Drug Shortages Lead to Price Gouging

Hospital pharmacists are getting desperate. They are being forced to devote precious time to hunting down scarce supplies of critical medications. That’s because drug shortages are increasing nationwide.
Since 2006 the number of medicines that have become hard to find in any given year has tripled. The FDA has reported that over the last year nearly 200 drugs have been unavailable or in limited supply. That means that sometimes patients undergoing surgery will have procedures delayed. Less effective or far more expensive treatments may need to be substituted.
In recent months, the lack of crucial chemotherapy agents has ignited a firestorm of controversy. Oncologists worry about access to basic medicines used in the fight against cancer.
Health care systems are forced to allocate scarce resources to track down such supplies. In addition to certain chemo drugs, pharmacists have had to search for some anesthetics used in surgery, antibiotics, morphine and epinephrine, a medicine critical for treating life-threatening allergic reactions.
Part of the problem is that there is no organization in charge of ensuring adequate supplies of essential medications. The FDA has no authority over how much medicine a company produces. If a generic drug manufacturer decides to halt production, there is no recourse.
Why would a company stop making a pharmaceutical it has made for years? Sometimes the answer is pure profit. There may not be enough incentive to continue with a generic drug that is sold for a low price.
Oncologist Ezekiel Emanuel, MD, wrote in The New York Times that shortages are an unintended consequence of the 2003 legislation that set up Part D Medicare drug coverage for senior citizens. The Act called for Medicare to reimburse chemotherapy drugs at the actual average selling price plus 6 percent. As a result, price increases can’t exceed that amount in six months.
Normally, shortages would result in the manufacturer charging substantially higher prices. But because the generic drug companies are constrained by law against raising prices quickly, they just stop making vital medicines.
This provides an opportunity, unfortunately, for a number of unscrupulous operators to take advantage of the situation. A gray market has developed for hard-to-find drugs. Distributors may send faxes or emails to hospital pharmacies offering an otherwise unavailable medicine at a grossly inflated price. Markups can range from 100 to 4000 percent.
It can be hard to track the origins of such medications. Pressured pharmacists may not be able to verify whether they were stored properly or even if they are genuine.
Overcoming drug shortages is a complicated problem. Congress will need to address the unintended consequences of its 2003 legislation. Generic drug companies should recognize that putting profit ahead of patients’ lives is a black mark on the industry.
The American drug distribution system needs to be better supervised so that gray market gouging is punished. A nation that does not permit profiteering after a natural disaster like a hurricane or tornado should not allow patients to suffer for lack of basic medicine.