Michael Halasy, writing at Angry Bear, draws our attention to an interesting JAMA article on drug shortages:
Many of these drugs are made at one site, by only one company, which limits supply and increases the chances of disruption.
While Gehrett does note that 80% of raw materials come from foreign countries, there does not seem to be any shortage of raw materials that have been documented or noted.
The only single, commonality, is that all of the medications we have seen in shortage status are off patent, generic medications, that are harder to formulate than some others, and have a definable shelf life.
My guess is that the most significant factors in constricting supply of the drugs noted are patents, barriers to entry, and liability.
On a peripherally-related subject here’s a study that found that of the 26,000 some-odd medical devices patented between 1990 and 1996 20% were patented by physicians or with physicians in the team. I agree with the reasoning in the AMA’s original 1847 Code of Ethics:
Equally derogatory to professional character is it, for physician to hold a patent for any surgical instrument, or medicine; or to dispense a secret nostrum, whether it be the composition or exclusive property of himself, or of others. For, if such nostrum be of real efficacy, any concealment regarding it is inconsistent with beneficence and professional liberality; and, if mystery alone give it value and importance, such craft implies either disgraceful ignorance, or fraudulent avarice. It is also reprehensible for physicians to give certificates attesting the efficacy of patent or secret medicines, or in any way to promote the use of them.
There is an inherent conflict of interests.
It’s also possible companies don’t want to manufacture those drugs because they aren’t as profitable as others.
Well, of course they aren’t. By prohibiting competition patents make some drugs more profitable than others. Imposing regulations on manufacturers raises the cost of entry into that sector. Prohibiting imports also changes the profit and loss equation.
I won’t pretend that reversing some of the decisions we’ve made over the years wouldn’t have their own negative consequences but where we are is a completely foreseeable consequence of the policies we’ve put in place.
True, but profitability isn’t limited simply to competition. All else being equal a drug in demand by twenty million is going to be more profitable than one needed by twenty thousand. That’s why so much pharma cash has gone into things like anti-depressants as opposed to MS. One goup’s absolute need is certainly greater (because without treatment they’ll die), but they just don’t bring in the really big bucks.
This doesn’t mean Big Pharma is evil in any sense, it just means that in health care markets alone can’t get the job done, nor should we expect corporations to be responsible for curing social ills.
We don’t have a healthcare market. We don’t have a pharmaceuticals market. We have carefully managed command systems. Command systems always have shortages.
@Dave
I’m honestly not sure of how you are using your terminology. If the definition of market is absence of government intrusion, then there is no such thing as markets. Shortages occur with or without command although to varying degrees. It can’t be any other way in a finite universe.
…and if mystery alone give it value and importance, such craft implies either disgraceful ignorance, or fraudulent avarice. It is also reprehensible for physicians to give certificates attesting the efficacy of patent or secret medicines, or in any way to promote the use of them
Damn. There goes witch doctoring as a second career.
I ll bet you will find the number of generics produced. Reduced after t he 90s crackdown on manufacturers, some of whom were rather shady. I haven’t followed the industry since we saw a slew of those financings in the 90s, but I bet the regulatory hurdles are much higher now.
Ben, you’re making a false comparison. The healthcare markets and pharmaceutical markets are regulated in the extreme. It’s a case where a difference in degree is a difference in kind.
It’s not like, say, opening a book store or a grocery store. Sure, there are regulations and restrictions in opening those, too. But they’re several orders of magnitude less.
1) These are almost all injectable drugs.
2) These are almost all older, off-patent drugs. To the best of my knowledge, none of the shortages have occurred with drugs still on patent. The new, expensive chemo drugs are not running out. I can get all of the expensive (probably doesnt work in my opinion) drug that might spare kidneys, but it has become difficult to find drugs we have used every day for 20 years.
3) This has become, I think, a complicated issue. It looks mostly like price competition has squeezed out all but one or two manufacturers. These companies tend to run big batches of the given drug, then retool their line to do something else. If a problems occurs, it is expensive to go back. Margins are very low.
4) Import restrictions may be a factor. When restrictions have been lifted and we have imported drugs, they have some differences we need to learn.
5) I am not sure what these regulations are that have been passed in the last 5 years to suddenly cause this problem, which is worsening. I think the gray market is also an issue.
6) Physicians shilling for device makers and pharma is more of a problem I think. Many of these guys make millions, then go to meetings to advocate for their product.
Steve