Drug Shortages: Congress Debates New Policy Proposals

The House Energy and Commerce Committee has issued a discussion draft with policy proposals to address drug shortages in the US. What is in the proposal?

The House Energy and Commerce Committee has issued a discussion draft with policy proposals to address drug shortages in the US. What is in the proposal? 

New legislative proposals to address drug shortages
Late last month (July 2023), the Chair of the Energy and Commerce Committee of the US House of Representatives, Cathy McMorris Rodgers (R-WA), released a discussion draft with policy proposals to address drug shortages in the US, making it the latest legislative proposal to address drug shortages in the US. The Commitee is seeking feedback on its proposal by August 25, 2023.

“America is the leader in developing innovative treatments and cures. Yet the economics of our convoluted health care system create shortages—particularly of low-cost and generic drugs—that harm patients in need,” she said in a July 28, 2023, statement. “The responses to our RFI [Request for Information] on addressing drug shortages overwhelmingly made clear that we need to address the root causes of shortages with a multifaceted approach. This discussion draft is part of our committee’s thoughtful, deliberative process to offer long-term solutions to these issues so that patients can access the drugs they need. I hope this draft will lead to bipartisan legislation, and I welcome feedback and collaboration from my colleagues across the aisle and chamber, stakeholders, and subject matter experts,” she said.

Highlights of the discussion draft are outlined below.  

Provide Market Flexibility: The discussion draft says that drug manufacturers that produce low-cost drugs and generics are often already operating on thin margins. Imposing restrictions in Medicaid (the US government healthcare program for low-income individuals) and the 340B Program (the US government program in which pharmaceutical manufacturers participating in Medicaid sell outpatient drugs at discounted prices to healthcare organizations that care for many uninsured and low-income patients, which include federal grantee organizations and several types of hospitals, including critical access hospitals sole community hospitals, rural referral centers, and public and nonprofit disproportionate share hospitals that serve low-income and indigent populations) hold the cost of these drugs at artificially low levels and undermines the economic stability of these supply chains, driving many of these drugs into shortages. The policy proposal under the discussion draft will give manufacturers of generic, sterile injectable drugs for serious diseases, such as cancer treatments, more flexibility to respond to market pressures, so they can invest in manufacturing and ramp up production when potential shortage situations arise.

Increase Transparency from Drug Middlemen: The policy proposal under the discussion draft increases disclosure requirements on group purchasing organizations that control bulk contracts between drug manufacturers and healthcare providers. Bringing these agreements to light may help cut down on arrangements where companies are incentivized not to produce drugs, according to the discussion draft.

Increase Accountability of US Food and Drug Administration . The policy proposal under the discussion draft requires the US Food and Drug Administration (FDA) to exercise the reporting requirement authorities it already possesses, including reporting on certain active pharmaceutical ingredient (API) metrics for generics, and establishes a pilot program for FDA to conduct preapproval inspections for new domestic sterile manufacturing facilities.

Require More Information to Stop Shortages: The policy proposal under the discussion draft requires a government watchdog to examine how policies, such as the 340B Program’s pricing policies and Medicaid’s generic-drug inflationary rebate, interact with drugs that have experienced shortages within the past decade. Additional requirements include data analysis and recommendations from the US Department of Health and Human Services related to how Medicare reimburses for certain drugs and how to protect against drug shortages, including the use of market-based pricing.

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