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Thu May 15, 2014, 05:25 AM

Ignoring a Solution to Chronic Drug Shortages--government manufacturing


Since shortages of critical drugs became a fixture of the American medical landscape a decade ago, pundits have proposed an array of incentives to encourage more production from pharmaceutical companies. But an obvious alternative or supplement — having the government manufacture the drugs — appears not to have made it to anyone’s list.

A factory designed, built and run by Uncle Sam could manufacture drugs in short supply — not least the older, low-profit but still highly effective generic medications that drug makers cannot, or simply will not, produce. And yet, when Remapping Debate raised the possibility, the initial reactions of economists, physicians, industry analysts, and others ranged from stammering, chuckling and long, sometimes awkward, pauses, to bewilderment and shock.

Several people we interviewed struggled to explain their reservations by pointing out that the government has no experience in medicine making. Some flatly rejected the idea because, in their view, it was a long shot to gain political traction. Others said the concept gave them pause because it ran afoul of their beliefs of how a free market system ought to operate.


Actually, Himmelstein says, “it’s even ridiculous to think of this as a market. The very fact that drugs are patented means that there is no market, right? Drug companies are given a monopoly. They control the market. So, by definition, there is no market. They are not in business to do good; they are in business to make money. Milton Friedman said many years ago that the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible is a dereliction of duty. So the problem isn’t that they’re misbehaving, it’s that they are behaving. They are behaving exactly as they’re supposed to.”

The pharmaceutical industry manages to make “enormous profits,” he adds, “so you ought to be able to undercut the prices charged for medicines and still do very well. And if government was not in search of a profit, it seems to me that you could make back the initial investment pretty readily.”

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