Statutory Thickets and Drug Shortages: Accumulating Legislation as an Underlying Cause.

Abstract

Over the past three decades, the U.S. health care system has experienced numerous shortages of commonly-used older medicines that are both off-patent and inexpensive. Commentators seeking to explain shortages have often pointed to manufacturing quality and low profit margins as principal causes. These proximate causes, however, do not explain why there was a sudden and dramatic increase in shortages between 2007 and 2012, when shortages almost tripled from 154 to 456, or why they have persisted at similar levels into the 2020s despite repeated efforts to address them. This Article posits that low prices and quality problems derive from underlying shifts in the market environment, and that these shifts in turn are largely the result of Congressional legislation. The role of such well-intentioned legislation over the past fifty years is evaluated, including the 1984 Hatch-Waxman Act, the 2003 Medicare Modernization Act, the 2012 Generic Drug User Fee Act, and the 2015 Bipartisan Budget Act. The analysis reveals these laws have inadvertently squeezed profitability out of the generic drug market and thereby served as a true root cause of many drug shortages. Also considered are the potential effects on drug shortages of more recent legislation, including the 2021 American Rescue Act Plan and the 2022 Inflation Reduction Act.