The Drug Shortage Wars

“I should have gotten cancer last month,” she told me.

That was the first thought from my patient after she’d heard the news: her ovarian cancer would remain untreated for weeks, due to a critical shortage of the chemotherapy agent doxorubicin. Like her, several thousand patients have been affected by critical shortages of chemotherapy agents like doxorubicin (Doxil) and methotrexate—common medicines that are essential backbones of cancer chemotherapy. But hundreds of other people have also been affected by critical shortages of pills around the country—limiting the supply of critical ICU medications like intravenous versed, or tuberculosis drugs like isoniazid.

Why are these shortages happening, and what can be done about them?

The state of the problem

Doxil and methotrexate are among 287 drugs in “critical shortage” in the United States, according to the University of Utah’s Drug Information Service, which has been tracking the problem. Shortages have been mounting in recent years, up from about 74 in 2005.

At present, the US Food and Drug Administration and independent researchers have tracked the status of major drug shortages occurring throughout the country. The FDA keeps an online catalog of these shortages. What this catalog reveals is that among 178 drugs that were in shortage during the year 2010, a vast majority (132) were sterile injectable drugs. These are generally cancer drugs, anesthetics used for patients undergoing surgery, as well as drugs needed for emergency medicine, and electrolytes needed for patients on IV feeding.

Is overregulation killing availability?

Pharmaceutical manufacturers and their advocates have claimed that these shortages are because the industry is hamstrung by the FDA—overregulated to the point of being unable to produce drugs to meet the demand. But a look at the data suggests otherwise.

First of all, FDA standards have not changed in years. A common theme among the catalog of problems found by both FDA analyses and an independent Government Accountability office report is that many of the critically-needed drugs have faced manufacturing problems because pharmaceutical plants have been contaminated or are operating under poor conditions that are below minimum international standards, not merely FDA standards. Furthermore, many of the drugs are now being produced in limited supply or only by one or a small number of manufacturers as they are medicines that have a high cost of production relative to their profit margin. Less commonly, the FDA and GAO have found production delays due to inadequate raw materials and components from suppliers, but this was often in the context of complex multi-chain business transactions in which suppliers were raising prices or pharmaceutical conglomerates were buying pills from each other in arrangements designed to maximize profit margins from minimal production.

As a result of their reduced profitability, fewer patent-based pharmaceutical firms have been making older sterile injectable drugs. The raw material suppliers the firms use are also diminishing in quantity and quality. This small number of manufacturers and limited production capacity for older sterile injectable drugs, combined with the long lead times and complexity of the manufacturing process for injectable drugs, results in these medicines being vulnerable to shortages.  When one company has a problem or discontinues, it is difficult for the remaining firms to increase production quickly, and a shortage occurs.

A key finding of an independent Health and Human Services Agency report on the issue is that generic firms have not been able to quickly provide supply as they have been essentially eliminated from many markets and can’t build up the capacity to regain product entry fast enough to meet critical patient demands.

Is pharmaceutical company money being spent appropriately?

The data on drug shortages suggest that a vast quantity of money is changing hands among inefficient internal manufacturing and distribution agreements, and money is being focused on marketing high-profit pills rather than those medicines most needed to meet public health demands.

For example, while a common claim is that pharmaceutical profits are directed to research and development, and that use of generic medicines or regulation of the industry would result in reduced R&D, the table below (constructed from the industry’s own tax filings to the Securities and Exchange Commission) shows that a far greater percentage of profit as a percent of revenue is spent on marketing than on research.

To place this fact in context, the patent-based pharmaceutical industry has among the highest ratios of profit as a percentage of revenue among all industries, rivaling the oil and defense industries.

What can be done?

This all seems like an inevitable result of unregulated oligopolies. But in response to the problem, the White House has given the FDA new authorities that allow the FDA to better track drug production supply early in the time-course of manufacturing, and crucially permit the FDA to investigate possible price fixing and gouging (having found drug makers hording supplies to inflate prices). The new rules will also allow the FDA to permit more competition into the marketplace by allowing foreign competitors into the market when they meet safety standards. For instance, in recent testimony to Congress, it was reported: “a leukemia drug whose typical contract price is about $12 per vial was being sold at $990 per vial—80 times higher.”

The White House action directly addressed the findings of a Government Accountability Office review indicating the FDA was hamstrung by inability to take action on the issue. What the long-term effects of ongoing FDA actions will be remains to be seen in light of new drug shortages. According to the Utah database, the number of shortages this year has already surpassed the number for the whole of last year; a decade worth of numbers describing these shortages is available from the Utah researchers in this slide show. In the meantime, reports continue to emerge that hospitals are stockpiling medications and worsening the maldistribution of limited supplies, while buying drugs from poorly-regulated “gray market” suppliers. The safety implications of this current crisis are therefore likely to manifest themselves in the weeks and months to come.

Sanjay Bansu, MD, PhD, is a public health epidemiologist. His blog, EpiAnalysis, is a forum for public health epidemiologists who study global health data, healthcare policy, economics, and sociology.

6 replies »

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  2. It is unconscionable that this is still going on in the US. You could find drugs easier in third World countries. The economic effect is disastrous especially give the state of the economy and it has been mainly caused and controlled by government. . Basic drugs like Lidocaine have been unavailable for months. I’ve worked for a medical supply./pharmaceutical for many years and every months sales go down and down. I have to get out before there is nothing left and i join the ranks of the unemployed.For the physicians and surgery centers that I deal with it has really hurt business and is just a piling on of problems coupled with how they are getting squeezed by Medicare and insurance companies.

  3. So, BigPharma thinks they are hamstrung by the FDA. The Government responds by increasing the power of the FDA (to which I agree, btw; in case the use of ‘BigPharma’ didn’t out my position). A simple comparison of the phenomally skewed profit/revenue chart of BigPharma with the equally phenomenal drug price increases will underscore the importance of tightening regulatory controls.

    One of the links in the article, (the one under ‘reports’), has Community Catalyst saying that the drug shortage is “because of problems in factories overseas, since 40% of finished drug products come from overseas”. It will further understanding of this issue, if this across-the-pond point is addressed in greater depth.

  4. last year Rituxan was being billed to us at $10,104.30 per 50mL.

    Saw one last week for $22,746.

    I find any argument based on lack of profit questionable. Profit margin maybe, if they are use to making 5000% margins, getting out of bed for only a 500% margin might sound unappealing.