Statutory Thickets and Drug Shortages: Accumulating Legislation as an Underlying Cause

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Public Health

Background:

• The U.S. healthcare system has faced persistent shortages of inexpensive, off-patent drugs for decades.
• Commonly cited causes include manufacturing quality issues and low profit margins.
• A significant increase in shortages occurred between 2007-2012, persisting into the 2020s despite interventions.

Purpose of the Study:

• To investigate the root causes of increased and persistent generic drug shortages.
• To evaluate the impact of specific Congressional legislation on the generic drug market and drug availability.
• To identify how legislative changes may have inadvertently contributed to drug shortages.

Main Methods:

• Analysis of U.S. healthcare system data on drug shortages.
• Evaluation of key legislative acts impacting the pharmaceutical market, including the Hatch-Waxman Act (1984), Medicare Modernization Act (2003), Generic Drug User Fee Act (2012), and Bipartisan Budget Act (2015).
• Assessment of the potential impact of recent legislation (American Rescue Plan Act 2021, Inflation Reduction Act 2022) on drug shortages.

Main Results:

• Low prices and quality problems in the generic drug market stem from underlying market shifts.
• Congressional legislation has inadvertently squeezed profitability within the generic drug sector.
• Specific laws enacted over the past fifty years are identified as a primary driver of drug shortages.

Conclusions:

• Legislative actions, while often well-intentioned, represent the true root cause of many U.S. drug shortages.
• Understanding the economic impact of legislation is crucial for addressing and preventing future drug supply disruptions.
• Policy interventions need to consider the long-term effects on generic drug market viability.