The Unscathed Middleman Fueling Drug Shortages and Challenges for Patients
Even before patients face the burden of rising out-of-pocket costs at the pharmacy, they can be faced with another barrier that fundamentally impedes their ability to access care: drug shortages. While cancer has been mentioned frequently in recent conversations about how drug shortages upend treatment and care delivery, this challenge extends beyond just one disease area. Behind the challenges of drug shortages in chemotherapy, antibiotics, cardiovascular disease, and other common drug classes are an often-overlooked middleman in the healthcare supply chain.
Group purchasing organizations (GPOs) operate with significant power and insignificant oversight – long avoiding scrutiny from Washington. Just as lawmakers across the aisle have shown a commitment to work together to address middleman practices of pharmacy benefit managers (PBMs), Congress and the Biden Administration must bring more oversight and transparency to GPO practices that help fuel drug shortages and hinder patient access.
Recently, our country reached record high levels of drug shortages, with the American Society of Health-System Pharmacists (ASHP) reporting that ongoing and active drug shortages are at their highest number since tracking began in 2001. With 323 active drug shortages reported in the first quarter of 2024, no drug class is exempt from these challenges. Pharmacists cite shortages of generic sterile injectable medications, including emergency medications stored in hospital crash carts and cancer chemotherapy drugs, among the most troubling.
A 2023 survey of cancer centers nationwide found that 86 percent reported a shortage of at least one type of anti-cancer drug. These challenges for patients seeking treatment for cancer have rightly generated focus from those at some of the highest levels of government. Health and Human Services (HHS) Secretary Xavier Becerra described drug shortages as a “devastating reality” for too many Americans and U.S. Food & Drug Administration (FDA) Commissioner Robert Califf called shortages of oncology drugs “especially critical.”
While there are numerous reasons for these drug shortages, at their root are healthcare supply chain middlemen who hold power over large contracts and control production. GPOs are entities within the supply chain that oversee the purchase of medicines and products for healthcare providers, such as hospitals, clinics, and nursing homes. Three GPOs alone are responsible for the purchasing for 90 percent of all U.S. hospitals – garnering these entities significant authority and influence over the ability of patients across the country to access the treatments and care they rely on.
GPOs leverage sole-source contracts with hospitals, which place increased pressure on the suppliers of certain generic drugs and leave the supply chain more vulnerable to drug interruptions and other threats. With already thin margins on lower-cost generic drugs, lower wholesale prices driven by GPOs cause manufacturers to lose out financially on these medicines – disincentivizing others in the industry from supporting the supply chain.
Just as PBMs have come under the spotlight in Congress and regulatory agencies, more stakeholders are looking into the power GPOs have over the supply chain that brings treatments to patients. Washington policymakers and regulators have taken critical first steps in examining and seeking to address the impact of GPO practices. In February, HHS and the Federal Trade Commission (FTC) issued a Request for Information on drug shortages and the impact GPOs have on patient access to certain medications. In May, the Senate Finance Committee released draft legislation focused on creating a more stable pricing structure for generic drug manufacturers through a proposed incentive program that rewards hospitals, GPOs, and other actors in the supply chain for quality, reliable, and sustainable long-term contracts. As the FTC conducts a separate investigation into PBM practices, the agency deepened its inquiry to include GPOs in May of last year.
These actions reflect a turning tide in Washington, with the recognition that middlemen in the healthcare system must no longer turn significant profits through practices that leave some of the most vulnerable patients struggling to access care.
Just one patient waiting for or missing a treatment for cancer or any other complex condition due to corporations’ profiteering practices is one too many. Leaders in Washington must advance proposals that root out the practices of GPOs and other entities within the supply chain that intervene and create significant barriers between patients and the treatments they need.
Marcia K. Horn, JD, is the President and CEO of ICAN, International Cancer Advocacy Network, a 501(c)(3) non-profit helping late-stage cancer patients since 1996.
