Drug Shortages the “New” Old Problem: People Are (Finally) Talking

November/December 2011, Vol4, No7 - Industry Trends
Caroline Helwick

On October 31, 2011, President Obama directed US regulators to take actions that would help ameliorate the ever-critical shortage of drugs.1 Drug shortages exist in several therapeutic areas—most prominently in oncology and the problem does not appear to be abating on its own. Most shortages involve cancer and leukemia drugs, anti-infectives, anesthetics, emergency medicine drugs, antihypertensives, and electrolytes. The problem has become an increasing concern for all healthcare stakeholders patients, physicians, pharmacists, payers, and manufacturers.

The number of drugs involved in shortages has nearly tripled in recent years, from 61 in 2005 to 178 in 2010, according to the US Food and Drug Administration (FDA).2 The American Society of Health-System Pharmacists (ASHP) tracked 232 drug shortages throughout 2011 by its drug shortages center, which tracks these developments and provides alternative treatment options.3 In November 2011, IMS Health released its analysis of the current state of drug shortages, based on the list tracked by the FDA and the ASHP as of October 7, 2011.4

More than half of hospitals and medical centers report that drug shortages compromise patient care, as reflected in a recent survey from the ASHP.5 About 97% of the survey respondents said the shortages also drove up costs through purchases from resellers, known as the “gray market.” The national labor cost of pharmacists having to deal with shortages was estimated to be $216 million.5 In addition, a study released in July 2011 by the ASHP shows that “increasing drug shortages are impacting patient care and increasing costs to the nation’s health system.”6

Addressing a group of industry stakeholders on September 26, 2011, during a public workshop on drug shortages convened by the Center for Drug Evaluation and Research (CDER), Douglas Throckmorton, deputy director of FDA’s CDER, said, “Despite the efforts of all the partners in the room, and particularly the FDA, our drug shortages are getting worse and not better.”7

But drug shortages wax and wane with market forces, according to Margaret Hamburg, MD, Commissioner of the FDA, who put the October 31, 2011, count at 84. In its recent directive, the administration encouraged manufacturers to give early notice to the FDA of impending shortages, which should aid in locating alternate sources, increasing production, or bringing new manufacturing plants online.1 The administration is also pushing for legislation to mandate the reporting of drug shortages and is asking the FDA to work with the Justice Department to “examine whether potential shortages have led to illegal price gouging or stockpiling of life-saving medications.”1

In Oncology, Disincentives May Compound the Problem
The FDA indicates that sterile injectables account for 80% of the shortages, and most of these products have one manufacturer that produces at least 90% of the drug. Almost 30% of sterile injectables are cancer drugs.2 In its recent report, IMS Health indicates that 28 cancer drugs are among the 168 drug shortages listed by the FDA and the ASHP; of these, 22 are chemotherapies.4

Discussing the impact of the shortages in oncology, Patrick Cobb, MD, immediate past president of the Community Oncology Alliance (COA) and chairman of COA’s Policy Committee, noted that a series of events, starting with the Medicare Modernization Act of 2003, has altered the oncology environment, creating “unintended consequences” by revisions in public policy, and one of these is a shortage of oncolytics.8

Generic manufacturers, Dr Cobb suggests, feel pricing pressure from the implementation of the ASP (average sales price) system, which dictates that manufacturers compete on actual sales price, not on the margins that were established under the old AWP (average wholesale price) system. Additional pricing pressure has come from an increase in practices that qualify for lower 340B pricing, according to Dr Cobb.8

The result is that many cancer injectable generics are now priced extremely low, which is good for patients and payers, but reduces a manufacturer’s incentive to stay in the market. This situation encourages secondary middlemen (the gray market) to obtain drugs in short supply and resell them at inflated prices.8 The IMS report echoes this analysis, indicating that 83% of the drug shortages are indeed for generics (and most of those are injectables).4

Anesthesiology Hard Hit: 2011 ASA Annual Meeting
At the 2011 American Society of Anesthesiologists (ASA) annual meeting in October, Arnold J. Berry, MD, MPH, ASA Vice President for Scientific Affairs, said that anesthesiologists are very concerned about the drug shortages, because anesthetic agents are among the main drugs affected. “The bottom line is that without having the drugs we need, it’s hard to safely take care of our patients.”

In its drug shortage survey of 1373 ASA members conducted in April 2011, 90% of respondents reported a shortage of at least 1 drug, and 98% had experienced a shortage during the previous 12 months.9

Gray market resellers obtain the drugs from pharmacies or other resellers and offer them to facilities in need of the drugs. Although this practice may be helpful, it is clearly not economical. A 2011 survey by the Institute for Safe Medication Practices showed that 56% of 549 hospital purchasing agents and pharmacists reported receiving daily solicitations from vendors, and 52% reported buying drugs from gray market suppliers.10 Survey respondents reported markups as much as 1500% for the anesthetic propofol.10

According to Dr Berry, part of the problem is the FDA’s limited ability to control drug shortages. The agency cannot dictate production quantity and must rely on voluntary participation of the industry. Furthermore, the agency at this point is primarily interested in shortages of drugs considered “medically necessary.”

However, in 2010 the FDA prevented 38 shortages, and in 2011 it has already prevented 99, by receiving early notification from the industry of an impending shortage, according to Dr Berry. When notified of a problem, the FDA can encourage other firms to ramp up production, expedite helpful regulatory processes, and allow temporary importation of substitute drugs, as it did, for example, with propofol.

The Industry Perspective
Presenting the industry’s perspective at the 2011 ASA annual meeting, Thomas G. Moore, PharmD, President of Hospira USA, said, “This is a multistakeholder issue, and addressing the broader concerns of drug shortages requires a collective effort. Many drug shortages can be prevented, but we need early dialogue.”

Dr Moore acknowledged at the meeting that the pharmaceutical industry “is acutely aware of the distress caused to patients, families, and clinicians by the shortage of medically necessary drugs,” but he said that there are “common misconceptions” that should be corrected. According to Dr Moore, most drug shortages are not caused by a manufacturer’s decision to voluntarily discontinue supplying the product, or to withhold drugs to push prices up. Rather, the key problem is “regulatory compliance and product quality issues,” which Dr Moore says is the cause for half of all drug shortages. Furthermore, the majority of these cases do not involve any “quality problem per se with a drug”; rather, there is a compliance issue with manufacturing guidelines or an issue that demands regulatory action.

Furthermore, Dr Moore said, “We want to meet the FDA guidelines of good manufacturing practices, but actions taken are a significant cause of drug shortages we see today.” The overall solution, he proposed, “transcends the pharmaceutical industry” and requires the involvement of the following stakeholders:

  • Active pharmaceutical ingredient suppliers
  • Component suppliers
  • Wholesalers and distributors
  • Group purchasing organizations
  • Healthcare providers
  • Regulatory authorities (eg, FDA, Drug Enforcement Administration).

“It’s a complex problem that requires a lot of collaboration and communication. I think we’re finally starting to see some of that occur between the various stakeholders,” Dr Moore observed.


  1. The White House Office of the Press Secretary. We can’t wait: Obama administration takes action to reduce prescription drug shortages, fight price gouging. October 31, 2011. www.whitehouse.gov/the-press-office/2011/10/31/we-can-t-wait-obamaadministration- takes-action-reduce-prescription-drug. Accessed October 31, 2011.
  2. US Food and Drug Administration. A review of FDA’s approach to medical product shortages. www.whitehouse.gov/the-press-office/2011/10/31/we-can-t-wait-obamaadministration-takes-action-reduce-prescription-drug. Updated November 3, 2011. Accessed November 21, 2011.
  3. American Society of Health-System Pharmacists. Drug shortages: current drugs. www.ashp.org/DrugShortages/Current. Accessed November 21, 2011.
  4. IMS Institute for Healthcare Informatics. Drug shortages: a closer look at products, suppliers and volume volatility. November 2011. www.imshealth.com/portal/site/ ims/menuitem.edb2b81823f67dab41d84b903208c22a/?vgnextoid=a6fbcc0f68f73310 VgnVCM100000ed152ca2RCRD&vgnextfmt=default. Accessed November 21, 2011.
  5. Traynor K. Drug shortage solutions elude stakeholders. Am Soc HealthSyst Pharmacists News. November 15, 2011. www.ashp.org/menu/News/PharmacyNews/ NewsArticle.aspx?id=3626. Accessed November 21, 2011.
  6. American Society of Health-System Pharmacists. Drug shortages harm patients, increasing costs to hospitals. July 11, 2011. www.ashp.org/menu/AboutUs/ForPress/ PressReleases/PressRelease.aspx?id=646. Accessed November 27, 2011.
  7. Center for Drug Evaluation and Research. Drug shortage workshop. September 26, 2011. www.fda.gov/downloads/Drugs/NewsEvents/UCM275801.pdf. Accessed November 21, 2011.
  8. Cobb P, Okon T. What is causing drug shortages? OncologySTAT. October 20, 2011. www.oncologystat.com/viewpoints/cancer-policy-forum/What_is_Causing_ Drug_Shortages.html. Accessed November 21, 2011.
  9. American Society of Anesthesiologists. Survey reveals 90 percent of anesthesiologists experience shortages of anesthetics. May 9, 2011. www.asahq.org/For-the-Publicand- Media/Press-Room/ASA-News/Survey-Reveals-90-Percent-of-Anesthesiologists- Experiencing-Drug-Shortages-of-Anesthetics.aspx. Accessed November 14, 2011.
  10. Institute for Safe Medication Practices. ISMP survey on drug shortage “gray market” shows widespread impact on hospitals. August 25, 2011. http://ismp.org/pressroom/PR20110825.pdf. Accessed November 21, 2011. INDUSTRY TRENDS 484
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Last modified: December 28, 2011
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