Pharmaceutical drug shortages have been around for a long time. The reasons behind the problem involve policies, hospitals, public attitudes and market mechanisms, and it could be hard to find any solutions in the short term.
Drugs are undeniably a commodity. As such, they are subject to market mechanisms, one of which is pricing based on quantity. Large hospitals, which dominate the use of medicines, can reduce their unit costs through bulk purchasing, while pharmaceutical companies are willing to offer them concessionary prices to gain and maintain a market share.
This is what is known as the “pharmaceutical price gap,” and there is nothing wrong with it in terms of a commercial market.
However, government officials see things differently. They are not happy to see a price gap for pharmaceutical drugs, so they impose measures to obtain data about hospitals’ costs, and then cut drug prices accordingly.
That causes the strange phenomenon of drug prices falling several times in one year, even when the price of everything else is going up.
Hospitals call the shots on how medicine is used, so they do not take this lying down. When the price of a drug is cut so low that there is no price margin, while another drug has a margin, it is natural to change drugs.
This leads to the “nomadic” practice of moving to wherever there is a price margin, so if prices are cut, people change their choice of drug. This means that a drug can have a life cycle that goes from having a price margin to having none at all, and finally exiting the market.
Many drugs are not offered in Taiwan at all, because global suppliers do not need to play this game in Taiwan’s little market.
The second factor to consider is that Taiwanese are generally not familiar with generic drugs. Most people do not look at the ingredients in a medicine, but might recognize its appearance and packaging.
If the labeling is different, they tend to think that the pharmacist has given them the wrong medicine.
Recently, even though there was a plentiful supply of other drugs with the same active ingredient — acetaminophen — people bought every available box of Paracetamol, leading to a market shortage.
The perspective, “If it ain’t KFC, it ain’t fried chicken,” comes with an “I won’t eat it” attitude.
This made it impossible for pharmacists to get through the drug shortage by offering consumers different brands that use the same ingredients.
However, local pharmacies are sandwiched between hospitals and the public. They do not rule the roost in drug use and they buy goods in small quantities, so pharmaceutical companies do not offer them concessionary prices. They might even be unwilling to supply them with the goods they need.
Their costs are therefore often higher than National Health Insurance (NHI) prices.
Furthermore, because most consumers are not familiar with generic drugs, pharmacy owners have to make friends with salespeople of pharmaceutical companies.
Another solution is to find out what medicines other pharmacies have in stock, so that they can swap what they have for whatever they lack. They might even transfer drugs between pharmacies across the country.
Pharmacists have been known to transfer medicines from Penghu County to Taiwan proper just to dispense a single prescription. These background activities are not visible to anyone else, and they are certainly not a long-term solution.
The government is trying to control the flow of pharmaceuticals, so pharmacists could consider the private transfer of medicines as a way around the problem.
Private transfer of drugs requires traveling and cultivating networks. It takes a lot of time, energy and money, with no subsidies to make up for it.
Pharmacists usually work with the mentality of honoring people’s trust to achieve their goals, but relying on their enthusiasm cannot keep the system going forever.
Drug shortages are not a short-term problem, so short-term solutions are not the answer.
Liu Yu-chi is a director of the Taichung City New Pharmacist Association.
Translated by Julian Clegg
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