Medical Devices and Prescription Drug Policy

Hatch blames government price controls for shortages of medical drugs

The top Republican on the Senate Finance Committee on Wednesday pointed the finger squarely at federal price controls for the nation’s worsening drug shortage crisis, particularly for cancer medicines.

“Experts contend that federal government pricing and rebate programs are a significant contributing factor to the current drug shortage crisis,” Sen. Orrin Hatch (R-Utah) said during a committee hearing on the issue. “Current pricing structures have been very effective at driving generic utilization. However, they may not fully capture or reward the costs associated with the complex development and manufacturing of injectables, as opposed to the more straightforward manufacturing process in the pill market.”

{mosads}The drugs under discussion are reimbursed directly to medical providers through Medicare’s price-controlled Part B program, not the competitively bid Part D prescription drug program. The call for higher reimbursements comes as lawmakers are struggling to pare down the nation’s $15 trillion debt, which is driven in great part by out-of-control healthcare spending.

Hatch, who is running for reelection next year, quoted research published in the New England Journal of Medicine showing that 74 percent of the 178 drug shortages last year were sterile injectable drugs, which are complex to manufacture but reimbursed at a low price. Several witnesses at the committee’s hearing on the issue agreed.

“The drug shortage problem is a direct consequence of the reimbursement system,” Montana oncologist Patrick Cobb testified. “It is critical that Congress move quickly to modify the Medicare reimbursement system, certainly not cut reimbursement any further as some propose, and to create appropriate incentives for manufacturers.”

Other witnesses said the jury’s still out on the lead cause of shortages, but that manufacturers aren’t blameless.

“Our analysis over the last 10 years has shown that many drug shortages are the result of quality issues in the manufacturing process, loss of a manufacturing site, delays and capacity issues, shortages of raw materials … and secondary shortages of a therapeutic alternative resulting from a primary shortage,” said Kasey Thompson, vice president for policy with the American Society of Health-System Pharmacists. “We recognize that there is no one cause of drug shortages, and therefore no one solution.”

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