Prescription drug supply shortages fuel price hikes, new research shows

The New England Journal of Medicine reported that supply chain disruptions lead to drug price hikes.

According to research published by the New England Journal of Medicine and reported by the Wall Street Journal, shortages of prescription drug supplies in the U.S. in recent years resulted in price increases for some drugs.

In 2014 and 2015, a shortfall of the bladder-cancer drug BCG triggered a sharp increase in prices for mitomycin, a less effective alternative, according to research published online in the medical journal last week.

Mitomycin, a generic produced by Accord Healthcare, saw its price for a single vial nearly double to $869.59 in the summer of 2014 following reports of the BCG shortage. The price for a lower dose of mitomycin jumped 146% to $165.60 during the same period.

The shortage of BCG continued into 2015 due to manufacturing quality problems with Sanofi and Merck, driving the costs for mitomycin to $1,415 for the high-dose vial and $272.46 for the lower dose, the research indicated.

As a result of the hikes, the federal Medicare health-insurance program saw its spending on mitomycin soar from $4.3 million in 2012 to $15.8 million in 2015, researchers said.

"There's a secondary shock" of shortages, Benjamin Davies, M.D., a urology professor at the University of Pittsburgh School of Medicine and a co-author of the the medical journal article, told the WSJ. “"Not only can we not give you the drug we want to give you, but the drug we don't want to give you is now more expensive than it was last month."

Additional drug-supply shortages that led to price increases cited in the report included the antiparasitic agent, mebendazole, which Teva halted production of in 2011. The price of an alternative treatment, albendazole, which is now produced by Amedra under the Impax Labs umbrella, jumped from $5.92 for a daily dose in 2010 to $119.58 in 2013.

The finding comes even as the Justice Department is investigating whether saline manufacturers engaged in any anticompetitive practices taking advantage of a shortage of saline solution which bedeviled the healthcare industry for several years. Baxter International said last week in a public filing that one of its employees has received a federal grand jury subpoena to provide documents and testimony about the manufacture, pricing and shortages of saline solution and other injectables.

The subpoena also asked for information on communications the company had with competitors about any of that, Baxter reported. The drugmaker, which is cooperating, said it earlier got a request from the New York attorney general’s office to provide info about the saline IV business.