Demand and Supply of America Medicine Market

Associated with the quality life that modern society people pursued, an excellent health care is always concerned no matter where people are. However, the medicine demand and supply are an indispensible part of the chain. So there is a medicine issue of demand and supply in America, which eventually has required US government intervention is of serious concern.

Initially, from the article, it is can be explored that the demand of vital drugs like generic drug that is used to treat cancer, where shortage reports seem most critical and total number for drug shortage reached 232 in 2011 (The Economist, 2011). The factor caused this firstly is because of limited production capacity. So, as the demand for this type of medicines increasing, production lines are stretched to limitation. As a result, the shortage is caused while price goes up too.

Another factor for America medicine shortage is the consequence of long run excessive production. The medicine firms are willing to produce more drugs in order to maximize profits. However, the pressure on production causes a severe drawback on medicine’s quality. The bacterial or fungal contamination will result in large proportion of rejects and lowering real quantity that can be traded to the medical market. Thus, the whole industry has to depend on a handful of manufacturers who are keeping hygienic rules strictly but providing less quantity of drugs, which gives rise to lacking medicine supply again. In this case, a oligopoly market was formed, and US government requires manufacturers to hand in a notice before actually terminating its production six months in advance; it is also banned to sell any scarce medicine at a high price, otherwise, a possible prosecution is going to punish those lawbreakers or in the form of fine. This measure might have an impact on the medicine producer to be more cautious for medicines and pushed to manufacture less quantity but medicines with higher quality and price.

Apart from those factors, political elements have an impact on short supply of medicine as well. Based on healthcare reform last year, the government forces the medical suppliers’ profit margins to be dampened and enable them reluctantly produce vital medicines at lower price to combat the dramatic demand especially during the time of high unemployment rates that dozens of dwellers are unable to paid high cost healthcare. This is known as price ceiling. However, the thing does not always happen the way expected despite the government means to fix the medicine chain properly. Although some certain type of prescription medicine have involved in Medicare, the price has still been being more expensive than ever that cannot be afforded particularly for elder people. The medicine company continuously set a high price under the line that government allowed maintaining to make maximum profits. So the relationship between Medicare institute and Medicine Company is utilized to set a quite unacceptable price that leads to this policy to be carried out abortively. In short, the political factors are influencing medicine supply in the form of a trend of increasing medicine price. Besides, the Unapproved Drugs Initiative sponsored by FDA (Food and Drug Administration, 2011) is another political factor for the consequence. The doctors blame for the act becoming an obstruction for time-honored drugs used constantly to pass the GMP certified. So the policy makes for a forced low price that is minority firms do and a time delay on the old drugs to remanufacture from the healthcare reform, which contributes to medicine lacking as well.

Considering the black market, which works as an external factor for medicine shortage that led by government’s price ceiling; it is the only way that can be elected while the clinics, pharmacy and even hospital face an urgent medicine shortage. Sometimes, the drug sellers are offering a lower price than the official places to attract individuals and organisations to purchase those medicines that are not security guaranteed. Frequently, they peddle prescription medicines at a higher price to poor America citizens who do not have insurance particularly for poor Hispanics (KOMO News, 2010). Thus, under a circumstance that people and organisations are short of drugs, no security guaranteed medicine with wrong dose coming from an illegal way at a lower or higher price is sold to the society without supervision. The place that these drugs came from is Mexico on account of lax restriction for prescription drugs （Sagan, 2010). In addition, even so they have medicine to sell with a mark-up, the middlemen also hoard medicines and wait for a good opportunity to sell at a higher premium when grey markets flourished excessively.

Unlike falling supply of medicine, demand for medicine is surging at an incredible rate 2.3 percent (IMS Institute, 2011). The demand increases because of vital medicines necessity in surgery. The patient failed to cure the disease without necessary medicine. In addition, the variety types of substitutes are provided in the Market each year that induce a competitive situation but do enlarge the Medicine Market as a result. Although buyers are willing to choose a comparatively reasonable price and new technology accompanied product under that situation if they are struggling to purchase one since they got the prescription; the total demand for medicine still obviously increases.