December 16, 2011—Witnesses testifying at a Senate committee hearing yesterday—including the head of the trade association for generic pharmaceutical manufacturers—overwhelmingly concurred that government drug pricing programs such as 340B are not the reason why so many generic injectable drugs are in short supply.
The Senate Health, Education, Labor and Pensions (HELP) Committee was the third congressional panel in as many weeks to take a look at the problem. Representatives from the Department of Health and Human Services (HHS), the Food and Drug Administration (FDA), the Government Accountability Office (GAO), and the Generic Pharmaceutical Association (GPhA) all agreed that strengthening the FDA’s ability to address shortages would be the wisest course for Congress to take.
In conjunction with the hearing, the GAO issued a report recommending that Congress require drug manufacturers to inform the FDA of any changes that could affect the supply of their products. In addition, it called on the FDA to develop an information system to manage data about shortages.
During the hearing, GPhA President Ralph Neas said he had paid close attention to the prior two congressional hearings and their focus on “the economics of drug shortages and potential economic initiatives.”
He said that while he was pleased to see the discussion of “new and innovative ideas to address the problem” during those sessions, GPhA’s member companies “have indicated that improved communication, an expedited process for qualifying alternative suppliers, and increased collaboration among stakeholders would address the causes of the vast majority of shortages.”
As he did before during the earlier Senate Finance Committee hearing on shortages, Sen. Orrin Hatch (R-Utah) observed that some stakeholders attribute the problem in part to “government mandated rebate programs [that] have lowered the payment levels for these products to the point where they aren’t cost effective for manufacturers to produce them or to make investments in updating manufacturing capacity.” Hatch is drafting legislation that is expected to include a call for halting 340B discounts on shortage drugs for up to three years.
“Our analysis is that it’s not a reduction in price,” said HHS Assistant Secretary for Planning and Evaluation Sherry Glied. “The prices are actually rising for those drugs in shortages. Prices paid to manufacturers have really not been a source of this problem. Manufacturers see a robust market ahead for them and price is not an issue.”