Why Are There Drug Shortages?
Regulations: In 2010, product quality issues — and the subsequent regulatory actions taken by FDA to address these problems – were involved in 42% of the drug shortages.
Price controls: The result of these policies is that generic prices can’t rise to reflect changing demand or the need for bigger investments in manufacturing.
Labeling restrictions: that prevent firms from branding their products, and reflecting by how they price them, legitimate improvements in manufacturing that allow drugs to be produced more reliably and in scalable facilities.
Source: Scott Gottlieb testimony. See our previous posts here, here, here and here.
Remember, these policies are killing people.
The ultimate reason for drug shortages is government price controls. Dr. Gottlieb points out that there is no shortage of name-brand drugs — which by definition only have one supplier. Yet, name-brand drugs are not in short supply. The reason some generic, injectable drugs are scarce is because the reimbursed price is so low that manufacturers don’t have an incentive to produce more of the drug.
This is hard to believe.
It’s hard to believe, but it shows how government flawed government’s approach is to this industry and probably a few others. And they keep blaming the “gray market”.
Shortages are almost always caused by government policies.