Drug shortage in supply

“The Royal Surrey County Hospital Trust was criticised in February for exporting more than £4m of drugs.

The trust now admits it was selling a cancer drug which has now been placed on a list of medicines that are deemed hard to get hold of in England.

But it said there was “absolutely no evidence” to suggest its practices had contributed to the shortage.

The list of drugs being sold on the export market by the trust was revealed in the Health Service Journal (HSJ) after a freedom of information request.

The HSJ said the trust sold 240 packs of the cancer drug imatinib between May and October 2009. Less than a month later the drug was listed as being in short supply. ”

In the UK, exports of medicine is discouraged because it may cause shortage in their country’s domestic supply of drugs.
Looking at the article, the incentives that a hospital may have for trading medicine is the shortage of these certain drugs in other locations. If the supply in other areas of the world for this certain drug is much lower than the UK, the equilibrium between the supply and the demand curve would create a much higher market equilibrium price for the drug in that area. Hospitals in the UK would be able to make large profits by exporting their drugs and selling them at a higher price.