What Obama Doesn’t Want You to Know About the Drug Shortage

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President Obama is going to pass another Executive Order to look for the corruption in the drug industry, which he believes might be the basis for what is now a critical shortage of life-saving drugs. The Order is unlikely to do much of anything since the Order has become another opportunity to slam Republicans for not passing the jobs bill as opposed to a real solution. That is not to say there aren’t people taking advantage of the situation, but that is not the root cause.

I wouldn’t be surprised if there is not an active gray market since the President saw fit to straddle companies with regulations and Obamacare to the point that life-saving drugs cannot be made available.

Back in June, I reported about the drug shortages which have become critical. While Reuters claims to not know the cause, and while President Obama blames the Republicans for not passing the jobs bill, the real reason can be easily found in Obama’s own regulatory policies and in Obamacare.

In June, there were nearly 250 drugs that are in short supply and the number is growing. Some are life saving drugs, including those that treat cancer. The cause of these shortages is a direct result of the federal drug rebate program which provides drugs to the indigent from huge discounts. (My editor’s note: My friend is on Medicare. She pays $5 for each of her drugs. She can afford much more. Nearly free drugs are not just going to the indigent and therein lies the biggest problem.)

Drug companies, as a result, cannot recoup their investment or make a profit. Furthering the problem, the FDA and DEA have increased regulations on drug manufacturers and the Affordable Care Act (ObamaCare make the cost of making these drugs worse. fRichard Walker

A new report from the Premier healthcare alliance found that drug shortages have risen to “critical levels.” Hospitals are scrambling to make up the shortfall, in some cases rationing medications, postponing surgeries and using alternative drugs.

The Federal Food and Drug Administration (FDA) has been increasing its over-regulating through quality enforcement efforts — levying fines and forcing manufacturers to retool their facilities both here and abroad. They have slowed production of drugs, but worse yet, they have a zero tolerance forcing manufacturers to abide by rigid and inflexible rules. Drug manufacturers must get approvals for how many drugs they produce in what period of time and if a shortage develops because the FDA shuts down a plant, another manufacturer cannot step up productions without going through another arduous approval process on output and time intervals.

Even the Drug Enforcement Agency (DEA) has a role — because minute quantities of controlled substances are often used to make other drugs. This is the apparent reason for a nationwide shortage of ADHD drugs, for example, including the generic version of Ritalin. And like the FDA, DEA regulations are rigid and inflexible. For example, if a shortage develops and the manufacturers have reached their preauthorized production cap, a manufacturer cannot respond by increasing output without going back to the DEA for approval.

The Centers for Medicare and Medicaid Services (CMS) also has a role – levying large fines for “overcharging,” forcing some companies to leave the generic market altogether.

Drug companies are also forced (under the federal 340B drug rebate program) to sell drugs for less than they cost to make. After the Federal government offers the drugs for 23% less, states can offer further discounts.

My Internist told me he also has to pay towards any flu vaccine and does it as a service for his patients but he loses money on it.

The Affordable Care Act (ObamaCare) will make matters worse. In 2002, about 8,000 hospitals and clinics were in the program. By 2010 more than 14,457 were participating. The total number of eligible hospitals and clinics is now estimated at nearly 20,000.

People respond to persistent shortages by doing things that invariably make the problem worse. These types of regulations lead to stockpiling, black markets, and the use of lesser drugs when the appropriate drug is not available.~John Goodman

ObamaCare did not cause the problem but will make it far worse with its penchant for regulation over free market forces. Government should be in the business of investigating and informing but overregulating is destroying our health care system. Read details about it here: John Goodman, NCPA

 

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