Analysis and Commentary


First it was toilet paper, now it’s serious – drugs in short supply

Analysis and Commentary




By Peter Roberts

In the early days of the Covid-19 pandemic it was shortages of everyday items such as toilet paper that suffered the disruptions of global supply chains.

Now a risible situation is becoming really serious – we are experiencing shortages of critical medicines such as drugs for diabetes, hormone replacement therapy, depression, nausea, stroke and contraception.

According to the Therapeutic Goods Administration medicine shortage reports database 320 drugs are in short supply, some of them listed as critical.

Even simple off the shelf pain relievers are in short supply, and of course so far all our Covid-19 vaccines have been imported.

The fundamental issue raised here is that Australia simply does not produce enough of our own drugs.

The country produces no antibiotics of our own – that’s right, nil, zilch.

Everything has to be imported.

With really serious international disruptions, how could we maintain out lifestyle with no antibiotics – surely being able to produce antibiotics is essential.

We have got to this parlous situation purely because of the antipathy of dry economists of the sort that inhabit federal Treasury and the Productivity Commission to accept any sort of support or preferential treatment for key industries.

This has seen a shrinking of the drug manufacturing sector over time as the companies were squeezed by low prices offered under the Pharmaceutical Benefits Scheme.

Only in the past year the Melbourne factory of Glaxo (pictured), which once exported $1 billion worth of drugs annually, closed and is in the process of being turned into a general business park.

Memories of other multi-million dollar exporters such as MSD are a distant memory.

The lack of presence of the multi-national manufacturers has also crimped the ability of innovative Australian drug companies to have their innovations manufactured onshore.

Derided as picking winners, even the Liberals have now abandoned the barren doctrine which got us into this mess, with their focus on defence industry, the naming of six National Manufacturing Priorities, and support for sectors such as critical minerals.

There was a time when we had modest support for drug manufacturers under the Hawke government.

Companies that manufactured here, or undertook R&D were rewarded with slightly higher prices under the PBS in a policy known as Factor (f).

This saw the growth of drug manufacturing during the 1980s and 90s.

Well right now, we need something like this again.

We have to incentivise local manufacturing, and that means treating it as an infant industry that needs to be nurtured with some sort of special attention.

We simply have to be able to manufacture our basic drug needs.

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