AAPS Requests Amendment to S. 1227 — Urges FTC Investigation of GPO Abuse of Anti-Kickback Safe Harbor

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August 21, 2019

The Honorable Charles Grassley
Chairman, United States Senate Committee on Finance
219 Dirksen Senate Office Building
Washington DC, 20510

Dear Chairman Grassley:

We are grateful for your work to find market-based solutions to lower the cost to patients and taxpayers of medical care and medications.

Thank you for introducing S. 1227, the Prescription Pricing for the People Act of 2019 directing the Federal Trade Commission to investigate the middlemen who are driving up costs without adding value. The Association of American Physicians and Surgeons (AAPS) supports this bill, but we are writing to ask you to consider making one change.

Although you mentioned Group Purchasing Organizations (GPOs) in the Chairman’s comments about the bill, as we currently read S. 1227 it does not expressly require an investigation into the activities of Group Purchasing Organizations (GPOs).  We respectfully ask that you consider amending the bill to specifically name GPOs as entities that the FTC is charged with investigating.

In our view, GPO abuse of the rebate safe harbor they were granted to the Medicare anti-kickback statute is an under-appreciated culprit increasing the cost of critical drugs and medical supplies used in hospital settings, while simultaneously causing or exacerbating shortages.

While the impact on prices caused by Pharmacy Benefits Managers is now on Congress’ radar screen, the harmful impact of GPOs has been all but ignored. This may be because patients do not see the direct effect. However anesthesiologists and emergency room physicians know all too well how the anti-competitive actions of these middlemen are putting patients’ lives at risk. They have been compelled to use drugs that may not be ideal for the patient, adding unnecessary challenges to delivering quality patient care. 

It is unacceptable for the United States to be in short supply of saline and common anesthesia and emergency room drugs for any reason. It is particularly shameful when the shortages are caused by those who abuse the shield of government protection from market forces and laws that would otherwise curb their harmful actions.

Thank you for considering our request and please do not hesitate to reach out to us anytime for further discussion.

Sincerely,

Marilyn M. Singleton, M.D., J.D.
President, Association of American Physicians & Surgeons