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Drug prices tend to rise when medicines are scarce

Oct. 9, 2018—Drug companies jack up prices during medicine shortages, according to a new study published in the Annals of Internal Medicine. It found that between 2015 and 2016, prices rose more than twice as fast as expected for drugs with a limited supply.

The researchers looked only at market data from the U.S. Food and Drug Administration's drug shortages database, so they can't say for sure why the prices soared. But they suspect price gouging. Manufacturers appear to be engaging in "opportunistic behavior" when the medicine people need is scarce, they said.

The study zeroed in on 90 drug products. Researchers reported that in the 11 months before the shortage began, prices rose by 7.3 percent. That compared to a 16 percent jump in the 11 months after the shortage.

The study also found that the fewer competitors there were for a scarce drug, the more prices climbed. For drugs with fewer than three manufacturers, prices rose 12.1 percent in the 11 months before the shortage and 27.4 percent in the 11 months after it.

A call for intervention

Prescription drug shortages in the U.S. cause an estimated $230 million in additional costs yearly—due to the higher costs of alternative drugs and the imposed costs of drugs during shortages.

That makes prescription drug shortages a public health crisis, the researchers warned. They called for payment caps for drugs during shortages to protect consumers.

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