Blumenthal, Lee, Klobuchar, Hatch Urge FTC to Investigate Antitrust Violations Connected to IV Solution Shortages, Increasing Costs of Hospital Operations and Patient Care

“One health care expert has claimed that this could make the saline solution shortage the most expensive drug shortage in U.S. history.”

“Rising healthcare costs are one of the most pressing concerns facing this nation, and ensuring that anticompetitive conduct does not further increase those costs is one of the FTC’s most important charges.”

(WASHINGTON, D.C.) – Today, a bipartisan group of U.S. Senators Richard Blumenthal (D-Conn.), Mike Lee (R-Utah), Amy Klobuchar (D-Minn.) and Orrin G. Hatch (R-Utah) urged the Federal Trade Commission (FTC) to investigate possible illegal collusion by saline solution manufacturers. Senators Lee and Klobuchar are the Chairman and Ranking Member, respectively, of the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, and Senator Hatch is the former Chairman of the full Judiciary Committee. In a letter to FTC Chairwoman Edith Ramirez, the senators noted the nation’s shortage of saline solution since 2013 and the failure of the three companies that provide all of the saline solution in the U.S. to end the shortage. As saline solution is a necessity in hospitals across the country, actions by manufacturers indicate possible collusive behavior to exploit the shortage to increase company profits and harm competitors, resulting in higher costs for the nation’s hospitals, patients, and overall healthcare system.

“Since the saline shortage began in late 2013, suppliers are reported to have increased their prices by 200-300 percent,” the senators wrote. “This equates to increased annual costs to individual hospitals in the range of hundreds of thousands to millions of dollars.”

“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.”

Instead of addressing the shortage, the cost of saline has continued to rise and manufacturers have increasingly capitalized on the shortage, specifically by “imposing even greater price increases on customers who do not also purchase additional non-saline products, effectively tying saline sales to other products such as the pumps, tubing, and catheters through which saline is delivered to the patient.” The senators noted, “If true, these actions pose a potential risk to the wellbeing of patients by forcing hospitals to purchase products they may believe to be clinically inferior and add significant costs to our health care system.”

“…the saline suppliers’ ability to extract several-hundred-percent price increases and to lock their customers into long term contracts is likely reducing their incentive to alleviate this troubling shortage, which, in turn, further exacerbates the shortage and results in consumer harm.”

Full text of the letter is below.

Dear Chairwoman Ramirez:

We are writing today to express our concern about the ongoing shortage of saline solution in the United States, and to urge the Federal Trade Commission (FTC) to investigate whether saline suppliers may be taking advantage of this shortage in ways that run afoul of antitrust law and pose risks to patient care.

The nation has been facing a shortage of saline solution since at least 2013, when the Food and Drug Administration added it to the drug shortage list. Saline solution, which is delivered to patients through intravenous (IV) pumps, is a critical input to the United States healthcare system. It is crucial to the treatment regimen of everything from Ebola to cancer to the flu. Hospitals rely on saline every day to dilute medication, hydrate patients, and complete countless procedures.  More than a billion units of saline are used in the U.S. every year, and no hospital in America can properly function without it.

Three companies provide all of the saline solution used in the United States – Baxter, Hospira and B. Braun. 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. Since the saline shortage began in late 2013, suppliers are reported to have increased their prices by 200-300 percent. This equates to increased annual costs to individual hospitals in the range of hundreds of thousands to millions of dollars. One health care expert has claimed that this could make the saline solution shortage the most expensive drug shortage in U.S. history.

Even more troubling, hospitals have reported that all three saline suppliers are imposing even greater price increases on customers who do not also purchase additional non-saline products, effectively tying saline sales to other products such as the pumps, tubing, and catheters through which saline is delivered to the patient. If true, these actions pose a potential risk to the wellbeing of patients by forcing hospitals to purchase products they may believe to be clinically inferior and add significant costs to our health care system.

Other hospitals have reported that their saline supplier indicated that the hospital would not be able to purchase any saline at any price unless the hospital also purchased additional products. While prices tend to increase during a shortage, these price increases appear to be outside the bound of natural market forces. 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.

The ongoing shortage, the fact that the shortage has not cleared even with significant price increases, and the behavior reported by hospitals raises questions about potential coordination between the saline suppliers. Even absent coordination, the saline suppliers’ ability to extract several-hundred-percent price increases and to lock their customers into long term contracts is likely reducing their incentive to alleviate this troubling shortage, which, in turn, further exacerbates the shortage and results in consumer harm.

Rising healthcare costs are one of the most pressing concerns facing this nation, and ensuring that anticompetitive conduct does not further increase those costs is one of the FTC’s most important charges. We find the conduct described above troubling and deserving of close and thorough scrutiny by the FTC. We urge the FTC to formally investigate whether the saline suppliers’ apparent anticompetitive conduct is harming consumers and running afoul of the antitrust laws.

Sincerely,

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