Drug Shortages Cause Concern for Healthcare Industry

Since 1968, Michael Cohen has worked as a pharmacist, focusing on helping patients and ensuring he is providing safe and effective therapies. Mr. Cohen is now president of the Institute for Safe Medication Practices, a nonprofit organization.

Like others in the healthcare industry, Mr. Cohen is alarmed at the increasing number of drug shortages, which has nearly tripled in the past 6 years. Generic drugs and injectables are mostly affected. The issue has caught the attention of politicians at the highest levels of government.

After several members of the both the Senate and House of Representatives proposed bills and pleaded for a hearing on drug shortages, the US Food and Drug Administration (FDA) agreed to set up a public meeting. On September 26 in Silver Spring, Maryland, Mr. Cohen and other pharmacists, physicians, politicians, and others are scheduled to discuss the cost and safety concerns related to shortages and suggest how the problem can be addressed.

“It’s becoming a public health crisis,” Mr. Cohen said in an interview with First Report Managed Care. “It’s really gotten bad. We’ve got to get a hold of this.”

There are several explanations for the shortages, including production problems or delays, unavailability of raw materials, an increased demand for drugs, manufacturers discontinuing investments for financial reasons, and more scrutiny from the FDA on regulations and product recalls.

Shortages can lead to delays in treatment or a switch to alternative therapies that may hinder the patients’ recovery. Another concern related to shortages is the gray market, in which unauthorized distributors buy drugs in short supply and sell them at steep markups, typically for at least double the normal price. The gray market increases costs for providers and patients and also is not regulated, creating safety questions.

“The gray market is a major issue,” Mr. Cohen said. “There’s an ethical dilemma. [Providers] want to treat people, but they don’t know where these drugs are coming from. Hopefully they’re dealing with the right organizations.”

The FDA indicated there were 178 drug shortages in 2010 compared with 61 in 2005. The FDA’s statistics do not include vaccines, immune globulin products, other biologics, or products made from blood, tissue, or another biological source.

The number of drug shortages continues to increase this year. According to data from the University of Utah’s Drug Information Service, there were 180 drug shortages from January 1, 2011, through July 31, 2011. As of August 31, 2011, there were 196 current drug shortages listed on the American Society of Health-System Pharmacists (ASHP) Web site.

Premier healthcare alliance, a consortium of >2500 nonprofit hospitals and >76,000 other healthcare sites, noted that most of the drugs in short supply are necessary for sedation, emergency care, and chemotherapy. The group said 77% of the drugs in short supply in 2010 were sterile injectables.

The FDA does not require companies to provide information on problems that could lead to shortages, although they are mandated to notify the FDA 6 months in advance if they intend to discontinue production of a drug. However, there are no legal ramifications or penalties for failing to abide by the rule.

A report from Premier healthcare alliance released in March found that drug shortages cost US hospitals $200 million per year. In addition, the shortages of drugs where generic alternatives are available costs $78 million per year, with infectious disease ($22.5 million), surgery ($12 million), oncology ($10.5 million), and cardiovascular therapies ($8.5 million) associated with the highest costs.

The researchers surveyed 311 pharmacists from 228 hospitals and other healthcare sites from July 2010 through December 2010. During the 6-month period, 98% of pharmacists had a shortage resulting in increased costs, 89% had a drug shortage causing a safety issue or error in patient care, and 80% had a drug shortage that delayed or canceled patient care intervention.

A pair of studies released in July reinforced the problems. The University of Michigan Health System and ASHP collaborated on an online survey completed by 353 directors of pharmacy in hospitals in all 50 states. The authors estimated it cost $216 million per year to manage drug shortages and found >90% of respondents said there was an increased burden and cost associated with the shortages compared with 2 years ago. Only 4 participants said they had not been affected by any of the 30 drug shortages mentioned in the survey.

In a June 2011 survey the American Hospital Association (AHA) sent to 820 nonfederal, short-term acute care hospitals, 99.5% of respondents had ≥1 drug shortage in the previous 6 months and 44% had ≥21 drug shortages during that period. Researchers found 47% of hospitals had drug shortages on a daily basis, 78% implemented rationing and/or restrictions on drugs in short supply, and 77% rarely received or never received advance notice of the drug shortages.

With a rapid increase in drug shortages, the gray market is growing.

Earlier this year, the Premier healthcare alliance sent a survey to its acute care members asking for instances in which they received unauthorized offers to buy drugs that were in short supply. During a 2-week period, 42 hospitals provided 1745 examples of gray market offers for products to treat critically ill patients. The average markup was 650%, while 96% of offers were for at least double the normal price, 45% were for at least 10 times the normal price, and 27% were for at least 20 times the normal price.

“The report itself really is a game-changer because it shows how widespread the gray market is,” Sen. Richard Blumenthal (D-Conn) said in a conference call in August after the Premier report was released. “It demonstrates the magnitude and the impact of this appalling, astonishing, and extremely alarming activity that literally deals with life and death remedies for disease and other illnesses.… This kind of egregious and shockingly bad behavior ought to be a target for Washington. We should absolutely say no to gray markets playing Russian roulette with our healthcare system.”

As the Premier researchers mentioned, concerns pertaining to the gray market are not only related to skyrocketing costs. Pharmaceutical products are highly regulated, with controls in place regarding distribution, storage, and handling. However, many of the drugs sold on the gray market do not undergo the same safety scrutiny, which could harm patients.

“It’s so important for people to get the facts on [drug shortages],” Sen. Amy Klobuchar (D-Minn) said in the conference call. “Otherwise, we’re just going to have anecdotes all over the country. I can tell you there’s plenty in my state. Having the actual numbers makes a huge difference.… The fact that I’ve seen these actual patients has made a marked difference for me in terms of seeing why this is such an important issue.”

Politicians have taken notice. In May, Senator Blumenthal, Sen. Bob Casey (D-Penn), and Sen. Tom Harkin (D-Iowa) sent a letter to US Government Accountability Office (GAO) Comptroller Gene L. Dodaro requesting the GAO conduct a study on drug shortages. They wanted to know how the FDA identifies and responds to drug shortages, the causes of drug shortages, the communication methods utilized during shortages, and suggestions as to how the FDA could improve the problem. Senator Blumenthal said the GAO agreed to release a report on the issue.

In June, Senators Blumenthal, Casey, and Klobuchar joined a bipartisan group of senators that sent a letter to Department of Health and Human Services (DHHS) Secretary Kathleen Sebelius asking for a public hearing on drug shortages. Sens. Richard Burr (R-NC), Bob Corker (R-Tenn), and John McCain (R-Ariz) also signed the letter.

According to Senator Klobuchar, the FDA prevented 38 drug shortages in 2010 because drug manufacturers provided early notification despite there being no mandatory requirement. In their bill, the senators want to require the companies to notify the FDA of any potential shortages and face consequences for not complying with the mandate.

Also in June, Reps. Diana DeGette (D-Colo) and Tom Rooney (R-Fla) introduced the Preserving Access to Life-Saving Medications Act. The bill would require drug manufacturers to notify the FDA of any discontinuance or interruption ≥6 months in advance and any unplanned discontinuance or interruption as soon as possible; the DHHS to publish drug shortages and notifications on its Web site; and the GAO to conduct a study examining causes of drug shortages. The American Society of Clinical Oncology, ASHP, AHA, Institute for Safe Medication Practices, and generic drug manufacturer Hospira, Inc, endorsed the bill.

“People are starting to see [drug shortages] crop up all over the country,” Senator Klobuchar said. “We have to get something done. I don’t care how much fighting is going on in Congress. I don’t think anyone wants to be responsible for a little kid dying if he doesn’t get a cancer drug because we haven’t been able to figure out the bureaucracy of this. It’s time to act.”