In June 2018, 31 United States senators and 104 United States representatives wrote to Scott Gotlieb, MD, who was the Commissioner of Food and Drugs. The representatives and senators approached Gotlieb to create a task force looking into root causes of drug shortages. The task force would also then be asked to create a plan of action in addressing these root causes to try to prevent them in the future.
Gottlieb assembled the Task Force from members of the Food and Drug Administration and its partner agencies, then convened in November of 2018. The Task Force invited scientists and economists from the Food and Drug Administration to comb through drug shortage data from 2013-2017 and do their best to understand the underlying factors driving the shortages.
Starting in 2011, which was a peak year for drug shortages, the instances of drug shortage had been steadily declining. However, the instances of drug shortage began to steadily increase again, lasting longer than before. Of the drug shortages studied between 2013 and 2017, the following trends were noted:
- 63% of the 163 drugs sampled for the study were administered by injection (sterile injectables)
- 67% of the drugs sampled were drugs that have a generic version on the market (meaning that these shortage drugs are not novel and protected by patent)
- The median time since approval of the drugs studied was 35 years (meaning most of the drugs in shortage are older)
- The median price per unit of the drug studied was only $8.73 (meaning that the cost of these drugs is relatively low)
After studying this selection of drugs, the Task Force identified the following root causes of current drug shortages:
- Lack of incentives to produce less profitable drugs. The task force noticed that when drug producers were limited in production, they chose to produce drugs that were more marketable and more consistently in demand. Most notably, manufacturers of older generic drugs faced price competition, unpredictable revenue, and high investment requirements, which significantly limit their ability to make a profit manufacturing.
- The drug market does not recognize and reward manufacturers for mature quality management systems. Drug manufacturers are required to adhere to Current Good Manufacturing Practices (CGMPs), which are created and regulated by the FDA. In order to sell a drug in the US marketplace, a manufacturer must comply with these quality standards. However, drug purchasers do not have access to the information provided to the FDA in compliance with these standards. There’s not currently a chain of information linking facility maintenance and drug quality to a specific facility of origin. This means that if a drug company charges more for their drug because their facilities have better technology and maintenance, they are not guaranteed a corresponding increase in revenue for this performance because the information about the quality of the manufacturing facility is never communicated to the buyer.
- Logistical and regulatory challenges make it difficult for the market to recover after a disruption. Typically, when a market faces a shortage, a manufacturer can simply increase production to ensure that supply matches demand. In a normal market, if the supplier didn’t increase production, they would simply face new competitors entering the market to provide an additional supply. For drug companies, adjusting production is a long process that involves communicating with manufacturing facilities overseas, coordinating a supply of active pharmaceutical ingredients (API), submitting the drug and its requisite information to regulatory agencies, and more. These steps take a significant amount of time and add lag to the provision of the drug supply to the market. If a new supplier were to try to use the shortage to their advantage and try to enter the market to manufacture the drug, they would first need to develop a manufacturing infrastructure and supply chain, then additionally develop and file an application with the FDA, first waiting for the FDA’s approval before being allowed to enter the market.
Equipped with the root cause information, the FDA Task Force and its scientific and economic advisors prepared the following recommendations for resolving drug shortage problems:
- Create a shared understanding of the impact of drug shortages and the contracting practices that may contribute to them. In studying drug shortages, the Task Force found relatively few studies conducted on drug shortage harm and economic cost. The lack of data means that it is impossible to quantify the true public health cost of drug shortages, as well as long term effects on public health and economic cost. The Task Force also noted a great need for increased transparency and distribution of information from private sectors (some manufacturing contract practices include weak “failure-to-supply” clauses, which do little to punish a manufacturer for not meeting demand, but no data has been collected on this practice).
- Create a rating system to incentivize drug manufacturers to invest in achieving quality management system maturity. After identifying the second root cause, the Task Force proposed creating a system to ensure that buyers are aware of the quality investments made by drug manufacturers. This is in an effort to incentivize drug manufacturers to invest heavily in high quality, reliable manufacturing for their products.
- Promote sustainable private sector contracts. After noting the lack of information available to the Task Force on how manufacturing contracts are created, the Task Force proposed an increased financial incentives and rewards for responsibly created, sustainable production contracts. This resolution proposes that contract pricing is increased for drugs that are hard to receive returns for, like older generic drugs only utilized for uncommon conditions. It also advocates for increased pricing for drugs produced through mature quality management (otherwise known as drugs manufactured in a higher quality environment).
The FDA Task Force proposed its own initiatives to address the growing frequency and length of drug shortages as well. The proposed actions include improving their data sharing abilities, which would require drug manufacturers to provide much more detailed reports when reporting to the FDA about interruptions in manufacturing, requiring drug manufacturers to provide risk management plans, and ensuring that all drugs going to market have the longest expiration dates possible to lengthen shelf life and create a larger drug supply. Ultimately, though, the FDA’s Task Force concluded by saying that the cause and resolution of drug shortages is not easy to pursue. As the issue is split between regulation, economics, and production, it’s difficult to enact regulation or requirements that end the shortages for good. The Task Force hopes to begin enacting these plans as soon as possible, but the long-term effects of the collected data and interim regulatory requirements may not be seen for a long time.