Low generic-drug prices exacerbate drug shortages: FDA

 More drugs are in short supply for longer periods of time due to a fundamentally flawed pharmaceutical supply chain, according to a new report.

The number of ongoing drug shortages has increased from 2017 to 2018 after declining from a peak in 2011. Shortages have also been lasting longer, in some cases more than eight years, according to a new report from the flawed pharmaceutical supply chain Drug Shortages Task Force. Two-thirds of the 163 products studied had a generic version, had been on the market for decades and were relatively cheap off-patent drugs.

Sixty-two percent of the pharmaceuticals analyzed went into shortage after supply disruptions related to manufacturing or quality problems.

“We feel there is market failure here,” Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, said during a House Energy and Commerce Committee hearing Wednesday on the pharmaceutical supply chain. “It is an economic problem where cost minimization and driving to the lowest price then disincentivizes investment by manufacturers, which then gets them out of the market or eventually gets them into manufacturing difficulties.”

The root causes stem from a lack of incentives to produce less profitable drugs and a “race to the bottom” pricing mentality, a lack of recognition and financial incentive to reward quality manufacturers, and logistical and regulatory hurdles to increase production during a shortage, the FDA said.

The impact is significant. According to an analysis published in JAMA of the norepinephrine shortage in 2011 and 2012, deaths increased by 3.7 percentage points and there were estimated losses of $13.7 billion nationwide.

One of the latest examples is the shortage of vincristine, which is used to treat leukemia, as well as other types of cancer. Pfizer, which has had about 98% of the market and became the sole-supplier in July when Teva Pharmaceuticals made a “business decision” to stop supplying the drug, experienced a manufacturing delay in early October.

The Children’s Oncology Group wrote in a letter to the cancer community that it is “greatly concerned that some children are already being impacted by this shortage and by the understandable anxiety this creates for all families of children with cancer.” Care is often delayed when shortages arise, studies have shown.


Pfizer offered a limited one-time release on Oct. 25 and will require providers to send in specific patient and dosing information to get subsequent doses. Since vincristine is a “work horse” chemotherapy medication, it may represent hundreds of patients within Cleveland Clinic alone who require multiple doses, said Chris Snyder, a Cleveland Clinic pharmacist and drug shortage specialist.

The lifesaving drug only costs about $8 for a sterile vial, Woodcock said.

“If we are only willing to pay that much, manufacturers are going to drop out of the market,” she said during the hearing.

The FDA proposed three main solutions, one of which was to create a rating system that would evaluate the robustness of a manufacturing facility’s quality system and reward high-performers, which drew the most support from pharmaceutical experts.

“There should be a very public scorecard for manufacturers,” said Scott Knoer, chief pharmacy officer at Cleveland Clinic, adding that there is a very low bar for offshore companies who produce medication. “Because price has been the No. 1 issue that people, PBMs and insurance companies drive to, low quality has been allowed to become acceptable. Technically not acceptable, but not enough infrastructure and desire to ensure quality and safety.”

It would make a big difference to be able to purchase drugs based on quality, and hopefully decrease shortages and recalls, said Erin Fox, a drug shortage expert who is the senior director of drug information and support services at University of Utah Health.

Drug purchasers have limited access to any quality data other than if the FDA approved it, which doesn’t ensure reliability, Woodcock said.

“If we could rate quality maturity, which ensures reliability, we could assign some type of system that would hopefully incentivize some rewarding for value in the healthcare system purchasing chain,” said Woodcock, adding that the FDA is seeking real-time data from manufacturers, although that would require congressional action.

Another solution was to collect and analyze comprehensive information to characterize shortages, quantify their effects and closely observe the contracting practices that may be driving them.

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Healthcare organizations should also pay more for generic drugs—and for high-performing manufacturers in particular—ensuring that they continue to supply critical, older generic drugs, the agency said.

“I think we do need to pay more to a create a more sustainable market, but there have to be incentives for hospitals to do so,” said Fox, explaining that the current payment structure does not encourage hospitals to purchase based on quality.

In 2018, 88% of the manufacturing sites making active pharmaceutical ingredients and 63% of sites making finished dosage forms were located overseas, according to the report. This represents a national security issue that further fragments the supply chain, experts said.

“There is capacity to produce API in the U.S. but there is not economic incentive,” said Woodcock, citing lower labor costs less environmental regulation overseas.

Source: modernhealthcare