Drug shortages: Penny-wise and pound-foolish | NCPA Executive Update | May 27, 2022

NCPA May 27, 2022

Dear Colleague,

Doug HoeyLet's play a trivia game:

Who said:

A) "The definition of insanity is doing the same thing over and over again and expecting a different result."

B) "Never let a good crisis go to waste."

C) "Penny-wise and pound-foolish."

If you said Albert Einstein, Rahm Emanuel (President Obama's chief of staff), and Benjamin Franklin, better turn off "Jeopardy!" and stick with "Wheel of Fortune." (But if you do like trivia, we've got a contest tied to NCPA Annual Convention that you're going to love. We'll tell you more soon.)

Well, maybe Franklin didn't say that exactly, but I think wise old Ben would surely be appalled by the vulnerability of the U.S. drug supply these days.

The pandemic has shown just how penny-wise and pound-foolish U.S. government officials have been in becoming increasingly reliant on prescription drug supplies from other countries—especially countries with which we have, at best, a "frenemy" relationship (China, we see you.). Our country's leaders have been complicit in allowing the U.S. to be reliant on others for some of our most basic medication. In 2018, China accounted for 95 percent of U.S. imports of ibuprofen, 91 percent of U.S. imports of hydrocortisone, 70 percent of U.S. imports of acetaminophen, 40-45 percent of U.S. imports of penicillin and 40 percent of U.S. imports of heparin, according to Commerce Department data.

Here's another "Jeopardy!"-style answer: These companies profit from manipulating the drug supply chain and have helped drive the production of essential medications overseas.

If you answered, "What is a PBM?," then Alex Trebek just gave you a thumbs up from the big game show upstairs!

See, when we think about the negative impact of PBMs on health care in the U.S., it goes beyond their contributions to higher drug prices, less competition, and patient steering. Allowing PBM practices to run unabated resulted in the business case for making many Rx products on U.S. soil go into such a death spiral that it no longer made business sense to make many products domestically.

On Sunday, I watched a "60 Minutes" segment on drug shortages. It reminded me of a 2018 book I read called "China Rx: Exposing the Risks of America's Dependence on China for Medicine." The segment focused on drug shortages in hospitals and pointed the finger at middlemen—in this case, hospital GPO middlemen. But the symptoms we see in the outpatient setting are the same: manufacturer profit margins driven so low that some production lines were shuttered. According to the "60 Minutes" report, 40 percent of generic drugs now have just one manufacturer. That reminds me of another expression: Don't put all your eggs in one basket.

A momentary extra profit for health insurance-owned PBM shareholders has led to having to hope that undependable trading partners like China and other countries won't leverage their commanding position with some of these products against U.S. citizens. Hope is not a strategy. That is one reason why NCPA continues to advocate to federal and state government officials for PBM reform and changing the pharmacy payment model.

If you are still wondering who really said those quotes I mentioned at the start, they're most commonly attributed to novelist Rita Mae Brown, not Einstein; Winston Churchill, not Emanuel; and British writer Robert Burton, not Franklin.

Another aphorism frequently (but mistakenly) attributed to Franklin is "a penny saved is a penny earned." Whoever thought of that saying would likely rethink the sentiment if he knew that those pennies would fall into the deep pockets of mega-middlemen and leave U.S. citizens wondering if they will be able get the medications they need to live healthy lives.

Best,

Doug Hoey

B. Douglas Hoey, Pharmacist, MBA
NCPA CEO

NCPA