cover of episode Why do hospitals keep running out of generic drugs?

Why do hospitals keep running out of generic drugs?

2024/10/25
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Planet Money

Key Insights

Why do hospitals keep running out of generic drugs?

Shortages often stem from factory closures, recalls, or manufacturing issues. Additionally, generic drugs are not profitable, leading to fewer manufacturers and increased vulnerability to shortages.

Why are generic sterile injectables not profitable for manufacturers?

As generic drugs, they face intense price competition, driving down prices to unsustainable levels. Manufacturers drop out or cut costs, increasing the likelihood of shortages.

How do group purchasing organizations (GPOs) affect drug prices?

GPOs combine hospital purchasing power to negotiate lower prices, which pressures manufacturers to keep costs low and can lead to unsustainable pricing.

Why don't hospitals prioritize drug supply chain resilience?

Hospitals are incentivized to keep costs low, and shortages, while harmful, do not significantly impact their financial performance or patient satisfaction.

What role does the government play in drug shortages?

Government regulations aim to keep healthcare costs low, but this can contribute to unsustainable pricing for generic drugs. Proposed solutions include government intervention to support manufacturers or incentivize hospitals to prioritize supply chain resilience.

What is CivicaRx's approach to combating drug shortages?

CivicaRx, a nonprofit, builds sterile factories to produce generic sterile injectable drugs and encourages hospitals to sign longer-term contracts to ensure a more stable supply.

Why do drug shortages persist despite market dynamics?

Market dynamics are hindered by low profitability of generic drugs, combined hospital purchasing power driving prices down, and lack of incentives for hospitals to prioritize supply chain resilience.

Chapters

Hospitals across the country are facing persistent shortages of common generic drugs, impacting patient care and creating logistical challenges for medical professionals. A nurse's frustration highlights the urgency of this issue, questioning why seemingly simple solutions haven't been implemented.
  • Drug shortages affect common, cheap medications like saline and dextrose.
  • Shortages necessitate workarounds, impacting patient care.
  • A nurse's frustration prompted an email inquiry to Planet Money, highlighting the economic puzzle.

Shownotes Transcript

There's something strange going on in hospitals. Cheap, common drugs that nurses use every day seem to be constantly hit by shortages. These are often generic drugs that don't seem super complicated to make, things like dextrose and saline (aka sugar water and salt water).So what's going on? The answer, as with anything in healthcare, is complicated.On today's show: why hospitals keep running out of generic drugs. The story behind these shortages tells us a lot about how these drugs are made, bought and sold–and, it shows us how these markets can falter without the proper care.*This episode was hosted by Sally Helm and Alexi Horowitz-Ghazi. It was produced by Willa Rubin, with help from James Sneed and Sam Yellowhorse Kesler. It was edited by Martina Castro. Fact-checking by Dania Suleman. Planet Money's executive producer is Alex Goldmark.Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts) or at plus.npr.org/planetmoney).*Learn more about sponsor message choices: podcastchoices.com/adchoices)NPR Privacy Policy)