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And then there is the factor that managed to elude Democrats even as they produced 2700 pages of ObamaCare: tort reform was completely omitted from the bill. While litigation is a necessary evil with respect to protecting consumers from bad drugs, much like patent expirations and the elimination of R&D departments, it is a double-edged sword. For example, one of the primary drugs used for anesthesia is propofol. At one point, it was made by three companies. On May 11, one of those companies, Teva, was held liable for $365 million in damages when a Las Vegas clinic infected a patient with Hepatitis C from a re-used vial of propofol in 2008. The company had nothing to do with the clinic’s unsafe practices, but apparently that was irrelevant to the jury.
As a result, Teva no longer manufactures propofol. Now there is a shortage of the drug, forcing doctors to seek alternative sources for medication. This leads directly to another problem: chronic shortages of key medicines increase the risk of drug errors as hospital pharmacies often turn to outside pharmacies, drug distributors, or a “gray market” of small distributors to get replacement medications. A survey of 1800 healthcare providers conducted last fall by Institute for Safe Medication Practices revealed at least 1,000 medication errors related to drug shortages. Furthermore, many of these gray market drug suppliers are are taking advantage of the shortages and driving prices through the roof.
Nyack Hospital Pharmacy Director Joseph Pinto is concerned that the shortage is so acute that hospital pharmacists might have to go back to making their own drugs from raw ingredients. “It isn’t always the best practice. We are not always equipped,” he said. “It’s cumbersome, and it’s manpower hours,” he added. Thomas Magaldi, pharmacy administrator at Sound Shore Medical Center in New Rochelle, noted that numerous recalls, which occur when a drug is defective or potentially harmful, have also disrupted the availability of dozens of drugs in recent years.
Yet Mr. Magaldi said something that illuminates the essence of progressive thinking, and in doing so, provides the final clue as to where reducing the profit incentive for drug companies leads. If a company stops making a drug or there is a recall, he argued, the federal government should step in to compel other manufacturers to fill the gap. That is nothing more than government coercion. If such coercion sounds familiar, that’s because it is the essence of ObamaCare, which cannot survive without compelling individual Americans to purchase health insurance, or pay a fine for refusing to do so.
Meanwhile, drug companies are reporting their biggest drop in profits in four years, and firms such as Pfizer, Merck & Co. and Bristol Myers Squibb Co. are “eliminating jobs, cutting costs and shedding business units to prepare for patent expirations.” Les Funtleyder, a New York-based fund manager at Miller Tabak & Co., explained such a reality “in is pipelines and corporate transactions–either acquisitions or divestitures” are “going to dominate [drug company] discussions.”
In other words, most of what is causing current drug shortages will continue to occur. As for those who contend drug company profits are “obscene,” here is a chart of the top 12 companies. Note the highest position of any drug manufacturer in the Fortune 500 is number 31, and that most of the twelve largest companies have seen considerable drops in profit from 2009 to 2010.
Yet if Americans still want to demonize drug manufacturers they are free to make that choice — the same free choice which also extends to any company that wants to stop manufacturing anything they consider unprofitable. That is what freedom and free-market capitalism is all about. Does such a system have its flaws? Unquestionably, but that isn’t the ultimate question. The ultimate question is how does it stack up against a socialist-inspired system epitomized in ObamaCare, in which profits are considered unseemly compared to societal “well-being.”
An increasing level of drug shortages ought to provide the answer to that question. But drug shortages are only the the first wake-up call for a healthcare system in which Democrats are doing their best to demonize the incentive of profits. If Americans don’t wise up, they may learn the same brutal lesson with respect to the rest of their healthcare that they are currently experiencing with regard to drugs: disincentives produce shortages. And such shortages make the “right” to healthcare meaningless.
Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.com.
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