True or False:Cheap Generic Drugs Causes Drug Shortages?

https://www.axios.com/2024/01/05/america-generic-drug-shortage-reasons
A rash of generic drug shortages across the United States can be partly explained by a somewhat counterintuitive and politically inconvenient factor: The prices are way too low.

The challenging economics of domestic drug production don’t only affect how our health system deals with unusually high levels of drug shortages — they also raise major national security implications, given U.S. dependency on foreign suppliers.

But making more generic drugs at home would inevitably cost much more and require taxpayers, hospitals or patients themselves to pay more. Other commonly discussed options for easing shortages would also raise costs, albeit by not as much.

“Our drugs in the U.S. are either too expensive or too cheap,” said Janet Woodcock, the Food and Drug Administration’s principal deputy commissioner.

Generic drugs are much cheaper than branded versions, as manufacturers compete for market share based on price. This creates a race-to-the-bottom effect.

For some especially cheap generics, there’s less incentive for competitors to join or remain in the market, so there’s less room for error if a drugmaker stops making a product or has production issues.

Shortages are more common among drugs with lower list prices, according to a November report from health analytics firm IQVIA.

"If we want resilience of our supply chains, we’ll have to pay for it," said Marta Wosińska, a senior fellow at the Brookings Institution.

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The only way to have decent affordable health care is to ration it? When everybody has health care it just takes it away from people who do have it?

“Race to the bottom”? I thought the market was supposed to find the sweet spot and avoid that?

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translation “Free market competition is bad. Competition makes it too hard to make as much profit as we want. Guarantee our profit, and we will make more meds, until we decide we want more profit, and create shortages to squeeze bigger profit guarantees out of the government”.

Welcome to Shiny-land.

Steve

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Some Senator said the same thing about the airline industry years back when deregulation was showing its fingerprints. Too much competition. Nobody can make any money. I say, if market forces are working as they should, profits will approach zero anyway. (At least that concept of market forces they like to talk about. In real life of course you’d end up with Feudalism, which oddly is a sort of socialism. You work. We noblesse oblige. Modern capitalism just leaves out teh noblesse oblige stuff))

The US government should be suing drug manufacturers. Criminal prosecutions should not be out of the ordinary when someone dies because Merck or whoever would not produce a drug for the US market but would supply literally every other major first world market at a negotiated price.

The drug manufacturers are so used to factoring how many people will die in the US with a limited drug supply. It is criminal.

Not all prices are market driven. At one point the regulated price of aspirin in Venezuela was so low that I doubted it covered the cost of the packaging. In those conditions, why make and sell aspirin? “Dumping” is the strategy of selling under the cost of production to drive competitors out of the market. John D. Rockefeller’s “good sweating” was another form of market manipulation. Subsidies and tariffs also distort “free markets.”

Black markets are likely the most “free” of markets. BTW, “free markets” don’t mean “compassionate markets.”

The Captain

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The airlines industry has always run at a major overall net loss for the country. What at some point spits out profits turns to a bunch of bad debts.

Aspirin can go that low and be profitable. The issue is how many grains on average per pills. Aspirin that is carefully manufactured has the same number of grains per pill. Easy cheap manufacture is 2 to 7 grains per pill.

Its difficult to invest in manufacture of a given generic if others can undercut your price and take your business.

New capacity probably has financing costs factored in. That puts new capacity at a competitive disadvantage. It takes deep pockets and a long term strategy to play. Those are rare in western businesses; not uncommon in Asia.

Is there a better way? What? Our competitive market system gives low prices. But others know how to use it against us to their advantage.

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We are left believing there is no strategy? Longer term?

No we are just locked out of looking at future profit estimates. Keeping the gubbermint away from pharma.

Their manufacturing costs are not an issue. I get that is a claim and a sympathy. It is misplaced.

Pharma just keeps screwing America. Keep it to sociopathic behavior.

I disagree. If you have idle manufacturing capacity putting it to use when you can be competitive is good business.

But investing in new capacity is not a good idea unless you can also collect your financing costs. So new competition or new capacity is unlikely except in extraordinary circumstances.

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The problem is not drawn out that way.

The pills are ultra-cheap to produce. The factory lines do not have to be idle. The market demand is fully known. There are situations where prices are low but profitable.

The pharma companies are hoping you will cry for them. The companies BS the American public that we need to support their costs. It is a joke. The generic manufacturers are price gouging as well.

If a pill costs a few cents but sells for 20 or 40 cents it is a rip off. The factory production costs are met.

Assuming the companies are not twisting their story is wrong.

There is a huge element of being out-and-out sociopaths. There is a definite element of it does not matter to them who dies. That is not to save money. That is not to avoid losses. That is to be used to gouge the public. That is all they know in our markets.

Note you won’t hear necessarily of the same generic from the same factory being in short supply anywhere else in the first world. Just here.

You are not getting an honest picture from them. There is no legal or government pressure on the drug companies to be honest. The press selling ad space won’t report who the drug companies purposely left to die.

You know our savior the American press?