Drug prices go up when needed most
Our expert's opinion
"The law of Supply and Demand is a known theory. When the demand is increasing and the supply can’t follow, the prices go up (because the products are scarcer). This is called a shortage. It is especially troublesome in the pharma industry and the hospital environment, where a shortage of some commonly used drug is a big issue. Certainly, when the alternatives for these drugs are even more expensive. On top of that, and for no apparent reasons, the prices are increasing way more than they should.
In the healthcare sector, drugs have the prices that are increasing the most in the US. Hospitals are even saying that they spend more on drugs than on actual care. There is no cap to control the market right now but the Trump Administration is actively working on solutions. I think that these are the times when we can be glad to live in Europe where price regulation exists for this sector in most EU countries."
- Antoine Desprez, Associate Consultant
A new report says pharma companies increased drug prices by nearly double during shortages — and it highlights the biggest debate in healthcare today
- Drug shortages are a constant worry for the US healthcare system.
- Researchers looked at prices of drugs under shortage from 2015 to 2016 and found that manufacturers increased their prices almost double the expected rate in absence of a shortage.
- Though no clear reasoning was found behind the price increases, researchers suspect that manufacturers opportunistically priced these drugs due to high demand.
Drug shortages are a constant problem burdening the US healthcare system.
Earlier this year, hospitals starting running out of epidurals, typically administered to women when they give birth. That's adding to the aftermath of last year's Hurricane Maria, which disrupted the supply of saline and other intravenous fluids.
A new study published by researchers from the University of Pittsburgh School of Pharmacy, UPMC Health Plan and Harvard Medical School in Annals of Internal Medicine found that on average the prices of drugs increased more than twice their usual rate.
No clear reasoning was found behind why the prices increased so drastically, but researchers suspect that manufacturers were exploiting shortages to charge more for drugs in high demand. The study also found that that prices rose even faster for drugs where there was less competition.
To conduct the study, researchers looked at prices for 917 drugs under shortage between 2015 and 2016 using the FDA's shortage database.
Prescription drug shortages can cause health systems to use less effective drugs as substitutions or reduce doses and reserve supply for only those in emergent need. They can rack up an estimated $230 million in additional costs each year, according to the study. This includes the rising prices of drugs under shortage and the higher costs of alternatives.
Dr. William Shrank, an author on the study, said there was no obvious rationale behind the price hikes. Unless there are serious issues with the material or production facility that requires higher costs, Shrank thinks that there should be a cap to control the pricing on these drugs.
"It's really a central, if not the central, public healthcare policy that we're dealing with today," he said. "The price of drugs is rising faster than all other sectors of the healthcare economy, and we're spending more on drugs than we are on hospital care. It's a bipartisan issue that we're all looking to address and tackle."
The issue of high drug prices has been at the center of the Trump Administration's healthcare agenda, ever since President Donald Trump said last year that pharmaceutical companies are “getting away with murder” in terms of what they charge for medicine. The administration laid out a blueprint in May specifically to tackle drug pricing.
Source: Business Insider UK