Transcript: Drug shortages Q&A by Sen. Jeff Bingaman

Senate Committee on Finance hearing on “Drug Shortages: Why They Happen and What They Mean” held on Dec. 7, 2011

Transcript of Q&A by Sen. Jeff Bingaman (D-NM):

Sen. Jeff Bingaman (D-NM). IMAGE SOURCE:

Sen. Jeff Bingaman (D-NM):

“Thank you very much. Thank you all for your testimony. Let me just follow up on that last comment. Are there some specific actions that you think the government should try to pursue to create incentives for manufacturers to keep active in producing some of these drugs that are no longer on patent and no longer bring in the high revenues that they once did?

“Dr. Thompson, maybe you could answer first.”


Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“As we’ve mentioned, helping manufacturers resolve some of these problems in their production processes is one factor. As I mentioned in my testimony, looking at economic factors or looking at tax incentives as well, we’re not in the position to describe what those are. I think manufacturers are in the best position to say what would be helpful to them, but we think some sort of tax incentive should be looked at for manufacturers to stay in this business.”


Sen. Jeff Bingaman (D-NM):

“Any of the rest of you have a thought about that?”


Dr. Rena Conti, Assistant Professor of Health Policy and Economics at the University of Chicago: 

“I do. I think that the solutions – or potential solutions – require both a carrot and a stick. What I mean by that is we absolutely need to ensure that firms receive additional monies for the production of drugs in short supply. In particular, we need to think about what drugs in short supply would we want to recommend that they make. I suggest that defining necessary – therapeutically necessary – lines of therapies seems to be an important ingredient.

“Secondly, I do think that increased incentives also need to be jointedly enacted with some penalties that compel generic drug manufacturers to invest in the capacities to produce an adequate supply of the drugs that are deemed to be necessary in the marketplace. That can include both penalties on the generic firms but also penalties within the generic firm and purchasing organization contract.”


Dr. Scott Gottlieb, Resident Fellow at the American Enterprise Institute:

“Two thoughts. I do think the idea of some kind of incentives to develop domestic capacity for manufacturing of these products is something important to look at. When we did that with respect to flu vaccine, we got companies to build many more facilities in the U.S. to manufacture flu vaccines when we looked upon that as a strategic national asset. I think the same thing applies to a lot of these drugs. These are critical need drugs that are in short supply worldwide. In many cases, the manufacturing capacity of these drugs is not domestic. That could become a problem down the road.

“The other thing – longer term – I think we should think about whether or not there’s a way to develop a construct that would allow companies to develop intellectual property around making the kind of manufacturing improvements they’re now being prodded to do by the Food and Drug Administration. Manufacturing improvements that make the manufacturing process more reliable, more scalable. If companies could make those manufacturing improvements and develop some IP around it, even if it didn’t change the characteristics of the drugs, they can make claims and labeling as to what kind of improvements that they’ve made, maybe that would allow for some kind of pass-through payments, whether it’s something that’s a pass-through payment under a DRG or maybe guaranteed purchasing by certain government programs like VA. But it would allow for and create an incentive structure for developing intellectual property around improving the manufacturing process to make it more reliable.”


Sen. Jeff Bingaman (D-NM):

“The suggestions that several of you made that we change the reimbursement policies of Medicare in order to facilitate or solve the problem of these shortages. Is it your view that the statutes need to be changed in order that Medicare have that authority or that Medicare has that authority today and can go ahead and make these reimbursement policy changes?”


Dr. Patrick Cobb, Frontier Cancer Center and Blood Institute:

“As far as policy is concerned, I’m not really sure about legally how that would happen. But for us, we think that scrapping the ASP model for reimbursement for generic drugs is really important. The problem for us is that the ASP system for generic drugs has turned generic drugs into commodities. But the problem is that chemotherapy is not really a commodity. Because if you look at pork bellies – if you run out of pork chops, you can reasonably substitute a hamburger. But if you run out of Cytarabines, there are no substitutes for this. So chemotherapy has to be taken out of this commodity-based pricing that’s the result of ASP. I think that’s really important.”


Sen. Jeff Bingaman (D-NM):

“Any of the rest of you have a thought on that? My time is up at any rate. Sen. [Orrin] Hatch, thank you.”



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2 Comments on “Transcript: Drug shortages Q&A by Sen. Jeff Bingaman

  1. Pingback: FDA approves emergency importation of cancer drug to ease shortage | What The Folly?!

  2. Pingback: Transcript: Drug shortages Q&A by Sen. Orrin Hatch | What The Folly?!

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