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FTC and HHS Probe 'Opaque Middlemen' in Pharmaceutical Supply Chain to Address Generic Drug Shortages

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Anthony Raphael
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FTC and HHS Probe 'Opaque Middlemen' in Pharmaceutical Supply Chain to Address Generic Drug Shortages

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FTC and HHS Launch Inquiry into Role of 'Opaque Middlemen' in Drug Shortages

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The Federal Trade Commission (FTC) and the U.S. Department of Health and Human Services (HHS) are currently conducting an inquiry into the role of 'opaque middlemen' in the pharmaceutical supply chain. These middlemen, primarily group purchasing organizations (GPOs) and drug wholesalers, are being scrutinized for their impact on the pricing, availability, and market concentration of generic pharmaceuticals.

Understanding the Role of GPOs and Drug Wholesalers

The FTC and HHS have issued a Request for Information to gain a better understanding of how GPOs and drug wholesalers may be contributing to generic drug shortages. They are seeking public comment on market concentration and contracting practices of these middlemen to uncover the root causes and potential solutions to drug shortages. The public has 60 days to submit comments on this matter.

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Impact on Generic Drug Pricing and Availability

FTC Chair Lina Khan emphasized the acute shortages of critical drugs endangering patients' lives. The inquiry requests information on the factors driving these shortages and scrutinizes the practices of these opaque drug middlemen. Oncology experts have testified about the impact of the shortages, highlighting the risks to patients. Generic drug industry executives have expressed concerns about their reliance on major GPOs and the erosion of stability in the industry.

Consolidation, Regulatory Exemptions, and Sole-Source Agreements

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There has been significant concern regarding the market concentration, contracting practices, and regulatory exemptions of GPOs and drug wholesalers. Advocacy groups have highlighted the substantial negotiating leverage of these groups resulting from consolidation, regulatory exemptions, and their sole-source agreements. The FTC and HHS are seeking public input to address chronic drug shortages and promote a resilient drug supply chain.

Addressing Unlawful Consolidation and Roll-ups

The FTC and HHS are not just looking into the practices of GPOs and drug wholesalers, but also examining other areas of concern such as unlawful consolidation and roll-ups in the healthcare industry. The FTC is taking actions to address these issues and is seeking public input on the impact of private equity and corporations' control of healthcare on Americans. The FTC is also scrutinizing pharmacy benefit managers (PBMs) and their adherence to antitrust laws.

Seeking Solutions for Drug Shortages

This inquiry aims to identify root causes and potential solutions to the problem of drug shortages. The FTC and HHS are urging the public to share their views and experiences to help address this issue effectively. Recommendations to lawmakers to create new manufacturing incentives for older generic drugs, enhance supply chain resiliency, and implement other manufacturer-focused reforms are being considered.

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