February is National Cancer Prevention Month. If it seems that more and more American families are being touched by cancer, it’s because they are. The number of cancer cases among young people is skyrocketing across the U.S., with more than 85,000 American adolescents and young adults diagnosed with cancer each year. One 2022 study went as far as calling it an “early-onset cancer epidemic.” Even more concerning, these patients can’t get the treatments they need because of a shortage of chemotherapy drugs, and they have the Inflation Reduction Act (IRA) partly to blame.
Democrats touted the passing of the IRA in late 2022 as a way to get more medicines to the American public at lower costs. But the reality is more grim as the IRA is creating incentives to keep treatments from those whose very lives depend on them. Since President Biden signed the IRA into law, two dozen companies have announced they were paring back or stopping research and development on new drugs and secondary uses for orphan drugs due to incentives and penalties discouraging the research and development of costly medicines that treat diseases like cancer. Every expert – from the Congressional Budget Office to private academics – says the law will result in fewer treatments and cures.
The loss of those new drugs and therapies comes as the U.S. is experiencing mass prescription drug shortages. Drug shortages occur when the supply of a drug cannot meet the demand for the product. Shortages arise due to many factors, including supply disruptions and price decreases, making it difficult to sustain production. The decline in prices for generic products – such as the cancer products currently in shortage, has been acute. In fact, in the past five years, the total value of all generic sales has fallen by $6.4 billion even though patients have used more generic products.
And shortages are occurring frequently, as the Food and Drug Administration (FDA) has reported between 30 and 50 new drug shortages per year. Currently, the Food and Drug Administration lists more than 120 drugs in shortage; 15 of those drugs are oncology drugs. That shortage won’t be fixed quickly. A report from the Senate found that the average drug shortage lasts a year and a half. Even more disturbing, there’s been a shortage of more than a dozen critical drugs for over a decade.
In addition to the IRA’s incentives against producing new drugs, there may be another contributing factor –inflation rebates tied to drug pricing. The IRA requires manufacturers to pay a rebate to the government when prices rise faster than inflation. This new rebate is similar to Medicaid rebates for generics enacted by Congress in 2015, but the IRA applies an inflation penalty to single-source generics and gives Medicare the authority to exempt products in or at risk of shortage.
Children battling cancer, forced to spend their childhoods in hospitals undergoing painful surgeries and treatments instead of playing with their friends and families, often do not have a year, let alone a decade, to wait for these drug shortages to end. They need treatment now.
But, children cannot be cured if the Inflation Reduction Act continues to keep drugs from coming to market. Congress cannot wait; it must act immediately and address the drug shortage problem. The first step is reversing the unfair treatment of orphan drugs and removing the barriers to the research and development of new drugs and therapies. Allowing an exemption for shortage products in Medicaid would allow manufacturers to scale up production and ramp down shortages. Congress should also change the law to allow exemptions from rebates for products just coming out of shortage to allow time to build up capacity.
All these fixes are just Band-Aids. Federal policy also caps the Average Manufacturer Price and mandates additional discounts through 340B. These multiple, conflicting, and often punitive price regulations distort the market and contribute to, and in some cases may cause, drug shortages. What is truly needed is a comprehensive federal policy approach across programs that incentivizes the lowest price to generate stable, consistent, and high-quality manufacturing.
That would be critically important for the parents who are holding their toddler’s hand as they lay in a hospital bed, hooked up to machines, fighting for their young lives. They don’t care about the politics holding up cures. They only care about getting their child healthy. If lawmakers don’t act, those parents may join a club no one wants to join– parents who have lost a child to cancer.