When our children were young, we started a tradition at Thanksgiving of going around the table and having each of us (around 20 with extended family) saying what we were thankful for. Of course, you hear a lot of being thankful for our family, our health (especially during the long days of COVID!), our jobs, etc. But, in all the years we have been doing this, we've never had anyone say that they are thankful for their medicines!

But, maybe that will change this year given that we've heard about so many drug shortages. What causes these shortages, and how do we solve this ongoing problem? A recent study by IQVIA took a closer look at the problem and provided some useful insight.

IQVIA summarized that “[s]hortages can have different causes depending on the market dynamics at play and require a variety of solutions and participation from all stakeholders to resolve and prevent future shortages from occurring.” Shortages were found to be concentrated in certain areas, such as anesthesia, cardiovascular, infectious diseases, and oncology. But, the causes of those shortages were often varied. For example, recent shortages in ADHD medicine were in part caused by increased demand and the complexities of DEA's involvement in regulating these controlled substances. After demand had fallen off significantly during the COVID pandemic when many children were isolating, a spike in demand for pediatric antibacterials caused a shortage in such products as people returned to normal life.

One thing that might come as a surprise to many people is that shortages were most likely to occur where there were multi-source generic products, especially where prices had been driven significantly down due to robust generic competition. In fact, 56% of all drug molecules in shortage were priced at less than $1 per unit. Of course, any economist (and certainly everyone toiling in the generic drug industry) certainly understands that these supra-competitive markets make it difficult for companies to continue providing supply, especially when any disruptions occur. As policymakers continue to debate policies to reduce drug costs, they need to keep in mind the market dynamics at play that may lead to drug shortages.

As I sit around our table this Thanksgiving, I will definitely be giving thanks for my family, my health, my colleagues, and even my clients. But, I may have to throw in a thanks for my pharmaceuticals as well!

“Shortages are more common at lower prices, with 56% of molecules in shortage priced at less than $1 per unit.