Access – Always the Most Important Part of Healthcare

In the 25 years I’ve been involved in some part of healthcare, I’ve always understood that access is the most important part of care delivery. It doesn’t matter how good the medicine is or how good the surgery is or how good a medical device is if you don’t have access to it. Not having access can be because you can’t afford it, or it isn’t covered by your insurance, or it is delayed by administrative policies, or it hasn’t yet been discovered or there is a shortage. Most of my blogs have been dealing with one or more of these reasons for a shortage. We’re all accustomed to some popular items being temporarily “out of stock,” usually because of high demand that outpaced production, but this a fairly new phenomenon with generic drugs. While these shortages have been sporadic, they were a warning of a much more troubling problem that will continue to grow unless we find solutions.

Last week the Senate Aging Committee held a hearing on “Made in America: Restoring Trust in U.S. Medicines.” It essentially was a hearing that was called to deal with the fact that 80% of our generic drugs are produced outside of the U.S. which has caused problems with availability, quality, and our country’s security. As it seems everything in Washington is these days, this problem is complicated. A little background.

The Hatch-Waxman Act was signed 41 years ago and established exclusivity periods for new drugs to encourage innovation. It worked! The U.S. became the center for drug discovery and, after the exclusivity period ran out, we grew a thriving generic drug manufacturing business that dramatically reduced the cost of medicines. Today, over 90% of the medicines we take are low priced generics. Competition continued to reduce the cost of popular generics, which is the job of the free market, but troubles began to show up.

Overseas manufacturers offered lower prices due to their lower labor and manufacturing costs and lower costs for the raw ingredients and some of the governments of these countries began to subsidize the drug manufacturing businesses. Also, their manufacturing facilities were not inspected at the same level as U.S. plants and the manufacturing facilities and raw ingredients were supplied by adversarial countries. These tactics made it impossible for U.S. manufacturers to compete, which resulted in 80% of our generic medicines coming from outside the U.S.

The bi-partisan hearing (you don’t hear that very often these days) talked more about these problems.

Plant Inspections – The FDA inspects our manufacturing facilities regularly. The hearing brought out many instances where foreign facilities were allowed to continue working when obvious and serious transgressions were identified. These were allowed because the FDA:

·       Didn’t have the resources to inspect as often as needed.

·       Sent out a notice of a pending inspection so foreign manufacturers could temporarily hide any problems.

·       Would inspect and shut down a plant, after which the foreign manufacturer would just switch to a different plant so they could continue using the same inferior methods until the next intermittent inspection.

·       Would allow the plant to stay open so there wouldn’t be a shortage of that medicine.

National Security – Many of the raw ingredients come from, and the drug manufacturing is done by, countries that could be categorized as adversaries. China is the best example of this situation, although international relationships can change very quickly. If tensions rise, would we be comfortable taking medicines for which ingredients or manufacturing were supplied by our adversary? Even relying on other friendly countries has its risks.

The hearing identified some solutions. One of them was various subsidies that, from my point of view, were complicated and seemed to be focused on particular companies. A change that seemed appropriate was to broaden the regulations surrounding small business loans that would allow more companies to qualify and participate in different aspects of the manufacturing process. Another idea was to expand the use of guaranteed purchase contract amounts so that capital investment monies could be acquired. The change that I think should be done immediately is requiring the country of origin, for both the ingredients and the manufacturing, to be clearly identified on the label. I think it would insert quality back into the buying decision.

As always, access is key but access to inferior products is not the access Americans are used to. From my point of view, the cost of generic drugs is a small percentage of the total cost for healthcare in our country, and if we need to pay a little more to preserve quality and our national security, it’s worth it.

Best, Thair