Legislators Request Info on Link Between Drug Shortages and Increased Reliance on Compounding

Nov 19, 2012

In the wake of congressional hearings into the events leading up to an outbreak of fungal meningitis caused by contaminated compounded medicines, House Democrats have requested the Government Accountability Office (GAO) to conduct an inquiry into factors leading to an increased reliance on compounded products.

Specifically, the legislators have asked for an investigation into Group Purchasing Organizations (GPOs), entities that negotiate drug and device prices for large operations, such as hospitals.  In a letter sent to the head of the GAO, the legislators ask whether anticompetitive, exclusionary contracts between GPOs and generic drug manufacturers coupled with high fees have created a disincentive for manufacturers to produce some of the generic sterile injectables that are currently in shortage, causing hospitals and clinics to obtain them instead from compounding pharmacies.  The letter points out that the drug at the root of the meningitis outbreak, methylprednisolone acetate, is currently in shortage.

Specifically, the letter’s authors ask the GAO to investigate:

  • What impacts have contracting practices by manufacturers, GPOs, and providers had on access, competition and innovation, and pricing of devices and drugs?
  • What market factors contribute to the reliance of hospitals and other health care providers on compounding pharmacies?
  • Do drug shortages drive hospitals and other health care providers to a greater reliance on products from compounding pharmacies?
  • Do incentives in the current GPO model lead to inflated prices for drugs and devices?
  • What is known about the impact that GPO administrative fees have had on generic drug manufacturers’ financial condition, their ability to maintain and upgrade plant equipment, and their ability to maintain quality control?

In an accompanying press release, Rep. DeGette (D-CO) said, “In the drug shortage crisis of recent years, doctors and hospitals were increasingly forced to turn to compounding pharmacies like the one that caused the devastating meningitis outbreak. While we've begun to address drug shortages legislatively, it is clear we must aggressively investigate the factors that led to this deadly outbreak and determine possible remedies, so we can take steps to save patients lives.”

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