The Effect of Drug Shortages on a Pharmacy Benefit

The American Journal of Pharmacy Benefits, January/February 2012, Volume 4, Issue 1

Drug shortages, whether caused by the manufacturers or the FDA, continue to escalate. The federal government has recently begun to address this concern.

You have been diagnosed with a life-threatening illness or receved the dreaded diagnosis of cancer. Your doctor tells you there are drugs that can help you. Then you fi nd out that the drug is not available. What a terrible thing to hear. Unfortunately, this is nowadays not an uncommon event.

Drug shortages are not new. It is not unusual to have intermittent supply defi cits due to issues such as quality problems, production delays, or insuffi cient supply of ingredients necessary to produce a medication. What is different is the number of medications that are in short supply. The University of Utah’s Drug Information Service states that there have been a record setting 232 documented shortages this year after a previous high of 211 last year. Over the last 5 years, there has been a tripling of drugs that have been in signifi cant shortage.

The drug shortages spread over a number of classes:

• Oncology: 16%, the most common area of shortage. The medications that are most affected are inexpensive oncology therapies that until recently were commonly utilized.

• Anti-infective: 15%

• Cardiovascular: 12%

• Central nervous system: 11%

• Pain: 9%

• Vitamins and minerals: 9%

The reasons for these shortages vary depending on with whom you speak. The US Food and Drug Administration (FDA) has stated that much of the blame lies with the manufacturers who have had a number of citations for quality issues. Approximately 10% of the time, the manufacturers have just curtailed production due to business reasons. Once a drug is removed from the market at one price, it can come back on the market after a specified time period at a much higher price. Suddenly, a drug that may have had very little profi t margin attached to it can generate signifi cant positive revenue. If you speak with the drug manufacturers, they will state that a large portion of the problem stems from the FDA and the brutal regulatory requirements to which the manufacturers have to adhere.

Regardless of who is to blame, a very real problem exists. Implications of drug shortages include clinical issues, such as curtailing therapies that have been working for a patient, having to choose alternative therapies that may be less effective, having a safety profi le that is lower, or having to utilize a more expensive drug.

There have been a number of stories about chemotherapy regimens having to be pushed back in time or the drug regimen having to be changed. What the longterm implications are to a patient’s outcome is unknown. Another potential issue associated with clinical outcomes has to do with counterfeit medications that are being passed through the black market. Some of these medications have fl awed ingredients, inappropriate amounts of important ingredients, or even none of the active ingredients that are necessary for the drug to work.

It is often the economic implications associated with these shortages that are touted. Black market sales of some of these medications and the associated price gouging for the limited amount of medication that may be available have produced scenarios that have created markups of over 3000% during the last year.

Although much of the press regarding drug shortages has focused on medications used in the outpatient environment, the problem is not limited to the ambulatory healthcare arena. The American Hospital Association found that a number of the hospitals they surveyed were either at risk of running out or had run out of essential medications. Payers and healthcare consumers are often less aware of those shortages that occur within the inpatient settings because physicians are often choosing alternative medications without discussing the issue with the patient and there is less transparency in the cost of the alternative drugs due to how these medications are paid for.

This issue has come to the attention of both legislatures and the executive branch of the government. President Obama recently issued an executive order instructing the FDA to monitor the drug shortage issue more closely and to speed up the reviews of applications that would change production procedures for drugs that are in short supply or are at risk of being in short supply. He has also asked both the FDA and the Justice Department to be on the lookout for price gouging. President Obama has gone as far as to fl oat the idea of a law requiring a national stockpile of certain essential drugs.

Response by payers has been somewhat muted. In some cases it is because they are only aware of the problem when a health plan member or employee complains to them. Other payers state that there is little that they can do, which is not necessarily the case. A few Pharmacy & Therapeutics committees have responded to drug shortages by adjusting their formularies, moving brands to lower tiers requiring less out-of-pocket payment from the patient. Others have kept their formularies as is and are dealing with the shortages on an individual basis. Some of this depends on whether the shortages are short-lived or long-term. Payers should also work with their legislators to help shape any legislation that comes forward to address the issue. Until this problem is addressed, the problem of drug shortages will continue to escalate.

Have you or your organization noticed any problems with drug shortages? What have you done to address the issue?

We would like to hear from you.