Drug Shortages Drive Up Prices

Prescription drug shortages have contributed to rising drug prices, adding an estimated $230 million to overall U.S. spending on pharmaceuticals each year, according to a study published in the Annals of Internal Medicine.

The authors analyzed FDA data to identify more than 600 different varieties of 90 drugs that were involved in shortages between December 2015 and December 2016. They used pricing data from AnalySource to measure the price of each drug over a 12-month period preceding and following a shortage.

Researchers found that average prices for drugs in short supply rose by 20 percent in the 11 months after a shortage began, compared to a 9 percent increase for unaffected drugs.

The analysis also revealed that the number of manufacturers of a drug in short supply affected the change in price: When a drug was manufactured by three or fewer companies, its price rose an average of 12.1 percent in the 11 months preceding a shortage and 24.7 percent following a shortage; when a drug was produced by four or more manufacturers, prices increased by an average of 2.5 percent and 4.8 percent in the 11 months before and after a shortage, respectively.

While acknowledging a variety of reasons for dramatic price increases during drug shortages, the researchers argue that the pharmaceutical companies are partially to blame. “The results suggest manufacturers are leveraging the imbalance between demand and supply in the course of shortages and increasing prices in an opportunistic manner,” Inmaculada Hernandez, PharmD, PhD, a study co-author, told STAT News.

“If [rapid price hikes are] based on business decisions or faulty production, it seems unfair,” co-author Will Shrank, MD, added, echoing the views of Food and Drug Administration Commissioner Scott Gottlieb, MD. Earlier this year, Dr. Gottlieb placed most of the blame for shortages on manufacturing and quality issues.

Sources: STAT News, September 17, 2018; Reuters, September 21, 2018.

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