19 ms·

Applying my rudimentary knowledge of microeconomics, the situation with the shortage of cancer drugs seems to be a case of a race to the bottom, as one commente

• LastTrain 3y ago
  Where is the consumer - the sick cancer patient - represented in your analysis?
  • submeta 3y ago
    I am not saying that this is the way it should be.
    • LastTrain 3y ago
      Understood, I was actually wondering where they fit in your analysis. It seems they are locked out of direct participation in a transaction that is ultimately harmful to them, with no regulatory protections for /them/.
      • Loic 3y ago
        The suffering patient is not the customer. The customer is the health insurance. This is why most of the health systems have issues now, because the patient is not the customer, the patient is only a vehicle to extract money out of the health insurance.
        • LastTrain 3y ago
          The person consuming the medicine is not the consumer? I catch your point, and maybe you’re right if the insurance company is paying 100%, but if there is a co-pay of any sort the sick cancer patient is also the consumer.
  • deleted 3y ago
    [deleted]
• light_hue_1 3y ago
  You didn't read the article at all. That's not what is happening. Plants in India undercut everyone in price and drove them out of the market by making a substandard and dangerous version of the drug violating basic safety standards. The FDA failed miserably to detect this until everyone was driven out of the market by these low prices. Had the FDA done it's job from day 1 this would not have happened. And had we built a strategic reserve in case something went wrong we would have enough of a buffer to weather this storm.
  • submeta 3y ago
    What the article says is that the shortage of vital generic drugs, such as cisplatin and carboplatin used in cancer treatment, primarily stems from the financial struggles of the generic drug industry. A host of issues, including constant pressure to reduce prices, thin profit margins, and shifting focus towards more profitable high-priced drugs, have led manufacturers to cease production of many essential generics. Further complicating matters, oversight of production quality is challenging for overseas manufacturers, and a lack of contingency plans for sudden disruptions, as seen with the closure of the Intas Pharmaceuticals plant in India, exacerbates shortages. So, the complex problem spans across supply chain challenges, market dynamics, and regulatory shortfalls. I focused on the thin profit margins and the consequences.
    • bsder 3y ago
      > What the article says is that the shortage of vital generic drugs, such as cisplatin and carboplatin used in cancer treatment, primarily stems from the financial struggles of the generic drug industry. Then perhaps the government should be building plants to produce these domestically as clearly they need to be a common good rather than subject to the free market, no? Or, perhaps, we shouldn't allow medical equipment and supplies to be manufactured overseas and imported as that results in cheap overseas manufacturers dumping product at prices sufficiently low that they will cut corners hoping the FDA doesn't catch them all the while driving out domestic suppliers? Or, perhaps, any company found to have imported drugs from a plant that won't pass FDA inspection needs to have its executives sitting in fucking jail so that US companies have a vested interest in directly inspecting their overseas plants? See, there are solutions ...
• reaperman 3y ago
  The article isn't really just about cancer drugs, but people care more about cancer than ADHD or diet drugs so it's useful to headline the cancer drugs towards a search for reform. The actual story is about a long list of drug shortages across a wide variety of categories, driven by a wide variety of proximal causes. That list is here: https://www.accessdata.fda.gov/scripts/drugshortages/default.cfm https://www.accessdata.fda.gov/scripts/drugshortages/default... I count about 15 drugs which are in shortage or recently were in shortage that are also proprietary and don't have generics available on the market. On one hand you can say "well 15 out of 220 clearly shows generics are more likely to have shortages!" but the vast majority of drugs (counted either by licensed drugs or prescriptions written) are generics. There's not a clear correlation between whether a drug has generics available vs. whether it is or recently was subject to a shortage. Bacteriostatic water / Water for injection absolutely fits the model you posited -- American Regent discontinued production and no one else wants to fill the gap because as soon as demand is satisfied, prices will plummet and drive negative ROI. Game theory shows the stable equilibrium is continued shortage for these generics, as you've stated. But your model does not fit Wegovy, Semaglutide, Ozempic, Avycaz, Trulicity, Ultravist, etc. Commodities like medicine and food do have terrible price elasticity which cause great problems in unregulated markets. Unsupported, these commodity prices can crash to floor, and in one year farmers might switch to other crops or shut their doors forever, and then in the next year there would be huge shortages and high prices which take too many years to fix. The original commodity swing could be caused by anything - consumers decide for whatever reason that milk/cheese just isn't that cool this year, last year prices went up 10% and then too many farmers jumped in on that commodity so this year there's a massive oversupply, etc. The natural free-market state of things is: wild price swings and capacity chasing last year's profits/losses. Ideally the futures markets would help stabilize these prices by creating incentive for smart people to predict capacity-demand equilibria for upcoming years and allocate capital appropriately but it doesn't seem to do that effectively for really any inelastic commodity, at least from what I see -- all minerals/oil/gas/food/etc seem to experience incredible price swings on a regular basis. The nature of reality is that demand for inelastic commodities does not seem to be able to be predicted to the precision needed to maintain stable prices and maintain the necessary revenue flows to keep enough producers online in a free market. That's a major reason why many (most? all?) developed nations create various "Farm Safety Nets" to help create an annual floor for the production of basic food staples. The USDA knows about how much of each basic food staple the nation needs in an average year and works to ensure that something like 110% of this amount is produced each year. They do this by paying for excess production -- in years when consumer demand is low, they pay the excess and leave it up to the farmers to figure out what to do with the product that no one wants. Maybe it's sold at a nominal loss to someone who can use it for something else, maybe it's buried in the ground, whatever. (During parts of the COVID swings, new Farm Safety Nets were authorized because the farmers literally didn't have enough cash to even dispose of some excess food). These basic crops include milk, wheat, oats, barley, corn, grain sorghum, rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe and sesame seed, dry peas, lentils, chickpeas, etc etc. There's still the possibility that too many players jump into a market, prices crash, and some producers fail. But the USDA does their damnedest to ensure that 110% (or whatever, I don't know what their target safety margin is) of the necessary production is well supported and can go on to produce again with more guaranteed margins next year. We probably need more systems like this for some other industries -- medicine being a pretty good contender for the first industry we should put more attention into. It's been working well for our farms and food supplies for 100 years. It has the potential to be used disastrously in a failed communist style USSR/Mao planned-economy debacle or an equally disastrous kleptocractic / regulatory capture / campaign finance corruption / conflict-of-interest debacle, but we've been doing it already for a century and we seem to be doing it reasonably well, all things considered. Though the shortages and price spikes of the past few years since COVID do give me a bit of pause.
• Aerbil313 3y ago
  Why this comment reads too much like a well-fine-tuned-to-sound-real GPT?
  • SiempreViernes 3y ago
    Probably because you've been reading a lot of GPT output in other venues?
  • lsaferite 3y ago
    I went back and read the comment again and I'd guess it's that first sentence. IME the ChatGPT models tend to output something similar to that when you ask them to answer questions as an expert in a field.
• resolutebat 3y ago
  Healthcare is very, very far from "an example of perfect competition". For example, there are apparently plentiful supplies of both drugs discussed in the article in China, but they can't be legally used because they don't have the appropriate FDA paperwork, purchasing agreements with the middlemen who distribute drugs, etc etc.
  • 0xEF 3y ago
    I have to wonder if this results in some kind of blackmarket trade for cancer drugs or other treatments that don't fall into the street drugs category. If it does, I am ignorant to it, likely because I am just beginning to understand (in my 40's, mind you) that the US health care system is so remarkably broken, my asthma treatments are governed not by my doctor, but whatever insurance my employer decides to carry. Lots of excellent replies here shedding some light on micro/macro ecenomics of the whole thing, but in a scary "how did it get like this" way.
    • Jach 3y ago
      It wouldn't be surprising. Back on the first Silk Road site, you could get more than just "fun drugs" / street drugs. Medical tourism has also been a thing for a long time. There was also some drama around insulin not that long ago, plenty of Americans went to Canada or Mexico for it.
    • robocat 3y ago
      Not just the US. New Zealand has free health care, but there are a variety of drugs you can’t get prescribed easily (often because the system is trying to prevent drug-seeking). However it regularly ends up that necessary medicines are legally unobtainable (two situations recently in my own family). I have seen friends turn to illegal sources, or seek substitutes (especially “alternative” medicines and/or internet bullshit).
    • SomeRndName11 3y ago
      I live in former USSR, and here we have the opposite problem: everything (except for psychoactive drugs; for those you need to use black market) is on sale, open market essentualy. At any neighborhood pharmacy you can buy any drug, antibiotics, anticancer you name it, no prescription required. Which is also a very bad practice.
• hannob 3y ago
  This is probably a good example why naive market economics thinking is problematic. Any "ideal market" assumes some kind of demand elasticity, i.e. people will buy more when it's cheap and less when it's expensive. But for cancer drugs, that really shouldn't be the case. The amount of drugs a patient takes should be determined by the best science, not some market mechanism.
  • changoplatanero 3y ago
    I don’t understand how you can ignite market forces in health care. How else can you balance priorities for all the different uses that people’s financial resources can be used for? What does it even mean to let science decide? No cap on spending?
    • mathgeek 3y ago
      > What does it even mean to let science decide? In the case of cancer, it means a patient should be given the appropriate dose for their diagnosis, as determined by what science has shown to be effective.
      • MoreSEMI 3y ago
        This principle would just be summed up as an inelastic good in economic terms. Market forces apply wether or not we want them too. To me it seems, this would result in us being willing to pay any price for it, which may even be the correct principle. It should however, then not be surprising when cancer treatments cost 100s of thousands.
      • changoplatanero 3y ago
        Like imagine a few decades ago when it could have cost more than 1 billion dollars to sequence the dna of a cancer tumor. If science could show that it is effective in treating cancer to have the dna sequenced should the tax payers have paid 1 billion dollars to save one persons life? That would plainly be absurd.
    • tialaramex 3y ago
• 2Gkashmiri 3y ago
  http://janaushadhi.gov.in/ProductList.aspx http://janaushadhi.gov.in/ProductList.aspx at least in india we have this generic medicine system that is run by the government. Not a fan of a lot of things but generic medicine at very very low prices. check this link out and search for medicine. remember the prices are in indian rupees where $ 1 USD = 90 INR ~. they have cancer medicine, surgical supplies, basically almost all generic medicine under the sun. I wonder why cant this model be replicated in other countries.
• psychphysic 3y ago
  In going to be brutally cynical. Cisplatin may cost $6 a dose to buy, I bet it sells for much more at the US hospital to the Insurance company or god forbid the patient.
  • chromatin 3y ago
    At the hospital, the cost of cisplatin also includes the salary of the chemo pharmacist, the chemo nurse, and the medical oncologist (plus probably layers of unnecessary bureaucratic administrators)
    • omniglottal 3y ago
      Notably, it's a multi-day fraction of those salaries, regardless of the multi-minute effort they put in to "analyze" a purely statistical inference which is applied to the individual patient.
• generationP 3y ago
  > Cisplatin and carboplatin are made in special production lines under sterile conditions, and expanding or changing the lines requires FDA approval. Is this reflected in your microeconomical model? It should break the assumptions of most theorems.
• theonlybutlet 3y ago
  This is where they should be applying fuzzy logic principles. Go with the second lowest bidder always or something like that. Some markets already do this.
  • omniglottal 3y ago
    > This is where they should be applying fuzzy logic principles. Go with the second lowest bidder always or something like that. Some markets already do this. In a market with only two bidders, the more expensive one is guaranteed to get whatever they ask for.
• ackbar03 3y ago
  Something's still missing though. If there really were a shortage, absent any irregularities, prices go up, someone else steps in to make it to earn more money, albeit maybe after sometime. Seems to me just something wrong / slowing down the price adjustment mechanism? e.g. layers of regulation / bureaucracy or whatever it is the US runs on these days?
  • Jach 3y ago
    That markets and companies don't respond as fast as machine traders do seems to confuse and anger people and then make them denounce the whole thing.
  • fallingknife 3y ago
    Bureaucracy is certainly part of the problem, but absent that it still takes quite a while to set up mass production. Time from CEO saying "start producing drug X" to the first doses coming off the line is going to be months at minimum. This works great for ibuprofen, but cancer drugs are kind of time sensitive.
    • omniglottal 3y ago
      Months are preferable to years approachong a decade, which is the current case due to regulatory and IP controls.
• fzeindl 3y ago
  > Here, multiple generic drug manufacturers are competing to win sales contracts by offering the lowest possible price. This can be seen as an example of perfect competition, where firms are price takers and compete mainly on price, driving prices down to the point where they equal the marginal cost of production. In Switzerland there are laws covering biddings, where the state has to accept the second to lowest offering, not the lowest, thereby circumventing this race.
• roenxi 3y ago
  > There might be external forces... Seems reasonable to upgrade "might" to "must". The article is quoting drugs with a sticker price of $6. It isn't reasonable to say that drug manufacturers would rather let the market enter a state of shortage rather than price their drug at $12 and see what happens. On a bad day I can buy bottled water at insane markups at these sort of prices, and water is much easier to compete with. Drug companies could easily be charging $10 for something that usually costs $6 and that would push the market towards a profitable equilibrium price. People aren't that picky about their purchases if there are no alternatives. My money is on it being illegal to charge the real market rate if it involves raising prices.
• me_me_me 3y ago
  I am interested why governments are not setting up national drug production companies. Cheap healthcare products ensures more productive society, that needs less spend on healthcare and pays more taxes. National businesses do not care for being profitable and will keep prices in check for monopoly profiteers, but probably not be lean enough to kill private generics businesses.
  • dontlaugh 3y ago
    The correct answer, indeed. Healthcare, education, trains, etc. don’t need to make a profit. Central planning can choose to produce for need, instead.