A new draft bill from the Senate Finance Committee aims to establish a new provider incentive program to address drug shortages.
The legislation, which was released jointly by Chairman Ron Wyden, D-Oregon, and ranking member Mike Crapo, R-Idaho, would establish a new Medicare program beginning in 2027 called the Medicare Drug Shortage Prevention and Mitigation Program. The initiative would pay providers "targeted" incentives for adopting improvements and reforms in their purchasing processes.
The goal, according to a one-pager (PDF) on the bill, is to encourage providers to enter into longer-term purchasing agreements for drugs that are facing shortages. Group purchasing organizations would be allowed to participate in the program as well.
In order to receive the incentives, providers would be asked to sign contracts with manufacturers that last for at least three years and commit to meaningful purchase volumes and stable pricing.
“Prescription drug shortages are fueling high prices and limiting access to life-saving treatments and cures,” Crapo said in a press release. "Our bipartisan discussion draft would take meaningful strides toward mitigating and preventing prescription drug shortages, ensuring that patients can receive the care they need, when they need it.
Participating providers would be subject to requirements around contingency contracts, which the legislators say would both bolster competition and prevent supply chain issues from causing shortages.
The program would also bar exclusive contracting agreements for providers and other behaviors deemed anticompetitive, and seeks to boost transparency within the pharmaceutical supply chain to preempt any major issues.
Should the program's outlined standards be met for a certain product, providers would be eligible for lump sum incentive payments on a quarterly basis, which would be "calculated as a percentage of a price benchmark and scaled up based on compliant purchase volume," according to the fact sheet. For those who achieve "advanced standards" for a given drug, they could receive add-on percentage-point payments.
The program would also establish a separate bonus pool that would be paid out to providers with high performance on key outcomes measures, according to the fact sheet.
"Our bipartisan proposal uses the power of Medicare and Medicaid to ensure the entire American health care system has adequate supply for key medicines across the country," Wyden said in the release. "Middlemen like GPOs should not be able to do business with Medicare if their contracting practices are actively worsening the drug shortage challenge in America.”
The Department of Health and Human Services floated a similar plan to address drug shortages last month.