Shortages persist due to complex structural issues. As an example, the pandemic briefly exposed the fact that many U.S. drugs are made elsewhere, at the end of long supply chains. In some cases, raw materials known as active pharmaceutical ingredients, or APIs, come from overseas, mainly India and China. In other cases, entire drugs—the raw materials that are mixed with other ingredients to make finished products—are produced abroad by contract manufacturing organizations. “It’s possible that even though there are three products on the market with three labels, they all come from the same facility,” says Michael Ganio, clinical pharmacist and ASHP’s senior director of pharmacy practice and quality. “It’s also possible to have three manufacturers all sourcing from the same API manufacturer. Transparency doesn’t exist.”
Transparency can start to do the trick. More information is a necessary first step in anticipating shortages and building a resilient system that can mitigate their effects. That’s especially important because most shortages don’t occur in new blockbuster drugs, but in older drugs with thin margins. Supplies of these drugs are most likely to be disrupted by contamination, mechanical failure, or other production issues — because while the FDA requires manufacturers to keep production lines safe, it doesn’t require them to reinvest in equipment on any particular schedule to keep those lines running . The business case for investing in traditional products is far less than high-yield breakthrough products.
Warnings of impending closures of production lines due to material supply or manufacturing issues could help regulators balance the market. But such a disclosure would require the company to divulge proprietary information. “It’s hard to legislate on the free market, and most problems that need to be addressed have some element of the free market,” said Erin Fox, senior director of drug information for healthcare at the University of Utah, who leads a team of researchers that provides shortage information to ASHP.
Fox is also a member of the committee of the National Academies of Sciences, Engineering and Medicine that recommended reforms in a report last year. It lays out a series of prompts for federal action, such as expanding the Strategic National Stockpile, which currently holds bioterrorism defense drugs, and developing an international trade pact to keep the raw material flowing. It also proposes the development of a federal rating system to score companies on their resiliency planning and disclosures. (The quality rating system is also endorsed by the FDA report.)
For companies, the National Academies report recommends carrots over sticks, acknowledging that companies cannot be forced to release private information, and recommends incentives to persuade them to be more candid. For example, these federal ratings could be used by healthcare organizations to justify paying slightly higher drug prices as a reward for transparency.
Adoption will be challenging. “We’ve been battling ever-increasing drug costs,” Ganio said. “So it’s not easy to go to a hospital CFO or pharmacy executive and say, ‘Hey, we’re going to buy a product that costs a little bit more, but we think it’s a good investment.‘”
But, he noted, shortages are already forcing healthcare organizations to pay more, both directly in labor costs and indirectly in the impact on patient safety. A 2019 study by consulting firm Vizient estimated that U.S. hospitals are spending an additional $359 million a year in staff time and overtime to cope with shortages. That same year, Australian researchers identified 38 studies that found shortages led to longer wait times for treatment, longer hospital stays, adverse reactions to alternative medicines, surgical complications and, in some cases, preventable deaths .
Healthcare workers think it’s worth tackling the challenge to avoid the chaos that plagues their systems when shortages arrive. “Each time, we have to create a regimen for the drug that we’re going to use,” said Melissa Johnson, professor of medicine at Duke University and president of the Society of Infectious Disease Pharmacists. “What do we not have this week? Can we identify alternative sources? Do we have to compound ourselves?
Maintaining the status quo means leaving the problem unsolved, leaving the burden of drug shortages on weary pharmacists — sick children and panicked parents just waiting.
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