Inside America’s Drug Shortage

The first in a two-part series investigating why critical prescription drugs are in short supply in the U.S.

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“What’s driving the shortages is primarily the economics of drug supply,” says Kantarjian. “Anybody who tells you otherwise is not telling the truth.”

Kantarjian was directly affected by supply problems in December, when inventories of the chemotherapy drug cytarabine — a critical drug that can improve survival rates of patients with acute myeloid leukemia from 0% to 40% — began to shrink. When the shortfall was publicized, he and other cancer doctors soon received offers from distributors who appeared to have stockpiled stashes of the drug and were only too happy to sell them — for a price. They were asking $800 to $900 per gram for a medication that normally costs $16. “Nobody should profit from the lives of patients,” he says. “This price gouging is not illegal, but it is immoral.”

The distributors are not the real source of the drug shortage, however. They’re merely opportunists taking advantage of an unfortunate situation. Of the 178 drugs that the FDA reported in short supply in 2010, the majority were generics, meaning they don’t have patent protection and aren’t as profitable for the companies that make them. Many drugmakers say they are not letting their bottom line influence their focus on the manufacture of generic medications, but it’s hard to ignore the fact that the number of drug shortages has climbed in tandem with the number of generics on the market.

With cancer drugs, that’s not just coincidence, especially not after Congress changed the reimbursement scheme in 2005 for doctors administering chemo. To make chemotherapy treatments easier and more convenient for patients, doctors started offering the infusions in their own offices, instead of at a hospital, buying the drugs themselves and billing patients for them. In order to control escalating drug prices, the Medicare Modernization Act limited Medicare reimbursement to doctors to a 6% profit on these drugs, on top of the retail price of the medications. The problem was, the retail price reimbursed by Medicare lagged behind current market prices by about six months, which meant that reimbursements rates were lower than what doctors were paying to buy the drugs. That pushed some physicians to switch to offering their patients brand-name drugs, at higher prices.

The net effect? Fewer orders for generic drugs, which further shrank the market and lowered incentives for generic-drug makers to continue manufacturing such low-profit products. “In order to gain market share, companies underbid the market to get the business, and it’s a race to the bottom,” says Dr. Len Lichtenfeld, deputy chief medical officer for the American Cancer Society. “Whoever is the last company standing can’t charge enough to make a profit on the drug and to make needed investments to keep making the drug.”

That’s what may have happened with the methotrexate that Alyssa Divers depends on. Four domestic manufacturers produced the preservative-free injectable form of the drug: one company — Ben Venue Laboratories, one of the nation’s largest suppliers — decided to close its plant to make changes to satisfy the FDA after an inspection; another, which had 40% of the market share of the drug, lacked enough raw material to continue production; and a third company also started restricting its production. So by the beginning of the year, the supply of methotrexate had begun to plummet.

MORE: How to Stop the Counterfeit-Medicines Drug Trade

When Alyssa’s mother called her daughter’s nurse for a second time back in February, several days before her next scheduled infusion of methotrexate, the nurse still couldn’t assure her that Alyssa would get her dose. Even more worrisome for Divers was the fact that Alyssa already hasn’t responded to, or can’t tolerate, the side effects of two of the possible chemotherapy drugs that could fight her cancer. “If we can’t get methotrexate, that sends further terror into your heart,” she says.

Because the chemotherapy treatments have worn down Alyssa’s immune system, she has been hospitalized eight times for infections, and had a fracture in her leg that prevented her from walking for six months. “This kid has been through hell and back,” says Divers. “On top of everything else, to not have the medication she needs be available is devastating.”

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