Since 2006, the U.S. has experienced a marked increase in the number of prescription drug shortages-with sterile injectable drugs, like oncology drugs, accounting for more than 70% of these shortages in 2011 (ASPE 2011). Numerous experts maintain that the recent rise in oncology drug shortages is due ultimately to economic factors and, specifically, a provision of the Medicare Drug Improvement and Modernization Act (MMA) that substantially reduced Medicare reimbursement for many physician-administered (Part-B) drugs, including chemotherapy agents, beginning in 2005. The proposed study will examine the direct and long run effects of the MMA on oncology drug shortages (Aim 1);how the MMA may interact with other factors, such as patent expirations and FDA enforcement, to generate shortages (Aim 2);and the mechanisms through which the MMA could have generated drug shortages, including oncology practice and manufacturer consolidation (Aim 3). While ongoing policy efforts try to address the proximal causes of shortages through, for example, early warnings to the FDA and expedited approval of alternative life-saving medications, a lasting solution to the drug shortage problem must address the fundamental causes - particularly, the role of economic incentives created by policies such as the MMA.
The proposed study will examine whether a major 2005 Medicare payment reform caused a recent increase in oncology drug shortages. It will analyze the mechanisms, including manufacturer and oncology practice consolidation and shifts in the site of care, through which this may have occurred and assess whether the reform interacted with other factors, such as patent expirations and FDA enforcement, to generate shortages.