The Unhealthy Side Effects of Mixing Medicare with Big Business

Cancer drug shortages in the United States are putting lives at risk, especially when treatments require regular dosages over extended periods of time.  Alice Park of Time Magazine writes:

In late February, when Divers called the hospital to confirm Alyssa’s upcoming chemotherapy treatment, the nurse informed her that there was a drug shortage. The hospital couldn’t be sure that there would be enough methotrexate — the cornerstone of therapy for some childhood cancers, including leukemia and osteosarcoma — to treat Alyssa, now 10. Divers was told she might have to reschedule the session; the hospital would let her know. “It made me sick to my stomach to hear that,” says Divers, a former chaplain from Palmyra, Va. “Alyssa was in treatment for over a year already, and the last thing you want to do is add unnecessary delays in treatment, which gives the cancer a chance to catch up.” Divers explains that her daughter’s cancer doubles in tumor load every 34 days, “so you need to hit it again and again to eradicate it.” (See article)

And this is just one of the many cases.  But what is causing these shortages?  Although this is not the whole story (since the big picture is a bit more complicated, including procedural issues with FDA inspections), a substantial portion of the problem is caused by the economics of drug supply.  One thread of the economic story goes something like this: in order to make chemotherapy treatments easier for patients, doctors began offering infusions in their offices rather than in hospitals.  The 2005 reimbursement scheme, however, allowed doctors to be reimbursed at a 6% profit.  The problem was that the reimbursement price lagged behind the market prices by six months, which made the reimbursements lower than what the doctors paid for the drug, essentially pushing some physicians to prescribe pricier brand name drugs.  This, in turn, amounted in lower orders of generic drugs, which further shrank the market.

“In order to gain market share, companies underbid the market to get the business, and it’s a race to the bottom,” says Dr. Len Lichtenfeld, deputy chief medical officer for the American Cancer Society. “Whoever is the last company standing can’t charge enough to make a profit on the drug and to make needed investments to keep making the drug.” That’s what may have happened with the methotrexate that Alyssa Divers depends on. (See article)

To add to this incredible situation, once the drug shortages were publicized, doctors started receiving offers from distributors, with stockpiled stashes of the harder to get drugs, who were very happy to sell the medicines, charging “$800 to $900 per gram for a medication that normally costs $16” (see article).

I guess that one way to respond to this is to blame the government for its untimely reimbursement policy, which certainly makes me wonder (why is there a six month lag in the first place?).  What really puts a bad taste in my mouth, however, is how intimately the production of pharmaceuticals is linked to the administration of treatments that use certain drugs.  When a profession views itself as essentially helping humankind by caring for human well being and health and when the societal respect is accorded to this profession for such reasons, it is more than disheartening to find out how closely some such professionals can resemble mere pedlars of life when viewed in light of their business connections to pharmaceutical companies (which seem to have no moral qualms about charging 56 times the market worth of a life-saving medicine).

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