Why Do We Have Shortages Of Drugs?

The fact that more and more drugs (180 so far in 2011) are out-of-stock or have limited supply should seem crazy to most of us.  We all feel like we pay so much for healthcare and medication and the system is so intelligent that it should be able to estimate supply in a profitable way.

Obviously, something is broken.  (Here’s a good NYTimes article on the situation.)  And, if you need to be more offended yet capitalistically intrigued, you can read about people price gouging on these drugs when they do find them.  (You only hope that people didn’t buy up large supplies to create false shortages to then create high prices.)

While 1/2 the problems are from issues found during the inspection process, the other 1/2 appear to be from business model problems where there isn’t interest (read money) in producing the drug or not enough supply is produced (perhaps due to constant changing of suppliers or the race to the bottom in generics).

So, what will happen?

  • Will the government step in and do something?  [probably]
  • Will the government stockpile drugs?  [maybe]
  • Will the government require early notification of shortages?  [probably]
  • Will anyone address the business model problem?  [maybe but unlikely]
This isn’t different than some of the issues around vaccines.  As it became ultra-competitive and demand was unpredictable, it wasn’t worth being in the business.  (See 2002 report from the Manhattan Institute.)
To understand some of the regulatory reasons for the shortages, I think Alex Tabarrok does a good job here. Separately, you can read the FDA’s perspective on drug shortages here.  Another link is to ASHP where they track the current shortages.
It would be one thing if the shortages were happening around traditional drugs for chronic medications like high cholesterol where it’s easier to find an alternative, but a lot of the shortages are around oncology drugs which are harder to substitute.  And, at least one article I read on the topic talked about people finding difficulty getting the alternative covered.  IMHO – There should be a process by which an override occurs when a drug hits some national list for shortage so people can take an alternative and only have to worry about clinical outcomes or side effects not coverage issues also.
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One Response to “Why Do We Have Shortages Of Drugs?”

  1. As hard as it is to imagine, some drugs are short because they’ve been bought up to help create the shortage. Others are short but available except they are being hoarded for “special” customers.

    Manufacturers could do a better job of predicting potential shortages and then controlling access/orders to the drug to insure continued availability. Wholesalers do hoard when known or suspected shortages are anticipated. One of the problems we face is that the supply chain has pushed inventory back up the channel to the point that even small disruptions in manufacturer supply means shortages in the channel. There is no longer inventory in the channel to absorb disruptions. A natural result of the backlash to forward buying that actually worked pretty well for the industry.

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