A bipartisan group of U.S. senators wants the Federal Trade Commission to investigate whether saline solution suppliers have violated antitrust laws by raising prices during a product shortage.
The senators want the FTC to look into “whether saline suppliers may be taking advantage of this shortage in ways that run afoul of antitrust law and pose risks to patient care.”
The solution, which is used to hydrate patients, has been on the Food and Drug Administration's drug shortage list since 2014.
“The shortage is still ongoing after nearly two years, raising questions about the incentives of the saline suppliers to solve this problem and about possible coordination among them,” the senators wrote in their letter Monday.
The lawmakers behind the letter include Sen. Richard Blumenthal (D-Conn.), former Senate Health, Education, Labor, and Pensions Committee Chairman Orrin Hatch (R-Utah) and Sens. Mike Lee (R-Utah) and Amy Klobuchar (D-Minn.), who are members of the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.
The letter alleges that suppliers have reportedly raised their prices by 200% to 300%, costing individual hospitals hundreds of thousands to millions of dollars.
Two of the companies that supply saline in the U.S.—Baxter International and Hospira—said Monday that saline solution remains one of the best values in healthcare. Attempts to reach the third company that supplies saline in the U.S., B. Braun, were not immediately successful.
An Hospira spokesman said the company will cooperate with any FTC inquiry.
“In many cases the market fundamentals of this business have resulted in a lack of investment, leading to fewer high-quality suppliers,” the Hospira spokesman said in a statement. The company, the statement continues, responded to the initial market shortage by manufacturing saline products “24 hours a day, seven days a week.”
Debora Spak, a spokeswoman for Baxter, said the average selling price of Baxter's commonly prescribed one-liter sterile saline solution in the U.S. has increased annually at a modest level, in the single to low double digits—nothing like the amounts cited by the senators.
“Baxter has made extraordinary efforts to maximize the availability of sterile solutions,” Spak said in an e-mail. Spak added that the company's Sabinanigo, Spain, manufacturing facility was approved by the FDA to ship saline solutions into the U.S.
The FDA first attributed the shortage, ">in a January 2014 notice
">in a January 2014 notice, to “a range of factors, including a reported increased demand by hospitals, potentially related to the flu season.” Since then, the FDA has allowed imports of saline to help alleviate the shortage.
Hospitals claim all three suppliers have increased prices even higher when providers don't also buy other saline-related products such as pumps, tubing and catheters, according to the senators. In some cases, hospitals haven't been allowed to buy saline at all unless they also bought the additional products, the senators' letter said.
“The ongoing shortage, the fact that the shortage has not cleared even with significant price increases, and the behavior reported by hospitals raises questions about potential coordination between the saline suppliers,” according to the letter. “Even absent coordination, the saline suppliers' ability to extract several-hundred-percent price increases and to lock their customers into long-term contracts is likely reducing their incentive to alleviate this troubling shortage, which, in turn, further exacerbates the shortage and results in consumer harm.”
FTC Chairwoman Edith Ramirez will likely want to start an investigation following the letter, said Matthew Cantor, a partner at law firm Constantine Cannon.
He said, however, that raising prices and reducing output are not, in and of themselves, antitrust violations. The FTC would have to find at least circumstantial evidence of a conspiracy to show antitrust violations.
But the allegation that the manufacturers charged hospitals higher prices if they didn't agree to also buy other products could constitute a so-called “tying” violation.
Erin Fox, director of drug information at the University of Utah Health Care's Drug Information Service, said saline has long been sold in bundles with other saline-related products, and that's not a strategy that's new to the shortage. She also noted that some of the more expensive saline recently has been foreign supplies approved by the FDA to help alleviate the shortage.
If the FTC were to find antitrust violations, it could fine the companies or ask a judge for an injunction, among other possibilities, Cantor said. “If the FTC takes action and uncovers there was a conspiracy, then you would most certainly have hospitals suing to recover damages,” he added.
Fox says in order to fix this shortage and others, companies need to invest in expanding their manufacturing capacity to meet the rising demand in healthcare.
The FDA is currently working to address dozens of drug shortages in the U.S., many of which, the agency says, are the result of manufacturing issues.