Drug shortages may add $230 million to annual U.S. drug costs

(Reuters Health) – Prescription drug shortages may drive up prices twice as much as they would rise with medicines in abundant supply, adding $230 million a year to U.S. drug costs, a new study estimates.

Researchers examined data on 90 medications involved in shortages between December 2015 and December 2016. They compared average wholesale drug prices for 11 months before and after shortages began, and they also looked at a decade of historical price increases.

Over the 11 months preceding shortages, prices for the drugs rose an average of 7.3 percent, researchers report in the Annals of Internal Medicine. In the 11 months afterward, prices surged 16 percent on average.

“Patients exposed to out-of-pocket costs should be aware that medications may become more expensive when there is a shortage,” said lead study author Inmaculada Hernandez of the University of Pittsburgh School of Pharmacy.

Sometimes, patients who lack insurance or have bare-bones drug benefits may be able to switch to a similar drug unaffected by shortages, Hernandez said by email. But this won’t always be an option.

“The possibility of switching to alternative therapies is dependent on the medication affected, and the disease that patients take it for,” Hernandez said.

While researchers couldn’t assess the reasons behind the price increases, they did find a difference based on how many manufacturers made drugs in short supply.

When drugs were made by three or fewer companies, prices rose by an average of 12.1 percent over the 11 months preceding a shortage and by an average of 24.7 percent over the 11 months afterward, the analysis found.

By contrast, when at least four manufacturers sold the same drug, prices rose by an average of 2.5 percent over the 11 months preceding a shortage and by an average of 4.8 percent afterward.

In the 11 months after the shortage began, the expected price increase for all drugs was 20 percent compared with nine percent in the absence of a shortage, researchers calculated.

Data for the drug shortages came from U.S. Food and Drug Administration (FDA), and data on pricing came from AnalySource.

One limitation of the study is that wholesale prices don’t always reflect the final price after rebates from the manufacturers or discounts negotiated by purchasers.

Still, the findings highlight a serious public health problem that results when people can’t access or afford medications they need, said Stacie Dusetzina, a researcher at Vanderbilt University School of Medicine in Nashville, Tennessee, who wasn’t involved in the study.

“This is really a very simple case of supply and demand – if the supply is low and demand is high, the price goes up,” Dusetzina said by email.

“Some of these increases will be picked up by insurance but if patients are paying deductibles (the amount you pay before your insurance kicks in) or if they are required to pay a percentage of the price (a coinsurance) they could see their out-of-pocket spending increase,” Dusetzina added. “For patients who are uninsured, they would have to pay the full price.”

SOURCE: bit.ly/2QJ4LxD Annals of Internal Medicine, online September 17, 2018.