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Drug shortages and Industry Behavior: a case in point

2011-12-23

A recent letter to the New York Times pointed out a fact which is shocking in the extreme to all who are concerned about drug shortages. Apparently, the cancer drug Doxil is protected under the Orphan Drug Act, a federal law which allows companies to seek extended patent protection for drugs which are not in enough demand to induce competition for their production. These drugs are needed by only a small number of patients in most cases. The Act allows companies that have developed such drugs to obtain extensions on the usual twenty year patent (which was increased from seventeen years some time ago.) Under the extended patent, a company has the exclusive right to produce (or license production for) a drug for longer periods, thus allowing the company to avoid competition.

Unfortunately, Johnson and Johnson, the company that applied for and received extended protection until 2014, is no longer producing Doxil. No other company would plan to produce Doxil until Johnson and Johnson’s patent protection has expired. The result is that there is no Doxil, nor is there any generic equivalent. This drug is useful in the treatment of some cancers, and up to now has been the subject of continued research. Treatment with this drug is no longer available, and research is impossible.

The web site for Doxil has an update today on the “supply shortage” (actually the complete unavailability of any more of the drug) which states that the third party company that was making Doxil has suspended production until they can implement “lasting corrective actions” for the “equipment issues” that they are facing.  They are currently estimating that production will not resume until late 2012.  The Wall Street Journal has an article which describes “overdue preventive maintenance and other required actions” and mentions recalls of two other drugs produced at the plant, which produces sterile injectable drugs for several companies.  It appears that equipment at this plant is worn out and in need of replacement.

There are speculations that Johnson and Johnson will attempt to find an alternate manufacturing facility for Doxil.  We can, however, speculate that the manufacturer has been negligent and has failed to respond to FDA inspections and warnings in a timely fashion.  We can also speculate that finding a solution for the manufacturer’s problems has not been a priority to J+J, since they have not overseen their third party manufacturer in an expeditious manner.

The company has made a management decision that the needs of a few thousand cancer patients (there are about one thousand on a waiting list) are less important than the company’s profits. It seems unreasonable that a company which makes huge profits on many popular drugs (like Risperdal and Aciphex) could not support the production of a small amount of an unprofitable drug, as part of the cost of doing business in an ethical fashion.  Yet that is what has happened: the management has failed to adequately supervise the “third party” it has contracted with, by not inspecting the manufacturing facility, and not discovering in a timely fashion that the equipment needed to be updated or replaced.  As a result, the “third party” has been shut down, partly due to FDA warnings and partly due to recalls of faulty product.  Responsibility, diffused through a “third party”, has been shirked.   When a person fails to get the oil changed in his car, that is a personal failure.  When a large company fails to perform preventive maintenance on its manufacturing facility (which produces drugs vital to the treatment of lethal diseases), that is a systemic failure.

Decisions of this nature have led to shortages of many drugs, not just unpopular ones. There are several drugs for which demand has increased dramatically in recent years and which are in the throes of shortages. These shortages are not due to increased demand, but from cutbacks in production that appear to be strategic in nature: designed to force patients to take alternative drugs on which profit margins are much higher.
The behavior of pharmaceutical manufacturers is a clear explanation of why regulation is needed. Companies that have enough power to make anticompetitive and unreasonable, yet profitable, decisions will do so unless they are prohibited by law and policed by regulatory agencies.

Deregulation is the biggest fraud ever perpetrated by the Republican Party and its conservative base. Ronald Reagan was the biggest liar ever, and he started this fraud by claiming that regulations were at fault for the problems that deregulation had provoked. There are videos still extant of Mr Reagan proclaiming that “excessive regulations” were causing the government collapse that he had just provoked by cancelling the regulations that would have prevented it.
A copy of the letter is appended:
Re “Drug Scarcity’s Dire Cost, and Some Ways to Cope” (The Consumer, Dec. 13): In a free market, another manufacturer could step in to take advantage of the unavailability of the cancer drug Doxil and other lifesaving drugs that are in short supply. For several reasons, there is no longer a free market in these drugs.

In the case of Doxil, Johnson & Johnson sought and won extended patent protection under the Orphan Drug Act. The company has the exclusive right to manufacture Doxil until 2014, but it isn’t making it, thus endangering the lives of the more than 7,000 people who were depending on it and bringing to a halt many of the 30 clinical trials that require it.

The consolidation of the drug companies has resulted in powerful monopolies that increasingly do not serve the public interest.

Anne M. Dranginis

Glen Cove, N.Y.

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