Obama Orders FDA to Double Down on Drug Shortage Crisis

October 31, 2011

October 31, 2011 — President Barack Obama today put the US Food and Drug Administration (FDA) in red-alert mode about a drug shortage crisis that has endangered patients, delayed clinical trials, and triggered price gouging.

The number of drugs deemed in short supply by the FDA has nearly tripled, from 61 in 2005 to 178 in 2010, with roughly 200 shortages reported so far in 2011. Scarce drugs are mostly sterile injectables such as cancer medications, anesthetics, and antibiotics. Many of them are generics.

The president's executive order directs the FDA to broaden its reporting of potential drug shortages to give the agency enough time to prevent or reduce them. With early notification, the FDA can work with manufacturers to more quickly address quality issues that shut down production, as well as find other manufacturers to help increase their output. In a press conference today, US Department of Health and Human Services Secretary Kathleen Sebelius said that such advance notice has helped the FDA avert 137 shortages during the last 21 months.

The president's order also requires the FDA to grease its regulatory wheels by speeding up the review of new manufacturing sites, manufacturing changes, and drug suppliers that could prevent a shortage from occurring.

Obama's new initiative seeks to go beyond the narrow requirement now in place that sole-supplier manufacturers of critical medications inform the FDA if they intend to stop making them; bipartisan legislation pending in the Senate and House would extend this requirement to all manufacturers. Sebelius said the administration is urging Congress to pass the legislation to maximize the authority that the FDA has to require drug shortage reporting. The executive order is the next best thing to Congressional action, Sebelius said.

"We can't stand by and watch Americans go without medicines they count on," she said.

In addition, the executive order directs the FDA to work with the Department of Justice to investigate whether secondary drug wholesalers or other market players have illegally raised drug prices to gouge hospitals and physicians, or hoarded medications to exploit potential drug shortages. Sebelius said the price of one hypertensive medication in short supply has shot up from $26 to $1200 per dose.

The Obama administration also announced other steps it was taking to address shortages that have delayed surgeries, disrupted chemotherapy regimens, and forced clinicians to rely on less effective less familiar medications: It is roughly doubling the staff at the FDA's Drug Shortage Program, and today the administration sent a letter to manufacturers reminding them of their responsibility to report the discontinuation of some medications, and encouraging them to voluntarily disclose all potential shortages.

A Department of Health and Human Services report released today attributes the drug shortage crisis largely to demand outstripping manufacturing capacity. An unusually high rate of brand-name drugs going off-patent beginning in 2008, the report states, has left producers of generic versions unable to meet the need.

Obama Commended for Adopting Physician Recommendations

The president's decision to push the FDA harder on reducing drug shortages immediately garnered applause from several of the healthcare organizations that are most affected by the problem.

"On behalf of our physicians and patients, we praise President Obama for his bold action in addressing the growing drug shortages pandemic," said Jerry Cohen, MD, president of the American Society of Anesthesiologists, in a press release. Dr. Cohen noted that Obama's executive order incorporates several recommendations made by a coalition of groups that includes the American Society of Anesthesiologists.

Likewise, the American Society of Clinical Oncology said in a statement that it is "pleased the Administration is taking action to help ensure patients with cancer receive the life-saving treatments on which they rely." The society added that it hoped the executive order will put additional pressure on the Senate and House to act on the shortage notification legislation.

Similar commendations came from the American Hospital Association and the American Society of Health-System Pharmacists.

Divorce Oncologist Revenue From Drug Sales, Write NEJM Authors

Two articles published online today in the New England Journal of Medicine suggest additional and more far-reaching solutions to the drug-shortage crisis. In one piece, Bruce Chabner, MD, from the Massachusetts General Hospital Cancer Center, Boston, recommends that the federal government require manufacturers of generic drugs to establish "redundant" manufacturing capacity and revoke marketing licenses of companies that fall short of minimal production goals.

"A license to market lifesaving products should entail public obligation to meet demand," writes Dr. Chabner.

In addition, the government should increase Medicare reimbursement of generic medications to motivate manufacturers to boost production, as well as improve quality, according to Dr. Chabner. He writes that Medicare currently limits reimbursement for injectable generics to no more than 6% above the average sales price during the preceding quarter.

Such a formula also minimizes profits for oncologists who purchase chemotherapy drugs and resell them. In their New England Journal of Medicine article, Mandy Gatesman, PharmD, and Thomas Smith, MD, write that oncologists naturally would rather earn their 6% margin on brand-name Abraxane (Celgene), priced at $5824, rather than generic paclitaxel, which is priced at $312, under this reimbursement scheme.

Dr. Gatesman and Dr. Smith argue that oncologist revenue should not hinge on chemotherapy sales. This payment system not only favors higher-priced brand-name drugs, which is unsustainable, but also "puts oncologists in potential ethical conflict with patients, since it hides revenue information that might influence drug choices and thus affects costs and patients' copayments," the authors write.

To get away from the dependence on medication sales, the authors recommend adopting clinical pathways that specify preferred chemotherapy combinations and sequences, and paying disease-management fees to oncologists who follow such pathways. Another option that would eliminate conflict of interest, they write, is putting oncologists on salary.

"The only good news," write Dr. Gatesman and Dr. Smith, "is that the drug shortages may catalyze a shift from a mostly market-based system to one that rewards provision of high-quality cancer care at an affordable cost."

More information on drug shortages is available on the FDA Web site.

Dr. Gatesman and Dr. Smith have disclosed no relevant financial relationships. Dr. Chabner reported that he sits on the board of directors of 2 pharmaceutical companies and serves as a consultant to a number of others.


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