Monday, August 29th, 2011
Last week the Food and Drug Administration announced that about 180 drugs used to treat cancer and other serious illness are in short supply. A survey by the American Hospital Association found that a large majority of hospitals sometimes have to delay treatments or substitute a less effective drug. Some hospitals are forced to ration life-saving drugs.
Available data do not say whether the shortages specifically have compromised mesothelioma treatment, but they have hindered treatment for childhood leukemia, breast cancer, colon cancer, and other more common cancers. So, what is causing the shortages, and is anyone doing anything about it?
More than half of the shortages occurred because batches of drugs failed inspection. Many drugs sold in the U.S. are manufactured overseas in factories that are rarely inspected. This saves money for the manufacturers but results in products that are not made correctly or, worse, are contaminated by bacteria and other toxins. In other cases, the foreign suppliers simply are unable to keep up with demand.
Generic drugs are most likely to be scarce. Once the patent on a drug has run out, anyone can manufacture it. Price competition drives down the cost, and then many companies will stop making that drug because there’s not enough of a profit in it.
But then when a drug becomes scarce, the price shoots up. Some wholesalers purchase large quantities of drugs that they think might become scarce, and of course the wholesalers are helping to make them scarce. Then they contact hospitals to offer the drugs at 10 to 20 times the normal price. At the moment, this is completely legal.
So why don’t manufacturers crank up production of the scarce drug? The Medicare Prescription Drug Act of 2003 stipulates that the price of a drug cannot increase by more than 6 percent in any six-month period. Manufacturers say this keeps them from responding to a shortage, because the price they can bill Medicare for a scarce drug does not go up enough to provide an incentive to re-start manufacture of the drug.
Somehow, that doesn’t stop wholesalers from making a killing. And it needs to be noted that other industrialized democracies, which nearly all enforce strict price controls on drugs sold within their borders, are not having the same problems with shortages.
What’s to be done? There are proposals that the federal government keep a national stockpile of cancer drugs that can be used in case of shortages. Some want the FDA to temporarily suspend laws against buying a drug in a foreign country if that drug becomes scarce. Others argue that tax incentives or subsidies would encourage American manufacturers to continue to produce older generic drugs that are essential for cancer treatment.
One generic drug company has proposed the pharmaceutical industry pay to have FDA inspections of foreign plants making drugs for sale in the U.S. This would cost the industry $299 million a year and would have to be approved by Congress. However, from the manufacturers’ point of view, that might be less expensive than having to dump large batches of product because they didn’t pass inspection.