'Broken Marketplace' Behind Ongoing Drug Shortages, FDA Says

Megan Brooks

October 29, 2019

A report released today by the US Food and Drug Administration (FDA) identifies root causes behind ongoing drug shortages in the United States and provides recommendations intended to tackle the problem.

Drug shortages have "devastating effects on patients," Ned Sharpless, MD, acting FDA commissioner, said during a media briefing. Despite efforts to prevent and stop drug shortages, they continue to occur and persist, he noted.

"The root causes of shortages involve economic factors that are driven by both private- and public-sector decision-making. This means that the types of enduring solutions proposed in the report will require multi-stakeholder efforts and rethinking business practices throughout all sectors of the health care system," Sharpless and Janet Woodcock, MD, director of the FDA's Center for Drug Evaluation and Research, said in a statement.

Last year, at the request of Congress, the FDA convened an interagency Drug Shortages Task Force to study the problem. The task force analyzed 163 drugs in short supply from 2013 to 2017 and compared them with similar drugs in adequate supply.

Of the 163 drugs in the sample, 63% were sterile injectables and 67% were drugs that have a generic version on the market. They were also older drugs, with a median time since first approval of almost 35 years, Randall Lutter, senior advisor in the FDA's office of the commissioner, said during the briefing.

Three Root Causes

In the report, Drug Shortages: Root Causes and Potential Solutions, the task force highlights three root causes of drug shortages:

1. Lack of incentives for manufacturers to produce less profitable drugs. Drugs in short supply are likely to be relatively cheap and financially unattractive to companies, the task force says. Manufacturers may also stop production of drugs before a shortage for commercial reasons, such as loss of profitability.

2. The market does not recognize and reward manufacturers for "mature quality systems" that focus on continuous improvement and early detection of supply-chain issues.

3. Logistical and regulatory challenges make it difficult for the market to recover from a disruption. Shortages often happened as a result of disruption in supply. During shortages, production typically does not increase enough to restore supply to preshortage levels, the report notes.

Taken together, this suggests a "broken marketplace," Sharpless said. Absent major changes to this marketplace, it is likely that drug shortages will continue to persist, he warned.


The task force made three recommendations to address drug shortages:

1. Create a shared understanding of the impact of drug shortages on patients and the contracting practices that may contribute to shortages. "Currently, there is little private or public sector effort to collect and analyze comprehensive information to characterize shortages, quantify their effects, or closely observe the contracting practices that may be driving them," Sharpless and Woodcock said in the statement.

"More systematic and transparent study of current contracting practices is needed to support development of model contracts designed to promote reliable access to safe, effective, and affordable drugs," they add.

2. Develop a rating system to incentivize drug manufacturers to invest in quality management maturity for their facilities. "This effort would introduce transparency into the market, and provide companies committed to quality management maturity with a competitive advantage, potentially enabling them to obtain sustainable prices as well as grow market share," Sharpless and Woodcock said.

3. Promote sustainable private sector contracts (eg, with payers, purchasers, and group purchasing organizations) to make sure there is a reliable supply of medically important drugs. "This may include providing financial incentives to make certain that manufacturers, especially of older generic drugs, earn sustainable returns on their products," Sharpless and Woodcock said.

"This could be done through several different mechanisms, such as paying higher prices for drugs manufactured at top-rated facilities, requiring a certain quality maturity rating as a condition of contracting, or guaranteeing purchase of a set volume of products from sites achieving a certain quality maturity rating," they point out.

Sharpless told the briefing that several legislative proposals and planned FDA initiatives are focused on preventing future supply disruptions that lead to shortages. These include new requests in the president's fiscal year 2020 budget and new guidance that the agency intends to release by year's end.

International action is also necessary to combat drug shortages, the task force concluded.

The International Council for Harmonisation is finalizing a guideline that will provide opportunities for regulatory flexibility in making postapproval changes to the product or its manufacturing process.

"Global implementation of this guideline, once finalized, could facilitate the efforts of manufacturers for the international market who wish to modernize processes and equipment to avoid potential disruptions, but have found the regulatory landscapes of different countries to pose a financial burden," Sharpless and Woodcock said.

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