FDA Regulation Causing Cancer Drug Shortages

Medical Progress Today contributor Avik Roy has an excellent article out in Forbes today about how FDA director Margaret Hamburg's overzealous regulations, coupled with price controls in Medicare Part B, have together produced the devastating cancer drug shortage that the nation is currently enduring. Here's a critical excerpt from the article:

"Upon taking office, Hamburg promised an aggressive effort to enforce the FDA's stringent manufacturing standards. In 2010, Hamburg's officials issued 673 warning letters to drugmakers and other companies: a 42 percent increase from 2009. In 2011, the agency issued 1,720 warning letters: a further increase of 156 percent.

...The impact of Hamburg's enforcement actions was swift and dramatic. Of America's five largest manufacturers of generic injectable drugs--APP, Hospira, Teva, Bedford, and Sandoz--the latter four were effectively forced to simultaneously take significant production off-line in order to deal with FDA warnings. As a result, their production of generic injectables declined by 30 percent, contributing to a massive shortage."

The article also explains how this problem is exacerbated by Medicare's price controls, which prevent drug companies from correcting for excess demand by raising their prices:

"...the Medicare Modernization Act reformed the way in which the government paid doctors for injectable drugs. Today, Medicare uses a formula called "ASP plus 6," in which doctors are reimbursed at the actual reported average selling price of a drug, plus 6 percent. In addition, in order to limit drug-price inflation, the law limited increases in ASP to six percent every six months...In a normal market, whenever you have a shortage, manufacturers can raise prices, in order to restore their incentive to supply more product. But because of Medicare's 6 percent cap on price increases, suppliers had no ability to raise prices to respond to doctor and patient demand."

You can read the full article here.

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