The generic drug trade group Association for Accessible Medicines (AAM) is urging the Federal Trade Commission and the Department of Justice to issue a new guideline that limits group purchasing organization (GPO) market share to 20% and ban certain contract terms, like failure-to-supply drugs or most favored nation provisions. The organization says such policies make it harder for generic drug suppliers to secure sustainable contracts.
The move comes after FTC and HHS launched an investigation in February into whether the business practices of pharmaceutical chain middlemen like GPOs and wholesalers are contributing to drug shortages. AAM responded Thursday (May 30) to the agencies’ request for information . The generic drug lobby has raised concerns three wholesalers are controlling 70% of the purchasing of generic drugs for most hospitals, which they say makes it harder for generic drug makers to secure sustainable prices and leads them to ultimately exit the market, contributing to the drug shortage crisis.
FTC's guidance from 1996 allows a GPO to control up to 35% of the market without being considered monopolistic, but DOJ canceled this policy in 2023, saying it was too lenient and didn't reflect the current health care market. AAM asks FTC to reduce GPOs’ market share limit to 20% rather than the previous 35% where only three GPOs controlled 70% of the market. If a GPO controls market share above 20%, it should have to justify it to FTC to avoid antirust action, according to AAM.
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