Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Opinion
February 24, 2018 12:00 AM

Guest Commentary: Pharmaceutical supply crisis and its costs ultimately reflect a market failure

Lee Perlman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Lee Perlman is president of GNYHA Ventures, the business arm of the Greater New York Hospital Association.

    As a healthcare executive long involved in supply-chain procurement for hospitals, I've been flooded with calls from hospital CEOs asking why so many of the pharmaceuticals they need to deliver care are so difficult to secure in sufficient quantities.

    After all, we have a pharmaceutical market with no shortage of willing buyers and sellers, ample raw materials, researchers pursuing new breakthroughs, and scores of long-established, clinically effective drugs.

    So what's the problem?

    First, the U.S. is experiencing an alarming shortage of generic injectable drugs—from basic items such as sodium bicarbonate (baking soda) to narcotics such as morphine. When several pharmaceutical plants were temporarily shut down over the past few years to ostensibly protect the public from possible safety violations, there was no real thought to the consequences of those shutdowns and the need to rapidly shift production capacity from closed plants to alternative supply sources.

    And as we learned from the hurricanes last fall that ravaged Puerto Rico—where several drug and medical supply plants were significantly damaged and temporarily closed—natural disasters can disrupt the nation's pharmaceutical supply chain virtually overnight.

    There are always vendors with the capacity to step into the market, but the regulatory barriers are formidable, and the Food and Drug Administration's Abbreviated New Drug Application approval process—even for critical generic drugs in acute short supply—isn't nearly abbreviated enough.

    Second, the nation's opioid abuse epidemic is inadvertently worsening the shortage. The Drug Enforcement Administration has reduced the raw material allocations needed to make opioids, which—epidemic notwithstanding—every hospital in the country needs for basic pain relief.

    Then there's the FDA's "unapproved drug initiative," which essentially grants monopoly pricing power to induce vendors to obtain evidence of safety and efficacy, and file applications for "old" drugs on the market—such as neostigmine, vasopressin and ephedrine—that predated the current approval process. A small number of suppliers control the drugs sought through this initiative because all non-approved manufacturers of the old drug must leave the market—a perfect recipe for shortages and higher prices. In wanting to ensure that all drugs are approved under the FDA's latest standards, the agency did not consider this well-intentioned policy's adverse impact on the pharmaceutical market.

    Which brings us to the life and legacy of the late Dr. Florence Kelsey, the heroic FDA investigator who, in the 1960s, saved countless American children from widespread birth defects caused by thalidomide, which was originally used as a sedative and then to alleviate morning sickness in pregnant women. To her enduring credit, Dr. Kelsey created the FDA's well-deserved "safety" brand that remains its moral underpinning to this day.

    While the commitment to safety must never be compromised, the FDA has not kept pace with a pharmaceutical landscape that has changed dramatically. In 2018, with too many generic injectable drugs in scarce supply, the agency must also become a "market maker" by encouraging competition and innovation. Ironically, failure to do so comes at the expense of Americans' health and safety.

    Fortunately, the FDA is well-positioned to address these market imperatives. Its commissioner, Dr. Scott Gottlieb, understands the importance of free markets and the innovation and value that true competition brings for both buyers and sellers of pharmaceuticals.

    The pharmaceutical crisis is ultimately a market failure, because an over-regulated market cannot, by definition, be a free market.

    Having spent most of my career in the healthcare group purchasing industry, where we use competition every day to create an effective marketplace, and where we negotiate pharmaceutical prices for hospitals and other providers, I am convinced that the FDA can preserve Dr. Kelsey's safety legacy while still recognizing, and acting on, market pressures that necessitate flexible, expedited actions.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Tullman and Roddick
    Digital health companies led by Andy Roddick and Glen Tullman partner
    Dr. Maria Ansari
    Three priorities for Kaiser Permanente Medical Group's new CEO
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing