Physicians and others in the healthcare industry are increasingly expressing their frustration about an inadequate supply of critical hospital medicines and are calling for action from private enterprise and US officials to resolve the root causes of these chronic drug shortages.
“This is a commonly used generic medicine and is the first line of treatment, and there is no good reason that it shouldn’t be readily available at all times,” Houston said in a comment to the US Food and Drug Administration (FDA), which was posted online at Regulations.gov in January.
In response to the agency’s request for feedback on addressing drug shortages, many physicians told the agency about having to take special measures because of missing products. Tracy Pfeifer, MD, New York City, recalled a situation 4 years ago in which lactated Ringer’s solution was unavailable. She also told the FDA about a fellow physician who sent “an email plea” to colleagues to find out where his wife could get drugs she needed to continue treatment for ovarian cancer.
“We cannot get certain antibiotics, multiple medications are always on ‘back order,’ ” Pfeifer also told the FDA. She stressed that the United States is not a poor nation where such shortages might be expected. “Why are medications not available?” she asked.
Federal officials, medical groups, and healthcare companies have been struggling for years to address the fragile US supply of critical hospital products.
“As of October 2018, and as you well know, there are currently 91 medically necessary drugs on the FDAs shortage list,” Martin Van Trieste, the chief executive officer of Civica Rx, a new nonprofit venture started by hospitals to address the shortages, told the FDA in a comment. “Approximately 200 drugs have been on and off the FDA‘s drug shortage list during the past several years.”
A 2012 law gave the FDA expanded authority to monitor the supply. Drugmakers, for example, must notify the FDA about disruptions or discontinuations of manufacturing of critical products. The FDA also has been extending the use-by dates for products in critical need, such as injectable sodium bicarbonate and sterile water.
Still, shortages of staple products such as saline persist. Many generic hospital drugs are manufactured by a single company. Clinicians scramble to find alternative therapies or engage in compounding, according to the American Society of Health-System Pharmacists.
“We certainly don’t have easy solutions, or we would have fixed this problem a long time ago, but it’s gone on too long,” FDA Commissioner Scott Gottlieb, MD, said at a November 2018 meeting on drug shortages. “The risks have mounted over time, and the frustrations have really reached a tipping point.”
Cheaper Than a Gallon of Milk
There are a few specific, easily identifiable contributors to shortages, such as the disruption of Puerto Rico’s pharmaceutical industry caused by Hurricane Maria in 2017.
Much has been written about the manufacturing troubles at companies such as Hospira, a leading maker of injectable drugs that Pfizer Inc acquired in 2015. In a 2018 warning letter, the FDA said a discovery of mold caused a temporary halt in production at the firm’s generic-drug plant in McPherson, Kansas.
There is also growing concern about the broader market dynamics for generic drugs.
The public debate on the cost of medicines tends to focus on newer products that cause consumer sticker shock. Cancer medicines, for example, can cost $15,000 a month.
The low prices drugmakers get for older injectable medicines are not enough to entice more companies into making these products. “[T]here may be critical drugs that may sometimes be priced too low relative to the full cost of reliably producing a predictable and high-quality pharmaceutical product,” wrote Gottlieb and Janet Woodcock, MD, director of the FDA‘s Center for Drug Evaluation and Research, in a blog post.
In its comment to the FDA, Pfizer said it has spent more than $800 million over the past 2 years on its injectable drug business. It intends to spend more than $1.4 billion over the next several years, wrote Robert Jones, Pfizer’s senior vice president for government relations.
“But when you contrast that investment with the fact that two-thirds of the generic sterile injectable units Pfizer sells annually cost less than the average gallon of milk, it places the challenge of market sustainability into perspective,” Jones wrote.
In the comment, Jones also told the FDA about the challenges of having a fickle customer base for critical hospital products. Buyers rarely make serious commitments on price or volume, according to his comment.
Even after entering into multiyear contracts to sell medicines, makers of hospital drugs can see these agreements “undermined at any time during the life of the contract” by a challenge on price from a rival pharmaceutical firm, Jones wrote.
“This lack of contractual commitments impedes manufacturers’ ability to deploy capital for new capacity, redundancies or excess inventory, which is predicated on reasonable levels of predictability and expected return on investment,” he wrote.
Exception to Kickback Law
In an article published online in October 2018 in the Journal of the American Medical Association, Martin Makary, MD, MPH, of Johns Hopkins University, and colleagues questioned whether the structure of group purchasing organizations (GPOs) contributes to the persistent shortages of injectable generic drugs.
Congress in 1972 enacted a federal law to prevent kickbacks that could put patients at risk, Makary and colleagues wrote. In 1987, GPOs were granted an exception to the law, which lobbyists and policy analysts refer to as a safe harbor exemption.
This exception to the kickback law helps GPOs to use “creative strategies” to boost their profit, according to Makary and colleagues. GPOs ask manufacturers to pay undisclosed vendor fees as a condition for having their products placed among the offerings available to hospitals. Manufacturers also can pay premium fees to become the sole supplier of a product, Makary and colleagues wrote. As a result, one or two manufacturers may be responsible for a regional or national supply chain, the authors said.
“Although there is limited evidence to support the direct link between GPOs and drug shortages, the vendor fee model of GPOs has the potential to create barriers to market entry for manufacturers by rewarding fewer larger manufacturers and thus increasing dependence on fewer supply chains,” Makary and colleagues wrote.
In the JAMA article, Makary and colleagues note that GPOs do provide many benefits for hospitals, such as simplifying purchases of many supplies.
In contrast, Robert Campbell, MD, an anesthesiologist and founder of Physicians Against Drug Shortages, describes the GPOs as having a “payola” model. He calls for a change in federal rules that now allow GPOs to collect fees from their suppliers.
“End the pay to play market model and we will have a renaissance of high quality manufacturing for all these drugs,” Campbell wrote in his FDA comments. “Prices will fall, supply will be restored, capital investment for quality improvement will be possible, and new entrants with innovative products will emerge.”
Physicians Against Drug Shortages had encouraged its supporters to respond to the FDA‘s comment period, which ended January 11. There were more than 147 comments posted on the Regulations.gov site that used the same language to question an exception in federal anti-kickback law.
Although not naming Physicians Against Drug Shortages, the ASA said it “was aware” of a group that associated GPOs with drug shortages. “Yet, the Society is not aware of any independent and reliable data or information that supports this argument,” Linda Mason, MD, president of the ASA, said in a comment to the FDA.
The ASA recommended that Congress’ investigative unit, the Government Accountability Office (GAO), conduct a study of drug shortages and the entire drug supply chain. The GAO issued reports on the topic in 2014, 2015, and 2016. “ASA believes it is time to revisit this issue and see if there are any new circumstances or events exacerbating drug shortages,” Mason wrote.
The trade association that represents GPOs also objected to the idea that kickback protection plays a role in shortages. Todd Ebert, MS, chief executive officer of the Healthcare Supply Chain Association, told Medscape Medical News that the GPO exception to the kickback law allows GPOs to “deliver billions in annual savings to hospitals and other healthcare providers, Medicare and Medicaid, and taxpayers.”
“The GPO Safe Harbor is not unusual — in fact, it is one of 23 such provisions in the 1987 Act,” said Ebert, who is a registered pharmacist.
He also said GPOs help mitigate shortages, which he attributed to “quality control problems, manufacturing issues, and barriers to getting new suppliers on line.”
In its comment to the FDA on drug shortages, the American Medical Association (AMA) noted that past GAO reports had identified low profit margins as a contributing factor to persistent shortages. The AMA urged the FDA‘s Drug Shortages Task Force to consider “mergers and consolidations, economic factors including federal reimbursement practices, as well as contracting practices by market participants on competition, access to drugs, and pricing.”
The AMA also recommended an examination of federal healthcare programs’ payment rates for drugs that are susceptible to shortages.
“Carefully targeted policies to address potential underinvestment in vital products subject to intractable shortages should be evaluated,” wrote James L. Madara, MD, chief executive officer of the AMA, in the comment.
“We have spent countless hours working as interdisciplinary teams to develop alternate solutions,” Jennifer Fulmer Groves, vice president of pharmacy operations for Providence St. Joseph Health, told Medscape Medical News in an email.
In some cases, pharmacists may need to track down alternative medications or restrict use of a drug in short supply to treat patients who meet specific criteria, Groves said.
Providence St. Joseph Health is part of a coalition of hospitals that last year launched Civica Rx, a venture intended to stop the shortages. Its goal is to provide drug manufacturers with more stable contracts with hospital customers.
Seven major health systems last year announced the kickoff of Civica Rx, which is meant to be a virtual generic drug company. Other founding members include Intermountain Healthcare and Mayo Clinic. By January, an additional 12 health systems had joined the Utah-based Civica Rx as founding members. The nonprofit Laura and John Arnold Foundation also is a supporter of Civica Rx.
“By working with philanthropic donors and other health systems, Providence St. Joseph Health is in the process of creating a drug manufacturer that will produce medications that have been in short supply in the market,” Groves said.
In his comment to the FDA, Civica Rx’s Van Trieste said the venture aims to use long-term guaranteed contracts and will refuse to pay fees and rebates “to middlemen in the pharmaceutical supply chain.”
In an interview with Medscape Medical News, Van Trieste spoke of a broad strategy for enticing manufacturers into making the generic products hospitals need. In some cases, companies already have the needed FDA clearance and the manufacturing capacity to make these products, but they’ve opted not to, owing to low profits.
Van Trieste, a veteran pharmaceutical executive who earlier worked for Amgen, Bayer, and Abbott Laboratories, observed that the problem with generic hospital drugs extends beyond simple economics. These older products don’t capture the attention of investors and the public in the same way that experimental treatments and upstart medical firms do.
“The economic model has broken down, but another piece of it is these are older generic drugs. They’re not the sexy new biotech drugs,” Van Trieste said. “These drugs are decades old, and some of them even a century old. There’s no pizzazz to the products themselves. But they are essential for hospitals to operate. When they’re not available, then it creates a crisis.”
Although Civica Rx is only in its start-up phase, the approach it has taken is worth looking at, said Rosemary Gibson, a senior advisor at the Hastings Center and coauthor of China Rx: Exposing the Risks of America’s Dependence on China for Medicine.
“It would assure the manufactures that they will have customers that won’t come and go,” she told Medscape Medical News.
The intense focus on reducing costs has resulted in the shifting of key elements of generic drug production to China and has weakened the domestic supply, she said. The current difficulties in keeping hospital pharmacies well stocked may be “just the tip of the iceberg,” she said.
“We’re going to see more shortages and more quality problems because we are treating these products like a cheap commodity,” she said.