Drug Shortages and the Free Market: Problem or Solution?

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  • 01/06/2012

Is the free market the cause or the solution to the problem of drug shortages.?


According to a story in today’s Detroit Free Press:

“The most common causes are manufacturing violations, production delays, shipping problems or ingredient shortages … Shortages grow as generic manufacturers have consolidated and fewer plants are left making certain drugs.”

All of these issues can be addressed and resolved through smart free market solutions and the helping hand of economic incentives.

As Scott Gottlieb commented in front of the Senate Finance Committee:

The is a clear correlation between price and availability – with many of the cheapest infused medicines also being the ones that seem most likely to be in shortage. These drugs are often sold for very low prices, sometimes just several dollars for a single dosage vial of a medicine. As a result, the cost of manufacturing ends up comprising a sizable proportion of the overall price of the finished medicine. In some cases, these drugs are being sold at a loss to their manufacturers once all the production and distribution expenses get fully loaded into the cost. The economic problems are widespread, and deeply embedded in the markets for these drugs.

We should consider policy constructs that would give manufacturers a financial incentive to develop intellectual property that improved the manufacturing characteristics of generic medicines even if these changes it didn’t alter the clinical properties of a drug.

Let’s adopt a free-market solution and free American physicians, pharmacists, and patients of the problem of needless drug shortages.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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