Evaluating Legislative Measures to Reform Healthcare Purchasing Practices and Reduce Drug Shortages in the U.S.

Group Purchasing Organizations (GPOs) are groups that work for healthcare providers, mainly hospitals, to get supplies and drugs at cheaper prices. They have a big say in hospital buying and control more than $250 billion of hospital purchases each year. The top three GPOs cover about 90% of this market.

GPOs try to lower costs by using their buying power. But their focus on getting the lowest price, especially for generic drugs, can cause problems. Drug makers may earn less money and some may stop making those drugs. This can lead to shortages of important medicines.

One recent example is the shortage of liquid albuterol, a drug used to treat asthma attacks. When Akorn Pharma, a main supplier, closed, only one U.S. manufacturer was left. This showed how fragile the drug supply can be when there are few producers and GPO rules favor low costs.

Healthcare managers should know that while GPOs help cut costs at first, their methods sometimes hurt drug makers’ stability. This can cause drug shortages. When drugs run out, hospitals must spend more time and money to find substitutes and handle extra work.

Drug Shortages: Impact on Healthcare Operations and Patient Care

Drug shortages affect what hospitals and clinics do every day. When a needed drug is not available, staff must find another option. This takes time and effort. Pharmacists, doctors, nurses, and administrators have to work together. This raises their workload and can cause delays.

The American Hospital Association (AHA), which represents many hospitals and healthcare workers, says dealing with drug changes costs hospitals at least $359 million each year in extra labor. This shows shortages strain both patient care and hospital budgets.

Shortages can also lead to mistakes. Staff might use drugs they don’t know well, or doses might be confusing. Patients can get delayed treatment, which is risky in places like cancer care or intensive care where special drugs are needed.

Hospital and IT managers should know shortages affect more than just the pharmacy. The whole system must work together to manage risks and costs caused by missing drugs.

Legislative Attempts to Address Drug Shortages and Pricing

New laws and proposals are being made to fix drug shortages and lower costs. One bill, the “Drug Shortage Prevention and Mitigation Act,” focuses on generic sterile injectable drugs. It includes ideas like:

• Paying hospitals through Medicare to sign long-term contracts with drug makers.
• Setting up backup drug stocks in the private sector to handle supply problems.
• Making drug makers tell regulators where they make drugs and warn about demand surges.
• Agreements to make drugmakers keep quality and supply promises.

The AHA supports these changes but wants some rules fixed, especially about the 340B Drug Pricing Program. This program gives discounts to hospitals that serve poor communities. The bill’s rules might stop 340B hospitals from getting discounts when they join Medicare drug shortage programs, which could raise costs for them. The AHA suggests changing these parts to protect patient care access.

Another focus is negotiating drug prices. The Inflation Reduction Act helped start Medicare drug price talks that may save $6 billion by cutting prices 38% to 79% for some drugs in 2026. If price talks expand to more drugs and programs like Medicaid, savings could exceed $1 trillion in 10 years.

Still, some problems remain:

• The Medicaid Generics Penalty limits price increases on cheap generics, which stops some companies from investing.
• GPOs have legal protection that keeps them safe from penalties, even if their buying hurts competition.
• Not enough clear information and weak rules make it hard to spot shortages early.

Healthcare leaders should keep up with these laws as they affect buying policies, payments, and supply chains.

Pricing Pressures and Market Dynamics

Drug costs have gone up steadily in the U.S. In 2023, drug spending hit $722.5 billion, a 13.6% rise from the year before. Drug prices in the U.S. are almost three times higher than in similar countries. High costs cause many people to not take medicines as prescribed. A poll found that 3 out of 10 adults skipped meds because of price.

The system involves many middlemen like Pharmacy Benefit Managers (PBMs). They affect prices through rebates and discounts. But the way these deals happen is not clear, which raises worries about extra fees and high prices.

Experts say we should make the process simpler. They want more electronic prior approvals and a clear quality rating for generic drugs. This can stop poor-quality drugs and reduce shortages caused by cheap production.

IT managers in healthcare need systems that handle changing drug lists, real-time prices, and work smoothly with electronic health records. Good, updated data helps balance cost and care quality.

AI Integration and Workflow Automation in Healthcare Purchasing and Drug Supply Management

Artificial intelligence (AI) and automation can help with drug buying, shortages, and costs. For healthcare managers and IT staff, using AI tools can improve office work and supply chain jobs. This can make things faster and cut errors.

Automated Communication Systems

AI phone systems can help hospitals, suppliers, and providers talk better. They answer calls about drug orders and stock quickly. This lets staff spend time on more important tasks. These systems reduce wait times and avoid delays.

Inventory Prediction and Demand Forecasting

AI can study past buying patterns, prescriptions, and events like outbreaks to guess drug needs. This helps hospitals get ready and reorder before running out. Automation can send alerts and start orders, lowering human mistakes.

Supply Chain Risk Assessment

Combining AI with supply chain data helps managers see where drugs come from and how suppliers perform. Automated systems track agreements and warn if problems like delays or poor quality appear. This helps choose reliable suppliers instead of just the cheapest ones.

Compliance and Contract Management

Some laws require hospitals to watch if drug makers keep quality and supply promises. AI can track contracts, reminders, and reports. This cuts down paperwork and helps hospitals follow rules without too much work.

Reducing Administrative Workflow Burdens

Electronic prior authorization saves money. AI can connect approval steps directly with pharmacies and insurers. This cuts time doctors spend on forms so they can focus on patient care and meds.

By adding AI and automation, managers can handle drug buying better, avoid supply problems, and keep up with new laws easier.

Challenges and Considerations for Healthcare Administrators

Healthcare administrators face many demands from patient care, laws, and budgets. They need to understand trends and rules about drug purchasing.

• Balancing Cost and Stability: Saving money through GPO deals must be weighed against the chance that drug makers stop supplying, causing shortages. Contracts should think about supplier trustworthiness as well as price.
• Maintaining Access in 340B Programs: Hospitals helping poor communities rely on 340B discounts. Changes in law may raise drug prices, which affects their budgets.
• Using Data for Decisions: Combining buying data with clinical info lets hospitals check if drug spending matches patient results. This helps improve care while managing costs.
• Advocating for Transparency: Hospitals should push for clearer supply chain info, like where drugs are made and early warnings about demand, to be better prepared.

Future Directions

Drug supply problems in the U.S. involve rules, markets, and healthcare systems working together. New laws could help but must be done carefully with ongoing checks.

Healthcare providers and managers need to be flexible. They should invest in technology such as AI tools that keep work running smoothly and drug supplies steady. Working together, governments, hospitals, and technology companies can make systems that lower costs and improve patient care by ensuring key medicines are available.

Medical practice managers, hospital leaders, and IT staff should keep up with changing policies and new technology. Combining laws with modern ways of working will help keep healthcare good and available in the U.S.