If you’re a regular follower of this blog, you know that rationing is a standard policy of those countries with socialized medicine systems. Although our healthcare system today is not considered socialized medicine, this has been the goal of the Democratic Party, and Progressives in particular, since the days of President Teddy Roosevelt over 100 years ago.

When the Affordable Care Act (ObamaCare) was being debated in Congress in 2009, it was the intent of the Obama Administration to implement socialized medicine, but they knew the time was not right then for such a drastic change. Therefore, they settled for the ACA, which greatly increased the rolls of Medicaid, as a first step in that direction. More and more Americans now receive their healthcare through government-controlled programs and government-controlled prices.

The recently passed Inflation Reduction Act (a misnomer by any observer) has provided more government control over drug prices for those drugs paid for by Medicare. While this move will have very little impact on the actual prices paid by consumers, it will have a much larger impact on drug production and new drug innovation. That means fewer new drugs to combat cancer, diabetes, Alzheimer’s disease, and a host of other chronic diseases.

In a recent post, Insulin Prices – Who is the Villain?, I discussed the commonly-held belief of many politicians that drug companies are greedy and the government must watch out for the consumer lest they be overcharged for commonly-prescribed drugs. A recent Senate Health, Education, Labor, and Pensions (HELP) Committee hearing convened by Senator Bernie Sanders (the leader of the socialized medicine chorus) tried to promote these ideas, but was refuted strongly by the pharmaceutical industry and recent industry research. Here’s a quote from that blog post:

“According to the business services consultancy Deloitte, the average cost of developing a new drug among the top 20 global biopharmaceutical companies rose 15% ($298 million) last year to approximately $2.3 billion. Worse for drug developers, the return on investment reaped by these companies for new drugs and vaccines plunged last year by 82% to 1.2% – the lowest percentage recorded in the 13 years Deloitte launched its annual reports on biopharmaceutical companies R&D – from 6.8% in 2021 and 10.1% in 2010, the first year studied by Deloitte.”

The point of this post was that Progressives consider treatment of the elderly for Alzheimer’s Disease too expensive so they thwart efforts to develop new drugs and ration the use of currently available drugs. Now we are seeing the same rationing of care in the treatment of cancer.

In an editorial published in The Wall Street Journal, we learn of shortages of essential medicines because drugs prices are too low. They report the American Society of Health-System Pharmacists lists 301 drugs in short supply, up from 202 five years ago. These include many local anesthetics, basic hospital drugs, chemotherapy drugs and liquid albuterol for lung ailments.

The American Cancer Society warned this month that “first-line treatments for a number of cancers, including triple-negative breast cancer, ovarian cancer and leukemia often experienced by pediatric cancer patients,” are facing shortages that “could lead to delays in treatment that could result in worse outcomes.” Healthcare providers say they’re having to limit access to some drugs to the sickest patients. They can substitute therapeutic alternatives when possible, but this increases risk of medication errors and inferior results.

They say most drugs in short supply are older generics that are off-patent and complicated to make. Manufacturers have stopped producing them because profit margins are too thin, resulting in one or two suppliers. Generic manufacturers typically operate at full capacity and often use one production line to produce multiple drugs. If a plant experiences a quality or cross-contamination problem, an entire production line must shut down, which can affect multiple drugs for months. Other generic manufacturers can’t easily ramp up production.

What’s the reason for this problem?

The WSJ editors say, “Fewer branded drugs are in short supply because their manufacturers build more slack and resilience into supply chains. Higher profits give them more capital and a financial incentive to do so. And therein lies the underlying problem: Generic profits have shriveled owing to government efforts to reduce drug spending.” In other words, when you can’t make sufficient profit from making these drugs, no one wants to make them! Progressives seem to believe that drug companies should “take one for the team” and just make these drugs even at a loss!

This reminds me of one of the first and most important lessons of adulthood – “There’s no such thing as a free lunch.” You can’t expect anyone to lose money doing anything; you must allow everyone to make a reasonable, fair profit for their investment of time and money. But Progressives like Sen. Sanders still believe “There is an enormous amount of greed in the system.”

Mandatory Medicaid rebates have also squeezed generic drug margins. Medicaid is the top payer for many generic drugs. But low reimbursements by government health systems are a global problem, and manufacturers with plants in Europe cut production amid last year’s energy price spike. The FDA recently flagged problems at a major Indian plant and halted exports. Politicians criticize generic companies for shifting production to India and China to reduce costs, but the alternative for many would be going out of business, which Illinois-based Akorn Pharmaceuticals did this past winter.

WSJ editors say, “The solution is for government to pay more for drugs, which politicians oppose because it will increase healthcare spending. Instead, they want to squeeze more money out of the pharmaceutical industry, which will exacerbate shortages.” Politicians always want a foil to be the brunt of their angst and the pharmaceutical industry is their favorite foil. But blaming them won’t solve the drug shortage or provide the drugs needed to treat Americans.