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A Senate Proposal to address Generic Drug Shortages

May 03, 2024

U.S. Senators today revealed a draft proposal that seeks to address generic drug shortages, including chemotherapy and ADHD medications. 

The proposal—from Senate Finance Committee Chair Ron Wyden, (D-Oregon) and Ranking Member Mike Crapo (R-Idaho)—focuses on strategies to stabilize the availability of several critical generic medicines. 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.”

The program participants would need to meet certain participation requirements, including:

  1. Minimum three-year contracts with manufacturers for generic drugs that present high shortage risks.
  2. Purchase volume commitments and stable pricing aimed at addressing market distortions.
  3. Requirements for contingency contracts with alternate manufacturers to shore up competition and prevent shortages from supply-chain disruptions.
  4. Prohibitions against anticompetitive practices, such as exclusive contracting requirements for providers, within the program.
  5. Transparency around manufacturer quality control issues to improve supply-chain visibility and preempt potential shortfalls. 

The proposal comes as U.S. drug shortages reached record levels during the first quarter of 2024. There were 323 active shortages during the first quarter of 2024, according to the American Society of Health-System Pharmacists (ASHP) and the University of Utah Drug Information Service. 

In January, the Finance Committee  released a white paper outlining policy options in January.                          

A one-page summary of the discussion draft and a section-by-section summary are available online.