Understanding Drug Shortages: Systemic Impacts on Supply Chains - Episode 2
Typical Causes of Drug Shortages
Physicians enumerate the ways drug shortages begin, with an emphasis on the McPherson, Kansas, facility shutdown, a lack of active pharmaceutical ingredients, and market consolidation.
Troy Trygstad, PharmD, MBA, PhD: Erin, you’re widely known in the press and in a circle of folks who live and breathe drug shortages. Where do drug shortages start, and how do they end up on our doorstep?
Erin Fox, PharmD, BCPS, FASHP: That’s a great question. Drug shortages start at the manufacturing factory. When that factory has a problem—since the factory usually doesn’t have an extra line, extra capacity, or a backup plan in many cases—can’t make up the difference. When a manufacturing problem happens, it almost always results in a drug shortage.
Troy Trygstad, PharmD, MBA, PhD: How does that roll down from there then? It’s going from manufacturer to wholesaler?
Erin Fox, PharmD, BCPS, FASHP: Yes. When you think about products being manufactured, manufacturers don’t have 6 months to a year’s worth of product on hand; they have small amounts. They do just-in-time manufacturing, and so when there’s a glitch and they’re supposed to send products to the distributors, the wholesalers, and hospitals, any kind of a glitch will probably result in a 2- to 3-month period of time when you’re not going to get the deliveries that you’re hoping for.
Troy Trygstad, PharmD, MBA, PhD: It’s interconnected too, it sounds like, because there are substrate products that go into the manufacturing of the drug product: labeling, glassware, all sorts of other things. Can you describe this interconnected supply exchange?
Erin Fox, PharmD, BCPS, FASHP: In most of the raw materials, the active pharmaceutical ingredient…is similar: the raw materials come from China and India in the majority of cases. When there’s a problem there, clearly the manufacturers can’t make the product. But manufacturers do have to purchase a large number of other products to make their products; glass vials, for example—sometimes there’s a shortage of those—and problems with the rubber seals inside the syringes. All of those additional materials can pose some manufacturing problems. The manufacturer is in charge of making sure it has good supplies of all its products, including the raw materials. That’s why I say it starts with the manufacturers. But you’re right, there are many other components as well.
Troy Trygstad, PharmD, MBA, PhD: This sounds to me a little bit like a scenario we had a couple of months ago, with a car manufacturer…that couldn’t make a certain part. There was a factory that was shut down or somewhere in the supply chain. That part couldn’t be made, and it essentially stopped the entire manufacturing of a line of transportation vehicles. It’s similar to that in the drug supply chain?
Richard Montgomery, RPh, MBA: That’s a perfect analogy. When you look at what goes into making a sterile product, with all of the checkpoints, validations, and testing, everything comes to a halt because the manufacturer can’t get the glass to make the vial or has an insufficient number of labels, or the rubber stopper doesn’t work with the drug because the supplier changed its formulation. It’s multifactorial; it’s a process that’s owned by the vendor. But you’re right: 1 little hiccup and the flow of work and production shuts down.
Troy Trygstad, PharmD, MBA, PhD: Where do most active pharmaceutical ingredients come from?
Richard Montgomery, RPh, MBA: They come from China and India for the most part.
Troy Trygstad, PharmD, MBA, PhD: So we’re clearly connected around the world.
There was a recent shutdown in McPherson, Kansas. Just using that as an example, here you are downstream at the health systems, and you see a shutdown and immediately you start planning for that. Is that how it works?
Richard Montgomery, RPh, MBA: Well, we don’t see the shutdown.
Troy Trygstad, PharmD, MBA, PhD: So you’re catching up.
Richard Montgomery, RPh, MBA: We’re catching up. I think once we find out what the problem is, we can kind of guestimate whether it’s going to be short term or long term. I think the problem is knowing what the issue is that’s causing the problem. Where’s the hiccup? That isn’t always available to us.
Troy Trygstad, PharmD, MBA, PhD: So, Erin, again, you travel the country working on these issues. You’ve been working with drug shortages in particular for 20 years, and you are a luminary in the field. Do we not have an early-warning system for this?
Erin Fox, PharmD, BCPS, FASHP: We don’t. That’s the gold standard. One of the most frustrating things about drug shortages is how reactive you have to be. There’s no way to become proactive because there’s no requirement for a drug company to tell you that it’s not going to have your product available for you. Half the time the drug companies don’t even do a good job of telling the FDA, and that’s a law that’s required. And so having to be reactive all the time is very, very frustrating. For example, for the McPherson, Kansas, closure, we found out about that months later, and that was only because the drug company chose to tell us. In many cases, we actually never find out, especially if it’s a privately held company.
Troy Trygstad, PharmD, MBA, PhD: Give me an example of a downstream effect. You have a drug shortage. How does this affect patients’ lives? What are the pragmatic results of these shortages?
Erin Fox, PharmD, BCPS, FASHP: At the most basic level, the impact is that they don’t get the treatment they need or there’s a delay in their treatment. Luckily, those types of shortages are very uncommon, but they’re also at more risk of having a medication error. When hospitals have to use a 2-mL vial versus a 5-mL vial or a 10-mL vial, accidents can happen and medication errors can happen. Patients are at risk as well.
Troy Trygstad, PharmD, MBA, PhD: What other reasons might shortages come to pass?
Richard Montgomery, RPh, MBA: Market consolidation. Some companies will either be purchased or drop the product line for profit margin. Companies are publicly held, and they have an obligation to their shareholders to generate revenue.
Troy Trygstad, PharmD, MBA, PhD: What’s happened over the past 20 years that might have amplified that scenario?
Richard Montgomery, RPh, MBA: I think we’ve had a few people drop out of the market. You’ve had Ben Venue Laboratories Inc or Bedford Laboratories, which dropped out and left a big hole to patch up. We’ve had some consolidation mergers in which products lines had to be divested, after which there was a whole other process. Somebody else has to pick them up; there are a lot of different moving parts in the industry.
Troy Trygstad, PharmD, MBA, PhD: It is fair to say that there are more single points of failure today in the supply chain than there were in the past, when they might have been buffered by 2, 3, or 4 folks in the marketplace.
Richard Montgomery, RPh, MBA: For the most part, we have a single source or dual source on a lot of products that are mission critical.
Troy Trygstad, PharmD, MBA, PhD: When you think about a “single point of failure,” Erin, as a national expert, how does this relate to public health, bioterrorism, and the US Department of Defense? Is this an issue that is discussed in Washington?
Erin Fox, PharmD, BCPS, FASHP: It is. There is a thought that some medications are so critical, like saline, that they should be considered a part of the critical infrastructure; there should be a required backup plan and redundancy. Those discussions are ongoing, but it will be a bit of time before we see any movement there. It is a national security issue when we don’t have those medications in supply. It’s as if we’re short on dextrose, sodium bicarbonate,…and water.
Troy Trygstad, PharmD, MBA, PhD: It’s interesting. So a lot of these supplies arrive just on time? Is this part of the evolution, as well as what has caused some issues?
Richard Montgomery, RPh, MBA: Yes. Having a certain amount of supply is cost saving to a company, but if they are short, there’s a multifactorial effect.
Troy Trygstad, PharmD, MBA, PhD: We also have acts of God, like Hurricane Maria, right?
Erin Fox, PharmD, BCPS, FASHP: Sure.
Troy Trygstad, PharmD, MBA, PhD: Were both of you impacted by Hurricane Maria?
Richard Montgomery, RPh, MBA: We were a bit; the vendors we used weren’t quite as affected as some other hospitals. They can have all the product they want, but if you don’t have power, there’s nothing arriving.
Troy Trygstad, PharmD, MBA, PhD: We had Hurricane Florence and 3 other hurricanes meander through North Carolina this year, as well as one of the largest typhoons ever in the other hemisphere. Can that affect you as well?
Richard Montgomery, RPh, MBA: Sure.
Troy Trygstad, PharmD, MBA, PhD: This interconnectedness is fascinating to think about from a drug-supply-chain perspective. There’s the evolution of generic dispensing rates—somewhere about 90% now. Is that affected? How has that affected drug supply?
Richard Montgomery, RPh, MBA: It depends on where you sit. For the acute-care space, it affects us a bit more. As more patients receive specific regimens like branded biosimilars or precision medicine, there’s more chance for disruption.