Study Shows Drugs on FDA Shortage List Are Likely to See Price Hikes
Published: Oct 08, 2018 By Alex Keown
Throughout 2018, there have been a number of drug shortages of products that are considered medically necessary. The shortage has noticeably included the EpiPen, as well as some opioid pain treatments, injectables used only in hospital settings, and penicillin.
According to a drug shortage list provided by the U.S. Food and Drug Administration (FDA), there have been more than 100 drugs that have faced shortages this year. Some have been resolved and some continue. In addition to the drugs, there have also been other shortages, such as sterile water and IV bags. While the shortage has led to some potential treatment concerns for physicians, another issue has reared its head with the shortages – price gouging.
Price gouging has certainly been known to happen during various catastrophic weather events, such as a hurricane, but it has also become more known during this summer of drug shortages.
A study published in the Annals of Internal Medicine highlights some of the problems that drug shortages bring to the healthcare system, including a rise in prices. The research, as highlighted by Business Insider, examined the prices of 917 drugs that were in shortage between 2015 and 2016.
The study, which was published by researchers from the University of Pittsburgh School of Pharmacy, UPMC Health Plan and Harvard Medical School, found that the drug 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 drug.” During that time period, the price of drugs on the shortage list increased on average by “twice their usual rate.”
According to the study data, all of the 917 drugs in the one-year sample saw at least a 7.3 percent in price in the 11 months prior to the shortage. During the shortage, those same drugs saw a 16 percent increase in price, the study said. For those drugs that only have three or fewer manufacturers, the price increases were a bit more dramatic. For the 11 months prior, the prices increased 12 percent and during the shortage, those prices increased 27.4 percent.
To combat the price hikes of drugs related to shortages, FDA Commissioner Scott Gottlieb said earlier this summer that the FDA could look for foreign drug supplies to offset some drug shortages in the United States. At the time, Gottlieb pointed to single-source drug providers who can initiate “significant price increases that close off channels of availability.” Although Gottlieb did not mention any particular company at the time, the shadow of Martin Shkreli and Turing Pharmaceuticals’ 5,000 percent Daraprim price hike hung over the announcement. Turing was the only company that manufactured Daraprim and after acquiring the medication, the company dramatically increased the price, which caused a national outcry.
Shkreli and Turing aren’t the only companies to do this. Earlier this month Nirmal Mulye, chief executive officer of Missouri-based Nostrum Pharmaceuticals, defended his company’s 400 percent price increase for its antibiotic nitrofurantoin. Nostrum raised the price from $427.74 per bottle to $2,393. Mulye said he had a “moral requirement” to make money and “to sell the drug for the highest price.”
Because of those kinds of concerns, Gottlieb said the FDA is now exploring the idea of importing foreign drugs “help meet near-term patient need in the U.S. until new competition is able to enter the domestic market.”
The United States isn’t the only place where drug shortages are becoming an issue. As the United Kingdom plans its withdrawal from the European Union, there are concerns over the stockpile of medications. Companies such as Sanofi, AstraZeneca and Novartis have said they are stockpiling drugs. U.K.-based AstraZeneca said it planned to increase its drug stockpiles by about 20 percent in preparation for Brexit.
While AstraZeneca and others plan to stockpile drugs, it’s unknown whether or not there will be any concerns regarding the costs of medications, particularly given the government pricing controls in place. As an example, in August, the U.K.’s National Institute for Health and Care Excellence (NICE) rejected Gilead Science’s CAR-T treatment Yescarta over price. Yescarta is the first CAR-T treatment in Europe to be approved for two types of aggressive non-Hodgkin Lymphoma. But in the U.K., NICE said the drug will not be supported by the nation’s publicly-funded healthcare agency.