October 18 2011
Death Panels May Have Been Scare Tactics, but Drug Shortages are Real
While buzz about so-called "death panels" has waned since the passage of the ACA, the very real dangers of prescription drug shortages have been in the news lately. The FDA reported a record number of shortages in 2010, and says 2011 is expected to see even more. Prices for several drugs have been climbing since the 2003 act that “modernized” Medicare and instituted price controls on drugs that had previously been artificially marked up by insurers. Unsurprisingly, it is the most marginally profitable drugs - including many older, tried and true cancer treatments - that are being discontinued by drugmakers in favor of newer, more profitable treatments. It seems that all the “fear-mongering” during the health care reform debate about rationing care wasn’t for nothing, as that’s exactly what oncologists are now doing. Earlier this week, Salon's Mary Elizabeth Williams - herself a cancer patient - explains how strictly rationed her melanoma treatment is:
Last week, I began a Phase I clinical trial that will combine the Ipilimumab with a promising new drug, and for a longer course of therapy. I’d wager the Ipilimumab alone will run 200 grand. Fortunately, because I live in New York City, because Sloan-Kettering is my hospital, and because, on the cancer spectrum, I am considered both “young” and “healthy,” I get to be one of 64 people in America who can do this trial. Fortunately, because I’m in this trial, the drug company is picking up the tab for the treatment. Fortunately, because I not one of the nearly 50 million Americans without health insurance, my unrelated healthcare expenses – doctor visits, additional tests and lab work – are covered. In return, I am giving my tissue and time and enough blood to fill an elevator at the Overlook Hotel so that maybe someday soon someone else will get a lifesaving treatment...
Survival isn’t just for those who, as Herman Cain puts it, can only “blame yourselves” for not being rich. And death and disease are not just for those who, like Ron Paul, think that’s “what freedom is all about — taking your own risks.” All the riches and “freedom” in the world won’t save your ass if you don’t have access to the right treatment. And when effective medicine isn’t getting out there because the financial incentive isn’t compelling enough, it’s just plain sickening.
Lest anybody accuse me of being a heartless "let them die" free-market ideologue, let me be clear: my mother died at a relatively young age (50) from a very uncommon form of cancer. I've known people my age who've both survived and died from cancer. I've had my own scares with weird bumps that I thought could be tumorous. Everybody in this country knows somebody who's battled terminal or chronic disease. Very, very few free-market advocates who take health care and public health issues seriously will say "let them die" is a serious, ethical answer.
That said, implementing price controls (as well as price-growth caps) on drugs has led to outright rationing of cancer treatment. It’s clear that these controls (on generic drugs that any drug manufacturer could make) should be lifted immediately. The alternative is to try to inject more federal control into the pharmaceutical industry to ensure that manufacturers have the right incentives to keep making whatever the “right” drugs are at the moment, but as Megan McArdle recently wrote, such an approach is rife with unintended consequences:
This is why it is so unwise to simply assume that you can identify excess profits in the health care system, and wring out those profits with a well chosen set of rules. The odds are good that you don't understand the market quite as well as you think. And even if you did . . . in this case there seems to be a quite clear tradeoff between paying providers too much, or giving up inexpensive cancer drugs.
Experience is showing us that not even the brightest industry experts with all kinds of data and support staff and economists at their disposal can foresee what will happen when enacting new regulations on an industry that deals with life and death.