Government Causing Generic Drug Shortage

A proposed Food and Drug Administration rule on product labeling will exacerbate shortages of generic drugs already resulting from regulations on Medicare reimbursement rates and other factors, critics charge.

Patient advocacy groups, lawmakers, and industry representatives warn that the FDA rule, which requires generic drug makers to update information on products if they become aware of new safety information, would add to the drug shortages.

Meanwhile, Roger Pilon, vice president for legal affairs at the Cato Institute, said one of the primary causes of shortages in the generic market is the government’s role in regulating Medicare reimbursement rates and not allowing prices to match market demand.

“There is a problem [of generic drug shortages] because of the price controls included in the 2003 Medicare Modernization Act. When you have caps on prices, the result is you see manufacturers producing fewer drugs or getting out of the market altogether,” Pilon said.

In 2011, the Government Accountability Office reported a substantial increase in the number of drug shortages since 2006, with many involving generic drugs.

According to the GAO, a total of 1,190 shortages were reported from Jan. 1, 2001, through June 20, 2011. From 2006 through 2010, the number of drug shortages increased each year, growing by more than 200 percent over that period.