FTC probes whether GPOs, wholesalers cause drug shortages

The Federal Trade Commission and HHS launched an investigation Feb. 14 into how group purchasing organizations and drug wholesalers might cause drug shortages. 

The two organizations are seeking public comment to understand how GPOs and drug wholesalers influence the costs and availability of medications. The answers could "uncover the root causes and potential solutions to drug shortages," the FTC said in a news release. 

GPOs negotiate deals for medical supplies between healthcare providers, including hospitals and nursing homes, and manufacturers and distributors. Wholesalers also work between healthcare providers and manufacturers by purchasing medicines directly from drugmakers. 

As part of the probe, the agencies are seeking to learn whether the industries hurt rural hospitals and disincentivize suppliers from competing in generic drug markets. The FTC and HHS said they are also investigating the GPO compensation model and if it involves "favorable treatment" for some suppliers. 

"GPOs help stabilize the market for generic drugs by working with manufacturers on contracts that provide the certainty and predictable demand they need to remain in the market," a spokesperson for the Healthcare Supply Chain Association told Becker's, adding that the common causes for drug shortages are quality control issues, production delays, lack of raw materials and manufacturer business decisions.

Other middlemen in the drug industry, pharmacy benefit managers, are also facing scrutiny from the FTC.

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