Strict enforcement that caused 4 generic drug manufacturers to shut down 30% of their manufacturing capacity is at the root of current drug shortages, according to a report issued by the House of Representatives Committee on Oversight and Government Reform.
Increased regulatory action, which the committee attributed to FDA Director Margaret Hamburg’s 2009 appointment, led to manufacturing shutdowns at 4 major generic pharmaceutical makers. The shutdowns occurred simultaneously at Teva Pharmaceuticals,Hospira Inc, Sandoz Pharmaceuticals, and Bedford Inc, all of which required plant remediation, the report stated.
Although the report focused on FDA regulatory actions, the committee noted that group purchasing organization (GPO) agreements, in which intermediaries negotiate price and volume contracts, and provisions in the Medicare Modernization Act of 2003 also laid the framework for drug shortages. The price caps in GPO agreements prompt only a few manufacturers to produce certain medications, because it is not profitable to produce the medicines in smaller quantities. Meanwhile, Medicare Modernization Act provisions decreased reimbursement payments to a level that is below the manufacturing cost. The combination forced a reliance on a select few companies to produce the medications, the report stated.
The committee’s recommendations included revisions to the FDA’s protocols, including requiring consideration of potential shortages before recommending manufacturing shutdowns and improving the generic drug pricing system so Medicare reimbursements reflect supply and demand. In addition, it recommended allowing drug companies to share information about manufacturing capability and product availability, although it noted the information sharing could put consumers at risk from manufacturer collusion.
More than 200 drugs—many of which are generic versions of injectable medications—were listed as being in short supply by the American Society of Health Systems Pharmacists as of February 2012. The medications include oncology drugs, including those used for chemotherapy, anesthetics, and rheumatology medications. Meanwhile, the committee reported a 250% increase in FDA warning letters issued between the 2009 and 2011 fiscal years.
Prior to the remediation requirements, the companies each produced about 1 billion units of injectable generics per year, the report stated. Since then, each company has produced only about 700 million units, a 30% decrease in manufacturing capacity.
The report estimated a 2- to 3- year period for the manufacturers to return to their normal capacity.
“It is also important to note that the overall damage inflicted by the FDA’s decisions to shutter manufacturing lines may extend well beyond the current drug shortage crisis,” Committee Chairman Darrell Issa (R-CA) said. “This shortage of injectable generic drugs is only the most visible result thus far of FDA enhanced enforcement action.”
In addition, the committee reported that it could not find evidence that the shutdowns correlated to reports of drugs harming consumers; however, an FDA spokesperson told Reuters the shortages stem from manufacturing and quality concerns.
“We recognize that the problem of drug shortages is complex and stems from an interconnected series of factors,” Eric Jefferson, FDA spokesperson, told Reuters. “However, manufacturing and quality problems continue to account for the majority of current shortages.”
Serious quality issues, including bacterial contamination or glass shards in medication vials, can contribute to the manufacturing suspensions, according to Reuters. In addition, at least 1 expert interview by the news service noted the absence of specific information on the manufacturing suspensions.
“Certainly, the FDA has very likely made it hard for these companies to comply,” Erin Fox, director of the drug information service at the University of Utah, said. “But, on the other hand, FDA is finding scary things. I wouldn’t want my loved ones to have drugs that are contaminated with bacteria injected into their veins, or with glass shards. I was surprised (the report) wants to lay so much of the blame on the FDA without mentioning the very severe quality issues found by them.”
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