The Broken Marketplace Causing Drug Shortages and Innovative Solutions
56% of surveyed hospitals reported they changed patient care or delayed therapy due to a drug shortage in 2015-2017
Summary
Drug shortages are associated with deferred procedures, adverse drug events, medication errors and are estimated to add almost $600 million/year in additional health system expenses.
Drugs likely to experience shortages are: Older; have lower prices; and are financially unattractive.
Strategies to solve the underlying problems should include: Regulatory changes; Changes from the manufacturers; and Innovative new solutions (outlined below).
Background
Declining from a peak of over 300 drug shortages in Q3 of 2014, to approximately 175 per quarter in 2016, the frequency, intensity and duration of shortages has been increasing (225 in Q3 2017). Although not well proven, drug shortages are attributed with treatment delays, prolonged patient suffering, and contribute to disease progression. The financial burden of drug shortages has been estimated as $359 million annually of increased labor costs and an additional $230 million on alternative therapies.
Declining from a peak of over 300 drug shortages in Q3 of 2014, to approximately 175 per quarter in 2016, the frequency, intensity and duration of shortages has been increasing (225 in Q3 2017). Although not well proven, drug shortages are attributed with treatment delays, prolonged patient suffering, and contribute to disease progression. The financial burden of drug shortages has been estimated as $359 million annually of increased labor costs and an additional $230 million on alternative therapies.
Drug shortages typically occur with financially unattractive agents:
As of June 2019 for all approved generic drugs: 39% were marketed; 61% were not marketed.
Lower priced (163 shortages between 2013-2017): Median price = $8.73
Injectable = $11.05; Oral = $2.27
Older agents - median age 35 years since approval
Review
Root Causes of Drug Shortages
Lack of Incentives to Produce Less Profitable Agents
a.Unfavorable pricing dynamics:
Market driven by lowest price independent of quality or reliable suppliers
High capital investment for facilities required by manufacturers
Little incentive to market less profitable drugs
b. Business uncertainty:
Difficult to forecast revenues, volumes and profit margins
Uncertainty managing global supply chain, exchange rates, labor costs
Regulatory fees and timelines vary by country
2. Lack of Rewards to Manufacturers in spending for quality systems, nor does the system penalize for manufacturer failing to modernize
3. Logistical and Regulatory Challenges Recovering from Disruption
a. With overseas production, supply chain has become longer, fragmented and complex
b. Supply chain unavailability
c. Lack of active ingredients
Solving the Drug Shortage Problem:
Procedural Options
a. Evaluation of drug shortages on:
Patient outcomes, health care delivery and health system costs
Improved characterization of shortages - Frequency, duration, intensity
Quantify impact of shortages on available treatments within specific diseases
b. Greater transparency of private sector contracting practices
Source of ingredients
Avoid switching to lowest price with quality manufacture systems
c. Incentivize drug manufactures to invest in quality management systems
Develop rating system available to purchasers, GPO’s consumers, etc
New contracting approaches ensuring reliable supply of medications
d. Maintain reserves of finished products
2. Regulatory Options
a.Improved data disclosure with timely and adequate notification of:
1. Impending interruptions in manufacturing with penalties if not met.
2. Permanent discontinuation of certain products
b. Periodic risk management assessments and reporting by manufacturers of critical drugs
Identify vulnerabilities in supply chain
Develop plans to mitigate risk
c. Lengthen shelf life expiration dates to prevent or mitigate shortage:
Submit data allowing a longer expiration shelf life expiration date.
3. Innovative Options
a. States contract with generic manufacturers to produce their own state’s labeled drugs.
More focused on high prescription costs
Currently lacking detail
b. Non-Profit Cooperative of health systems (Civica Rx)
Created partnerships with major health systems
Negotiates stable prices and production quantity directly with manufacturers
Partner system buys reliable supply in predetermined volume.
Develop and manufacture Cooperatives own drugs
Generic drug makers donate old Abbreviated New Drug Application (ANDA)
Conclusions
The full clinical impact of drug shortages is unknown, but the financial burden is very large
Drug shortages can occur for a variety of reasons including manufacturing and quality interruptions, low prices, profitability and permanent discontinuation of products.
Collaborative and dramatic changes are necessary to assist in fixing this broken marketplace.