Pharmacoeconomics 101: The job of the drugmaker is to make drugs. What is so hard to understand?

Look, I’m no economic theorist. To come clean, I dropped out of my freshman introductory economics course faster than I could mispronounce the phrase Malthusian Principles, never mind the principles themselves. But I still retain this much understanding of the general theory of supply and demand: If you can’t figure out a way to get your goods to market, you really shouldn’t be insisting that you have a viable business.

Ten months ago, I scribbled down some stuff about a Canadian development that just seemed to be one more of those strange and unwelcome occurrences that happen routinely up here (comparable to when one o’ them big ole bears trudge their way down Highway 11 from Algonquin Park each spring and attempts to board the Toronto subway, and are dealt with sharply by a uniformed member of  Amalgamated Transit Union Local 113, who loses patience with the bear’s slowness to present a valid pass.)

The issue back last July was the inability of retail pharmacies in certain parts of the country to keep many different prescription drugs in stock. There were convenient explanations offered, which ranged from the conspiratorial, to the political, to the highly mundane. However, since the matter was restricted to Canada, it was met by Canadians with a characteristically phlegmatic response, which was, “Well, I suppose it shall be no more drugs for our grandmama, then. Poor old duck will die, and we will be very sad indeed. We shall miss her, but we mustn’t complain too loudly, you know. Wouldn’t wish to place any more stress on anyone. We do have the finest healthcare system in the world, after all.”

In other words, it seemed right then to be a quintessentially local issue. Little did we imagine that we were witnessing one of those rare occasions when Canada was in the vanguard of a continent-wide phenomenon: the emergence of a startling new paradigm involving the pharma industry’s inability to supply drugs.

Here is how the Washington Post recently framed the topic: “Doctors, hospitals and federal regulators are struggling to cope with an unprecedented surge in drug shortages in the United States that is endangering cancer patients, heart attack victims, accident survivors and a host of other ill people” (check out the article from 04-26-11.) This illustrates yet another difference between the national temperaments of Canada and the United States, with the former taking things in a kind of resigned stride, while the latter goes immediately apeshit. “It’s a crisis,” a Utah pharmacist screams at the Post‘s reporter. “Patients are at risk.”

Respond to the news as you will, the stateside metrics aren’t good: 211 drugs now in short-supply, three times as many as five years ago, 89 new shortages already reported in Q1 of this year. In a country that celebrates the ability of the marketplace to provide citizens with access to a dry Riesling to accompany your lobster quesadilla at three in the morning in any Denny’s location, this raises plenty of questions. No morphine? No norepinephrine? And where the cytarabine at? (Cytarabine being the one you never want to run out of, since leukemia and lymphoma patients require that it be administered in a timely fashion, to avoid the onset of a condition that medical professionals describe, with clinical accuracy, as “croaking.”) Deborah Banker of the Leukemia & Lymphoma Society explains why a cytarabine shortage is not desirable: “With this drug [patients] can be cured, and without this drug too many of them will certainly die. That’s the simplest way to put it. The disease progresses so rapidly that untreated patients can sadly die within days. There is no time for delay and no certainty of a good outcome if you can’t get a full dose.” Hard to miss her point.

Just as it’s difficult to avoid the reasons why the supply lines have dried up. In Canada, land of private-sector branch plants and public-sector convoluted governance, there is always an explanation that involves (a) greed or indifference originating at one or other of the distant-headquartered corporations, and (b) graft or incompetence at some level of Canadian government or its buraucracies. Things are refreshingly direct in the USA, however. According to the experts cited in the Washington Post‘s analysis, the reason the drug companies can’t provide their product is… the drug companies themselves.

Remember all that consolidation that occurred in the drugbiz, that was justified because companies needed to pool their R&D allocations in the hunt for new drugs to cure disease? Well, the way that played out was that there are now fewer and fewer organizations pursuing ever-bigger research projects — and hardly any manufacturers of the low-margin essential therapeutics that investment analysts don’t care about: your morphine, your norepinephrine. Big Pharma and the biotechies have been keeping themselves busy in the hunt for lifestyle drugs that might provide an adequate return on a billion-dollar development budget. Meanwhile, no one is paying sufficient attention to the old-timey war-horse products that you will want your pharmacy to have on hand, should you one day find yourself in need.

Not paying attention means out-sourcing procurement of fine-chemicals and other raw components to the places where one turns, when one treats his product as a price-sensitive commodity, and is trying to shave his costs. Trouble is, when that Chennai-based supplier has a glitch, or those inspectors shut down the Albanian facility, one is supposed to have a backup plan lined up. Because, otherwise, one’s customers will die, you see. At which point, as Malthus or Adam Smith or J.K. Galbraith or Milton Friedman might predict, one’s client base will no longer be desirous of one’s products or services, having just expired.

Evidently, that instruction was omitted from the management manuals at the Fangool Pharma Factory, or any of the other esteemed organizations that can no longer get the job done — or even comprehend what the drugmaker’s job is supposed to be any more.

Perhaps this is understandable. A quick search of the current career recruitment ads will determine that pharmaceutical manufacturers are seeking candidates for positions with titles such as Senior Vice-President – Outcomes Strategies, or Urban Community Liason Specialist, or Marketing Information Security Manager, or QA Systems Engineer IV, or Paralegal/Contracts Team Leader, and so on. Put plain, here is a business that is drowning in its own process, and oblivious to whether or not the goods are making their way out of the plant and on to the trucks.

Among the thousands of arcane job descriptions, it’s rare to encounter anyone in a pharma organization who actually knows anything about the rudiments of pharmaceutical manufacturing — or pretends to feign any form of interest. One can sympathize: Biopharma and chemical textbooks are what some might think of reading when they can’t find a date on Saturday night, or carry as a prop on a long flight, to discourage a gabby seatmate from initiating a conversation.

But sympathy will only take you so far, precisely the distance to the entrance of the hospital Emergency wing, where you can observe the attending physician shrieking obscenities at the pharmacist-on-duty, who is on the phone to her colleague in Pittsburgh, in a futile effort to locate the drugs that will keep someone you care about from croaking. Good luck to them all; best wishes, and santé to everyone, from an economy and a society that have both clearly lost their way.