Recommended CMS Actions to Support a Reliable and Domestic Supply of Essential Medicines

The U.S. generic drug market consists of manufacturers that can supply drugs at very low prices; however, that supply is not sufficiently reliable or consistent to avoid the chronic drug shortages that have been harming patients for decades. Cost pressures also cause generic drug manufacturers to seek lower-cost locations of production outside the U.S., which can create vulnerability to geopolitical risks and other future disruptions. Effective CMS payment reforms can create sustained demand for 1) a domestically sourced supply and 2) a more reliable supply. The dual aims of domestic and reliable are related but not the same – some of the most severe past shortages have resulted from manufacturing issues in U.S. plants.
In a recent Advance Notice of Proposed Rulemaking (ANPRM), CMS sought public input on potential new payments to encourage hospitals to buy PPE and essential medicines from domestic manufacturers, intending to mitigate risks from geographic concentration of production outside the U.S. The ANPRM’s approach is a promising starting point that could lead to meaningful policy reform. Building on learnings from past efforts such as the Domestic N95 Respirator Payment Adjustment, we provide five recommendations for how CMS can advance towards a proposed and then final rule in a manner that supports a drug supply chain that is both more domestically made and more reliably available.

Read the full brief here.