Drug Shortage Proposal Does Not Violate Antitrust Guidelines

A draft agreement that aims to relieve drug shortages by making it easier for the drugs to come to market is unlikely to harm competition, according to a Federal Trade Commission (FTC) advisory opinion issued August 8, 2012. The opinion comes in response to a Generic Pharmaceutical Association (GPhA) request on its Accelerated Recovery Initiative (ARI) proposal, which was created to help the FDA respond to shortages of important medicines.

More than 80% of the drugs on the FDA’s drug shortage list are injectable generic medications, including oncology drugs, anesthetics, and rheumatology medications. A report issued in July 2012 by the House of Representatives Committee on Oversight and Government Reform named increased FDA regulatory actions as a source of the drug shortages. The actions led to the near simultaneous shutdown of 4 generic drug manufacturers, it noted.

The shortages, however, stem from manufacturing and quality concerns, including bacterial contamination, glass shards in medication vials, and other issues, according to the FDA.

A critical part of the ARI proposal is an agreement among competing pharmaceutical manufacturers to compile sensitive product information from firms that manufacture drugs that are in short supply. Sharing the information— which includes present and future production output—raises antitrust concerns, prompting the GPhA’s request for analysis.

“Based on the information GPhA has provided, it appears that the proposed ARI program is not likely to harm competition,” Markus H. Meier, assistant director of the health care division of the FTC, said in a letter announcing the decision. “Although the manufacturer data that the GPhA proposes to collect is competitively sensitive and the ARI would raise substantial antitrust concerns if this information were shared with competitors, the proposed program includes many safeguards designed to insure that such sharing does not occur.”

The safeguards include using an independent third party, IMS Health Incorporated, to collect and transmit data to the FDA, according to Meier’s letter. IMS Health would combine the data with market data it already collects to predict drug shortages. The report would then be submitted to the FDA exclusively.

Access to the information within IMS Health would also be limited, to ensure that it is not included in parts of IMS’s business. In addition, generic and branded pharmaceutical firms participating in the ARI program would be required to comply with specific confidentiality rules, antitrust guidelines, and rules governing the ARI process, the letter stated.

“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,” Ralph G. Neas, president and chief executive office of GPhA, said. “The ARI will enhance our ability to minimize the drug shortages currently afflicting health care professional and patients and potentially prevent future ones from occurring.”