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Bill proposes Paying Hospitals for Maintaining Drug Stockpiles

A Senate committee drafted a measure in response to an HHS proposal that would reward hospitals and other healthcare supply chain participants for their stockpile-related and other medication shortage mitigation efforts.

The Senate Committee on Finance said in a press release on May 3 that the proposal, known as the Drug Shortage Prevention and Mitigation Act, would establish a government program that provides financial incentives to hospitals with “transparent, reliable, and resilient purchasing practices.”

According to the release, hospitals and doctors would then provide incentives to other businesses, such as drug manufacturers and group purchasing groups, to get high-quality medications. 

Hospitals would need to have minimum three-year contracts with generic drug manufacturers that outline high shortage risks, as well as “meaningful purchase volume commitments and stable pricing,” emergency contracts with alternative manufacturers, and transparency into the pharmaceutical supply chain, in order to be eligible for the program. Additionally, the scheme would outlaw provider exclusivity agreements.

The law rewords policy recommendations given by HHS in early April, which called for initiatives that would assign hospitals and pharmaceutical companies a medication supply dependability ranking. Though they acknowledged that the plan was in part acceptable, the American Society of Health-System Pharmacists stated that it “misses the mark by suggesting penalties against hospitals that do not adopt HHS-required inventory and purchasing practices.”

The committee’s bill specifies financial penalties for organizations that disregard the guidelines of the program. 

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