A regulatory pathway that aims to ensure drug safety is inflating healthcare spending by billions of dollars, according to a new report.
Four widely used drugs funneled through the Unapproved Drug Initiative will increase spending by more than $20.25 billion over a five-year span as manufacturers hiked prices between 525% to 1,644%, a new Vizient analysis found. Vizient identified another 19 unapproved drugs that could increase costs by $8.75 billion.
"Our members remember these drugs costing dollars, now they are seeing up to 1,600% increases for essential medicines they have been dispensing for their whole careers. This is a slippery slope for irresponsible price increases," said Dan Kistner, group senior vice president for pharmacy solutions at Vizient, a group purchasing organization. "Hospitals are absorbing additional cost for drugs that are not innovative, not curing new diseases, do not have overwhelming R&D investment, and are often the preferred drug of choice."
Hundreds of pharmaceuticals in use today entered the market prior to 1938, before the Food and Drug Administration implemented safety reviews.
The 2006 Unapproved Drug Initiative requires manufacturers to pull these drugs and prove to the FDA that they are safe. Typically, fewer manufacturers remain in the market after the FDA intervenes, which allows price manipulation.
Drugs that go through the UDI pathway can earn the manufacturer up to seven years of patent protection, which can prevent competition. At minimum, other suppliers of the drug targeted by the UDI also have to leave the market and receive approval, which can reduce competition.
While Kistner understands the intention to boost safety, the FDA should expedite the approval of competing drugs looking to reenter the market to mitigate unintended consequences, similar to what it does during drug shortages, he said.
Vizient highlighted vasopressin, which was developed in 1928 to treat critically low blood pressure and gained FDA approval through the UDI in 2014. While its market exclusivity has expired, numerous patents could protect it from competition until 2035.
Meanwhile, its wholesale acquisition cost increased 1,644% from $283 for a package of 25 to $4,939. Prior to the UDI approval, around $30.8 million was spent on vasopressin a year. That swelled to $510 million in 2019, which is expected to increase overall healthcare spending by $17.8 billion, Vizient projects.
Vizient also tracked the price inflation for anesthesia-reversing drug neostigmine methylsulfate, nutritional drug selenium and dehydrated alcohol, which treats severe heart disease. Prices rose 525%, 1,190% and 668% respectively. These drugs often don't have viable alternatives, which drains hospital finances and can lead to higher healthcare costs for employers and consumers alike.
The situation with ethanol is particularly egregious, said Erin Fox, a drug shortage expert and senior director of drug information and support services at University of Utah Health.
Belcher Pharmaceuticals is charging $1,000 per milliliter, which equates to $30,000 for one shot of ethanol, since it received an orphan drug designation through the UDI, granting Belcher's drug exclusivity through 2025, she said. Belcher won the orphan drug classification, a status for drugs that treat rare diseases, for its treatment of hypertrophic obstructive cardiomyopathy.
"It is the perfect example of how this FDA approval process is broken," Fox said. "Pediatric hospitals are going to be particularly impacted because ethanol is sometimes used to 'lock' IV ports to prevent infections in high-risk patients."
In most cases, these approvals lead solely to higher prices, without new clinical or safety information, she added.
Fox and her peers authored a study that found that prices of UDI-approved drugs between 2006 and 2015 increased by a median of 37%. The number of drug shortages also increased two yeas before and after the UDI regulatory action while the median duration of shortages increased from 31 to 217 days, their analysis revealed.
The University of Utah Health is working on a plan for these high-cost drugs, similar to how it manages drug shortages. It stocks less, uses less and figures out how to ration appropriately, Fox said.
"FDA's Unapproved Drug Initiative continues to have serious unintended consequences and in my opinion should be halted," she said.
