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Senator Urges FTC to Examine Link Between Drug Shortages, Pharma Consolidation

John Commins, for HealthLeaders Media, May 23, 2011

A critical shortage of drugs, especially chemotherapy and pain relief medications, is endangering patient safety and costing hospitals an estimated $200 million per year as they scramble to procure substitutes, often at higher prices.

Now Sen. Herb Kohl (D-WI) wants the Federal Trade Commission to examine the impact that consolidation in the pharmaceutical industry may be having on the nation's drug supply.

Kohl said in a letter to FTC Chairman Jonathan Leibowitz that he was prompted to make the request after fielding numerous complaints from healthcare providers about widespread drugs shortages. Kohl is chairman of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, which oversees the FTC.

"As you know, pharmaceutical industry consolidation in recent years has left fewer manufacturers for both branded and generic drugs," Kohl said in his letter. "There have been at least nine major pharmaceutical mergers since 2000, most of them valued at over $40 billion each. Just two years ago, in 2009, for example, there were three major mergers – the $68 billion Pfizer/Wyeth merger, the $ 41 billion Merck/Schering Plough merger, and the $47 billion Roche/Genetech merger. And just a few weeks ago, two of the leading generic drug companies, Teva and Cephalon, announced their intention to merge, a transaction valued at $7.5 billion. The impact of this consolidation may be having a serious effect on the availability of prescription drugs."

Roslyne Schulman, director for Policy Development at the American Hospital Association, told HealthLeaders Media that healthcare providers have been dealing with drug shortages for years, but that the problem has grown considerably in the last year or so. "It's a huge and growing issue. As the Senator mentioned, the number of shortages is unprecedented and it's affecting the ability of hospitals to provide care. They sometimes don't find out about a shortage until they try to place an order and they're told there is a backlog, with no idea when the shortage will be resolved," she says.

Schulman says the biggest shortages are linked to "the old standby generic drugs, many of them are what are referred to as sterile injectable drugs." Those are the biggest issue with regard to shortages now. A couple of generic manufacturers have been working with this coalition. They have been part of the discussion, looking at potential solutions.

Karl Uhlendorf, the deputy vice president of the Pharmaceutical Research and Manufacturers of America, said in a statement that "myriad factors contribute to drug shortages, including natural disasters; shifts in clinical practices; wholesaler and pharmacy inventory practices; raw material shortages; changes in hospital and pharmacy contractual relationships with suppliers and wholesalers; adherence to distribution protocols mandated by the Food and Drug Administration; individual company decisions to discontinue specific medicines; manufacturing challenges and consolidations.

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