How the FDA Can Solve the Prescription Drug Shortage Problem
Drug shortages are threatening care quality and costcontainment efforts. I describe the pharmaceutical marketplace changes that have caused the problem, and propose new policies to solve it, through changing incentives for producers and purchasers. I propose a grading scheme for the Food and Drug Administration when it inspects manufacturing facilities in the United States and abroad. The inspections' focus would change from closing unsafe plants to improving production process quality, reducing the likelihood that plants will be closed—the most frequent cause of drug shortages.
SHORTAGES OF PHARMACEU-ticals are suddenly occurring frequently in medical practice, and represent a bewildering situation for clinicians—one that most have never encountered. The shortages appear primarily among generic drugs, reliance on which is the main mechanism that health systems in the United States use to constrain pharmaceutical costs. According to the US Food and Drug Administration's (FDA's) report on drug shortages of October 31, 2011, the number of annual drug shortages had tripled from 61 in 2005 to 178 in 2010. As of July 2012 there were more than 200. What is it that has changed in the pharmaceutical market that has caused these shortages? What will it take to solve the problem? Once we better understand the underlying reasons for the shortages, remedies can be sought.
The shortages are occurring in all therapeutic categories. Although early reports noted the high incidence of shortages of sterile injectible drugs —often those used for cancer treatment— subsequent observations have pointed out that the problem is far more widespread than that. In fact, one report in 2008 studied the sudden shortage of heparin, the drug widely used for surgery patients.
The shortages are the result of a sort of "perfect storm" involving 3 phenomena:
Solving the problem will present difficult choices within our health system. The choices will be difficult because required changes will entail reordering priorities. For example, decreasing our reliance on generic drugs would reduce the enormous cost savings that generics have provided us. Increasing the number of competing generic firms and pharmaceutical purchasers would require far more aggressive enforcement of antitrust policies. Allowing the FDA more authority in overseeing shortages and regulating or redistributing production to alternative companies would expand the FDA's authority into uncharted areas. And more aggressive inspection of foreign suppliers to prevent contamination and other irregularities would raise the FDA's budget at a time of severe government attempts at cost constraint or (if the costs are passed on to manufacturers) raise the cost of many of our drug products.
Abstract and Introduction
Abstract
Drug shortages are threatening care quality and costcontainment efforts. I describe the pharmaceutical marketplace changes that have caused the problem, and propose new policies to solve it, through changing incentives for producers and purchasers. I propose a grading scheme for the Food and Drug Administration when it inspects manufacturing facilities in the United States and abroad. The inspections' focus would change from closing unsafe plants to improving production process quality, reducing the likelihood that plants will be closed—the most frequent cause of drug shortages.
Introduction
SHORTAGES OF PHARMACEU-ticals are suddenly occurring frequently in medical practice, and represent a bewildering situation for clinicians—one that most have never encountered. The shortages appear primarily among generic drugs, reliance on which is the main mechanism that health systems in the United States use to constrain pharmaceutical costs. According to the US Food and Drug Administration's (FDA's) report on drug shortages of October 31, 2011, the number of annual drug shortages had tripled from 61 in 2005 to 178 in 2010. As of July 2012 there were more than 200. What is it that has changed in the pharmaceutical market that has caused these shortages? What will it take to solve the problem? Once we better understand the underlying reasons for the shortages, remedies can be sought.
The shortages are occurring in all therapeutic categories. Although early reports noted the high incidence of shortages of sterile injectible drugs —often those used for cancer treatment— subsequent observations have pointed out that the problem is far more widespread than that. In fact, one report in 2008 studied the sudden shortage of heparin, the drug widely used for surgery patients.
The shortages are the result of a sort of "perfect storm" involving 3 phenomena:
A consolidation of the market for generic drugs, with reduced numbers of both buyers and manufacturers;
An increased penetration of generic drugs in the overall pharmaceutical marketplace; and
An increased dependence on outsourced drug products, either chemical ingredients or manufactured drugs, coming from countries where inspections are more difficult to conduct.
Solving the problem will present difficult choices within our health system. The choices will be difficult because required changes will entail reordering priorities. For example, decreasing our reliance on generic drugs would reduce the enormous cost savings that generics have provided us. Increasing the number of competing generic firms and pharmaceutical purchasers would require far more aggressive enforcement of antitrust policies. Allowing the FDA more authority in overseeing shortages and regulating or redistributing production to alternative companies would expand the FDA's authority into uncharted areas. And more aggressive inspection of foreign suppliers to prevent contamination and other irregularities would raise the FDA's budget at a time of severe government attempts at cost constraint or (if the costs are passed on to manufacturers) raise the cost of many of our drug products.
SHARE
