THE BLOG
03/13/2014 12:48 pm ET Updated May 13, 2014

In Search of a Cure for America's Drug Shortages

On the face of it, there is no connection between the arrival of a US trade delegation in India this week and America's problem of drug shortages -- a news item that keeps showing up on our monitors with alarming frequency.

A closer examination of the circumstances surrounding the visit reveals though how fundamentally flawed relations between the US and the rest of the world are creating a deep-rooted malaise back home in the US, for which there seems to be no cure.

Tripping Over TRIPS

American pharma companies want the US government to blacklist India because its domestic pharma industry doesn't respect patents and gleefully churns out copies of drugs -- called "generics" -- that American companies have invested billions in creating.

Buried under fancy-sounding terms like Trade Related Intellectual Property Rights (TRIPS) and Special 301 is the real irony that availability of cheap drugs is not just a concern for the poor in an India or a China, but also for the poor back home in the US.

Simplistic, techno-commercial approaches to health care, which often degenerate into legalese, has been the hallmark of domestic policies. President Obama had to expend most of his political capital and energies to reform just a part of the system, and the dust refuses to settle even on that.

Are American policymakers ready to go further and make the availability of cheap drugs, in plenty a similar priority?

Reminding US pharma companies that it's a two-way street with countries like India -- where these firms have seen a close to 500 percent increase in sales in the last decade -- might be a good place to begin.

It would be also worthwhile to recall that the Doha Declaration of 2001, signed by all WTO members, while reaffirming the commitment to TRIPS, also recognized that members had the freedom to structure their intellectual property regimes in a way that promoted access to medicines to all.

Chronic Disorder

Pharma company spin doctors will tell you that while there's been a drug shortage in 2013, the good news is that the numbers are much better than in 2012. July to September in 2013 saw 38 drug shortages as compared to 117 for the entire 2012. The bad news that won't make it to you is that as many as 300 drugs remain in long-term shortage!

These range from the humble, but necessary IV saline solutions to high-value, high-impact anticancer drugs. The FDA, which began to closely monitor shortages from 2011 onwards today maintains a drug shortages index that is regularly updated.

The reasons for these drug shortages fall chiefly in two categories. Either the drug is in extremely high demand and supplies cannot keep up, or a drug has been discontinued due to manufacturers shutting shop or quality issues.

The generics market can meet this demand -- by producing alternatives to blockbuster drugs in high demand, and by producing drugs at a lower cost in overseas locations. However, this is where friction arises over intellectual property in the former case and over quality issues in the latter.

Bitter Pill

There is a little that can be added to the intellectual property vs good of humanity debate that hasn't already been written about copiously. What can be said though is a call for the branded pharma players to maybe grow up and take a lesson from folks like Google who have figured out creative ways to monetize open source intellectual property, as demonstrated with the Android mobile operating system.

Quality, though, is non-negotiable, especially in the drugs business, and here some of the generics manufacturers have a lot of explaining to do. The counterfeit drug trade has managed to piggyback the generics wave and by some estimates accounts for 30 percent of supply of drugs in developing countries.

The US is not immune from this either. Unfortunately this is what drug shortages and obscenely priced life-saving drugs do.

Also, drugmakers like Ranbaxy of India have tried their best to commit professional suicide, and have undermined the cause of generics manufacturers everywhere, with their antics. The lack of weak regulatory regimes and empowered bodies like the FDA in many countries which could otherwise fulfill the global demand for cheap medicines is certainly not helping the cause.

Fortunately, global commerce is creating interdependencies even in the sometimes polarized pharma business. AstraZeneca still works with Ranbaxy to produce its best-selling acid-reflux drug, Nexium, and is ensuring that quality standards are met to protect its bottom line.

As prescriptions go, more cooperation at the global level to cure the problems of drug shortages in the US while providing access to cheap medicine in developing countries is mandatory.

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