Over the last two years, Americans have become increasingly familiar with the concept of supply chains and just how fragile they can be. Of course, gaps in grocery store shelves may be a new experience for consumers, but drug shortages have been a fact of life in the US for decades.
While drug shortages affect the entire medical field, they are especially disruptive to hospices for several reasons:
- Hospices are directly responsible for procurement of patient medications
- Prompt medication access is a primary quality measure in hospice
- A disproportionate number of shortages are for sterile generic injectable medications which are often essential to late-stage hospice treatment
The COVID-19 pandemic did not cause as many shortages as some had predicted, but it certainly didn’t make things any easier. Trends were already moving in the wrong direction, with the number of ongoing shortages growing each year since 2016. In 2021, the number of ongoing shortages in the US exceeded 100 for the first time in nearly a decade.
Why Are Pharmaceutical Shortages a Problem?
To understand why supply disruptions are such a problem, it helps to understand the market, which is divided between brand name and generic medications. When a company has exclusive rights to manufacture a particular drug (usually due to patent protections), it has significant leverage in pricing and often invests in branding and marketing to increase demand. When multiple companies can make a version of a drug, the price falls. These products are usually sold generically at a fraction of the cost of their branded equivalents.
Today, generics account for 90% of US prescriptions, but only 20% of total prescription spending. Generic utilization in hospice is even higher. Generics help keep a lid on prescription spending, but there is a downside. Because generic medications are considered interchangeable with their branded equivalents and each other, they compete solely on price. As more competitors enter the market for a drug, prices may fall too low for manufacturers to justify investments in quality control, backup capacity and other best practices. Instead, there’s a race to the bottom, leading to overreliance on overseas production and a handful of suppliers.
In the early 2000s, increased generic utilization led to market volatility and a steep rise in drug shortages. Companies would reduce or pause production for business reasons or even exit the market for certain products without warning. Lapses in quality control also led to sudden FDA facility closures. These issues reached a head in 2011 with over 250 new shortages.
Starting in 2012, the FDA gained new authority to secure the nation’s drug supply. A key provision required manufacturers to provide six-month advance warning when they plan to reduce, pause or cease production, allowing the FDA to work with other companies to increase production. These changes led to a sharp drop in shortages, which reached a low of 26 in 2015 and around 150 successful FDA interventions each year. However, both new and ongoing shortages (total at year’s end) have trended upward in recent years, in part due to disruptions to manufacturing facilities.
Increased shortages reflect limitations in FDA authority. The agency cannot force a company to make a particular drug. While it can shut down production due to quality issues, it cannot require that companies have any contingency plans to maintain production. It is even limited in its ability to determine where drugs are actually produced.
Trade Secrets Hide Drug Supply Chain Vulnerabilities
Pricing pressures, industry consolidation and globalization have all led to long, complicated and often opaque pharmaceutical supply chains, as well as overreliance on a handful of suppliers and regions. However, surprisingly little is known about the origins of the drugs we take.
The opaque nature of the pharmaceutical supply chain has led to some unpleasant surprises:
- In 2017, a shortage of a critical “last resort” antibiotic, piperacillin / tazobactam, was traced to an explosion at a Chinese factory that turned out to be the only major source of raw materials needed to make the drug.
- When Hurricane Maria devastated Puerto Rico, it disrupted production at a factory that produced 43% of bagged sterile saline for the US market.
- In 2020 and 2021, more than a dozen suppliers of Metformin extended-release tablets were forced to recall their products due to contamination with a carcinogenic compound, NMDA. NMDA levels , have also led to recent recalls of several angiotensin receptor blockers used to treat hypertension, heart failure and kidney disease as well as the withdrawal of the heartburn drug ranitidine.
There are two important terms to know when it comes to pharmacy supply chains:
- Finished dosage forms (FDFs) – the actual products delivered to patients
- Active pharmaceutical ingredients (APIs) needed to produce FDFs.
The FDA requires that all FDFs and APIs for the American market to be produced in registered facilities subject to inspection. However, the actual production volumes of those facilities is considered a trade secret. As a result, while the FDA knows and reports on the number of registered physical plants and their locations, it has no way of determining if a particular facility supplies 100 percent of a drug or none at all.
While we do not know the exact origins of our drug supply, it’s clear that much of it has moved overseas. While US retains significant manufacturing capacity, a recent report found that of 118 medications deemed essential by the FDA, 58 include an API with no domestic producer.
Available data show that most production of generic medications has moved to China and India. Some reports suggest that up to 80% of generic drugs sold in the US include at least one essential production step in one or both countries. This dependence is troubling for many reasons:
- In 2020, both China and India indicated they would curtail pharmaceutical exports due to COVID-related production delays and domestic demand before dialing back those efforts.
- Relations between the two countries have also deteriorated in recent years, with multiple military border skirmishes and suspected cyberattacks.
- Recent trade disputes have specifically targeted the pharmaceutical sector. In 2021, China doubled prices on Indian imports of essential APIs, including antibiotics with no other global producers. India has retaliated with major subsidies for domestic production.
Dealing With Medication Disruption
As the pandemic phase of COVID-19 recedes, geopolitical instability is rising, leading many countries to examine their dependence on global markets for lifesaving medications. In coming years, regulations, incentives and subsidies may help diversify sourcing of pharmaceuticals and their components and encourage stockpiling of some products with extended shelf lives. In the short term, however, it’s likely that providers and patients will bear the brunt of continued shortages.
Meeting this challenge will require flexibility and collaboration among hospice providers and their pharmacy partners and flexibility around preferred drug therapies. Examples include:
- Interdisciplinary collaboration between pharmacists and providers to support drug and dose conversions
- Exploring alternate drug delivery methods, including a shift from parenteral administration to transdermal, nebulized and rectal routes
- Deprescribing based on the patients’ goals of care and prognosis, as well as potential for drug-drug interactions
- Relationships to compounding pharmacies to supplement limited supplies of FDFs
- Access to larger suppliers with greater buying power
- Resources for locating hard-to-find medications at the local retail level
Enclara Pharmacia supports hospices in all of the shortage mitigation methods listed above, ensuring timely and appropriate symptom management for patients while helping hospices work more efficiently and manage costs. To learn more about Enclara’s customized hospice pharmacy solutions, please request a free, no-obligation analysis from one of our experienced consultants.