Do higher prices provide protection against drug shortages? Real-world evidence lessons from Canada
Presented at the CDA Symposium 2024, Sept. 4-6, 2024 and at the 2024 CAPT Conference, October 21-22, 2024
Étienne Gaudette, Shirin Rizzardo, Kevin R. Pothier, and Mina Tadrous
Introduction
Context: Drug shortages have important consequences for patients and the health care system. International supply chains could favor countries with higher prices when there are production disruptions, leading to more shortages in countries with lower prices.
Objective: To assess whether drug shortages reported by Canadian manufacturers were associated with lower drug prices in Canada than in other countries.
Data and approach
Sources: International drug sales data from the IQVIA MIDAS® database and drug shortage reports from the Drug Shortages Canada website for fiscal years (Apr. to Mar.) 2017 to 2022.
Main outcome and measures: The adjusted odds ratios of drugs being reported in shortage annually at different relative international price points, as computed after the estimation of multivariate logistic regressions with specifications including drug characteristics and year effects. Relative international prices were appraised using median foreign-to-Canadian unit price ratios (FTCs) among eleven comparator countries: Australia, Belgium, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.
Results
1. Shortage rates were lowest for drugs where the Canadian price was aligned with prices in other countries
- Drugs for which foreign prices were within 10% of the Canadian price (FTC between 0.9 and 1.1) had the lowest shortage rate with 21% (Figure 1).
- Both drugs for which the Canadian price was higher (FTC < 0.9) and lower (FTC > 1.1) than comparator countries had higher shortage rates.
- Drugs with a Canadian price aligned with international prices had a higher market size (2022 US$ 12.6 vs 9.8 million on average) and recorded sales in more countries (6.2 vs 4.9 on average) than other drugs.
Figure 1. Unadjusted drug shortage rates vs. foreign-to-Canadian price ratio (FTC)
Figure - Text version
| Foreign-to-Canadian price ratio (FTC) | Number (N) | Unadjusted shortage rate |
|---|---|---|
| Less than 0.5 | 4,296 | 29% |
| 0.5 to 0.7 | 2,161 | 28% |
| 0.7 to 0.9 | 2,038 | 24% |
| 0.9 to 1.1 | 1,377 | 21% |
| 1.1 to 1.3 | 688 | 30% |
| 1.3 to 1.5 | 429 | 34% |
| More than 1.5 | 1,233 | 36% |
Foreign-to-Canadian price ratio (FTC) less than 1 means the Canadian price is higher than foreign prices.
Foreign-to-Canadian price ratio (FTC) more than 1 means that the Canadian price is lower than foreign prices.
2. There was a weak association between international prices and shortage rates
- A drug priced 50% higher in comparator countries than in Canada (FTC > 1.5) had an odds ratio of 1.32 of being in shortage compared to a drug for which the price was aligned (FTC between 0.9 and 1.1) after accounting for differences in drug characteristics (Table 1).
- Other FTC values were not significantly associated with shortages.
- Simulated changes in the probability of shortages when Canadian prices increase or decrease relative to international prices were small. The predicted probability of shortage for both a low-cost high-use generic (metformin) and a patent-protected branded product (sofosbuvir:velpatasvir) showed only minor change at different FTC values (Figure 2).
Table 1. Odds ratios of a drug being reported in shortage during the year by foreign-to-Canadian price ratio (FTC)
| FTC | Odds Ratio (95% confidence interval) |
|---|---|
< 0.5 |
1.06 (0.90-1.25) |
0.5 - 0.7 |
1.13 (0.95-1.35) |
0.7 - 0.9 |
1.16 (0.96-1.39) |
0.9 - 1.1 |
1 (Reference group) |
1.1 - 1.3 |
1.24 (0.98-1.56) |
1.3 - 1.5 |
1.26 (0.97-1.66) |
> 1.5 |
1.32 (1.09-1.60) |
Note: Therapeutic class, generic status, single-source status, number of manufacturers, market size, countries with sales, and annual dummy indicators were included in the model specification.
Figure 2. Case studies: predicted probability of shortages by foreign-to-Canadian price ratio (FTC)
Figure - Text version
| Metformin (Leading manufacturer, 500mg tab) | Sofosbuvir:velpatasvir (Originator, 400mg+100mg tab) | |||||
|---|---|---|---|---|---|---|
| Foreign-to-Canadian price ratio (FTC) | 95% Confidence interval lower limit | Point estimate | 95% Confidence interval upper limit | 95% Confidence interval lower limit | Point estimate | 95% Confidence interval upper limit |
| Less than 0.5 | 44% | 49% | 54% | 5% | 7% | 9% |
| 0.5 to 0.7 | 45% | 50% | 56% | 6% | 7% | 9% |
| 0.7 to 0.9 | 45% | 51% | 57% | 6% | 7% | 10% |
| 0.9 to 1.1 | 41% | 47% | 53% | 5% | 6% | 9% |
| 1.1 to 1.3 | 46% | 53% | 59% | 6% | 8% | 11% |
| 1.3 to 1.5 | 46% | 53% | 60% | 6% | 8% | 11% |
| More than 1.5 | 48% | 54% | 60% | 6% | 8% | 11% |
Foreign-to-Canadian price ratio (FTC) less than 1 means the Canadian price is higher than foreign prices.
Foreign-to-Canadian price ratio (FTC) more than 1 means that the Canadian price is lower than foreign prices.
Note: the marker indicates the observed FTC for the drug in 2022.
Conclusions
The overall evidence did not show a strong relationship between international price ratios and drug shortages in Canada, which did not support the hypothesis of higher drug prices decreasing the probability of a drug being in shortage.
Limitations
The analysis performed was observational. Causal methods should be used in future research to confirm whether the associations documented align with the causal relationship between international prices and shortages. The analysis valued drugs at list prices and did not account for confidential discounts negotiated by Canadian and international payers. Higher prices may protect against drug shortages through other mechanisms than that studied in this study, for example by providing manufacturers an incentive to strengthen their supply chains and prevent disruptions causing shortages.
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