A couple weeks ago, DKoser KS LaVida wrote an excellent diary on why The looming antibiotic crisis can't be solved by the free market. While the focus in that piece was on the unwillingness of Big Pharma to create new antibiotics needed to prevent epidemics -- mainly because they are not profitable enough -- this problem is even wider. In recent years there have been hundreds of shortages of critical pharmaceuticals. The FDA maintains a long list of drugs currently in shortage -- shortages that in many cases are not resolving -- and shortages are coming to be regarded as a permanent new state in US health care.
Drugs in shortage include medical staples such as injectible antibiotics, and emergency room, EMT, and operating theater drugs. Most of the shortages result from manufacturing capacity that hasn't keep up with increasing demand, though some result from quality control problems or shortages in key ingredients. However, manufacturing capacity has fallen for many of these drugs because manufacturers have discontinued making them to pursue more profitable drugs.
In 2011, President Obama issued executive order 13588 - Reducing prescription drug shortages which ordered the FDA to spruce up its system for reporting and tracking shortages, and to identify manufacturers who are gaming the system by stockpiling drugs and creating shortages in order to jack up prices. But what the improved FDA tracking has demonstrated is that most shortages are simply caused by the fact that the market does not want to grow manufacturing capacity to meet demand -- in fact it wants to shift existing capacity to more profitable products.
In other words, we have a complete market dysfunction in the pharmaceutical industry.
This is a managed market, and unless we agree to large price rises in drugs, or large public outlays to private industry to create national strategic reserves, private sector manufacturing capacity is simply not going to produce enough of the things we need.
So I believe it is time to develop a public sector, non-profit manufacturing system for pharmaceuticals in shortage, and to develop new critical pharmaceuticals that the industry is not interested in developing.
Such a public manufacturing capacity would most naturally fit under the NIH, which has already become the main clearinghouse for all biomedical information and research though NCBI and PubMed.