Generic Drug Economics at Root of Many Drug Shortages

Eileen Oldfield, Associate Editor
Published Online: Wednesday, May 14, 2014
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The generic drug market’s economics have a particular impact on drug shortages, including shortages of critical drugs that may only be available in generic form, a report from the US Government Accountability Office (GAO) states.

Most of the shortages within the past 2 years, including half of critical shortages, involve injectable generic drugs, GAO reports in its February 2014 report Drug Shortages: Public Health Threat Continues, Despite Efforts to Help Ensure Product Availability. An analysis of critical drug shortages occurring between June 1, 2011, and June 30, 2013, determined that 63 of 96 shortages pertained to drugs that were only available in generic form.

Despite declining drug shortage reports in 2012, the last year for which complete annual data are available, the total number of active shortages has increased since 2007, GAO noted. Its analysis of the first 6 months of 2013 found 288 ongoing drug shortages that began during prior years, and 73 new drug shortages, for a total of 361 active shortages.

The drug classes most likely to have shortages included anti-infective, anesthetic and central nervous system, cardiovascular, and nutritive therapies.

More than half of the shortages reported since 2007 have occurred more than once, with the shortages ranging from a single day to more than 5 years, although most of the shortages lasted approximately 1 year.

An analysis of FDA data and several studies found that many of the shortages relate to manufacturing quality concerns, GAO noted. During the 2-year period between January 2011 and June 2013, 30% of drug shortages could be attributed to manufacturing delays or capacity issues, typically caused by shutdowns or slowdowns for maintenance or remediation.

In addition, low profit margins can prevent generic injectable manufacturers from investing in the infrastructure that would allow them to meet the FDA’s quality control requirements, GAO stated.

Permanent product discontinuations or temporary manufacturing halts can also influence generic injectable medication availability. In cases in which a few manufacturers make a product, manufacturers may not be able to keep up with the increased demand.

Manufacturers aren’t solely at fault, however. The report notes that the FDA’s increased ability to conduct site inspections has allowed more manufacturing problems to be identified. The shutdowns associated with the problems then trigger the shortages, GAO noted.

The lack of routine analysis of the FDA’s existing database is another shortcoming because analysis could allow the agency to identify potential drug shortages before they occur, and establish trends and patterns indicating potential shortages. The analysis is required by the government’s internal control standards for that reason, GAO notes.

“By only using the database to respond to individual shortages as they occur, FDA is missing opportunities to use the data proactively to enhance the agency’s ability to prevent and mitigate drug shortages.”

In addition, the policies for managing and using data within the FDA’s drug shortage database have not been established. The system also lacks automated features to check data accuracy, opening the database to errors and incomplete and inconsistent data.

The agency has improved its response to potential and actual drug shortages since GAO’s last report, issued in 2011, however. It attributes those improvements to the FDA Safety and Innovation Act, which was created to allow the agency to better respond to drug shortages. Hiring additional staff for shortage-related problems has helped as well, the report notes.

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Today Reps. Doug Collins (R-Ga.) and Dave Loebsack (D-Iowa) introduced H.R. 5815, The Generic Drug Pricing Fairness Act, which creates greater transparency in how pharmacy benefit managers reimburse pharmacies for generic prescription drugs under Medicare Part D, and the Federal Employees Health Benefits Program. The National Community Pharmacists Association endorsed the bill, which goes further than legislation the same two Congressmen introduced earlier year that has the same remedies, but only applied to Medicare Part D.
“GPhA applauds FDA for taking helpful steps to address, and hopefully limit, scenarios in which some brand drug companies misuse Risk Evaluation and Mitigation Strategies programs to thwart competition from more affordable generic drugs. The ongoing abuse of REMS and REMS-like programs costs the American health system and its patients $5.4 billion annually, according to a study conducted by Matrix Global Advisors. Interestingly, as the United States market readies for biosimilars, this same study identifies $140 million in lost savings that would occur for every $1 billion in biologics sales.
Generics saved $239 billion in 2013 (a 14% increase in savings from 2012) and more than $1.46 trillion over the recent decade. Further, the Express Scripts 2013 Drug Trend Report issued in 2014 shows that since 2008, the price of brand drugs has almost doubled, but the price of generic drugs has been cut roughly in half.
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