Manipulating Drug Prices: A New Study

Drug prices go up when there is a shortage.

That’s the conclusion of a University of Pittsburgh (UPMC) and Harvard study (“Changes in Drug Pricing After Drug Shortages in the United States”) published in the September 2018 Annals of Internal Medicine.

Okay, so the law of supply and demand has not been repealed. And, we know, drug prices in the United States are high when compared to other countries—Canada most notably since it shares a 5,525-mile border with the U.S.

But, could these prices have been rising faster than expected?

According to UPMC and Harvard researchers the answer is ‘yes.’ In 2016, they say, drug prices rose at a rate believed to be double what would ordinarily be expected.

Specifically, the investigators compared prices for 617 formulations and dosages for 91 medications that were in short supply during the year between December 2015 and December 2016.

They found that within 11 months before a shortage took place, prices could be expected to go up about 16% compared to drugs that were not in short supply whose prices only went up 7%.

Drugs which were produced by three or fewer suppliers increased in cost by about 12% ahead of a shortage and 24% within a year of a shortage.

Drug shortages are a frequent source of blame for rising medical costs. The researchers suspect drug manufacturers may be taking advantage of increased demand to charge higher prices, according to the study.

Yup. It’s almost a perfect correlation.

Go figure.