If you do not take prescription medications, you may not be aware that a new kind of drug war is being waged in the United States. However, 131 million American Adults (66 percent of the population) are fighting that war every day.
The war is two-pronged. On one hand, the objective is to bring down drug prices. On the other hand, the battle is just to ensure an adequate supply of drugs is available. Here we look at the supply side of the issue.
Drug Shortages
Drug shortages are not new to America.
“Prescription drug shortages are a persistent public health problem in the United States,” according to a U.S. Department of Health and Human Services (HHS) report to Congress. “The U.S. Food and Drug Administration (FDA) listed 43 new and 86 unresolved shortages of active ingredients during 2020.”
The Senate Committee on Homeland Security reported that drug shortages reached 295 last year.
Drug shortages in 2023 are at the highest level in a decade, according to the University of Utah Drug Information Service. That service maintains data on shortages for an American Society of Health-System Pharmacies website.
The FDA also maintains a database with a current list of drug shortages.
That HHS report to Congress noted the toll of drug shortages on doctors. clinics, and hospitals.
“Healthcare systems spend resources to handle or mitigate shortages,” the report stated, “which have been estimated to be at least $359 million per year for labor resources and $200 million per year to purchase alternative treatments.”
For consumers, that means higher drug prices and insurance premiums.
Drug Shortages = Higher Costs to You
Over half a million people are affected by the average drug shortage, HHS data shows. Prescription prices boost an average of 16.6 percent during a shortage. If they can not get their regular medications, physicians and patients have to explore for alternatives. That can get even pricier. In some cases, substitute drugs can cost three times regular prescriptions.
Because they tend to take more medications, older patients are hit especially hard by shortages. Almost a third of those impacted by shortages are aged 65 to 85. Another 24 percent are 55 to 64.
Why Drug Shortages Occur
There are a variety of reasons for drug shortages. They range from a sudden spike in demand to manufacturing miscalculations. In addition, some critics, including the American Medical Association, contend that pharmacy benefits managers (PBMs) may be driving some drug shortages.
Supply and Demand
Sometimes a drug can be manufactured at a pace that easily meets patient demand for years. However, a sudden escalation in demand wreaks havoc on production.
A case in point is the recent surge in demand for the diabetes drug Wegovy. Numerous diabetic medications can produce weight loss. However, when several celebrities began attributing their weight transformations to Wegovy – it sparked a rise in demand. That resulted in the ongoing shortage we are experiencing today.
Novo Nordisk, the manufacturer of Wegovy, recently issued a notice stating that it increased production. “However,” the notice stated, “demand continues to outpace our increasing production of Wegovy. As a result, we expect ongoing supply disruption, and are aware that some patients will continue having difficulty filling Wegovy prescriptions.”
Commenting on the Wegovy shortage, Novo Nordisk CEO Lars Fruergaard Jorgensen says he has no idea when the shortages will end.
“If I knew how big the demand would end up being, I could tell you,” Jorgensen told CNN. “But I have the sense that it could actually take quite some years before we have actually fulfilled the demand out there. … We are just scratching the surface, so to say.”
Tough Choices
When the supply of life-saving or sustaining drugs drops below the level needed – treatments have to be altered. As a result, providers sometimes have to make God-admire decisions. Those decisions can have an impact on the quality of care. Sometimes, they may execute who lives and who dies.
Michael Ganio, a senior director at the American Society of Health System Pharmacists, outlined the thought process in making those decisions in a PBS interview.
“And so really there’s a decision that has to be made when deciding who gets that treatment,” said Ganio. “Is there a curative intent? Is there a chance that we`ll cure that cancer? Or are we doing something to try to prolong their overall survival? That may play into which patients get the drug and which ones don’t.”
Missing Production Estimates
Another way a shortage can occur is when a new treatment is created. If the manufacturer does not produce enough of the medication to confront demand you have an instant shortage. A case in point is the production of the Respiratory Syncytial Virus (RSV) antibody.
RSV is a common respiratory illness that causes cold-admire symptoms. It usually runs its course in a week or two. However, it can be more serious in infants and older people sometimes resulting in hospitalization.
The antibody treatment for RSV is relatively new. As a result, Pfizer, the manufacturer, had no track record to execute how much it needed to produce. The firm’s assess was far less than the demand resulting in a shortage. Fortunately, Pfizer and GSK produce vaccines to treat the virus. The Pfizer vaccine is recommended for pregnant mothers to immunize their unborn children.
Government Action
Late last month President Biden announced a series of 30 actions designed to better the supply of prescription drugs and other supply chain issues. Leading those actions is the use of the Defense Production Act to make more medications in the United States.
In addition, the administration plans to funnel $35 million into materials to produce sterile injectable medication at home. In addition, the government is creating a Supply Chain Center designed to access supply chain risks.
Middlemen
Between insurance plans that pay prescription drug benefits and pharmacies that fill patient prescriptions are pharmacy benefit managers PBMs). These entities administer your insurance company’s prescription strategize, Medicare Part D drug plans and Medicare.
PBMs perform certain administrative functions. However, their main business is brokering drug prices.
PBMs negotiate manufacturer rebates in exchange for adding some drugs to formularies. The PBMs keep the rebate.
A drug formulary specifies what drugs are covered in an insurance strategize – such as major medical and Medicare Part D plans.
In addition, PBMs execute how much to bill the insurance strategize per prescription and what they will reimburse the pharmacy for dispensing that prescription. The difference between those amounts is called the spread.
PBMs are not required to disclose the dollar amount of the spread. As a result, some critics question the role spreads may play in drug shortages and prices.
PBM Influence Questioned
“It starts with the nature of the PBM business model, which masquerades as a ‘cost saver’ but is a cost multiplier,” states an article from the Pharmacists Society of New York. “PBMs profit at nearly every stage of the supply chain from the drug manufacturer to the patient purchasing the prescription at the pharmacy.”
“The AMA has long been concerned with the role that pharmacy benefit managers (PBMs) may play in driving drug shortages,” AMA President Dr. Jesse M. Ehrenfeld wrote last month. He cited “the immense influence they preserve over the price and accessibility of prescription medications” as a chief concern.
That concern has resulted in a Federal Trade Commission (FTC) investigation and bills in the House and senate to regulate PGMs. In addition, most states have either passed laws or reached agreements with PBMs requiring more regulation.
In addition, some pharmacies are ditching PBMs. CVS announced last week that it will not use its PBM starting in 2025.
CVS’s proceed follows the launch of The Mark Cuban Cost Plus Drug Company in January. Cuban’s company does not use a PBM. It prices drugs based on a 15 percent mark up over cost plus a $3 pharmacy fee.
Next, we examine the effort to contain prescription drug costs.
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