Earlier this year, the Food and Drug Administration reported that the number of new drug shortages was on the decline. Clearly this is positive news and a reflection of the hard work by multiple parties across the healthcare supply chain including the FDA, manufacturers, the distribution channel, group purchasing organizations and hospitals.
But a few days later, a Government Accountability Office report noted a significant increase in the number of longer-standing, ongoing drug shortages since 2007.
Ask any hospital pharmacist, and they'll tell you drug shortages remain a serious problem affecting patient care. Across the county, some pharmacies and clinics reported close to shortage levels of flu vaccine and the drug Tamiflu as flu outbreaks increased this past winter. During the same period, supplies of intravenous saline also ran low at times.
Another significant problem is the additional costs associated with shortage drugs. A recent Premier, Inc. analysis shows U.S. hospitals incurred annual average additional costs of approximately $230 million between 2011 and 2013 from the purchase of more expensive generic substitutes to compensate for shortage drugs. And the total economic impact is likely much bigger, since the figure excludes drugs purchased from off-contract distributors, more expensive purchases of therapeutic alternatives and indirect costs, such as added labor.
Managing shortages
No single cause explains drug shortages. Contributing trends include the quality of active pharmaceutical ingredients, drug recalls, industry consolidation, quality control issues at manufacturing plants, lack of manufacturing line capacity and just-in-time inventories. Regulatory and financial pressures further compound the problem.
According to a survey of pharmacy experts, one way to assist with managing shortages is to add additional generic drug manufacturers to contract portfolios, providing more options for providers to obtain drugs in short supply.
Working with our member hospitals, Premier identified a generic manufacturer — Heritage Pharmaceuticals, Inc. — capable of manufacturing some of the drugs on the shortage list. One drug is used to treat viruses associated with AIDS. Another drug, frequently used at Methodist Richardson Cancer Center in Dallas, prevents nausea and vomiting caused by surgery and cancer therapy.
Heritage Pharmaceuticals was not making these drugs, but we helped them realize they had the capacity to do so and provided them with a built-in market of eager buyers. Today, about 550 hospitals access the AIDS drug alone. This is a true example of accessing private sector solutions to partially mitigate a significant problem.
But we know that the drug shortage situation requires more than private sector solutions. This is particularly true when dealing with severe supply chain "spikes" that can create shortage situations of an undetermined timeframe.
For example, we've seen numerous reports of shortages for IV solutions, particularly saline solutions used to hydrate patients with a variety of conditions. According to the FDA, the shortage appears to have been caused by increased and unforeseen demand from hospitals using the solutions to treat patients with the flu. It has created a shock to the healthcare system hospitals weren't prepared to handle.
Not surprisingly, shortage spikes are an area of added concern requiring all players in the healthcare supply chain — both private and public — to share a sense of urgency. When spikes occur, we need a SWAT team mentality, with all parties working together to solve the problem as quickly and efficiently as possible. The FDA can play a particularly critical role, given its ability to approve the availability of additional drug supplies.
A lot has been done to address drug shortages, and it appears these efforts are having a positive effect. However, drug shortages and shortage spikes remain a persistent and pervasive problem that adversely affects hospitals' ability to provide care, while adding significant costs.
When we experience spikes, we need action on the part of all players in the supply chain with the FDA leading the way. Patients are counting on us to work together and find fast solutions. We owe it to them to do so.
Matt Moss PharmD, RPh, is director of pharmacy at Methodist Richardson Medical Center in Dallas.
Mike Alkire is COO of Premier, Inc. in Charlotte, N.C.
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