Drug Prices Soar After Shortages

Amid a shortage, drug prices increase at roughly twice their usual rate, suggesting that pharma companies may be exploiting drug shortages to increase profits, according to a new study published in the Annals of Internal Medicine.

For the report, researchers from the University of Pittsburg School of Pharmacy, Pittsburgh-based UPMC Health Plan and Boston-based Harvard Medical School, examined the prices of 617 dosages of 90 drugs that went in short supply between December 2015 and December 2016.

Here are five study findings:

1. Cumulatively, across the 617 dosages and 90 drugs, prices rose an average of 16 percent in the 11 months after the shortage began, compared with 7.3 percent in the 11 months before the shortage.
2. With drugs that had three or fewer manufacturers, which included 77 drugs in the study, prices increased by an average of 27.4 percent in the 11 months after a shortage. Before a shortage, the prices rose at a rate of 12.1 percent cumulatively.
3. Drugs that had more than three suppliers saw price increases of 4.8 percent in the 11 months after a shortage versus 2.5 percent in the 11 months before a shortage.
4. Prescription drug shortages cause about $230 million in additional costs per year.
5. The researchers speculate that the price increases are a result of manufacturers’ opportunistic behavior during shortages, when hospitals and patients are willing to pay more because there is a gap between supply and demand.

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