Analysis Shows FDA Regulations Increasing Healthcare Costs By $20.3 Billion

F.J. Thomas

Washington DC (WorkersCompensation.com) – A safety initiative put in place in 2006 by the Food and Drug Administration (FDA) has unintentionally increased healthcare costs by $20.3 Billion, according to a new drug cost analysis by Vizient.

The Unapproved Drugs Initiative (UDI) was put in place by the FDA in 2006 to keep patients safe. According to the agencyunapproved drugs pose a risk to patients due to using untested formulations, unlisted ingredients, inaccurate or incomplete prescribing information, unregulated manufacturing processes, and lack of evidence of effectiveness. Since the implementation of the UDI, hundreds of potentially unsafe drugs have been removed from the market.

While the goal of the initiative was to provide safe and reliable drugs for patients, some drug manufacturers pursued further testing and ultimate approval while their competitors did not. This created opportunities for monopolies, as well as a higher risk for drug shortages. The FDA has acknowledged that it is keenly aware of the pricing issues that can occur due to the UDI, however, the price risk far outweighs the safety benefit, it maintains.

In a 2017 NCBI report, a study taken from 2006 to 2015 showed an average increase of 37 percent in drug costs since the implementation of the UDI. Additionally, the number of drugs in shortage increased from 17 to 25. The length of time the shortage occurred increased as well, from 31 days to 217 days since the UDI was put into practice.

According to a Citizen Tribute report on the Vizient analysis, FDA approval of four drugs used in hospitals increased cost as much as $20.25 billion due to the drug manufacturers inflating costs after approval. With 19 drugs currently going through the FDA approval process, it is estimated that the repercussions of those approvals will cost patients an additional $8.75 billion in the next five years. Even with current approvals, Vizient is forecasting the drug rates to increase by 3.59 percent during third quarter of this year.

The Vizient analysis released this month reviewed increases in wholesale acquisition cost (WAC) for drugs approved since 2013. In reviewing four drugs commonly used in hospitals, the data showed pricing increases from 525 percent to as high as 1487 percent in WAC pricing after approval. When compared to the frequency and volume used, those increases were amplified.

One example given, Dehydrated alcohol which is used in treating chronic nerve pain, increased from an annual expense of $28 million to an expected $215 million in 2020. The Vizient analysis attributes the surge in costs to a 668 percent increase in WAC pricing after approval.

You can read access the full analysis from the Vizient website.

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