Drug shortages inflict more than $550 million in additional costs every year on hospitals and health systems, the American Hospital Association said in a letter to Congress.
On Feb. 6, the AHA submitted comments to the House of Representatives' Committee on Ways and Means before the committee met to discuss chronic drug shortages. The association called the nation's pharmaceutical supply chain fragile, in which a disruption in one link in the chain — including suppliers, manufacturers, distributors and group purchasing organizations — can cause prolonged shortages.
A cost-effective "just-in-time" framework adopted by many distributors and manufacturers is exacerbating this problem, the AHA said.
"During large scale emergencies and other disruptions in supply, the risks and added costs of such a strategy is clear — when those disruptions occur, providers often have little or no notice and can be left scrambling to acquire products necessary to care for the sick and injured," the letter said.
Vizient researchers in 2019 estimated that drug shortages place $359 million in additional labor costs to hospitals every year, and this finding is on top of the estimated $200 million extra costs from buying expensive alternative medicines.
To "fatten" the U.S. medical supply chain, the AHA asked Congress to manifest six ideas into legislation:
1. Lessen the nation's reliance on India and China as sources of critical raw materials, including active pharmaceutical ingredients and key starting materials.
2. Incentivize suppliers to increase their end-user inventories, which can quell the need for national and state stockpiles that are costly and wasteful.
3. Require the FDA to create ratings of drugmakers' quality control practices, which are predictive of supply chain and manufacturing vulnerabilities.
4. Order drug manufacturers to report to the FDA where their products are being manufactured.
5. Require drugmakers to notify the FDA of unusual spikes of demand for essential medications.
6. Require the FDA to identify essential drugs "that should have increased domestic manufacturing capacity to improve the resilience of the U.S. drug and device supply chain, and make recommendations to incentivize their production."