Short Supply, Cost of Key Drugs Leave Hospitals Scrambling

Kerry Dooley Young

January 16, 2019

Major hospital groups on Tuesday highlighted the challenges created by both frequent shortages of critical products, including saline and injectable opioids, and rising prices for medicines, including decades-old generic drugs.

The American Hospital Association (AHA), the Federation of American Hospitals (FAH), and the American Society of Health-System Pharmacists (ASHP) issued a new report prepared by NORC, an independent research institution at the University of Chicago in Illinois.

Almost 80% of the hospitals in the survey indicated that drug shortages increased their spending to a moderate or large extent in fiscal years (FYs) 2015 to 2017. And, about 78.7% reported finding it "extremely challenging" to obtain drugs in short supply, with another 19.9% saying it was "somewhat challenging," the report said. 

In addition to injectable opioids and saline, products in short supply also included sterile water, epinephrine, and dextrose, which is used for nutrition and hydration, the report said.

"Each shortage is basically an emergency, all hands are on deck," said Erin Fox, PharmD, senior director of drug information and support services for the University of Utah Health in Salt Lake City, on a Tuesday call with reporters.

Hospital officials and workers have a number of strategies for coping with a shortage of critical products, the report said. Many hospitals have had to substitute more expensive drugs and therapies and repackage medicines. They then must take additional steps to ensure proper communication about these pharmacy changes, the report added.

Hospitals also reported using alternative contracting and procurement steps, such as making off-contract purchases, negotiating directly with manufacturers, and using secondary wholesalers. The report offered a glimpse into how these shortages affect the operations of hospitals. One vice president interviewed spoke about staff spending 16 additional hours a week solely focused on managing inventory.

Higher Prices

The report highlighted the limited number of manufacturers as a root cause of the vulnerability of the hospital drug supply chain. With only a small circle of suppliers, there are limited avenues for making up supply lost because of recalls or production shuttered because of quality control issues, the report said. 

In addition, the industry has faced disruption as Puerto Rico recovers from Hurricane Maria, said Chip Kahn, president and chief executive officer of the Federation of American Hospitals, which represents investor-owned institutions.

"The problematic result is, though, that we find instances where drug companies are using these shortages to really put the hospitals and our patients at their mercy," Kahn said on the call.

Kahn and Rick Pollack, president and chief executive officer of the American Hospital Association, on the call urged Congress to remove hurdles that delay the introduction of new generic medicines.

The hospital groups are seeking action on legislation that's known as the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. Senate Finance Chairman Charles E. Grassley (R-IA) and Sen. Patrick Leahy (D-VT) say this legislation would end legal maneuvers that branded companies use to thwart the introduction of generic drugs.

Pollack noted with some optimism on Tuesday that lawmakers appear interested in examining pharmaceutical costs. Rep. Elijah E. Cummings (D-MD), now the chairman of the House Committee on Oversight and Reform, on Monday said he intends to launch one of the most wide-ranging investigations in decades into the prescription drug industry's pricing practices.

On Tuesday, the report from the hospital groups said that the average total drug spending per hospital admission increased by 18.5% between FY 2015 and FY 2017. Spending on outpatient drugs per admission rose by 28.7%, while inpatient drug spending per admission increased by 9.6% between FY 2015 and FY 2017. The groups stressed that these recent increases were additional to the 38% increase in inpatient drug spending between FY 2013 and FY 2015.

For hospitals, the rising pharmaceutical tab results in delaying needed construction and cutting back on services and even reducing staff, Pollack said.

The report also noted that there were large percentage increases (topping 80%) of unit price in several classes of widely used drugs, including those for anesthetics, parenteral solutions, and chemotherapy.

On the call with reporters, Kahn said that the price increases didn't appear linked to new innovations or expanded use of products. Instead, "we are talking here about the workhorses of hospital-patient care," Kahn said.

For this report, the researchers said they analyzed data collected through a survey sponsored by the AHA, the FAH, and the ASHP that targeted more than 4200 community hospitals (N = 4262). They also analyzed prescription drug purchasing data.

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