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Welcome to the first homepage edition of i2P for 2012.
In many ways it has been a slow start to the New Year because of having to deal with the “leftovers” from 2011.
One of those items for i2P was that a third-party provider to the site did not advise of a code change to the security section in our subscribe panel, creating a range of frustrated subscribers not able to get on board.
We apologise to all those potential subscribers who were unable to register with us in the second half of 2011, but if you try once more you should have no problem.

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Drug Shortages Require Urgent Government Intervention

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Neil Johnston articles by this author...

Neil Johnston is a pharmacist who trained as a management consultant. He was the first consultant to service the pharmacy profession and commenced practice as a full time consultant in 1972, specialising in community pharmacy management, pharmacy systems, preventive medicine and the marketing of professional services. He has owned, or part-owned a total of six pharmacies during his career, and for a decade spent time both as a clinical pharmacist and Chief Pharmacist in the public hospital system. He has been editor of i2P since 2000.

When something does not make sense I always find there is a political objective involved.
And underlying the politics always is the motivation of greed.
Make no mistake about it, Australian pharmacy is about to enter a period of manipulation never before experienced, and it involves supply chain manipulation by government and by Big Pharma.
It is globally orchestrated and tactics vary slightly country to country and the victims of this strategy are very ill patients and the pharmacies behind them desperately trying to bridge supply to keep them alive.

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The words cynical and immoral come to mind in the same thought process.

The fact that supply problems are occurring in the UK, the US, Australia and New Zealand simultaneously, suggests that being a global phenomenon, Big Pharma is the primary culprit with governments (massaged by Big Pharma lobbyists) taking an opportunistic approach and clawing back as many dollars as it can from the supply chain, through the many windfalls that occur during any commercial climate change.

And it seems to totally revolve around Big Pharma’s massive margins they are used to receiving for patented molecules. These are evaporating in the first half of 2012 through various patent expiries, the most notable being Lipitor.

So who bears the brunt of this massive fallout?
Well ultimately the patient, but directly behind them are the various community pharmacists who have to bear losses through:

a. Major government imposed price reductions on generic drugs.
b. Increases in manufacturer margins (rebate losses).
c. Increases in wholesaler margins (rebate losses).
d. Losses in settlement discount all around.
e. Increase in overheads directly attributable to artificial shortages of sensitive drugs and trying to source/ration, creating extra work.
f. Loss of shelf stock value at the point of price reduction.
g. Increases in overheads directly attributable to a major input into stock management, to stem the flow of blood.
h. Financial cost increases as banks and other financial institutions revise their lending/interest policies in relation to pharmacy.
i. Opportunity costs increase as lending policies become tougher.

In other words, the global financial crisis in a sense, is about to catch up with Australian pharmacy unfairly.

In many ways, pharmacy is also disadvantaged by government regulations not allowing pharmacy to offer a tangible benefit to patients, to encourage changes that could positively affect overheads, to be instituted.

For example, most repeat dispensing could be organised 7-10 days in advance if patient behaviour can be changed so that they submit prescriptions with a sufficient lead-time allowing better management of peak dispensing times that could be better employed by diverting sales resources to OTC products and information services.
Patient behaviour is not likely to change unless some incentive is offered.

Because of anticipated business pressures pharmacists may consider having the regulations changed (or simply ignore them as a matter of survival).

In the US drug shortages have become quite severe with the US president, Barack Obama taking a direct interest by signing an executive order to solve the issue.
A list comprising the worst 75 drugs that are chronically short has been identified. There are a number of different brands, but the actual manufacturers come down to one or two.
The corporations supplying the most number of drugs from the shortage list were Hospira Inc and Teva Pharmaceuticals USA. Others included Novartis AG, Watson Pharmaceuticals, Pfizer and Baxter Healthcare, according to the report.

The companies most commonly report manufacturing problems, discontinuation or suspension of production and increased demand as the cause of drug shortages.

In the UK exporting pharmacies are identified (by manufacturers) as being a major cause of shortages. However, if any export is involved by pharmacies it is regarded as being of little import for the overall UK drug shortages.
Pharmacists have previously been investigated by the profession's regulator for complaints relating to exporting. The MHRA has that it is carrying out a "targeted programme of inspection, aimed at "changing behaviours and ensuring compliance with duties on supply".

That does not sound very urgent and smacks of a diversion created by Big Pharma.

There is no rational explanation for drug shortages anywhere in the world today and one can only speculate that the supply chain is being milked unmercifully, without regard to human life.

In Australia, Pfizer is causing most difficulty with community pharmacy and appears to be using delayed delivery (totally against an agreed policy with the PGA) to manipulate pharmacists into buying up to 12 months supply of Pfizer drugs, mainly atorvastatin.
This helps to solve their loss of patent problem at pharmacist expense by blocking access to other brands for 12 months and further manipulating their dubious rebate scheme to keep pharmacists in line (or prop up their own profit margin if the pharmacist goes elsewhere for supply).

Cancer drugs have become critically short in the US and Australia. A news report on the ABC television illustrated a young mother with two children. She had a treatable breast cancer but could not commence treatment because continuity of supply could not be assured.

In my mind this is “unconscionable conduct” in the wielding of market power and ought to be an ACCC case. One company, Pfizer, controls a very large segment of drugs supplied under the PBS.
Because the PGA has close ties to Big Pharma companies like Pfizer, a legal case is unlikely to be mounted in PGA member interest.
Government, of course, is still standing on the sidelines in respect of partially fixing the problem, by mandating that all PBS suppliers must come under the CSO banner so that alternate supply can be sourced through pharmacy wholesalers.

This would partially resolve supply problems that are likely to get worse unless pressure is taken off Big Pharma selling prices to allow a higher profit margin when listed on the PBS.
Not that greater margin represents a solution because that is tantamount to bribery by Big Pharma.
As i2P has previously reported, there is no rational reason for drug shortages in Australia or anywhere else given the technologies that have been developed to monitor the supply chain and predict forward quantities.

Our government might also intervene with legislation suspending a drug patent if a manufacturer cannot maintain reasonable consistency in their supply.

Government and Australian industry representatives need to organise a tough response to Big Pharma or risk losing control over their entire health initiatives.
It’s a very serious issue, and if there is no correction we may just as well give over the management of the PBS to Big Pharma and simply sign a blank cheque on behalf of the Australian taxpayer.

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