Cover: Impact of Drug Shortages on Consumer Costs

Impact of Drug Shortages on Consumer Costs

Published in: Office of the Assistant Secretary for Planning and Evaluation website (2023)

Posted on Jun 28, 2023

by Andrew W. Mulcahy, Jonathan S. Levin, Nabeel Qureshi, Kanaka Shetty, Peggy G. Chen, Erik De Freitas, Asa Wilks, Daniel Schwam

Prescription drug shortages are an ongoing concern in the United States (U.S.). While prior analyses explore the frequency of drug shortages in the U.S., little is known about the extent to which U.S. shortages impact consumer costs and healthcare systems. Drug shortages impact consumer costs in various ways. Consumers may incur increased costs in the form of higher out-of-pocket costs, higher insurance premiums, and adverse health outcomes as a result of a drug shortage. Healthcare systems also incur costs to manage or mitigate drug shortages.

ASPE developed this report to compile findings from a study conducted by the RAND Corporation and to outline existing and potential tools to address cost disparities and shortages of drugs.

Using an extract from the Food and Drug Administration drug shortage database linked to 2016-2020 national prescription sales data from IQVIA, the key findings are:

  • Drug shortages impact consumers through reduced sales and/or increased prices. The average drug shortage affects at least a half a million consumers; more than two thirds of those impacted were consumers ages 65 to 85 (32 percent), 55 to 64 (24 percent) and 45 to 54 (17 percent).
  • Drug shortages impact consumers' ability to fill their prescriptions. After a shortage, there was an observed decline in sales volume of between 28 percent and 35 percent compared to the year before the drug entered a shortage. The reduction in volume of generic drug fills was larger (median of 37.6 percent) compared to brand-name drugs experiencing a shortage (median of 30.4 percent).
  • Drug shortages lead to higher drug prices. Analysis of the data showed a 16.6 percent increase in the price of drugs in shortage, driven mostly by an increase in the price of generics (14.6 percent). In some cases, the increase in the price of substitute drugs was at least three times higher than the price increase of the drug in shortage.

The report highlights potential policies that could be pursued to address cost increases when there are shortages and to ensure sufficient supply of generic drugs.

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This report is part of the RAND external publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

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