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Drug Shortages

From an article in today’s WSJ:

The vast majority of U.S. hospitals have restricted the use of life-saving chemotherapy drugs and other critical-care medications in the past six months to cope with unprecedented shortages, according to a survey released Tuesday.

This should come as no surprise.  Despite the means of production being privately owned, the government micromanages the healthcare system just as most other industries.  The single fatal flaw underlying all of leftist economic thought is the failure to notice this fundamental truth:  Goods are scarce.  Since goods are scarce, they must be rationed.  One system of rationing goods is markets.  The track record of markets is quite impressive when left alone to carry out this function.  But when government intervenes in markets they destroy the market mechanism.  Once the market is not able to function properly, some other mechanism must emerge to ration goods.

Politicians and governments love this because they usually get to design and control the mechanism.  In a market, willingness to pay determines who gets a good and how much they get.  Once people are unable to compete on price someone has to determine who gets it and how much.  Guess who that usually is.  In a market, the cost of production (relative to consumer’s willingness to pay) determines who produces and how much they produce.  But when firms and consumers are unable to compete on price, guess who decides these things.  Observe the case at hand:

The shortages are growing more severe, in part, because of industry consolidation and manufacturing problems in the past year. When one company runs into a manufacturing problem with a product or decides to quit making a drug, competing companies can’t quickly fill the void. In April, Teva reopened a California plant that it had shut down voluntarily for about a year, in part to retool to meet Food and Drug Administration manufacturing guidelines.

And then there’s this (this is the best part):

 Bills introduced in the House and Senate would require companies to notify the FDA when they have a problem that could result in a shortage. Current law requires companies to report to the FDA in cases when they are the only supplier of a drug and they plan to quit making it. The House bill, sponsored by Reps. Diana DeGette (D., Colo.) and Tom Rooney
(R., Fla.) would subject companies to fines of up to $10,000 a day, with a cap of $1.8 million, for failure to comply with reporting requirements.

…While some companies do notify the FDA about potential problems like shortages of ingredients used to make drugs, Ms. Klobuchar described the current system as
“haphazard

As usual, they will fix it with more government control.  But it seems like there is a pattern here.  The government intervenes in a market.  The market mysteriously becomes all “haphazard.”  The government rushes in to fix it with more intervention.  The more intervention they undertake, the more haphazard the market becomes and the more intervention is required.  But don’t worry, I’m sure with the new healthcare bill, everything will be fine, shortages of drugs and lines at the emergency room will go down, everyone will get to keep their doctor and nothing will be haphazard.  They just need a little more control…..

 

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