Senators float Medicare program that would offer incentive payments to combat drug shortages

As U.S. drug shortages run rampant, lawmakers are getting creative with their attempts to ease the situation.

In a recent draft proposal, lawmakers from the Senate Finance Committee introduced a new voluntary Medicare program that could bolster purchasing patterns by offering incentive payments to various players in the healthcare ecosystem.

The proposal (PDF), which committee Chair Ron Wyden, D-Oregon, and ranking member Mike Crapo, R-Idaho, furnished on Wednesday, lays out requirements for hospitals and physicians to receive monetary incentives for securing a more sustainable supply of essential medicines.

If enacted, participants across the supply chain would have to meet new standards that aim to address the various factors playing into the current shortages in order to get the Medicare incentive payments.

The proposed rules include three-year minimum contracts with manufacturers for generics at a high risk of shortage and greater purchase volume commitments plus contingency contracts with alternative suppliers.

The framework would begin in 2027, with those participating eligible for quarterly-lump sum payments and the opportunity for bonuses.

In addition to providers and group purchasing organizations, generic drug makers could become eligible suppliers by opting into manufacturer reliability agreements.

“Our bipartisan discussion draft would take meaningful strides toward mitigating and preventing prescription drug shortages, ensuring that patients can receive the care they need, when they need it,” Crapo said in a release. “We look forward to working with other members, experts and stakeholders on addressing these life-threatening challenges and promoting consistent, cost-effective health care for Americans nationwide.”

According to the American Society of Health-System Pharmacists (ASHP), U.S. drug shortages recently hit a new high. More than 300 medicines were in short supply as of 2024’s first quarter, representing for the highest amount since ASHP started tracking shortage data in 2001.

Generic drugs make up most of the shortages, with copycat injectables making up an estimated two-thirds of all shortages, the senators said. The Medicare program would start with a focus on generic sterile injectables and infusions such as chemotherapies.

The recent proposal answers similar calls from groups such as the American Society of Clinical Oncology (ASCO).

Earlier this year, in a prepared testimony for a congressional hearing, ASCO’s chief medical officer Julie Gralow, M.D., suggested lawmakers should implement incentives to boost U.S. manufacturing and consider alternative payment methods to relieve “artificially low” reimbursement rates on generic meds.