Washington, D.C. — Subcommittee on Oversight and Investigations Chair Morgan Griffith (R-VA) delivered the following opening remarks during today’s Oversight and Investigations Subcommittee hearing titled “Examining the Root Causes of Drug Shortages: Challenges in Pharmaceutical Drug Supply Chains.”

Excerpts and highlights below:

THE SCALE OF THE PRESCRIPTION DRUG SHORTAGE

“This morning’s hearing will examine the very serious and growing problem of prescription drug shortages.

“Americans need more reliable access to life saving drugs.

“According to the American Society of Health System Pharmacists we currently have over 247 active drug shortages.

“Between 2021 and 2022 drug shortages increased by almost 30%.

“It is unbelievable that in our great country there is a shortage of drugs to treat childhood cancer and that is just one example.

“It's even more galling when you consider that most shortages are in the generic drug space where there should be competition.

“The median price of a drug in shortage between 2013 and 2017 was less than 9 dollars per treatment dose.

“Generic drugs account for 90% of all prescriptions, but only 17% of drug spending.

“Generics are perhaps the only significant segment of our healthcare industry where costs haven’t increased faster than inflation.”

ROOT CAUSES OF SHORTAGES

“The generic pharmaceutical industry is plagued with a myriad of issues leading to drug shortages.

“We have an economic environment so unappealing to manufacturers that life-saving drugs are produced by one, or at most, two companies worldwide, often at an unsustainable, artificially low price.

“There is a broad consensus that the root cause of drug shortages is a profound market failure caused by economic forces unique to the drug market.

“Middlemen such as Pharmaceutical Benefit Managers or Group Purchasing Organizations do not care to look for ways to mitigate shortages.

“By one count, for every 100 dollars spent on a generic prescription drug 44 dollars go to a middleman.

“The three largest Pharmaceutical Benefit Managers control around 80% of the commercial drug sales.

“The four largest Group Purchasing Organizations control 90 percent of the medical supply market and have massive market power.

“They could help end drug shortages by prioritizing generic drugs availability and quality.

“Instead, they use their market power to force ‘race to the bottom pricing’ without consideration for quality or availability.

“Their contracts with generic drug manufacturers consist of a ‘take it or leave it’ approach.

“Leaving the generic manufacturer, the option to either comply or lose access.”

OUR SHRINKING MANUFACTURING CAPABILITY

“Over the past 10 years, the United States has seen dozens of generic drug manufacturing facilities close. And this shortage problem isn’t limited to just closings.

“The typical generic drug has just two manufacturing facilities.

“We currently do not fully utilize the factories we have. As Professor Sardella’s notes, we only use about half of our current generic manufacturing capacity.

“We now have fewer manufacturing facilities both in the U.S. and globally and our supply chain has proven to be fragile and vulnerable to disruption.

“Forty percent of generic drugs are made at just a single facility. Thus, even the temporary shutdown of a single facility triggers a shortage.

“We are also far too dependent on foreign countries for generic drugs and active pharmaceutical ingredients, or API, especially China and India.

“Our dependence on China represents a serious national security risk.

“China’s new interpretation of its national security law may make FDA’s already anemic inspection program in that country a crime.”

THE FDA’S FAILURES

“As we are holding this hearing, FDA Commissioner Califf is appearing before our Health Subcommittee.

“All too often his agency has made drug shortages worse and left us more vulnerable.

“The FDA’s response to shortages is to allow for foreign made generics and API to come unfettered to the US market.

“The FDA claims to be focused on collecting information, but it does not effectively use the information it already has.

“We need an FDA that prioritizes applications from U.S. manufacturers and gives companies the flexibly to address shortages with resources based here.

“Solving drugs shortages is going to require an all-of-the-above approach.

“Purchasers of generic drugs must incentivize quality and reliability in generic drugs. And we must always keep in mind the human toll of drug shortages.

“I look forward to hearing from our witnesses today who are all working in innovative ways to help solve drug shortages.”