HOSPITAL DRUG SHORTAGES

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1 HOSPITAL DRUG SHORTAGES OVERVIEW More than 45,000 different prescription drug products are on the market today, originating from about 1,400 different manufacturers. Each year, the U.S. experiences a shortage of some number of these products and according to the University of Utah s Drug Information Service, the current list of shortages is the longest in a decade, approaching 200 products. Most common among the list of shortages are injectable generics, chemotherapy drugs, surgical sedatives and standard remedies used in the emergency department setting. Extent of the drug shortage A survey of 311 hospital pharmacy experts representing 228 hospitals, as well as infusion, oncology and surgery centers, outpatient and retail pharmacies, and long-term care facilities, revealed that, over the course of a six-month period (July-December 2010): More than 240 drugs were either in short supply or completely unavailable in o Over 400 generic equivalents were backordered for greater than five days. o Many of the drugs noted as back orders in 2010 have remained unavailable or in short supply in o This represents a dramatic increase in drug shortages over the last five years.

2 Impact on Patient Care A shortage in the supply of a prescription drugs can have serious implications for patient care. In the hospital setting, a shortage may result in the delay of medical procedures. Substitution of therapeutic or similar medications, if available, may lead to medication errors and preventable adverse events especially when prescribers are not as familiar with the alternative products dosing and potential for adverse interactions with other drugs. Some second or third choice products may also be less clinically effective. In addition, faced with limited or no supply, some hospital pharmacies may even revert to alternative sources such as gray market vendors. Such vendors obtain products in short supply in order to resell them at substantially higher prices. Concerns arise about the reliability of the source of the drugs, which may be outside the U.S., and whether they have has been properly handled throughout the chain of custody. Premier s survey found: 89 percent experienced shortages that may have caused a medication safety issue or error in patient care. o 53 percent suggested occurrence 6+ times. 80 percent experienced shortages that resulted in a delay or cancellation of a patient care intervention. o 34 percent suggested occurrence 6+ times. 98 percent experienced shortages that resulted in an increase in costs. o 88 percent suggested occurrence 6+ times. o 41 percent suggested occurrence 21+ times Financial impact The growing problem of drug shortages is also costly to hospitals and to the healthcare system as a whole. Steps needed to respond to shortages can divert important resources away from improving care. The cost in time and money can be especially high when hospitals and other providers face shortages in drugs that are needed to respond to new treatment guidelines and to treat victims of natural and other catastrophes where disease outbreaks, for example, threaten large numbers of people. According to Premier s survey, the annual financial impact of drug shortages on Premier alliance members alone exceeds $78 million. More than $66 million (or 85 percent) of the impact is felt by Premier s 2,500 hospital members, with the remaining amount within Premier s non-acute care sites.*

3 This is a conservative estimate the shortage impact is likely much higher. o Research excludes drugs purchased on gray market or with therapeutic alternatives as data on these areas does not exist. Providers are paying an average of 11 percent more for shortage products, and in some cases, the price tag has risen 335 percent. o One gray market example has a Premier member hospital paying $195 per vial for a drug that was previously $1.21 per vial. Nationwide, the estimated impact exceeds $200 million. *Extrapolated from Premier research of drugs with generic alternatives that were backordered for January - December Cause and solutions No single cause explains the growing problem of prescription drug shortages in the U.S. Rather, the problem is rooted in a complex set of factors including: Consolidation of prescription drug manufacturers (one company now manufacturing a product where two or more may have been doing so before); Random and unpredictable problems in manufacturing (including safety problems that temporarily or permanently close down the manufacturing process); Interruptions of supply in the ingredients used to produce the drug (an estimated 80 percent of the raw materials used in pharmaceuticals comes from outside the U.S., including countries that are prone to political upheavals or problems with product contamination); and The economics of pharmaceuticals. Especially for generics, manufacturers may decide to cease production if they find that they are making little or no return in profit on the product.

4 No easy solution exists to improving the nation s prescription drug supply. Although the Food and Drug Administration (FDA) can address some of the shortages rooted in the regulatory process, it cannot order drug companies to produce more drugs. The extent to which the FDA can get involved in a drug shortage depends on whether a shortage meets medical necessity criteria. In the event that a shortage arises for a medically necessary product, the FDA may engage in discussions with manufacturers to encourage additional sources of the product, provide technical assistance to manufacturers experiencing difficulties with good manufacturing practices (i.e., a series of general principles that must be observed while producing prescription drugs and other products), or expedited reviews of drug product marketing applications or of their manufacturing processes. The FDA has indicated that it will accelerate approval processes in situations of shortages, but it necessarily must remain vigilant in enforcing requirements related to drug safety. In rare cases, the FDA has used its authority to clear for use non-licensed drugs from overseas that are similar to the medications that are scarce, but this may increase the risk of introducing counterfeit products into the market. RECOMMENDATIONS Some measures can be employed by health systems to ensure better preparation for a drug shortage and processes to deal with it. But private sector initiatives can only go so far in addressing the drug shortage problem. Lawmakers and the FDA need to step up efforts to encourage access to drug products and increase efforts to improve drug safety. FDA and manufacturers should work together to identify drugs that are critical to patient health which might experience shortage in the marketplace. Congress should require pharmaceutical manufacturers to provide advance notice to the FDA of shortages in their drug products and the reasons for these shortages (information the FDA could, in turn, make available on its website). At present, such notifications are voluntary. The time period should be mutually agreed upon, but if the manufacturer decides to discontinue manufacturing of a product due to financial concerns (lack of an adequate profit margin), they should notify the FDA perhaps nine to 12 months in advance so the FDA can find suitable alternatives. If the manufacturer is experiencing problems in the manufacturing process, packaging problems, or problems with raw materials, they should have to notify (in situations where the FDA is not already involved) at least 90 days in advance. FDA should perform expedited reinspections of manufacturers in the case of a drug shortage. If a manufacturer is forced to alter or suspend production due to an FDA initiated review, the FDA must perform a reinspection of the site within 90 days. Senator Amy Klobuchar (D-MN) has introduced a bill, S. 296, the Preserving Access to Life-Saving Medications Act, that would help alleviate the adverse consequences of drug shortages by implementing some of these types of changes.

5 Moreover, generic drugs take on average 27 months for approval. A process should be developed that expedites the approval of critical drugs that are currently experiencing shortage problems so these products are approved in a manner that puts them at the top of the FDA priority list. Finally, a collaborative public and private sector initiative is needed to develop a national strategy aimed at reducing the occurrence of drug shortages and managing such shortages better when they occur. This should include creation of a comprehensive early warning system. March 2011