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Life Health > Health Insurance > Health Insurance

Economics Leads to Drug Shortage Crisis

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You don’t need to be an expert in economics to recognize that when kids get cancer and need either expensive or unprofitable treatments, capitalism clashes with medical ethics and basic human decency. In childhood cancer, unprofitability can actually be the bigger threat than high cost.

Many forms of childhood cancer are curable with cheap, tried-and-true generic drugs — meaning that industry isn’t eager to make these prescriptions, so they aren’t always available when a child needs them.

(Related: Why We’re Still Unprepared for Flu and Other Crises)

Sometimes hard-to-get drugs can be ordered from other hospitals, but often patients get a different drug regimen instead, said Yoram Unguru, a pediatric oncologist at the Herman and Walter Samuelson Children’s Hospital at Sinai, in Baltimore. These second-choice drugs don’t always work as well.

A growing body of research is documenting the prevalence of U.S. nationwide drug shortages, and how they pose harm to patients. They have affected cancer drugs for adults, as well as painkillers, anesthetics, IV fluids, heart drugs and antibiotics. In February, The New York Times reported that a nationwide shortage made it impossible for many people to get the anti-anxiety drug buspirone. In the veterinary drug industry, a nationwide shortage has made it hard to get Vetmedin, a life-extending drug for dogs and cats with heart disease.

While lawmakers expressed concern this month in hearings on high drug prices, shortages represent another serious consequence of a free-market system. Makers of patented drugs are entitled to a temporary monopoly, when they can set extremely high prices. But when that ends, competition with generics often collapses prices, giving all the companies less incentive to produce these drugs.

Sometimes patients aren’t even aware they are affected by shortages, because they don’t know they are getting a second-choice drug, said oncologist and hematologist Andrew Hantel of the University of Chicago. He recently led a survey of hospital pharmacy managers to assess the state of shortages and how badly they are affecting quality of care.

Of 719 pharmacy managers surveyed, all reported shortages, he found, and more than half reported shortages of at least 50 drugs within the previous year. Four out of five respondents reported hoarding drugs. More than a third reported rationing.

Aside from the market allowing critical drugs to run short, other triggers can be a scarcity of raw ingredients, a natural disaster or a run-in with regulators. Buspirone ran short after the FDA deemed a West Virginia plant unclean and forced a temporary close. The site had supplied about a third of the nation’s buspirone.

Many shortages stem from a business decision to focus on more profitable products and not even produce a generic that is in demand but cheap. A related problem emerges when drug makers choose to produce a low-priced drug but know they won’t make a fortune doing so: As a report in Clinical Pharmacology and Therapeutics concludes, there’s little market incentive for companies making generics to produce high-quality drugs, and some cut corners.

Peter Bach of Memorial Sloan Kettering Cancer Center, a cancer epidemiologist and now also an expert on drug pricing, said that there are many vulnerable points in the drug-making process.

“Because companies can compete one another down to zero profit, every part of the chain gets squeezed,” he said in an email. “Suppliers of components of drugs, distributors, and manufacturers themselves sometimes just leave the market.”

Unguru, the childhood cancer doctor, said that after experiencing problems getting necessary drugs for his patients, he joined a task force on drug shortages for the Children’s Oncology Group. Over the years, doctors have run into trouble getting drugs that were the standard of care for a kind of curable cancer called acute lymphocytic leukemia.

Those shortages have more recently abated, but new ones cropped up, including a shortage of drug called mechlorethamine, developed in the 1960s to treat Hodgkin’s lymphoma in children. It’s used in a regimen developed at Stanford University to avoid relapse as well as infertility and other long-term side effects.

In a 2012 study published in the New England Journal of Medicine, doctors compared the mechlorethamine regimen with one using a substitute drug, and found that the original gave kids better odds of an “event-free” two-year survival period. None of the patients on either regimen died, but those getting the substitute were more likely to relapse and have to suffer through additional chemotherapy or bone marrow transplants.

In a study published in 2017 in the Journal of the American Medical Association, researchers looked at the effects of a shortage of norepinephrine, which is the standard of care for treating septic shock. They found that in hospitals that faced shortages and substituted other drugs, there was an increase in the rate of deaths from sepsis.

While they couldn’t prove the shortage directly caused the deaths, an accompanying commentary piece pointed out that the study raised the possibility that national drug shortages could be placing potentially large numbers of patients in jeopardy.

As cancer epidemiologist Bach put it: “A basic principle of the free market is that not every good for which there is demand gets produced.” So are unnecessary suffering, second-rate care and even a few deaths simply an inevitable effect of relying on the private sector for medications? Not necessarily. Efforts by legislators, activists and nonprofits could ensure a steadier supply, as I’ll address in a future column.

— For more columns from Bloomberg Opinion, visit

Pen (Image: iStock)Faye Flam is a Bloomberg Opinion columnist. She has written for the Economist, the New York Times, the Washington Post, Psychology Today, Science and other publications. She has a degree in geophysics from the California Institute of Technology.


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© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.