Behind the Bill: July 31, 2024

According to June 2024 data from the American Society of Health-System Pharmacists (ASHP), a staggering 300 drugs are currently in short supply in the US.¹ Drug shortages have been a pressing issue on the minds of many stakeholders, from health care providers and policymakers to patients, and even payers, who mention it several times in our 2024 MAI Payer Oncology Annual Trends syndicated research.

These shortages significantly impact patient care, particularly in oncology, where timely access to medications is critical. The US Department of Health and Human Services (HHS) acknowledged the severity of this issue and announced a comprehensive plan in early April to mitigate these shortages and proposed long-term solutions.²

One of the proposed initiatives is the Manufacturer Resiliency Assessment Program (MRAP). If implemented, MRAP will focus on generic drug manufacturers, evaluating their resilience practices and assigning a performance score. This scoring system aims to incentivize manufacturers to adopt more robust supply chain practices.²

Similarly, the Hospital Resilient Supply Program (HRSP) will grade hospitals based on their adherence to resiliency practices by using a detailed scorecard. The impact of these programs could be profound, encouraging community oncology practices to prioritize purchasing from manufacturers that demonstrate reliability and resilience. These practices might also seek partnerships to ensure a consistent supply of essential medications.²

Several oncology organizations, including the American Cancer Society Cancer Action Network (ACS CAN), have urged Congress to advance legislation that addresses ongoing drug shortages. The American Hospital Association (AHA) has echoed these calls, suggesting diversifying manufacturing sites and sources for critical pharmaceutical ingredients. Similar to the HHS plan, AHA proposes developing a rating system for drugmaker quality management processes and identifying essential drugs that require more domestic manufacturing.³

First Report Managed Care continues to cover federal pharmacy benefit manager legislation, and provided key insights from AMCP 2024.

In May, Senate Finance Committee Chair Ron Wyden and Ranking Member Mike Crapo issued a discussion draft bill aimed at addressing generic drug shortages, indicating congressional movement. The proposal outlines the establishment of a new program within Medicare, set to begin in 2027, called the Medicare Drug Shortage Prevention and Mitigation Program. This program intends to⁴:

• Use targeted payment incentives: improve supply chain practices to enhance the resiliency and sustainability of generic drugs, starting with sterile injectables and infused medications.
• Set core standards: providers must meet minimum standards, such as three-year contracts and stable pricing, to be eligible for quarterly incentive payments. A bonus pool will reward high-performing providers based on outcome measures.

• Limit inflationary rebates: under the Medicaid Drug Rebate Program, inflationary rebates for certain generic drugs susceptible to shortages would be limited.

Despite these well-intentioned measures, industry experts have expressed skepticism about the Senate’s proposal. The complexity and scale of drug shortages require comprehensive, multifaceted solutions that address both immediate and long-term challenges.⁵

The Senate’s proposal, HHS’s plan, and the suggestions from prominent advocacy and professional associations collectively indicate an urgent need to resolve drug shortages. Although these proposed legislations and programs are steps in the right direction, it will take a concerted effort from all stakeholders to build a resilient and reliable supply chain. Congress has also stated that addressing drug shortages will be a priority during their lame-duck session this year. Behind the Bill will be covering the outcome of that session, so stay tuned.

In the meantime, be sure to check out our Payer Annual Oncology Trend Report, which features the most valuable payer requests for manufacturers, including ensuring a reliable product supply to minimize drug shortages. 

Join me every Wednesday as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.

References

1. ASHP. Drug shortages statistics. 2024. Accessed July 29, 2024. https://www.ashp.org/drug-shortages/shortage-resources/drug-shortages-statistics

2. HHS releases white paper focused on preventing drug shortages. News release. Department of Health & Human Services. Published April 2, 2024. Accessed July 29, 2024. https://www.hhs.gov/about/news/2024/04/02/hhs-releases-white-paper-focused-preventing-drug-shortages.html

3. AHA recommends legislative action to address chronic drug shortages. American Hospital Association.  Published February 6, 2024. Accessed July 29, 2024. https://www.aha.org/news/headline/2024-02-06-aha-recommends-legislative-action-address-chronic-drug-shortages

4. Senate Finance Committee discussion draft: preventing & mitigating generic drug shortages. Senate Finance Committee. Published May 1, 2024. Accessed July 29, 2024. https://www.finance.senate.gov/imo/media/doc/050124_sfc_drug_shortages_discussion_draft_one_pager.pdf

5. AHA submits comments on draft drug shortage legislation to Senate Finance Committee leaders. American Hospital Association. Published June 7, 2024. Accessed July 29, 2024. https://www.aha.org/news/headline/2024-06-07-aha-submits-comments-draft-drug-shortage-legislation-senate-finance-committee-leaders