Drug shortages 2012: a worsening situation, but movement on industry response

Pharmaceutical CommercePharmaceutical Commerce - July/August 2012

Despite the lack of headlines today as compared to late last year, the drug-shortage situation has not improved. FDA, congressional and industry actions are beginning to change the dynamic

Drug shortages became a headline topic in the second half of 2011, as the count of short-supply drugs set a new record, FDA held an industry-wide workshop in September, and the Obama administration issued executive orders to address the problem in October. And while FDA can look to a successful reduction in the growth of new short-supply drugs, the problem has actually gotten worse: from a year-end total of 267 shortages last year, the count is now around 280, according to the University of Utah Drug Information Service (UUDIS; Salt Lake City, UT).

Two industry responses and several government actions have occurred in the interim. Most substantially, the Generic Pharmaceutical Assn. (GPhA; Washington, D.C.) has followed through on an “Accelerated Recovery Initiative” to get manufacturers and distributors to pool data on forecasted demand and supply, and has chosen IMS Health (Stamford, CT) to be the independent, third-party aggregator of these data. And HDMA has issued a white paper, “Communication Guidelines for Managing Product Shortages in the Healthcare Supply Chain,” with voluntary recommendations for manufacturers, distributors, pharmacies and GPOs.

Drug shortages were a component of the reauthorization of the Prescription Drug User Fee Act (PDFUA), which passed the Senate on May 24. That bill (a House version is under consideration at this time) is focused primarily on the funding mechanisms for FDA reviews of drug applications, but includes a section requiring broader notification of disruptions in drug production by manufacturers to FDA, and expedited reviews of generic-drug manufacturing plans.

Also in late May, Rep. Elijah Cummings (D-MD) introduced a bill, HR 5853, “to prohibit wholesalers from purchasing prescription drugs from pharmacies, and to enhance information and transparency regarding drug wholesalers engaged in interstate commerce.” The action comes from a campaign that Cummings and several other Congressmen have been waging to investigate claims of price gouging and hoarding by secondary distributors; however, most of these claims have been disputed by the wholesalers.

FDA itself is intensively engaged in addressing drug shortages. Through September 2011, it had investigated and mitigated 99 shortages through a combination of coordination with manufacturers involved, expedited reviews of manufacturing defects, and, in some cases, authorizing the import of drugs from abroad. Commissioner Margaret Hamburg said, in a May blog posting, that the agency had mitigated 128 shortages in the six months since the Obama executive order, and that new shortages have fallen from over 90 reported in the year-ago period to 42 in this period.

What to do now

All of which doesn’t overturn the fact that essential drugs, including oncolytics, pain medications and pre-surgery treatments remain in short supply. Hospital pharmacies have estimated that they are paying over $200 million extra, annually, to obtain short-supply drugs, and that they are expending over $200 million annually in committing staff and resources to locate the drugs—a near $500-million added expense to healthcare. Surgery schedules are disrupted; medication errors can occur as non-preferred dosage levels are employed; sick patients are getting sicker—and some are dying.

HDMA’s recommendations are focused on better communications among supply chain partners. Some of them require hyper-focused attention to the drug and its customers; for example, HDMA recommends manufacturers and wholesalers considering alternative express-delivery techniques or drop-shipping, while noting that this can require the company “to weigh internal cost/service tradeoffs against the impact on the total distribution channel.” But nearly across the board, HDMA’s recommendations focus on communications between a manufacturer and its customers, and a wholesaler and its customers, and not the market overall. Better communication among existing trading partners will certainly help, but will also leave many drug dispensers out in the cold.

The GPhA/IMS initiative promises to address that gap. On a voluntary basis, manufacturers will share forecast production data with IMS Health, and IMS will match it against its own methodology for predicting market demand. When a shortfall looms, IMS will notify FDA confidentially. According to Michal Barnes, senior principal in the Commercial Effectiveness Practice at IMS, GPhA itself will not be notified of the shortage (apart from IMS reporting how much data it has received, and how many analyses or reports have been generated).

On the front line: this is the team at FDA currently addressing

drug shortages; they assembled at a February public briefing

by FDA on the topic.

Credit: FDA

Barnes and GPhA believe that the system of reporting/analyzing will be up and running in the next two to three months. Ralph Neas, CEO of GPhA, said that this initiative “will strengthen the entire healthcare industry’s collective ability to increase communication and supply patients with the medicines they need.”

Barnes says that both FDA and the Federal Trade Commission will need to be engaged, with coordination with FDA over what information will be beneficial to them, and with FTC to ensure that anti-competitive requirements are complied with. “We’ve done a ‘fly-by’ with FTC and haven’t heard anything negative, but the full evaluation remains to be conducted,” he says.

Initially, the collaboration will focus on generic injectables, which represent more than three-quarters of current shortages, and Barnes says that manufacturers representing about an equal percentage of capacity for those drugs have committed to participating. Down the road, it could expand to include other types of drugs, and possibly branded products as well.

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