Senate Finance Committee combats drug shortages via draft legislation

On May 3, 2024, the United States Senate Committee on Finance (also called the Senate Finance Committee) issued a press release announcing a bipartisan draft legislation to address ongoing economic challenges that have contributed to generic drug shortages. The Senate Finance Committee Chair Ron Wyden, a Democratic senator in Oregon, and Ranking Member Mike Crapo, a Republican senator in Idaho, led the proposal.

While drug shortages are not a novel challenge across the healthcare industry, financial challenges and supply chain shortages throughout the COVID-19 pandemic highlighted multiple shortcomings in the US medication supply system.

From chemotherapy drugs to medications for managing attention deficit hyperactivity disorder (ADHD), several healthcare sectors and patient populations have faced challenges as a result of drug shortages.

“It is unacceptable that America is consistently running out of affordable and essential generic medicines,” Wyden said in the release. “Once again, monopolistic middlemen have put market power and profit over families’ healthcare. This proposal builds on my work to tear down regulatory barriers that are preventing families from accessing critical drugs like those needed to combat ADHD. Our bipartisan proposal uses the power of Medicare and Medicaid to ensure the entire American healthcare system has adequate supply for key medicines across the country. 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.” 

Although the proposal contains multiple factors to address the economic challenges fueling drug shortages, the discussion draft focuses on establishing a new Medicare program that promotes transparent and reliable purchasing across supply chain participants.

The program would require a minimum contract of three years with manufacturers for generic drugs that may have a high risk of shortages and promote meaningful purchase volume commitments and stable pricing to mitigate the risk of market changes that impact patient access to medication.

Additionally, the program would require contingency contracts with alternate manufacturers, prohibit anticompetitive practices, and promote supply chain visibility and transparency.

“Prescription drug shortages are fueling high prices and limiting access to life-saving treatments and cures,” Crapo added. “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.  We look forward to working with other members, experts and stakeholders on addressing these life-threatening challenges and promoting consistent, cost-effective healthcare for Americans nationwide.”