On Wednesday, the Federal Trade Commission and the Department of Health and Human Services announced an investigation into the causes of generic drug shortages and the practices of the “powerful middlemen” involved in the supply chain. This inquiry aims to look into the role played by group purchasing organizations and drug distributors, which have been in the spotlight recently as generic drug shortages have reached a 10-year peak.

The Agencies wish to examine the influence of companies on drug sales to health facilities, assessing if middlemen pressure pricing and manufacturing causing breakdowns.

During the congressional hearings held in the past year, several oncology experts testified about the adverse effects of the shortage of generic drug. They explained the challenging decisions that they had to make, which involved rationing essential chemotherapy drugs. The experts also revealed that there were gaps in the supply of these drugs that lasted for weeks or even months, which posed deadly risks for some patients.

The Executives in the generic drug industry have expressed increasing concern over their dependence on three major group purchasing organizations for contracts to sell medications to hospitals and healthcare centers. These executives have reported that their companies sometimes offer prices below the market value to win major contracts, which has led to instability in the industry. This is particularly true for makers of sterile injectable products that are often used in surgical and cancer care.