Industry Program Aimed at Preventing Drug Shortages Obtains FTC Approval

Posted 09 August 2012 | By Alexander Gaffney, RAC 

The Federal Trade Commission (FTC) has announced its approval of a proposed plan by the generic pharmaceutical industry to alleviate and hopefully prevent future drug shortages, saying safeguards built into the plan, "Make it unlikely to harm competition."

Unlike the US Food and Drug Administration (FDA), FTC is only concerned about the plan's effect on trade-not the quality or safety of a pharmaceutical product.

FTC said it was responding to a letter from the Generic Pharmaceutical Association asking it to assess the legality of its December 2011 plan, dubbed the "Accelerated Recovery Initiative." The plan called for an, "Unprecedented, multi-stakeholder initiative" involving a third-party stakeholder charged with collecting supply availability information from companies. GPhA said the information would be used to identify supply gaps and coordinate with a response team to be formed within FDA to respond to the shortages.

Because companies would be sharing supply availability information, the plan could potentially violate anti-competitive provisions in federal law aimed at preventing price collusion between companies.

FTC Says Safeguards are Sufficient

An 8 August letter from Markus Meier, assistant director of FTC, said safeguards built into the system by GPhA were likely to avoid allowing the "sensitive" information to be leaked and aid in collusive practices. The key to this program, writes Meier, is the collection of information by a third party-as opposed to GPhA itself-as the venue for information sharing.

"For these reasons, the Bureau of Competition has no present intention to recommend an enforcement action to challenge GPhA's proposed ARI program if it is implemented as described and the safeguards are adhered to in practice," Meier wrote.

The program is a relatively rare example-outside of marketing violations-of the FTC being involved in life science regulatory matters. Though the plan would still require FDA support to come into effect the way GPhA envisions, the clearance by FTC allows the plan to move forward without the threat of legal action by the agency.

'A Critical Step Forward'

In a statement, GPhA said it was pleased with the approval, which it called a "critical step forward in addressing the shortages of needed medicines in our country."

"While this remains a complex issue that cannot be solved overnight, this type of private-public sector, multi-stakeholder collaboration is exactly what is required to respond to this crisis," GPhA President Ralph Neas said.

The issue of drug shortages has been a high-profile one at FDA, the White House and Congress during the past year, with all three groups instituting a number of plans to combat rising shortages of essential drugs. Among the many factors blamed for the shortages: outdated Medicare reimbursement prices, FDA warning letters, manufacturing deficiencies, shortages of active pharmaceutical ingredients used to manufacture the drugs, contamination and quality problems, insufficient profit margins and gray market suppliers.

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