Drug shortages in the United States are at a record high. At least 14 essential generic cancer drugs are currently in shortage, forcing patients and doctors to make difficult decisions to delay or ration first-line treatments, or accept second-best treatments. ADHD treatments, antibiotics, children’s acetaminophen, and many other critical medicines are also in short supply.
But most of the solutions being discussed are just Band-Aids on a broken system. They would do nothing to transform the incentives that routinely produce shortages and other market failures.
What we really need — for the health of our economy and society — is a robust public option in pharmaceuticals that produces and distributes essential medicines, such as cancer treatments. Publicly accountable public agencies can assure resilient supply chains and offer medicines at or even below cost, because keeping people healthy without bankrupting them in the process is good for society (and cost-effective to boot). This already happens at scales large and small all over the world, including Brazil, Sweden, Cuba, the U.K., India, Thailand, and more.
The White House, prominent members of Congress, the Food and Drug Administration, patient groups, leading academics, and the generic pharmaceutical industry itself all agree that U.S. drug shortages have become a crisis. The market is failing to provide many of the medicines we need most. The stark truth is that for-profit drug companies have increasingly little interest in making the low-priced, generic medicines that account for 90% of all prescriptions. The majority of generic drugs are now supplied by just one or two companies. Rather than make the cheap medicines that work best for many patients, companies prefer instead to reap much greater profits from newer, higher-priced products.
We agree with the generic pharmaceutical lobby and other experts that America urgently needs major public investment in new infrastructure to make and distribute essential generic medicines. But we think it is shortsighted to assert that this public investment should come in the form of further subsidies to the same companies that have created dire shortages time and again, stretching back to the 2000s.
Given recurring shortages — and the broader context that Americans pay the world’s highest drug prices — it’s no wonder that a movement for public pharma is picking up steam. States from Michigan to Maine are exploring getting back into the business of making medicines. The most prominent is California, which has committed tens of millions of dollars to making low-cost, off-patent versions of insulin and naloxone. California Gov. Gavin Newsom said in 2022 that “[n]othing epitomizes market failure more than the cost of insulin” and that “California is now taking matters into its own hands.” The first CalRx insulins are expected to be available on the market in 2024.
“Socialized” pharma may sound radical, but it is not. In fact, there is a long, successful, and ongoing track record of government-owned drug manufacturing right here in the United States. For example, for more than 125 years, the Massachusetts state-owned MassBiologics has made and distributed vaccines, plasma derivatives, and (more recently) monoclonal antibodies. The Walter Reed Pilot Bioproduction Facility produces vaccines and other biologics as part of the Defense Department’s research and development efforts. In the 1980s and ’90s, the California Department of Public Health created, from scratch, a successful nonprofit treatment for infant botulism, and California continues to make and sell the product today.
In the past, public production was even more widespread in the U.S. The state-owned Michigan Biologic Products Institute successfully manufactured anthrax and rabies vaccines for decades until its privatization in 1998. The New York State Public Health Department developed and manufactured diphtheria antitoxin in the early 1900s. In the 20th century, as prevailing economic orthodoxies changed, these and other state-owned laboratories were shut down or sold to private owners. (The same trend toward privatization claimed Canada’s famed publicly owned Connaught Laboratories in 1972. In the 1920s, Connaught Laboratories became the first institution in the world to manufacture and distribute insulin, and it sold insulin and other products on a nonprofit basis for decades.)
Reviving public manufacturing of essential medicines in the U.S. won’t be easy and won’t happen overnight. Big pharma wields incredible political power in Washington, and its lobby will undoubtedly fight any proposal seen as an incursion into “its” markets. Moreover, creating new manufacturing and distribution capacity requires significant, multiyear upfront investments that public officials are often hesitant to make.
However, the case for new investments in public pharma grows stronger with each new shortage, each public health emergency, and each medicine priced beyond the reach of ordinary Americans. Currently pending proposals prioritize manufacturing of generic drugs for which there have been recurring shortages (such as naloxone and antibiotics), as well as drugs with chronically high prices and pronounced equity implications (such as insulin and asthma inhalers).
Now is the time for Washington to get on board, as was most recently suggested by Sen. Elizabeth Warren (D-Mass.) and Rep. Jan. Schakowsky (D-Ill.). The federal government has unique advantages when it comes to making medicines — advantages of scale, of distribution, of legal authorities to authorize use of privately owned patents when needed and even, perhaps, to order domestic companies to make vital drugs for “national public health.”
Building publicly owned drug manufacturing facilities would dovetail with President Biden’s avowed commitment to a vigorous new “industrial policy” that brings manufacturing back to the United States. Public pharma would yield stable, high-paying jobs for domestic scientists, engineers, line workers, and others who have faced stagnating salaries and layoffs as the pharma and biotech industries become ever more financialized, consolidated, and outsourced.
Drug shortages are a man-made catastrophe. Our current system has caused them, by making essential health care reliant on a handful of for-profit drug companies. Rather than double down on a broken system, now is the time to embrace a robust public option in pharma. Doing so will not only address critical shortages but begin to rebalance power between Big Pharma and the people, bringing other long-awaited reforms closer to reality.
Dana Brown is the director of health and economy at the Democracy Collaborative, where her research focuses on health and care systems, the pharmaceutical sector, and economic transformation for health and well-being. Christopher J. Morten is an associate clinical professor of law at Columbia Law School and director of Columbia’s Science, Health & Information Clinic. He is an expert on pharmaceutical and intellectual property law.