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How Bad Is the Problem?As of last summer, of 34 generic cancer drugs on the market, 14 were in short supply.22,23 These include mainstay treatments to treat leukemia, lymphoma, and testicular cancer. The President of the American Society of Clinical Oncology made it clear that doctors know how to cure the majority of these cancers, but patients are virtually helpless without access to these drugs.24|
What’s happening is that oncologists are being forced to use newer brand-name drugs that don’t have a proven cure rate, but can cost 100 times more than effective generics that have fallen into short supply.
According to one source, only about 10% of drug shortages can be attributed to a lack of ingredients to manufacture the drugs.22 Most shortages are instead the consequence of corporate decisions to cease production, or caused by interruptions in production caused by problems that manufacturers do not appear to be in a rush to fix. In a free market, this would not occur, as competition would readily fill the supply gap. But with the FDA deciding who can and cannot make generic drugs, the market is fixed, and those with the right connections can easily game the system to earn enormous profits, even if it means thousands of Americans perishing.
Adding to the problem is the thoroughly corrupt Medicare Prescription Drug Act of 2003 that added enormous complexities and opportunities for pharmaceutical companies to earn extortionist profits. The creation of drug shortages to gouge consumers was an inevitable consequence of this crooked legislation.
Life Extension bitterly fought against passage of the Medicare Prescription Drug Act that will cumulatively put over $1 trillion tax/debt dollars into drug company coffers. Congress allowed pharmaceutical lobbyists to prevail over rationality and humanity in passing this corrupt act.
Unintended Consequences of Government InterferenceHow would you like to be laid up in a hospital, and having the only drug that might save your life come from an obscure wholesaler that could not be trusted to provide an authentic medication?
That’s what’s happening today as hospital pharmacies receive hundreds of offers from murky wholesalers offering drugs in short supply at prices that are 10 to 20 times the normal rate.
Such sales may be legal, but the shady reputations of wholesalers who often serve as outlets for counterfeit drugs may be creating the very problem that overbearing regulations were enacted to prevent.
I have written before about how artificially-inflated drug prices provide a strong incentive for unscrupulous individuals to counterfeit, how pervasive drug counterfeiting has become in the US, and what little the FDA does to stop it.
Bureaucratic Gibberish and Shortages
|The United States has the world’s highest drug prices, yet simultaneously suffers severe drug shortages. Here is one bureaucratic reason why: |
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires Medicare to pay the drug’s average selling price, plus 6% for handling. Since it takes a long time for drug companies to compile accurate sales data and also for the government to revise the official average selling price, the result of the Medicare Prescription Drug Act is that prices are kept from increasing by more than 6% every six months.
An unintended consequence of this provision of The Medicare Prescription Drug Act is that it can’t adapt quickly enough to rapid drug price changes. By way of example, within a few years after a cancer drug goes generic, its price can drop by as much as 90%. But if a shortage of the active ingredient develops, the drug’s price should be able to increase again to attract more manufacturers. Since the Medicare Prescription Drug Act limits drug price increases, it impedes free market pricing from happening, which could cause manufactures to lose money on certain drugs if their cost for the active ingredient exceeds what the government allows them to charge. This is just one bureaucratic reason for today’s shortage of lifesaving drugs.22
Congress has been debating band-aid solutions, which will inevitably create more severe problems over the longer term. One bill introduced would require generic manufacturers to notify the FDA if they expected a supply problem or planned to stop manufacturing a drug. But the FDA isn’t able to force manufacturers to produce a drug, so learning about impending shortages is of limited benefit. For instance, early warning by the FDA of a shortage of a particular cancer drug could cause oncologists to start hoarding it, thereby exacerbating the problem.
The only permanent solution to the problems that collectively make up today’s health care cost crisis is to restore a free market environment to medicine—liberated from incompetent and corrupt interferences by Congress and the FDA.
With the opportunity to charge up to 20 times more because of the artificial shortages caused by today’s over-regulated environment, the incentive for prescription drug counterfeiting has never been greater.
Another horrific problem with this drug shortage is that clinical trials to evaluate new drugs have been postponed because studies must also offer older medicines that cannot now be reliably provided.