Drug shortages are a real problem in our country, and because they are often injectable chemotherapy drugs, they affect the sickest among us.  New legislation proposed by Congressman Bill Cassidy (R-LA) aims to remedy this growing problem.

Just how fast has it grown?  In 2005, there were 61 drugs in short supply.  In 2010 there were 178.  In 2011, there were more than 250.  Often there are substitute drugs that can be given, but the increased cost isn’t always feasible.  Take the cancer drug leucovorin: it costs Medicare $420, but is in short supply.  The alternative costs over $240,000 for the same number of treatments.  In an even more dire situation, there might not be any substitute at all, and a cancer patient is stuck with a less effective treatment.  It is easy to see why this is a problem that both the government and patients have an interest in remedying.

Congressman Cassidy hopes that his legislation will begin to address the problem:

We hear from patients, doctors, and hospitals that every day, shortages of cancer chemotherapy medicines and other drugs affect a patient’s treatment.  This legislation adjusts how Medicare pays for medicine so as to decrease the risk of a drug shortage.  It is good for everyone.  Patients are more likely to have their life-saving drugs.  Medicare saves money by eliminating the need to substitute much more expensive medications for inexpensive generics.  Doctors and hospitals, which currently spend a lot of resources dealing with drug shortages, can focus on better care for patients with less hassle and expense.

The members that proposed this bill believe the problem stems from the 2003 Medicare Modernization Act, which controls the cost of drugs for seniors, but has the intended consequence of setting generic prices so low that manufacturers must choose between producing the drugs at a loss or pulling the drugs from manufacture altogether.

So what are the details?

  1. A change in reimbursements— For drugs with three or fewer manufacturers, there would be higher reimbursements that more accurately reflect the real value of the drugs.  Therefore there is incentive for manufacturers to continue production on a drug, even when other manufacturers drop out.

2. Exemptions—Manufacturers of these drugs would be exempt from having to provide Medicare rebates and discounts that would lower prices even further.

3. Luring Branded Manufacturers—Branded manufacturers have no incentive to manufacture these drugs whose prices are too low to turn a profit.  Not only would they not make enough of a profit, but these injectable drugs are also complex and costly to make.  This bill would provide incentives to brand-name manufacturers to step in and produce these drugs when shortages are an issue.

You might be wondering if the FDA has made any attempt to deal with this problem, and the answer is yes.  The Food and Drug Administration Safety and Innovation Act did address the problem, but not through the means of trying to solve the economic problems that lead to the shortages to begin with.  The FDA’s actions were more aimed towards dealing efficiently with a shortage once it has already become a problem.  This bill on the other hand, attempts to deal with the source of the problem itself.

What do you think?  Do you think this bill is a step in the right direction, or do you think that it does not go far enough?

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