chester “Chip” Davis Jr. said that he opposes a provision narrowing bona fide service fees, as he believes that would “unintentionally exacerbate existing shortages.”
The expert witnesses also gave their thoughts on GPOs, or organizations that help hospitals and nursing homes save money by negotiating with manufacturers and distributors. David Gaugh, interim president and CEO of Association for Accessible Medicines, said that three GPOs control approximately 90% of all generic drug purchases for hospitals and clinics, leading to “unchecked consolidation.”
“Business practices by middlemen such as GPOs, wholesalers, PBMs and health plans are disrupting the economic sustainability of generic manufacturing,” he added. “Shrinking product portfolios, they're reducing the availability of resources to counter drug shortages.
Healthcare Supply Chain Association President and CEO Todd Ebert, who is also a former CEO of national GPO Amerinet, defended the role of GPOs. He stated that they mitigate and prevent drug shortages, helping their partners source drugs around the country.
Gaugh also thinks the inflation rebate programs are over-penalizing drug companies for price increases marginally above the going rate of inflation. In turn, drug prices decrease, promptly causing shortages. Barber said inflation rebate exceptions could incentivize new manufacturers to enter the market but doesn’t fix the root causes to revitalize the supply chains.
Eshoo also previewed future legislation during the hearing. She said she would introduce the Pediatric Cancer Drug Supply Act “in the coming days” to establish a program to create a six-month buffer stock of essential pediatric oncology drugs. Experts she asked about the idea during the hearing said they would support the proposal and even want it applied to central medicines for everyone, including adults.
When asked by a committee member if he foresees the climate surrounding drug companies getting more positive through the lens of fewer bankruptcies and drug shortages, Gaugh was less than optimistic.
“To kind of address this all at once, it’s getting worse and it’s going to get a lot worse,” he said.