Legislation Introduced to Help FDA Prevent and Control Drug Shortages

by Stephen Spotswood

February 17, 2012

WASHINGTON — Unless FDA knows of a potential drug shortage in advance, the agency is not very effective in preventing or controlling that shortage, according to a recent government report. The agency also has failed to keep adequate records of past shortages, which could allow for a better understanding of why shortages occur.

Marcia Crosse, PhD

Faced with a mounting problem of drug shortages, the report released last month by the Government Accountability Office (GAO) provides a comprehensive list of the measures that FDA is unable to take, compared with the agency’s relatively small list of powers.

FDA cannot require that manufacturers report actual or potential shortages or require those manufacturers to take action to prevent or alleviate shortages. The agency cannot require companies to increase production of a drug in short supply or control the distribution or pricing of drugs. Nor can it prevent drugs from being sold on the gray market, where drugs are sometimes sold at one hundredfold their usual market price. [The gray market includes ways of buying prescription drugs that, while legal, are unofficial or unauthorized by the manufacturer. ]

According to Marcia Crosse, PhD, GAO’s director of healthcare, who presented the report’s findings at a Senate Health Committee hearing, FDA’s response is almost never proactive due to lack of information.

“Because FDA usually does not know about a shortage until it’s well under way, the agency’s approach to managing drug shortages is predominantly reactive,” Crosse explained.

That approach includes:

* Providing assistance to manufacturers to resolve quality problems;

* Encouraging other manufacturers to increase production;

* Allowing products to be marketed despite labeling or quality problems;

* Permitting the import of foreign versions of drugs; and

* Expediting review of drug applications.

Whether the last approach works to alleviate drug shortages is unknown. The agency currently has a backlog of 8,000 generic drug applications.

“FDA informed GAO that they have expedited the review of several hundred such applications in order to address shortages,” Crosse said. “However, FDA was unable to tell us whether any of the expedited reviews were completed in time to resolve a shortage.”

Foreknowledge Needed

The good news in the report is that, when FDA has information about a potential shortage, those same responses that minimally impact a shortage after it has begun can be used to prevent one.

“When FDA is informed of the possibility of a shortage in advance, the agency has increasingly been able to prevent drug shortages from occurring by taking the same kinds of action the agency used to respond to a shortage,” Crosse said. “FDA has prevented shortages of the majority of drugs where the agency learned of potential shortages in advance.”

In the past two years, FDA has, with early notification by manufacturers, successfully prevented 121 drug shortfalls.

The majority of shortages occur with little or no warning, however, and that number is increasing. Five years ago, 55 drug shortages were reported. In 2010, there were 178. And, as of November, 231 had been reported in 2011.

In October, President Obama directed FDA to partner with the Department of Justice to focus attention on drug shortage and consumer protection issues. That directive also included a final rule involving sole source manufacturers. White House officials stressed at the time, however, that the order did not change the current law or give FDA more power than it previously had. For that, new legislation would be needed.

Legislation Introduced to Help FDA Prevent and Control Drug Shortages Cont.

As a first step, legislators are pushing for a bill that would require drug manufacturers to provide early notification to the FDA whenever there is the possibility of a drug shortage. The legislation — the Preserving Access to Life-Saving Medications Act — was introduced by Sen. Amy Klobuchar (D-MN) and Sen. Bob Casey (R-PA).

 “This will help FDA take the lead in working with pharmacy groups, drug manufacturers and healthcare providers to prepare for impending shortages when they occur and minimize their impact on patient care,” Klobuchar told the committee. “FDA recently announced a rule expanding shortage notification for sole-source manufacturers. That’s a step in the right direction, but we still need to get this legislation done, because we have manufacturers who are not sole source.”

The bill also would direct FDA to develop an evidence-based list of drugs vulnerable to shortages and to work with manufacturers to come up with a continuity of operations plan to address potential problems and add redundancies to protect against potential shortages.

“I understand this may be a short-term solution to a long-term problem,” Klobuchar admitted. She also is working with other legislators to come up with a broader, permanent solution — one that includes methods to address the root causes of drug shortages.

Mechanics of Shortage Unclear

The root causes of shortages are, in many cases, a mystery. According to the GAO report, FDA’s ability to understand them and to protect public health has been severely impacted by lack of data on past drug shortages.

“Without such data, FDA has not been able to monitor trends and enhance its ability to track the causes of drug shortages,” Crosse said. “Many of these drugs have repeatedly been in short supply over the last decade, but FDA has not been performing routine analyses to understand patterns or identify root causes.”

According to FDA, the drug market does not function in the same way as other markets when it comes to shortages of a product. In October, Sherry Glied, PhD, assistant secretary for planning and evaluation at HHS, released a report titled Economic Analysis of the Cause of Drug Shortages. In it, she and her department examine why shortages are seen in the drug market when they are not a feature of the U.S. economy, in general.

Usually, if demand goes up, price goes up in response, and demand drops, Glied told committee members. “The prices of drugs do rise in response to shortages, but short-term price increases have little impact on the demand or supply for these drugs.

“These drugs are medically necessary, so treatment patterns don’t change very much, even when prices rise, and that’s what we’d like to see,” Glied said. “But increasing capacity in this market can take several years and cost hundreds of millions of dollars.”

While some manufacturers can respond to shortages by switching production lines to another drug in the same class, this usually shifts the shortage from one drug to another. Manufacturers also can increase production capability — switching from two shifts to three, for example. However, most drug-production facilities are running at capacity already, Glied said. “And operating 24/7 can impact their ability to keep plants in working order, which may be causing some of the quality issues we see.”

Manufacturers can respond if they see a profitable market in the future, Glied noted. This is happening with generic sterile injectables — a class of drug that has been particularly susceptible to shortages in recent years. These include oncology drugs, anesthetics, parenteral nutrition drugs and many medications used in emergency rooms.

Manufacturers have told FDA that they have invested in building new facilities in response to the 50% growth of the market for this type of drug over the past decade. Those new facilities will not be online for one to three years, however.

In order to find solutions to this problem, policymakers will have to take part in a balancing act, Glide’s report noted. They will have to weigh the short-term advantages of tailoring regulatory responses to respond to specific market situations with the long-term possibility that this will reduce competition and that manufacturers may use regulatory actions for their own strategic purposes.

GAO – FDA’s Ability to Respond Should Be Strengthened

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