When it comes to drug shortages, pounding Big Pharma isn’t the answer. Finally someone is focusing on the perverse economic incentives of Average Sales Price (ASP) as a key factor behind the problem. And that someone is Senator Orrin Hatch (R, UT.)
His Patient Access to Drugs in Shortage Act is out for comment through April 25, 2012. This proposed legislation is the only bill dealing with the economic causes of the shortages.
Some important codicils include:
* Price Stability — The draft would change the Medicare reimbursement rate for generic injectable products with 4 or fewer active manufacturers from Average Sales Price (ASP) + 6% to Wholesale Acquisition Cost (WAC) in order to achieve market price stability.
* Medicaid/340B Rebate Exemption — The draft exempts generic injectable products with 4 or fewer active manufacturers from Medicaid rebates and 340B discounts in order to achieve market price stability.
* Extended Exclusivity — Manufacturers who hold an approved application for a drug that would mitigate a shortage can extend by 5 years any period of exclusivity, even if the drug is eventually moved from drug shortage designation.
* Drug Shortage Database — The Secretary would establish a mechanism by which health care providers and other third-party organizations may report evidence of a drug shortage.
This last point may sound innocuous – but it’s crucial. There are many players in the drug shortage game – not just innovator pharmaceutical companies and the FDA. There are generics manufacturers, hospitals, Group Purchasing Organizations (GPOs), and physicians. (For more on the GPO issue, see this new op-ed in today’s Washington Examiner).
As the Japanese say – don’t fix the blame; fix the problem.