Economics Behind Cancer Drug Shortages

Having cancer is stressful enough, but what if potentially lifesaving chemotherapy drugs were in short supply and unavailable to you? And how would you feel if these shortages were entirely preventable?

President Obama recently signed an executive order directing the FDA to step up work to reduce drug shortages. Drug companies will be required to let the FDA know of the possibility of drug shortages sooner. The FDA and the Department of Justice will be investigating abuses that would lead to drug shortages, and agencies will be empowered to stop the practice of driving up prices and creating shortages due to the manipulations of companies or distributors.

Why are many cancer drugs in short supply? The New England Journal of Medicine (NEJM) explains:

The main cause of drug shortages is economic. If manufacturers don’t make enough profit, they won’t make generic drugs. There have been some manufacturing problems, but manufacturers are not required to report any reasons or timetable for discontinuing a product. Contamination and shortages of raw materials probably account for less than 10% of the shortages. In addition, if a brand-name drug with a higher profit margin is available, a manufacturer may stop producing its generic.

The second economic cause of shortages is that oncologists have less incentive to administer generics than brand-name drugs. [...] Oncologists buy drugs from wholesalers, mark them up, and sell them to patients (or insurers) in the office. [...] In recent decades, oncology-drug prices have skyrocketed, and today more than half the revenue of an oncology office may come from chemotherapy sales.

Cancer-related health care expenses are exploding. An LA Times article reports that “the time it takes to manage these drug shortages has added $216 million to the nationís healthcare labor costs.”

Mandy L. Gatesman, Pharm.D., and Thomas J. Smith, M.D., authors of the NEJM article, offer some solutions:

- Regulate cancer drug prices, setting generic prices higher to give companies incentive to keep making them, similar to what is done in Europe, where there are fewer shortages.

- Pay oncologists more for talking with cancer patients about their treatment rather than incentivizing expensive procedures.

The NEJM reports concludes, “The current system not only is unsustainable but also puts oncologists in potential ethical conflict with patients, since it hides revenue information that might influence drug choices and thus affects costs and patients’ copayments. The only good news is that the drug shortages may catalyze a shift from a mostly market-based system to one that rewards the provision of high-quality cancer care at an affordable cost.”

Obviously, putting oncologists in conflict with the best interests of their patients is a bad thing. For many people with cancer, we’re talking about life and death decisions.

Jay Cuetara, a cancer patient and advocate has a few words to say on the subject:

Bonnie Frawley, Pharmacy Manager at Brigham & Women’s Hospital talks about the prescription drug shortage.

Image credit: U.S. National Institutes of Health

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Brenda W.
Brenda White6 years ago

You have to watch the movie Burzynski-The Movie Cancer is Big Business. You will be shocked, mad, and so on. The cure has been here since the 1970's but our FDA and our government won't let it out because the money will stop flowing in.Don't donate any more monies to the Cancer Institute, instead donate to Dr. Burzynski so he can start curing more. Look it up if you don't believe me, watch the video you will be pissed! I did and cried knowing that my dad didn't have to die from cancer had we known about Dr. Burzynski! I am serious look him up and what he has done its amazing!!!! He's amazing!!

Jai T.
Jai T6 years ago

They are not actively or deliberately looking for any "cure" to any cancers - do not hold your breath or continue to have false hopes. Cancer is a most lurcrative business - well people do not make money and that is THE bottom line!

Edgar Zuim
Edgar Zuim6 years ago

Damn money. People are able to do anything to make money.

Kathy Parsons
Kathy Parsons6 years ago

A good article, but mainly because it caused Thomas L. to comment. There has been a theory about for a while that cancer is curable (just a theory). The reason why it's not widely known (if it's true)? My guess is economics again.

Irene P.
Irene P6 years ago

It is so upsetting they would do something like this!

Gayle R.
Gayle R6 years ago

Thomas--I've got my fingers crossed that they'll find this will cure all kinds of cancer, including the rare ones, and it will become available to everyone. Thanks for the links, I'll reserve them for after I finish the neuroendocrine research I'm doing for my husband. This takes forever and there are no real answers, just more questions.

Andrew Carvin
Andrew Carvin6 years ago

It's like diamonds, or anything else that is artificially scarce.

Restrict the supply, and drive up the price.

Cancer patients have only two options: Pay or die.

The drug cooperations do not care how many people they murder by doing this, and should be brought to task over it.

You cannot rely on private business to take care of society.

Private business is not for the people by the people. Private business is for the money by the company. Private business will take your money, and give you nothing in return whenever they can get away with it. See private health care for examples.

Huge government is great because as long as it is run properly it protects the people it represents from private business that will murder them for their money if they can get away with it.

Thomas Liddle
Thomas Liddle6 years ago

cancer industry.. oi.

Thomas Liddle
Thomas Liddle6 years ago

Yo Gayle, if you are familiar with medical papers, legitimate papers will downplay extraordinary claims to be more palatable to highly skeptical peer review. That same link describes clinical tests in which the metabolism of tumors is changed and tumors are seen to go into remission.

Here's a great article to visualize how it works:

In the exact same article which you've quoted, there is this tidbit, "DCA was able to take away cancer's most important strength, the resistance to death. Since then, several independent groups across the world have confirmed the Alberta team's findings. In December 2009, the editors of "Science" predicted that cancer metabolism is one of only 5 areas across all scientific disciplines, to "watch for major breakthroughs" in 2010." This update was from May of last year.

Also there's this:

A former U of A student was marketing fake DCA online. That puts this line of your quote in context: "Researchers emphasize that use of DCA by patients or physicians, supplied from FOR-PROFIT SOURCES OR WITHOUT close clinical observation by experienced medical teams in the setting of research trials, is not only inappropriate but may also be dangerous."

That says nothing as to whether it works. There is naturally a need to approach cautiously, but the results are very promising, for everyone but the cance

Laurie Greenberg
Laurie Greenberg6 years ago

Money is the bottom line here. When greed enters the picture, human kindness flies out the window.