May 03,2024

Crapo, Wyden Release Draft Legislation to Combat Prescription Drug Shortages

As drug shortages persist and grow to record highs, bipartisan Finance Committee discussion draft seeks to stabilize supply of mainstay generic medicines

Washington, D.C.--U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and Chair Ron Wyden (D-Oregon) released a legislative proposal to address persistent economic problems leading to shortages of generic medicines plaguing America’s health care system, including chemotherapy drugs and ADHD medications.

“Prescription drug shortages are fueling high prices and limiting access to life-saving treatments and cures,” said Crapo.  “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 health care for Americans nationwide.”

“It is unacceptable that America is consistently running out of affordable and essential generic medicines,” said Wyden.  “Once again, monopolistic middlemen have put market power and profit over families’ health care.  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 health care 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.” 

The proposal, released as a discussion draft, would establish a new program in Medicare for hospitals and physicians to incentivize transparent, reliable, and resilient purchasing practices across supply-chain participants, including by driving health care providers, intermediaries (such as group purchasing organizations, or GPOs) and drug manufacturers to meet ambitious, proactive standards in securing a sustainable, high-quality supply of essential medicines for patients from all walks of life.  Key requirements for program participants, in order to receive targeted Medicare incentive payments, include:

  • Minimum three-year contracts with manufacturers for generic drugs that present high shortage risks
  • Meaningful purchase volume commitments and stable pricing aimed at addressing market distortions that jeopardize patient access to life-saving treatments
  • Requirements for contingency contracts with alternate manufacturers to shore up competition and prevent shortages stemming from supply-chain disruptions
  • Prohibitions against anticompetitive practices, such as exclusive contracting requirements for providers, within the program
  • Transparency around manufacturer quality control issues to improve supply-chain visibility and preempt potential shortfalls.

In order to ensure meaningful oversight and accountability across the program, the proposal includes numerous measures to enforce against participant violations of rules and requirements, including the potential for lockout from the new program for repeat or flagrant breaches.  These policies protect Medicare’s program integrity and guard against waste, fraud and abuse, ensuring that the shortage prevention and mitigation standards meet patients’ needs.

The proposal also makes a change to the Medicaid Drug Rebate Program (MDRP) enabling reductions or waivers to the inflation rebate for certain generic drugs in the event of shortage risk, modeled on current law under Medicare.

This month, the American Society of Health-System Pharmacists (ASHP) announced that drug shortages have reached an all-time high—with 323 medicines now in short supply.  Generic drugs comprise the majority of medications in shortage at any given time, and a recent analysis found that 56 percent of drugs in shortage in 2023 cost less than $1 per unit. Generic injectables have proven particularly vulnerable, representing an estimated 67 percent of shortages overall.

In December, Crapo and Wyden convened a hearing in the Finance Committee to examine the drug shortages challenge through the lens of the committee’s jurisdiction. They released a white paper outlining policy options in January.

                          

A one-page summary of the discussion draft can be found here.

A section-by-section summary can be found here.

The legislative text can be found here.