Like something out of an apocalyptic movie where people search to rebuild a food supply, the U.S may be searching to find essential chemotherapy drugs. For the first time in the U.S, essential chemotherapy drugs are in short supply. Most are generic drugs that have been used for years in childhood leukemia and curable cancers. The shortages have caused serious concerns about safety, cost, and availability of lifesaving treatments.
According to a survey from the Institute for Safe Medication Practices, 25 percent of clinicians indicated that an error had occurred at their site because of drug shortage. Many of these were attributed to inexperience with alternative products.
These shortages have increased the already escalating costs of cancer care. Brand-name substitutes for generic drugs can add substantial cost. For instance, Abraxane, a protein-bound version of Paclitaxel, costs 19 times as much as equally effective generic Paclitaxel.
Due to the increased time and work required to manage drug shortages, health care labor costs in the U.S have increased by about $216 million since 2010. Furthermore, an unofficial alternative market of drugs obtained by vendors outside the usual distribution networks has grown rapidly; these vendors are unregulated and have markups of up to 3000 percent for cancer drugs.
The main cause of drug shortages is economic. If manufacturers do not make enough profit, they will not make generic drugs. For example, Leucovorin has been available from several manufacturers since 1952. In 2008, Levoleucovorin, the active l-isomer of Leucovorin was approved by the FDA. It was reportedly no more effective than Leucovorin and 58 times as expensive, but its use grew rapidly. Eight months later, a widespread shortage of Leucovorin was reported.
The second economic cause of shortages is that oncologists have less incentive to administer generics than brand-name drugs. Chemotherapeutics are bought and sold in the doctor’s office, a practice that originated 40 years ago. Now in order for oncologist to support their practice and maximize financial margins, they buy drugs from wholesalers, mark them up, and sell them to patients, or insurers in the office. Medical oncology is a cognitive specialty lacking associated procedures, and without drug sales oncologists’ salaries would be relatively lower. Today, more than half the revenue of an oncology office may come from chemotherapy sales, which boost oncologists’ salaries and support expanding hospital cancer centers.
Before 2003, Medicare reimbursed 95 percent of the average wholesale price, an unregulated price set by manufacturers; whereas oncologists paid 66 percent to 88 percent of that price which resulted in receiving $1.6 billion annually in overpayments. In response, the Medicare Modernization Act mandated that the Centers for Medicare and Medicaid Services set reimbursement at the average sale price plus a 6 percent mark up to cover practice costs. This policy has reduced not only drug payments but also demand for generics. In some cases, the reimbursement is less than the cost of administration. For example, the price of a vial of Carboplatin has fallen from $125 to $3.50 making the 6 percent payment trivial. So some oncologists switched to higher-margin brand-name drugs.
The only good news is that the drug shortages may catalyze a shift from a mostly market-based system to one that rewards the provision of high-quality cancer care at an affordable cost.
SOURCE: New England Journal of Medicine, November 2011