Drug shortages lead to higher prices, trouble filling prescriptions
Data showed a 16.6% increase in the price of drugs in shortage, driven mostly by an increase in the price of generics.
Photo: Willie B. Thomas/Getty Images
Shortages of prescription drugs can lead to higher drug prices and impact consumer's ability to fill their prescriptions, but there are steps that can be taken to avoid these issues, according to a new report by the office of the Assistant Secretary for Planning and Evaluation (ASPE) and the RAND Corporation.
Drug shortages impact consumer costs in various ways, ASPE found. Consumers may incur increased costs in the form of higher out-of-pocket costs, higher insurance premiums and adverse health outcomes as a result of a drug shortage. Healthcare systems also incur costs to manage or mitigate drug shortages.
Using an extract from the Food and Drug Administration drug shortage database linked to 2016-2020 national prescription sales data from IQVIA, the report found that drug shortages can impact consumers through reduced sales and/or increased prices.
The average drug shortage affects at least a half a million consumers; more than two thirds of those impacted were consumers ages 65 to 85 (32%), 55 to 64 (24%) and 45 to 54 (17%).
Consumers may run into roadblocks trying to get their prescriptions filled. After a shortage, there was an observed decline in sales volume of between 28% and 35% compared to the year before the drug entered a shortage. The reduction in volume of generic drug fills was larger (median of 37.6%) compared to brand-name drugs experiencing a shortage (median of 30.4%).
As for drug prices, an analysis of the data showed a 16.6% increase in the price of drugs in shortage, driven mostly by an increase in the price of generics (14.6%). In some cases, the increase in the price of substitute drugs was at least three times higher than the price increase of the drug in shortage.
WHAT'S THE IMPACT?
Various means of addressing the issue already exist, facilitated by a number of actions, such as Executive Order 13588 on Reducing Prescription Drug Shortages from 2011; the enactment of the Food and Drug Administration Safety and Innovation Act in 2012; the Further Consolidated Appropriations (CREATES) Act of 2020; the Coronavirus Aid, Relief, and Economic Security Act of 2020; and the Inflation Reduction Act (IRA) of 2022.
Through these levers, it's possible to require manufacturers of certain drugs and active pharmaceutical ingredients (APIs) to notify the FDA and provide information on permanent discontinuation of manufacturing, and interruptions in manufacturing, that are likely to lead to meaningful disruption in supply in the U.S.
Additional measures include requiring the FDA to prioritize and expedite the review of certain applications and inspections, as appropriate; requiring manufacturers of certain drugs or of any API or any associated medical devices used for preparation or administration included in those drugs to develop, maintain, and implement a redundancy risk management plan; and requiring registrants of drug establishments to report annually on the amount of each listed drug that they manufactured, propagated, compounded or processed for commercial distribution.
In addition, the FDA has taken a number of steps to prevent or mitigate shortages, including working with manufacturers willing and able to increase production of certain drugs in shortage; expediting inspections and reviews of submissions to increase supply of products in shortage; reviewing requests for extensions of expiration dating, as well as working with manufacturers to determine whether there's data to support extending expiration dates of certain drugs in shortage; exercising temporary regulatory flexibility for sources of medically necessary drugs; and issuing emergency use authorizations under a public health emergency for certain therapeutic treatments and patients.
ASPE researchers noted that the Centers for Medicare and Medicaid Services is working to implement new IRA authorities that allow the secretary to negotiate prices for certain high expenditure, single source Medicare Part B or Part D drugs, lower the cost for insulin, and cap out-of-pocket costs under Medicare Part D prescription drug coverage at $2,000 per year by 2025.
"The new authorities would disincentivize price increases of some alternative treatments by requiring manufacturers to pay a rebate to the government when manufacturers increase the price for covered drugs faster than the rate of inflation," authors wrote.
The IRA would provide financial relief to certain manufacturers of drugs affected by shortages or supply chain disruptions by reducing or waiving rebate amounts.
THE LARGER TREND
A 2019 Vizient survey found that, on average, hospitals dedicate more than 8.6 million hours of additional labor hours annually to manage drug shortages.
The financial impact adds up to just under $360 million annually in labor costs for time spent seeking supply and implementing mitigation strategies that enable continuity of patient care.
The survey also showed that 100% of responding facilities have experienced shortages, with nearly two-thirds of respondents reporting that they had managed at least 20 shortages in the six-month period from July through December 2018.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
