ASCO Post: Oncology Drug Shortage: Unintended Consequences ...

[Guest guest]

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ASCO Post: Oncology Drug Shortage: An Unintended Consequences of the

Medicare Modernization Act and Free-market Forces?

.... http://bit.ly/nByrqf

Summary:

" Signed into law in 2003, the Medicare Modernization Act (MMA) worked as

intended-it lowered reimbursement for IV drugs and created more transparency

in pricing. Before MMA, IV drugs were reimbursed as a percentage of the

average wholesale price (AWP), but the AWP was not a transparent way to

understand the actual price paid for these medicines. "

It worked but ... it has contributed to the shortages as summarized in the

table:

Free Market scenario:

* When competitor leaves market, remaining players gain a larger share and

raise prices to reach new equilibrium

* Higher prices attracts new entrants ... increasing capacity.

MMA scenario:

* When Player leaves market, remaining players have to find manufacturing

capacity for a low margin product. Because of MMA-dictated Average Sales

Price (ASP) constraints, they cannot raise prices.

* Low margins, new drug application fees, and inability to raise price are

among reasons that players choose not to enter the market when there are

shortages.

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Footnote: As I understand it, there's a proposal to cut the MMA-dictated ASP

to address the deficit crisis. Is your representative aware of the

consequences to cancer patients if that proposal if adopted?

As I see it, it's our job to inform our representatives so that adopted

policy is based on meeting needs of all Americans... including the needs of

Americans who get cancer and who will get cancer in the future. 3 in 5 of

us.

Further, experts have given examples of how VERY expensive on-patent drugs

are substituted for proven drugs when there are shortages - so-called

off-label use. So this deficit-cutting proposal will not only put cancer

patients at increased risk but will also increase costs.

Lastly but not leastly, there are many clinical trials that have been put on

hold because of shortages of drugs that are part of " backbone " protocols ...

which are being studied in combination with targeted agents. So the drug

shortage is having a negative impact on clinical research - to find better

therapies for future generations.

__________________

All the best, ~ Karl

Caregiver to spouse - 14 yr survivor of FL; President, Patients Against

Lymphoma: www.Lymphomation.org <http://www.lymphomation.org/>