April 25th, 2024
Stat recently published an article co-authored by James Rebitzer, Professor in Markets, Public Policy, and Law, discussing the challenges facing the generic drug market.
It is not only due to group purchasing organizations’ (GPSOs) pricing power that generic drugs suffer from shortages and quality problems. Market dynamics and common-agency problems play significant roles in these challenges.
“GPO pricing power alone should not lead to persistent shortages, even if it does enable the GPO to force generic manufacturers to sell at low prices. An alternative explanation for persistent shortages highlights the incentives for group purchasing organizations to ensure adequate supply,” the article adds.
To address these challenges, experts suggest government intervention, involvement from non-governmental organizations, and involvement of large private players.
