Experts Probe Economic Factors Driving Drug Shortages

Patients, providers and policy makers are up in arms over persistent and more prevalent shortages of important medicines, primarily generic sterile injectables needed to treat critical diseases and infections, provide emergency care, and enable surgery and multiple aspects of medical care. Despite ongoing efforts to address the problem, FDA now sees a rise in active shortages and in the duration of supply problems. Some shortages have lasted more than eight years, according to data presented at a public meeting on drug shortages this week

, and solutions remain elusive.

Stakeholders participating in the FDA public meeting look to address the systemic root causes of shortages, with a focus on the economic incentives likely to drive appropriate drug reimbursement, product quality, and supply chain resiliency. In some cases, said FDA commissioner Scott Gottlieb, “the prices reimbursed on these drugs have been driven down to such low levels, that it makes it hard to manufacture them profitably and have enough margin left over to invest in modern manufacturing upgrades”. Adam Kroetsch, deputy director of the office of program and strategic analysis in the Center for Drug Evaluation and Research (CDER), linked shortages to older generic drugs where the market fails to reward product quality and reliability.

A key factor aggravating shortages is broad consolidation throughout the supply chain. Mergers in the generic drug industry can limit production of a drug to one firm and minimize sources of key ingredients. A handful of hospital buying groups and few large distributors, moreover, reduce competitive bidding opportunities and overall reimbursement for common, but important, injectables.

Seeking solutions

A full range of issues and proposals will be weighed by an FDA Drug Shortages Task Force, formed in July 2018 in response to rising concerns from members of Congress. The panel includes representatives from the Centers for Medicare and Medicaid Services, the Federal Trade Commission and other federal agencies, as well as senior leaders from FDA. The group has been meeting with manufacturers and other stakeholders leading up to the public meeting with the goal of developing a report to Congress outlining a policy framework to resolve the problems underlying persistent drug shortages.

Manufacturers at the meeting cited unclear or changing FDA product development standards and noted that efforts to scale up production to address a shortage can be stymied by FDA’s complex post-approval changes requirements. Several speakers urged greater transparency in agency warning letters and inspection reports to provide information earlier on where quality problems at one manufacturer may lead to limited production and create an opening for added competition. To avoid delays in gaining FDA approval of new or upgraded facilities to produce alternative products, the agency noted its adoption of a more efficient inspection program for sterile drug facilities, with more transparent quality standards that will make the oversight process more predictable.

There was disagreement among participants on some issues, with certain manufacturers seeking incentives to produce drug components in the U.S. to shorten supply chains, while others maintained that high quality products can be obtained reliably overseas. Generic drug makers proposed federal grants or other assistance to help manufacturers upgrade or build new manufacturing facilities and to establish a national contingency plan to stockpile critical medicines to provide excess capacity for when shortages occur.

FDA officials continue to urge industry to adopt more reliable, high quality manufacturing systems to avoid production breakdowns, but gains have been elusive. A quality metrics initiative has been mired in dispute for months over what and how to measure quality operations and a firm’s “quality culture.” CDER’s emerging technology program offers advice and support to companies looking to adopt continuous manufacturing and other advanced production technologies, but uptake has been limited. At the same time, newer just-in-time manufacturing systems that reduce vendor inventories may increase vulnerability to unexpected shortages. All these issues are before the FDA task force, and will be considered in its report on the multiple challenges in preventing drug shortages to ensure public health.