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FDA – New Processes, Incentives Needed for Drug Shortages

Pills and dollar bill

(Arek Socha, Pixabay)

29 Oct. 2019. A report from the Food and Drug Administration identifies the causes of recent shortages of some drugs, and calls for new processes and incentives to prevent future shortages. The report was prepared by a task force formed by FDA to study the problem in July 2018, after a request from 31 senators and 104 members of the House of Representatives. The agency routinely tracks drug shortages, but this report addresses more recent chronic problems.

FDA’s Agency Drug Shortages Task Force, comprised of economists and scientists from FDA and other agencies, analyzed 163 drugs that developed shortages between 2013 and 2017, and compared those medications to similar treatments for which no shortages occurred. The task force looked only at drugs for humans, but apparently similar patterns develop with veterinary medicines.

The report notes that the number of drugs with shortages — defined as where demand or projected demand in the U.S. exceeds supply — is a persistent problem, but in recent years the number of drug shortages have increased. In addition, those shortages are lasting longer, in some cases as long as eight years. Data on effects of these shortages are themselves lacking, says the report, and the task force notes that attempts so far to quantify these effects may be underestimating their impact.

Most of the drugs in short supply, says the report, are older, less expensive, and injectable. The task force found two-thirds of the 163 drugs (109 or 67%) have a generic version on the market, with almost as many (103 or 63%) administered by injection. In addition, half or more of the drugs in shortage were first approved at least 35 years ago. In the year before the drugs became in short supply, the median unit price of the drugs was $8.37, with injectable drugs priced at $11.05 and oral drugs at $2.27.

The task force says drug makers have few incentives to produce lower-priced drugs, already on the market for many years. This is particularly a problem for generic drugs, where price pressures are more intense, revenue streams uncertain, and limited returns on investment. Moreover, pharmaceutical companies have little incentive to invest in mature quality management systems with statistical process control to better track manufacturing capacity and product quality, in order to maintain adequate supplies. In addition, supply chains are becoming longer and more complex, with approvals needed by multiple regulatory bodies before new or expanded manufacturing facilities can be built.

The report offers a number of recommendations to prevent future drug shortages, beginning with a better understanding of the scope and dimensions of the problem. Better data are needed, says the task force, on the frequency, persistence, and intensity of drug shortages, as well as a better accounting of the harm inflicted on patients and health care providers. The report also points to the need for more transparency in drug supply contracts, where provisions may allow parties to walk away from the contracts, or have weak penalties for failure to supply the products.

The report recommends instituting a common rating system for companies’ quality management systems, with higher scores given to manufacturers with processes in place to maintain product quality and prevent production breakdowns. In addition, the report calls for more incentives in supply contracts to reward maintaining adequate inventories of medicines, particularly older generic drugs. Likewise, incentives are needed in supply contracts for companies with high-rated quality management systems, either specified as a condition for doing business or in the form of guaranteed purchases.

The report also lists legislative proposals, including those for the 2020 fiscal year, and FDA initiatives addressing drug shortages. A statement from acting FDA commissioner Ned Sharpless and Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research, notes, “A shortage of just one critical drug can have a major impact on a patient’s health, which underscores why government and industry need to act quickly to prevent future shortages.”

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