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The Healthcare Supply Chain Association (HSCA) has released an Avalere Health report, "Group Purchasing Organizations Work to Maintain Access to Product Supply for America's Health Care Providers," which found that healthcare group purchasing organizations (GPOs) play a vital role in helping their American hospital partners reduce the impact of critical drug shortages. HSCA also sent a letter to U.S. Department of Health & Human Services Secretary Kathleen Sebelius reaffirming GPO commitment to working with manufacturers, Congress and federal agencies to help ensure that hospitals have a continuous supply of life-saving drugs for the patients they serve.
"GPOs play a vital role in helping hospitals limit the impact of drug shortages and ensuring the least possible disruption to patient care by prompt and safe migration to alternative products, where possible," said the HSCA/Avalere Health drug shortages report. "GPOs help their members lessen the exposure to drug shortages by sourcing and selecting the most reliable manufacturers (and, at times, awarding alternate manufacturers) when awarding contracts."
HSCA President Curtis Rooney in his letter to Secretary Sebelius sad, "GPOs are prepared to work collaboratively with manufacturers, distributors, HHS and the FDA to ensure that our hospitals have the life-saving drugs they need for the patients they serve. The GPO mission is to contract for those products and services, including drugs, that are essential to the operation of hospitals and other healthcare facilities. Through these contract negotiations, GPOs work to obtain the best value for our members and clients- the lowest possible price for a reliable and safe supply of goods and services. Hospitals use GPO-contracted prices voluntarily-each drug purchase is ultimately made by the hospital, and most hospitals belong to more than one GPO. As a result, they have the ability to pick and choose among multiple options when purchasing these drugs, including purchasing the drugs straight from the manufacturer."
As part of the response to the drug shortage crisis, GPOs remain committed to:
- Working with manufacturers to ensure appropriate supply of products and encourage distributors to provide a pedigree of products to providers.
- Working with supplier partners to communicate product demand from provider members. By communicating this information to manufacturers in a timely fashion, manufacturers should have more advance notice about demand to assist in planning for production capacity.
- Strategizing with members and clients regarding potential access issues. Modes of communication include webinars, conferences, newsletters and electronic alerts as issues warrant.
In addition to proposing their own market-based efforts, GPOs called on all relevant industry stakeholders to support industry efforts to address the drug shortage crisis. HSCA has identified specific recommendations that aim to mitigate drug shortages by improving FDA approval processes, adopting early notification systems and public communication, and implementing market and operational efficiencies.
"GPOs negotiate vigorously on behalf of our hospital members and clients," Rooney sad in the letter to Secretary Sebellius. "Contract pricing is a constantly moving target, and drug companies regularly adjust pricing of GPO contracts based on market conditions such as manufacturing capacity, raw material availability and competitive suppliers. That means when manufacturers experience shocks to production, such as a higher input price, they have the ability to change the contracts quickly to reflect these shocks. GPOs manage thousands of price changes annually, both increases and decreases. Drug shortages are a complex challenge, and one without an easy or overnight fix. Hospitals turn to their group purchasing partners to deliver the best products at the best value, and we look forward to collaborating with healthcare stakeholders to address the shortage crisis and to protecting the continuous, uninterrupted supply of vital medications. The GPO industry supports the recent regulatory and legislative activities aimed at solving the drug shortage problems. As an industry, we are committed to mitigating this public health crisis."
HSCA recently applauded the Generic Pharmaceutical Association (GPhA) for proposing the creation of the Accelerated Recovery Initiative (ARI), a collaborative and innovative private-sector solution to the problem of drug shortages. ARI will bring together all healthcare supply chain stakeholders through a third-party entity. This independent entity will gather current and future product supply information; use the information to identify existing and potential supply gaps, focusing on products with an expected shortage time of longer than 90 days; and involve a high-level "SWAT" team within the FDA to quickly respond to shortages.
For the complete HSCA/Avalere Health report, visit: http://www.supplychainassociation.org/resource/resmgr/GPO_Drug_Shortage_Paper.pdf
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