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Investigation into the Role of GPOs and Drug Wholesalers in Current Drug Shortages

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Zara Nwosu
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Investigation into the Role of GPOs and Drug Wholesalers in Current Drug Shortages

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The Federal Trade Commission (FTC) and the U.S. Department of Health and Human Services (HHS) have taken the initiative to investigate how group purchasing organizations (GPOs) and drug wholesalers might be contributing to drug shortages. The two agencies have issued a Request for Information, seeking public comment to understand the influence these entities have on the costs and availability of medications.

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Understanding the Role of GPOs and Drug Wholesalers

GPOs operate by negotiating deals for medical supplies between healthcare providers and manufacturers. On the other hand, drug wholesalers purchase medicines directly from drugmakers. The FTC and HHS are particularly interested in understanding the impact of these industries on rural hospitals and generic drug markets. The investigation aims to determine whether these middlemen in the healthcare supply chain have inadvertently created a market environment that disincentivizes suppliers from competing in generic drug markets.

The Implication of 'Favorable Treatment'

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Another key aspect of the investigation revolves around the potential of 'favorable treatment' for some suppliers by the GPOs and drug wholesalers. The probe includes an examination of the GPO compensation model to determine if it involves preferential treatment for certain suppliers, which could be contributing to the imbalances in the availability and costs of medications.

Public Participation in the Investigation

The FTC and HHS have opened the investigation to public comment for a period of 60 days. The public is invited to submit comments, documents, and data at Regulations.gov, offering their insights and experiences on the issues being investigated. This public participation is expected to provide valuable input into the investigation, helping to uncover the root causes of drug shortages and suggesting potential solutions.

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Addressing the Critical Shortage of Generic Drugs

The investigation comes in response to an unprecedented shortfall of crucial medicines, which has forced hospitals and patients to ration drugs. The authorities are concerned about the impact of these shortages on patient care and the stability of the industry. The FTC is particularly interested in examining whether middlemen have misused their market power to cut the prices of generic drugs to the point that manufacturers can't profit and have to stop production. This scenario also discourages rival suppliers from competing in the generic drug market, further exacerbating the problem.

A Response to Concerns Raised by Industry Stakeholders

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The FTC and HHS have initiated the investigation in response to concerns raised by oncology experts, generic drug industry executives, and lawmakers. These stakeholders have expressed concerns about the influence of powerful middlemen in the generic drug industry, with lawmakers proposing changes to Medicare payments for sterile injectable drugs to address the issue. FTC Chair Lina Khan stated that Americans have faced acute shortages of critical drugs for years, endangering patients. This investigation aims to shed light on the factors driving these shortages and scrutinize the practices of the opaque drug middlemen.

Conclusion

The FTC and HHS investigation represents a significant step towards understanding and resolving the ongoing issue of drug shortages. By seeking public comment and investigating the practices of GPOs and drug wholesalers, the authorities are proactively seeking to uncover the root causes of these shortages and find potential solutions. The outcomes of this investigation could have far-reaching implications for the healthcare industry, potentially leading to changes in practices and policies that will ensure a steady supply of generic drugs for patients across the country.

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