Comments on Senate Finance Committee draft legislation to combat prescription drug shortages

Marta Wosińska and Richard Frank recently commented on a Senate Finance Committee legislative draft proposing a Medicare Drug Shortage Prevention and Mitigation Program (“Shortage Program”) and an exemption from Medicaid inflation rebates for multisource generics.

In their comment letter, Wosińska and Frank commend the Committee for building a strong foundation for increasing reliability of supply for generic sterile injectable drugs, which the Committee does by promoting long-term committed contracts and proactively addressing the Medicaid inflation rebates that would limit the Shortage Program effectiveness. However, Wosińska and Frank are concerned that paying providers for meeting specific contracting standards will fail to ensure that providers secure reliable drug supplies because reliability is not explicitly addressed by Shortage Program standards. They are also concerned that the program’s complexity will produce large compliance costs, discouraging program uptake and limiting the intended payment passthrough to manufacturers.

To address these concerns, Wosińska and Frank propose policymakers directly encourage reliability by retrospectively assessing whether the long-term contracts under the program result in timely delivery of drugs. By scoring program participants and then allowing resulting bonus payments to flow automatically to healthcare providers, policymakers can minimize participation burden on providers. 

Wosińska and Frank also discuss the importance of addressing two complementary policies: Medicaid inflation rebates and the Drug Enforcement Agency (DEA) quota system. As part of that discussion, they propose adjustments to the Medicaid inflation rebate proposal and propose that the DEA quota and buffer inventory regulations also be aligned with the Shortage Program.

Read the full comment letter here.