By Scott Alexander: For More Info, Go Here…
There is a national shortage of buspirone.
Buspirone is a 5HT-1 agonist used to control anxiety. Unlike most psychiatric drugs, it’s in a class of its own – there are no other sole 5HT-1 agonists on the market. It’s not a very strong medication, but it’s safe, it’s non-addictive, it’s off-patent, and it works well for a subset of patients. Some of them have been on it for years.
Now there’s a national shortage. My patients can’t get it, or have to go hunting from pharmacy to pharmacy until they find one that has it. I’ve told people find a source to stockpile a supply so they don’t run out. It feels like we’re living in the Soviet Union.
How did this happen? The New York Times writes:
The main reason for the buspirone shortage appears to be interrupted production at a Mylan Pharmaceuticals plant in Morgantown, W.Va., which produced about a third of the country’s supply of the drug. The Food and Drug Administration had said the facility was dirty and that the company failed to follow quality control procedures.
So the FDA shut down a major buspirone factory. But government agencies – ones that are a lot less nice than the FDA – shut down methamphetamine factories all the time without creating methamphetamine shortages. Why is the buspirone market so vulnerable? The Times again:
Rock bottom prices for some generic drugs are also contributing to the crisis. Consolidation among wholesalers has led to the creation of three buying consortium behemoths that purchase 90 percent of the generic pharmaceutical products in the United States, said Adam Fein, a consultant and chief executive of Drug Channels Institute. These “monster” buyers have squeezed manufacturers on prices, and “some of those generic manufacturers are deciding the profit is so low they can’t make money, and they’re exiting the category,” Dr. Fein said.
Is this really how economics works? There’s a medicine that millions of people desperately need? But nobody will produce it because they can’t make a profit? Huh? Isn’t the usual solution to just raise the price? And people will buy it at the higher price, because they need it so badly? And then you will make more profit, and can keep on making the medication? Isn’t “nobody will supply this product, it’s too cheap” just the economics version of “nobody goes there anymore, it’s too crowded”?
Sure, generic drug manufacturing is pretty consolidated. Most individual generic drugs are now manufactured only by one or two companies. If one of those few companies gets greedy (like Martin Shkreli did with Daraprim), they can increase prices by orders of magnitude without a lot of competitors to push back. And if one of those few companies suffers a shock (like the FDA closing the buspirone factory), it makes sense that there might not be enough competitors to pick up the slack.
But how come this is only happening in pharmaceuticals? How come (in capitalist countries) there are almost never meat shortages, bread shortages, laptop shortages, or chair shortages? Is there something unusual about the pharmaceutical landscape that predisposes it to this sort of thing?