An Analysis of Price Effects from Drug Shortages for Independent Pharmacies and the Potential Role of Drug Buying Groups

Wed Jan 19 15:24:38 EST 2011
By Dr. Graeme Hunter

Drug shortages have been occurring with increasing frequency in recent years, leading to adverse consequences such as medical complications and higher prices. In this study, NERA Senior Vice President Dr. Graeme Hunter analyzes seven drugs that experienced supply disruptions and examines the effect on prices and supply, including the specific effect on independent pharmacies. The paper begins with an examination of the frequency of drug shortages and discusses some of the potential effects on medical outcomes and the average effect on prices for the seven drugs analyzed. Dr. Hunter then examines in detail one of the seven drugs to demonstrate how sharply overall and independent pharmacy prices can react to shifts in supply. Finally, Dr. Hunter concludes with a discussion of the importance of buying groups and networks to independent pharmacies and a potential role they may have in protecting independent pharmacies.