Four US Senators have asked the Federal Trade Commission to investigate whether suppliers of saline solution have illegally inflated prices in order to exploit chronic shortages of the product, which is a fixture in hospitals across the country.
Since shortages began two years ago, the companies reportedly increased their prices by 200 percent to 300 percent. In a letter to FTC chairwoman Edith Ramirez, the senators contend that costs have increased for hospitals by hundreds of thousands to millions of dollars a year.
“Price increases often help clear shortages, but in this case the shortage is still ongoing after nearly two years, raising questions about the incentives of the saline suppliers to solve this problem and about possible coordination among them,” they wrote yesterday.
Saline is widely used to provide patients with fluids in order to keep they hydrated. But a shortage has persisted for more than two years and the Food and Drug Administration has allowed saline suppliers to ship products from overseas facilities to the US market in response to the shortages.
The letter was written by Richard Blumenthal, a Connecticut Democrat; Amy Klobuchar, a Minnesota Democrat; Orrin Hatch and Mike Lee, both Republicans from Utah. We asked the FTC whether it will pursue an investigation and will update you accordingly.
The companies named in their letter include Baxter International, B. Braun and Hospira, which is now owned by Pfizer. “While all three companies have publicly spoken to their commitment to ending the saline shortage, it has persisted for two years even as prices have risen,” the senators wrote.
The senators also charged that suppliers may be boosting saline prices to hospitals that do not purchase other medical products, “effectively tying saline sales to other products such as the pumps, tubing, and catheters through which saline is delivered to the patient.”
Baxter spokeswoman wrote us that its saline solution “is one of the best medical values in healthcare today – the cost of this Baxter prescription product is less than a cup of coffee.”
She also insisted the company has made “extraordinary efforts” to maintain supplies, including shipping product from a facility in Spain, and that the average selling price has increased “at a very modest level – nothing like the amounts cited” by the senators. “From late 2013 through today, average annual rates of increase are in the range of single to low double digits,” she added.
Pfizer spokesman wrote us that “in many cases the market fundamentals of this business have resulted in a lack of investment leading to fewer high quality suppliers.” He added that Hospira responded to shortages by increasing production, but did not discuss pricing. In any event, he said that Pfizer will cooperate with any inquiry by the FTC.
[UPDATE: Erin Fox, who heads the Drug Information Service at the University of Utah Health Care, tells us that, “in general, saline is… very often bundled with other products (pumps, tubing, nutrition solutions, etc) . Over the years, saline suppliers have changed their prices very little – and the price that hospitals pay for a bag of saline generally doesn’t cover the company’s costs, so they bundle the sales together with tubing or pumps.
“Before the shortage, most hospitals had been purchasing a bag of saline for about $1 – that had been the same price for years. However, it costs the manufacturer about $4 per bag to manufacture. I think the best thing for the market would be for the fluid companies to sell the products for what they cost (or a bit more – we know it’s a business and they have to make money) rather than continue to bundle products together.”
In any event, she says the shortage appears to close to being resolved.]Print This Post