Drug Shortages Raise Costs, Put Patients at Risk

But these costs are only the tip of the iceberg. Along with price increases, there are also indirect costs associated with shortages. Responding to shortages can divert resources away from patient care. The cost in time and money can be especially high when providers face shortages in drugs needed to respond to new treatment guidelines or provide care to victims of natural and other catastrophes where disease outbreaks may threaten large numbers of people.

No one cause explains drug shortages. Rather, the problem is rooted in a complex set of factors such as consolidation of prescription drug manufacturers; unpredictable problems in manufacturing, including safety issues that temporarily or permanently shut down manufacturing; and interruptions of supply in the ingredients used to produce the drug. In fact, an estimated 80 percent of the raw materials used in pharmaceuticals come from foreign nations such as China or India, both of which have less than ideal safety records that have resulted in product contamination and disruptions of supply. Another significant factor is the economics of pharmaceuticals. Especially for generics, manufacturers may decide to cease production if they find that they are making little or no profit.

No easy solution exists to address drug shortages. Although the FDA can address some of the problem through the regulatory process, it cannot order the production of more drugs, nor can it order public reporting of shortages. In some cases, the FDA may engage in discussions with manufacturers to encourage additional sources of supply, provide assistance on manufacturing practices to manufacturers experiencing manufacturing difficulties or expedited drug approvals. In rare cases, the FDA has approved use of nonlicensed drugs from overseas that are similar to the shortage drugs.

Clearly, new measures are needed to address drug shortages. Premier is working with our member health systems to provide them with ongoing information to help ward off shortages before they occur. In the event that hospitals experience a shortage, we advise them on reputable sources from which they should seek supplies. We are also working with manufacturers to provide information based on some of our members' drug needs.