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What's causing a national drug shortage?

Pharmacy technician Gloria Oates fills out a prescription of Levoxyl at Rosemont Pharmacy January 18, 2006 in Portland, Maine.

Jeremy Hobson: Well today Congress will bring together doctors, hospitals and drug makers to talk about the list of drugs that we're running out of in this country.

From the Marketplace health desk at WHYY in Philadelphia, Gregory Warner reports.


Gregory Warner: Some drugs are in such short supply that hospitals are buying them on the gray market, paying 10 times the price for certain cancer medications or anesthetics, or telling doctors to use unfamiliar alternatives. That's led to overdoses, deaths, and in some cases, patients waking up in the middle of surgery.

Michael Cohen: You know, it's a very, very scary situation.

Michael Cohen is president of the Institute for Safe Medicine Practices. He says consolidation in the generic drug industry is a big part of the problem: too few manufacturers.

Cohen: They've literally decided it's not profitable enough to make this drug anymore. We're not getting paid enough for it.

Medicare limits drug prices. Two bills in Congress would require drugmakers to alert the FDA before they stop production, so at least hospitals can make other plans. A more controversial fix would allow hospitals to buy drugs overseas. That could lead to other problems, like nurses having to decode dosing information -- in French.

In Philadelphia, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.
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This article is missing the closing conclusion:

"We can't figure what is causing the shortage."

If the consolidation is causing the problem, does that mean unit costs increase as drug production increases, violating the fundamental principle of economy of scale?

If the price limits on part of the market is eliminating profit as increased economy of scale reduces unit costs, are labor costs rising due to a labor shortage limiting production or driving up wages?

Perhaps the problem is too much competition in a global economy? The expiration of patents allows Israeli and Asian and French(?) generic drug makers to meet the demand outside the US, possibly under license from the US drug maker giving the US maker exclusive access to the US? In my experience, US firms employ marketing and lawyers who will seek to maintain control over a market they find too unprofitable to serve, fearing a competitor can grow by profitably serving that market. Or maybe simply by figuring you can't be blamed for not making a decision.

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