MRK Merck and Co Inc

By Peter Loftus 

Prescription-drug supply shortages have hurt U.S. medical care in recent years. According to new research, they've also caused another side effect -- drug-price increases.

A shortage of the bladder-cancer drug BCG in 2014 and 2015 led to sharp price increases for a less effective alternative treatment, mitomycin, according to research published online Wednesday by the New England Journal of Medicine.

The average wholesale price of a vial of mitomycin, a generic drug, nearly doubled to $869.59 in August 2014, shortly after the BCG shortage developed. The cost of a lower-dose vial of mitomycin rose 146% to $165.60.

The manufacturer of generic mitomycin, Accord Healthcare Inc., didn't respond to emails and a phone call seeking comment.

As the BCG shortage continued due to manufacturing snafus at drugmakers Sanofi SA and Merck & Co., prices for mitomycin increased again in 2015, to $1,415 for the higher-dose vial and $272.46 for the lower dose, according to the research, which cites data from Truven Health Analytics. The increases contributed to higher spending on mitomycin by the federal Medicare health-insurance program for the elderly, rising to $15.8 million in 2015 from $4.3 million in 2012, according to the NEJM research.

"There's a secondary shock" of shortages, said one of the NEJM article's co-authors, Benjamin Davies, a urology professor at University of Pittsburgh School of Medicine, in an interview. "Not only can we not give you the drug we want to give you, but the drug we don't want to give you is now more expensive than it was last month."

Dr. Davies, who co-wrote the NEJM article with researchers from Harvard Medical School, said he and other urologists had "noticed immediately" the price of mitomycin jumped after the BCG shortage developed. "We assumed it was price gouging," he said.

High and rising drug prices have sparked criticism of the pharmaceutical industry in recent years. President Donald Trump has called prices excessive and vowed to take steps to bring them down.

Other drug-supply disruptions have led to price increases. In 2011, Teva Pharmaceutical Industries Ltd. ceased production of an anti-parasitic agent, mebendazole. The price of an alternative treatment, albendazole, soared to $119.58 in 2013 for a typical daily dose from $5.92 in 2010, according to a 2014 NEJM article. Amedra Pharmaceuticals hiked the price after buying the marketing rights to the drug from GlaxoSmithKline PLC. Amedra is now part of Impax Laboratories Inc.; an Impax spokesman said the drug's price was already established when Impax acquired it, and the company doesn't disclose product pricing.

The authors of the new NEJM paper say more should be done to prevent drug shortages, which are often caused by outdated manufacturing facilities. They proposed additional U.S. regulatory incentives for companies to maintain high-quality production capacity, and easing limits on the importation of drugs made outside the U.S.

The number of drugs in shortage in the U.S. peaked in 2014 at around 320 and has since declined, but there are still about 176 active shortages, according to the University of Utah Drug Information Service. Many shortages developed because companies failed to build enough production capacity, haven't maintained equipment, and failed to ward off contamination in aging plants.

Factory contamination caused shortages of BCG, which forced doctors to delay treatment, cut dosing or switch patients to alternative treatment. Merck is now the sole supplier of BCG for the U.S. after Sanofi said in November it would cease production of its version.

A federal law passed in 2012 gave the U.S. Food and Drug Administration more powers to prevent and resolve shortages, including requiring manufacturers to provide advance notice to the agency of potential shortages, and allowing the FDA to speed up approvals of manufacturing upgrades.

Write to Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

April 12, 2017 17:14 ET (21:14 GMT)

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