U.S. Sens. Wyden and Crapo introduce proposal to address generic drug shortages

U.S. Sens. Ron Wyden (D-OR) and Mike Crapo (R-ID) introduced a draft legislative proposal to address shortages of generic medicines, including chemotherapy drugs and ADHD medications.

The proposal would establish a new program in Medicare for hospitals and physicians to incentivize transparent, reliable, and resilient purchasing practices across supply-chain participants. This would include driving health care providers, intermediaries, and drug manufacturers to meet standards in securing a sustainable, high-quality supply of essential medicines for patients.

This month, the American Society of Health-System Pharmacists (ASHP) said 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 represent an estimated 67 percent of shortages overall.

“It is unacceptable that America is consistently running out of affordable and essential generic medicines,” Wyden, chair of the Senate Finance Committee, said. “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.”

Key requirements for program participants 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; and
• Transparency around manufacturer quality control issues to improve supply-chain visibility and preempt potential shortfalls.

“Prescription drug shortages are fueling high prices and limiting access to life-saving treatments and cures,” Crapo, ranking member on the finance committee, said. “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.”

The proposal also includes numerous measures to enforce against participant violations of rules and requirements, including the potential for lockout for repeat or flagrant breaches. Additionally, it 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.

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