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Drug prices rise twice as fast during shortages
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During a shortage, drug prices increase two times as quickly as they would have in the absence of a shortage, according to findings published in Annals of Internal Medicine.
“Prescription drug shortages may result in substitution of less effective drugs, delays in necessary treatments, and omission of or reductions in doses,” Inmaculada Hernandez, PharmD, PhD, from the University of Pittsburgh School of Pharmacy, and colleagues wrote. “These shortages cause an estimated $230 million in additional costs each year because of the rising prices of drugs under shortage and the higher costs of substitute drugs.”
Hernandez and colleagues evaluated the relationship between price changes and drug shortages and how the number of manufacturers that supply each drug affects price changes.
The researchers identified 917 drugs with an active shortage between December 2015 and December 2016 and obtained their generic names, National Drug Code (NDC) numbers and shortage start dates using the FDA drug shortages database. They also obtained wholesale acquisition costs for each NDC number for the first month of the shortage and the preceding and following 12 months using pricing data from AnalySource (First Databank) between 2005 and 2016.
After excluding drugs with unavailable shortage start dates or wholesale acquisition costs, the final sample included 617 NDC numbers for 90 drug products.
Data indicated that there was a 7.3% increase in the prices of all drugs in the 11 months before the shortage began and a 16% increase in the 11 months after. Drugs supplied by three or fewer manufacturers had price increases of 12.1% in the 11 months before the shortage began and 27.4% in the 11 months after. Drugs supplied by more than three manufacturers had price increases of 2.5% in the 11 months before the shortage began and 4.8% in the 11 months after.
The shortage impacted the prices of drugs supplied by three or fewer manufacturers more so than those supplied by more than three manufacturers.
For all drugs, the expected price increase was 20% in the 11 months after the shortage started and 9% in the 11 months before. Expected price increases were 13 percentage points higher for drugs supplied by three or fewer manufacturers that were under shortages than those not under shortage and 8 percentage points higher for drugs supplied by more than three manufacturers under shortages.
These results suggest that drug prices rose two times as quickly than expected during shortages, Hernandez told Healio Internal Medicine.
“These increased prices may create access problems for patients who are uninsured or underinsured,” she said. “Our findings suggest that manufacturers take advantage of the mismatch in supply and demand, and price their products opportunistically. It would be challenging to argue that the higher prices somehow indicate that the drugs are more valuable to patients after a shortage.”
Hernandez said that the causes of drug shortages and whether they affect trends in pricing must be evaluated in future research.
“More importantly, policymakers should recognize drug shortages as a public health concern that demands attention and action,” she said. “With political leaders on both sides of the aisle agreeing that rising drug prices need to be addressed, drugs on shortage could be a place to start with. Specifically, one policy solution could be to limit the amount that public payers pay for drugs under shortage, limiting price increases to those predicted without shortages.”
Health care providers should consider out-of-pocket cost exposure for patients requiring medications with limited supply due to shortage because they may be considerably more expensive, she noted. – by Alaina Tedesco
Disclosures: Hernandez reports no relevant financial disclosures. Please see study for all other authors’ relevant financial disclosures.
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