The Senate Finance Committee released a new bipartisan draft legislation on Friday morning that would incentivize generic manufacturers and healthcare providers, like hospitals and clinics, to mitigate generic drug shortages by prioritizing drug quality and transparency.
“It is unacceptable that America is consistently running out of affordable and essential generic medicines,” Committee Chair Ron Wyden (D-OR) said in a statement. He singled out “monopolistic middlemen that have put market power and profit over families’ health care.”
One key point of the bill is a voluntary initiative, dubbed the Medicare Drug Shortage Prevention and Mitigation Program, that is proposed to launch in 2027 to improve the supply of medicines at high risk of shortage, such as generic sterile injectables and chemotherapies.
The program would encourage transparent and resilient purchasing of generic drugs among hospitals and clinics, pharma middlemen — like group purchasing organizations (GPOs) — and generic drug manufacturers.
To be eligible for quarterly Medicare bonuses, hospitals and clinics should commit to a minimum contract of three years with generic drug manufacturers and purchase “meaningful” drug quantities at a stable price. There should be “contingency contracts” with other manufacturers to promote competition and avoid shortages.
The program would prohibit hospitals and clinics from having exclusive contracts with generic drug manufacturers. Participants need to be transparent on manufacturing quality and supply chains to prevent shortages down the line.
According to a report by the American Society of Health-System Pharmacists, the number of drugs in shortage in the US has now reached an all-time high with a total of 323 medicines in the first quarter of the year. Generic injectables make up 67% of the shortages, according to the draft legislation.
The White House released a white paper earlier this month to push hospitals with Medicare payments to pay more for generic sterile injectables with a stronger and transparent supply chain based on a certain criteria, to much dismay by hospital and pharmacist groups.
Other committees, such as the House Ways and Means Committee, have said that generic drug pricing and transparent manufacturing are potentially key to overcoming drug shortages.
Editors note: This story has been updated to clarify previous mentions of healthcare providers as hospitals and clinics.