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The Federal Trade Commission (FTC) is reportedly launching an investigation into recent shortages of chemotherapies, including carboplatin, cisplatin, and other drugs, aiming to understand the market dynamics contributing to the scarcity of crucial medicines in U.S. hospitals.
The FTC seeks insights into the practices of drug distributors and hospital purchasing groups, including contracting methodologies, market concentration, and compensation structures.
The agency is interested in exploring whether intermediaries facilitating drug purchases for hospitals and those involved in shipping medicines have potentially wielded their market influence to drive down the prices of generic drugs.
The FTC’s inquiry targets a market dominated by a select few companies. Three key groups handle drug purchases for most U.S. hospitals, while three leading wholesalers supply approximately 90% of drugs to various healthcare entities nationwide.
The three leading group purchasing organizations (GPO), Vizient, Premier Inc (NASDAQ:PINC), and HealthTrust represent many hospitals, leveraging their negotiating power to secure low prices.
Critics argue that these prices are so low that some drugmakers reduce production or exit the market altogether.
Cencora Inc (NYSE:COR) (formerly AmerisourceBergen), Cardinal Health Inc (NYSE:CAH), and McKesson Corporation (NYSE:MCK) are the big drug wholesalers.
The agency’s objective is to examine the root causes of drug shortages, the Wall Street Journal noted, with an official announcement of the inquiry expected on Wednesday.
Trade associations representing hospital purchasing groups and pharmaceutical distributors have defended their practices amidst the FTC’s investigation.
The Healthcare Supply Chain Association attributes drug shortages to manufacturers’ quality issues and emphasizes collaborative efforts with hospitals to manage and mitigate shortages.
Similarly, the Healthcare Distribution Alliance, representing pharmaceutical distributors, cites various factors contributing to shortages, such as difficulties in sourcing raw materials and sudden spikes in demand.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image by HeungSoon from Pixabay
