Bill proposes paying hospitals for maintaining drug stockpiles

Following an HHS proposal, a Senate committee penned a bill to incentivize hospitals and other healthcare supply chain stakeholders for their drug shortage mitigation strategies, including stockpiles. 

The legislation, titled the Drug Shortage Prevention and Mitigation Act, would create a federal program that financially rewards hospitals with "transparent, reliable and resilient purchasing practices," the Senate Committee on Finance said in a May 3 news release. 

Hospitals and physicians would then incentivize other companies, including group purchasing organizations and drugmakers, to secure high-quality medicines, the release said. 

To be eligible for the program, hospitals would need minimum three-year contracts that detail high shortage risks with generic drug manufacturers, a "meaningful purchase volume commitments and stable pricing," contingency contracts with alternative manufacturers, and transparency into the pharmaceutical supply chain. The program would also ban exclusive contracts for providers. 

The bill paraphrases policy suggestions HHS made in early April that recommended programs that rank drug manufacturers and hospitals based on their drug supply reliability. The American Society of Health-System Pharmacists partly welcomed the proposal but said it "misses the mark by suggesting penalties against hospitals that do not adopt HHS-required inventory and purchasing practices."

The committee's bill outlines monetary penalties for entities that do not comply with the program's requirements. 

Read the proposed legislation here.

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