Hims & Hers Health has capitalized on the weight-loss drug shortage by offering cheaper alternatives to popular medications like Wegovy and Zepbound. However, their business model faces potential regulatory hurdles as supply chains stabilize and pharmaceutical companies ramp up production. This shift in the market raises questions about the future of affordable weight-loss options and the evolving landscape of drug distribution and regulation.
The Hatch-Waxman Act revolutionized the generic drug market, significantly reducing healthcare costs. However, the very success of generic drugs has led to shortages due to low prices, making production and quality assurance economically unfeasible. Group purchasing organizations (GPOs) have been blamed for driving prices down, but economists argue that their pricing power alone cannot fully explain the persistent shortages. The issue stems from the ‘common agency problem,’ where individual GPOs have insufficient incentives to ensure adequate supply because the benefits of their actions spill over to competitors. Government action and non-governmental initiatives are needed to address this market failure, such as subsidies for shortage-prone drugs, hospital reserves, and quality monitoring.
The European Commission and Belgian Presidency have established a Critical Medicines Alliance to tackle vulnerabilities in the EU’s drug supply chain. Amidst recurring shortages of essential medications, the Alliance aims to enhance supply chain resilience and diversification. Collaboration with stakeholders, including industry, healthcare professionals, and patient groups, will guide the Alliance’s efforts to strengthen manufacturing capacities, identify critical medicines, and develop partnerships with third countries. The Alliance’s work is expected to inform the development of potential future legislation, similar to the European Raw Materials Act and European Chips Act.
Drug shortages are at an all-time high, and while the White House has rolled out a plan to reduce future shortages, it ignores the main cause: the variable quality of America’s generic drug supply, much of which is imported from overseas. The plan does not encourage or require US wholesalers and pharmacy benefits managers to source generic drugs from manufacturers that consistently produce high-quality products.
