FDA’s Solutions to Counter Drug Shortage – Increased Drug Prices
[Thursday, October 31, 2019]
A joint government task force lead by FDA to study the causes of drug shortages found that these shortages occur primarily because the manufacturers are unable to charge higher prices for their drugs even when there is a shortage and that it takes a longer than anticipated time to catch-up once a drug is in short supply. Drug shortages create much more than a simple inconvenience for the patients who depend on a given drug in short supply, particularly if there are few alternatives to that drug. During the 5-year period of 2013-2017, 163 drugs went into shortage. Most of these drugs were very old drugs approved more than 35 years ago, about two-thirds of these drugs had generic versions, and most of these drugs were injectables. Almost all the drugs on shortage were off-patent and cheap, and many were discontinued by the manufacturers for lack of profitability. And since there decisions were business decisions, the FDA is practically helpless in addressing these. Apart from the government deciding to manufacture these cheaper drugs itself, it needs to create business incentives to encourage the manufacturers to continue manufacturing these drugs. The task force found that manufacturers were unable to charge more prices for the drugs on shortage due to contractual issues where the payors could force the manufacturers to continue selling the drugs are lower prices. Also, since many of these drugs are very old, the continue manufacturing them per the current GMP standards, the manufacturers had to upgrade their facilities and practices but lacked incentives to do that. As a solution, the task force suggested business-friendly measures. They suggested ways to allow manufacturers to charge a higher price for drugs under shortage. They also suggested that manufactures that upgrade their facilities and go above the minimum standards for cGMP, be able to charge a premium price for their products. Basically, the task force concluded that more than regulatory incentives, the government needs to create business incentives to address drug shortages. Some regulatory incentives were also proposed such as lengthening the expiration dates, increased data sharing, and risk management plans but these are considered to be of limited benefit. Without businesses being incentivized, FDA does not believe shortages can be effectively addressed.