Frankly speaking about the drug shortage (Part 3)

Thank you for coming back for part 3 of this discussion.  If you are new today, I would suggest you take a quick look at the previous blogs building up to today.

So far, we have covered an overview of the issue and have taken a look at a view from a practicing oncologist and clinical researcher.  Today, we will explore the comments made by Dr. Sherry Glied, PhD who is the Assistant Secretary for Planning and Evaluation for the U.S. Department of Health and Human Services.  By way of background, Dr. Glied also has a number of publications to her credit and has a rich history in both economic and public policy research.  She has held or been appointed to a number of public office posts including the President’s Council of Economic Advisers, the Clinton Health Care Task Force, the Institute of Medicine National Academy of Sciences, the Board of AcademyHealth, and was a member of the Congressional Budget Office’s Panel of Health Advisers.

Dr. Glied’s presentation was really an excellent (and understandable) representation of the financial considerations of the issue.  Like Chabner, she pointed out the limited capacity of the generic manufacturers – specifically related to the fact that their business model and profit margins require them to run production lines at full throttle with little ability to accommodate for repairs or ‘errors’ in the batch.  She also pointed out that this is the current situation during a time when the need for the medications they produce is increasing. 

She further showed the results of her research; measuring actual sales of drugs, companies choosing to begin to produce drug and companies choosing to stop producing a drug. What is interesting to note is that despite consistent sale of a product, there is actually a decrease in the brands entering the market and an even larger increase in the brands leaving the market.  As you can see, this is a recipe for not only a shortage in production, but also the lack of ability to predict or count on a consistent supply. 

Finally, she did address the reimbursement issue pointing out that the price of generic drugs generally go up and down over time and that Medicare reimbursement actually reflects drug selling prices of 6 months in the past. As mentioned yesterday, she also concluded that changes to reimbursement are not the solution to this issue.

Stay tuned for the next blog where we will look at the analysis of the Food and Drug Administration. We would love to hear what you think, leave your comments here!

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