US Agencies Start Inquiry Into Generic Drug Shortages

The Federal Trade Commission and the Department of Health and Human Services said on Wednesday that they would examine the causes of generic drug shortages and the practices of “powerful middlemen” that are involved in the supply chain.

The federal agencies’ inquiry is aimed at the group purchasing organizations and drug distributors that have been in the spotlight in recent months as drug shortages reached a 10-year peak. The agencies want to examine the companies’ influence on how the drugs are sold to hospitals and other health facilities, assessing whether the middlemen put pressure on pricing and manufacturing that led to breakdowns.

During Congressional hearings in the last year, oncology experts have testified about the effects of the shortages, describing difficult decisions that forced them to ration key chemotherapy drugs. They detailed month-to-month, sometimes week-to-week, gaps in supplies that were posing deadly risks for some patients.

“For years Americans have faced acute shortages of critical drugs, from chemotherapy to antibiotics, endangering patients,” Lina Khan, the F.T.C. chairwoman, said in a statement. “Our inquiry requests information on the factors driving these shortages and scrutinizes the practices of opaque drug middlemen.”

In earlier interviews with The Times, generic drug industry executives had expressed deepening concerns about their reliance on three major group purchasing organizations for contracts to sell medicines to hospitals and health center customers. The generic executives complained that their companies sometimes offered below-market prices to get big contracts, a strategy that had eroded stability in the industry, especially among makers of sterile injectable products often used in surgical and cancer care.

Lawmakers have echoed the concerns. Late last year, Senator Ron Wyden, a Democrat of Oregon and chairman of the Senate Finance Committee, criticized “very powerful health care middlemen” in the generic drug industry. Last month, he and Senator Mike Crapo, a Republican of Idaho, outlined ways to limit drug shortages, focusing in part on proposed changes to Medicare payments for sterile injectable drugs.

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