Transcript: Drug shortages Q&A by Sen. John Cornyn

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. John Cornyn (R-Texas):

Sen. John Cornyn (R-Texas). IMAGE SOURCE:

Sen. John Cornyn (R-Texas):

“I share Sen. [Ron] Wyden’s skepticism that the expertise or the competence of Congress to micromanage the manufacturer and pricing of generic sterile injectable drugs. I just think it’s crazy for us to try to get into the nitty gritty details of it. I wonder if there are lessons to be learned from other very successful programs under Medicare, like the Medicare prescription Part D program, which admittedly is different because it’s prescription drugs readily available. But we rather than price fixing, which seems to be the chronic problem that Congress has when it comes to health care, trying to set prices, we’d see the discipline of an actual market take place and amazingly the price of Medicare Part D now is some 40% under original projection because people have choices, they have transparency, they get better service because there’s competition, and the overall quality is very high. So I wonder are there lessons we can learn from what we’ve succeeded in and those areas where we’ve failed – where we’ve seen manifest shortages – that should guide our deliberations and how we go forward? Dr. Gottlieb, why don’t you start?”


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

“Well, I think ideally we should move Part B altogether into Part D and allow these drugs to be acquired in a competitively bid market. I think there’s a lot of complexities to doing that. You’re gonna need to use some of the savings that you’d accrued from that – savings that would accrue because you have these drugs now tiered and all the mechanisms that have driven down, you know, prices and the utilization of the Part D schemes would now be applied to the Part B drugs, and that would increase certain savings. You would have to use the savings to offset increases in premiums that patients would experience in their copays that they would experience. You’d have to find a way to reimburse the doctors directly and in an honest fashion for the infusion of those drugs rather than doing it through an arbitrage on the spread of those drugs. The whole system would be far more transparent and, I think, competitive in allowing these drugs to be continued to be reimbursed in the Part D scheme. So I agree with you Senator.”


Sen. John Cornyn (R-Texas):

“I would invite all of you to, even after this hearing, send us your ideas – your best ideas – about how we might be able to do that. We can certainly learn a lot from you.

“I know that under the Medicaid [Drug] Rebate Program that exists currently that the Medicaid enrollees must enter in rebate agreements with Secretary of HHS on behalf of the states and under those agreements, pharmaceutical manufacturers provide state Medicaid programs rebates from drugs from Medicaid beneficiaries. Of course, that’s designed to make sure that the states, and thus the Medicaid beneficiaries, pay the lowest price that manufacturers offer for those drugs. But I wonder whether that creates the sort of distortions that we’re talking about here and the disincentives – it strikes me.

“Dr. Cobb, would there be some way – and this is a little bit different twist over my lead-in – would there be any way, for example, if there’s a stockpile of a drug that you needed in Billings, Montana, and San Antonio, Texas, would there be some possibility of a clearinghouse that either the FDA or someone else could provide where physicians who are looking for maybe malapportionment or distribution bottlenecks could access those drugs? Would that at least make an easy way to deal with some of this problem?”


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

“I think that’s an interesting concept to have a stockpile that the country has. The problem with sterile injectables is that they outdate and they become unusable. So as a practical matter, it would be very difficult to have a certain warehouse of medications that you can just keep as a backlog. I think ultimately it would probably end up being more expensive. I think a better choice would be to have the market reflect the actual cost of manufacturing these drugs and to scrap the ASP model of reimbursement because that acts as the artificial price cap on things.”


Sen. John Cornyn (R-Texas):

“Dr. Thompson, do you have any comments on that?”


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

“We’ve, similar to Dr. Cobb, have never thought of stockpiling would be feasible just given the fact that…”


Sen. John Cornyn (R-Texas):

“And let me just clarify, it wouldn’t be an intentional stockpiling I was referring to. It’s just basically a maldistribution…”


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

“Yes. I think from conversations we’ve had with physicians and our members that there is a lot of sharing that happens in the supply chain. The problem is that it’s finite. Everybody is dealing with shortages, you know. One organization may have more product but it’s going to be in short supply eventually when you have absolutely nothing coming off the manufacturing line. So there’s a lot of creative things that are happening out there now, but when the drugs are not available from the manufacturers at some point it’s limited.”


Sen. John Cornyn (R-Texas):

“You mean there are creative things happening without Congress directing?”



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

“What I’ll say to that is that a lot of the allocations that does take place in the marketplace is the small distributors reallocating product. Often time, they have to acquire the product at a much higher price than what GPO might acquire at. I raise this just because there’s been a lot of discussions about this so-called gray market and profiteering but a lot of those small distributors who are acquiring the drugs at higher prices and significantly higher prices and then selling them obviously at higher prices as well are providing an important market clearing function.”


Sen. John Cornyn (R-Texas):

“Thank you.”


Learn More:

One Comment on “Transcript: Drug shortages Q&A by Sen. John Cornyn

  1. Pingback: Transcript: Drug shortages Q&A by Sen. Ron Wyden | What The Folly?!

Leave a Reply

Your email address will not be published.