Inside America’s Drug Shortage

The first in a two-part series investigating why critical prescription drugs are in short supply in the U.S.

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Lynn Divers thought she had heard the worst of it when doctors told her that her daughter Alyssa had cancer. But the diagnosis was only the first in a series of emotional bombshells: Alyssa’s cancer, osteosarcoma, is rare, and in her case, aggressive, requiring a cocktail of different chemotherapy drugs. She didn’t respond well to the first regimen that doctors tried, which led to their adding three other punishing medications to her treatment. Because of the chemotherapy, Alyssa’s kidneys were in danger of failing, so she would need nightly infusions of phosphorous to keep her organs functioning.

Then came the truly heartbreaking news. In late February, when Divers called the hospital to confirm Alyssa’s upcoming chemotherapy treatment, the nurse informed her that there was a drug shortage. The hospital couldn’t be sure that there would be enough methotrexate — the cornerstone of therapy for some childhood cancers, including leukemia and osteosarcoma — to treat Alyssa, now 10. Divers was told she might have to reschedule the session; the hospital would let her know. “It made me sick to my stomach to hear that,” says Divers, a former chaplain from Palmyra, Va. “Alyssa was in treatment for over a year already, and the last thing you want to do is add unnecessary delays in treatment, which gives the cancer a chance to catch up.”

Divers explains that her daughter’s cancer doubles in tumor load every 34 days, “so you need to hit it again and again to eradicate it.”

The story was much the same for Rebecca Robinson, 37, a historical interpreter from Sturbridge, Mass., when she showed up for chemotherapy at the Dana Farber Cancer Center in Boston in July. Robinson had been diagnosed with angiosarcoma, a rare, blood-based soft-tissue cancer, in February 2010, and she had already had five rounds of chemotherapy with Doxil, a drug that seemed to be keeping her cancer in check. When she showed up at the hospital expecting a sixth dose, however, her doctor told her that there was no more Doxil available. There were alternatives, but her physician wasn’t sure if the other drugs would work as well or if Robinson would have bad reactions to them.

“I was just in shock,” says Robinson. “How is it possible that no one knew this was coming? It just seemed impossible that a fairly commonly prescribed drug, especially in cancer treatments where it’s important for people to get the doses of their medicine regularly, could run out.”

For patients like Alyssa and Robinson, the questions — but no satisfactory answers — keep coming. How did this happen? How could hundreds, perhaps thousands of cancer patients suddenly find themselves without the drug treatments that could save their lives? The shortfalls have forced major cancer centers to stop putting new patients on either therapy; Dana Farber is adding only a limited number of new patients on Doxil treatment because physicians aren’t confident they can continue to provide the patients with enough of the drug to complete a full course of treatment.

In February, the U.S. government stepped in to resolve the critical cancer-drug shortages, allowing shipments of drugs from India and Australia to fill the gap. The immediate threat for many cancer patients had passed, but as Dr. Hagop Kantarjian, chairman of the leukemia department at M.D. Anderson Cancer Center in Houston, says, “All of these [efforts] are Band-Aids, temporary measures that don’t address the key issues.”

The shortfalls aren’t limited to cancer drugs either — antibiotics, anesthetics, vaccines and even medications to treat ADHD are getting scarcer. According to the Food and Drug Administration (FDA), demand outstripped the supply of 178 drugs in 2010. The University of Utah Drug Information Service, which works with the American Society of Health System Pharmacists (ASHP) to track shortfalls, says the number was actually closer to 211. Last year, the ASHP and Utah group say, the number of drugs in short supply reached a record high of 267.

What accounts for the widespread shortfalls? And why now? The FDA says 54% of the shortages in 2010 were due to manufacturing problems that led to temporary or permanent plant shutdowns. Drugmakers, while acknowledging that quality-control issues contribute to supply interruptions, point the finger back at the FDA. The agency is responsible for overseeing drug manufacturing safety and quality, but it lacks adequate funding to hire reviewers to look at companies’ applications for new manufacturing facilities and processes or to send inspectors to existing plants in a timely way. Its bureaucracy adds to delays in approvals for new facilities or manufacturing processes, which can run a year long; meanwhile, lags in new drug approvals also continue, leaving the drug supply in jeopardy.

Others cite the government’s tight price controls on generic drugs — particularly those paid for with Medicare and Medicaid — which slim down profit margins for manufacturers. Neither the government nor drugmakers subscribe to this explanation, but the argument goes that diminishing profits motivate drugmakers to abandon generics in pursuit of more profitable, patented products and de-incentivizes them from investing in better manufacturing technologies for generics. Both problems mean production of important drugs can grind to a halt when the slightest quality issue or financial glitch disrupts the system.

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Congress has launched several investigations of the drug-shortage problem, and last year President Obama issued an Executive Order directing the FDA to expand its authority to police drug shortages, including requiring all manufacturers to notify the agency of impending shortages; currently the FDA can only compel companies to alert them if they are the sole maker of a drug they plan to discontinue.

The Obama Administration also instructed the FDA to report any violations of the government’s price controls on generics, which some critics believe will serve only to inflame the problem rather than resolve it.

Meanwhile, the nation’s drug supply is growing increasingly unstable, leaving an unprecedented number of patients vulnerable to lapses in care. “There’s little question that it has never been like this, not just with cancer drugs but with drug shortages in general,” says Dr. Michael Link, president of the American Society of Clinical Oncology. “We have had shortages before, but they have been intermittent, and never anything as extensive both in terms of the breadth of drugs affected and the depths of shortages and how long they lasted.”

So who’s right — the FDA or the industry? Or neither?

Follow the Money
“What’s driving the shortages is primarily the economics of drug supply,” says Kantarjian. “Anybody who tells you otherwise is not telling the truth.”

Kantarjian was directly affected by supply problems in December, when inventories of the chemotherapy drug cytarabine — a critical drug that can improve survival rates of patients with acute myeloid leukemia from 0% to 40% — began to shrink. When the shortfall was publicized, he and other cancer doctors soon received offers from distributors who appeared to have stockpiled stashes of the drug and were only too happy to sell them — for a price. They were asking $800 to $900 per gram for a medication that normally costs $16. “Nobody should profit from the lives of patients,” he says. “This price gouging is not illegal, but it is immoral.”

The distributors are not the real source of the drug shortage, however. They’re merely opportunists taking advantage of an unfortunate situation. Of the 178 drugs that the FDA reported in short supply in 2010, the majority were generics, meaning they don’t have patent protection and aren’t as profitable for the companies that make them. Many drugmakers say they are not letting their bottom line influence their focus on the manufacture of generic medications, but it’s hard to ignore the fact that the number of drug shortages has climbed in tandem with the number of generics on the market.

With cancer drugs, that’s not just coincidence, especially not after Congress changed the reimbursement scheme in 2005 for doctors administering chemo. To make chemotherapy treatments easier and more convenient for patients, doctors started offering the infusions in their own offices, instead of at a hospital, buying the drugs themselves and billing patients for them. In order to control escalating drug prices, the Medicare Modernization Act limited Medicare reimbursement to doctors to a 6% profit on these drugs, on top of the retail price of the medications. The problem was, the retail price reimbursed by Medicare lagged behind current market prices by about six months, which meant that reimbursements rates were lower than what doctors were paying to buy the drugs. That pushed some physicians to switch to offering their patients brand-name drugs, at higher prices.

The net effect? Fewer orders for generic drugs, which further shrank the market and lowered incentives for generic-drug makers to continue manufacturing such low-profit products. “In order to gain market share, companies underbid the market to get the business, and it’s a race to the bottom,” says Dr. Len Lichtenfeld, deputy chief medical officer for the American Cancer Society. “Whoever is the last company standing can’t charge enough to make a profit on the drug and to make needed investments to keep making the drug.”

That’s what may have happened with the methotrexate that Alyssa Divers depends on. Four domestic manufacturers produced the preservative-free injectable form of the drug: one company — Ben Venue Laboratories, one of the nation’s largest suppliers — decided to close its plant to make changes to satisfy the FDA after an inspection; another, which had 40% of the market share of the drug, lacked enough raw material to continue production; and a third company also started restricting its production. So by the beginning of the year, the supply of methotrexate had begun to plummet.

MORE: How to Stop the Counterfeit-Medicines Drug Trade

When Alyssa’s mother called her daughter’s nurse for a second time back in February, several days before her next scheduled infusion of methotrexate, the nurse still couldn’t assure her that Alyssa would get her dose. Even more worrisome for Divers was the fact that Alyssa already hasn’t responded to, or can’t tolerate, the side effects of two of the possible chemotherapy drugs that could fight her cancer. “If we can’t get methotrexate, that sends further terror into your heart,” she says.

Because the chemotherapy treatments have worn down Alyssa’s immune system, she has been hospitalized eight times for infections, and had a fracture in her leg that prevented her from walking for six months. “This kid has been through hell and back,” says Divers. “On top of everything else, to not have the medication she needs be available is devastating.”

Why Don’t Drug Shortages Happen in Other Countries?
The FDA maintains that price controls aren’t the problem and that its system for inspecting and certifying production facilities hasn’t changed. Rather, it’s the companies’ manufacturing issues that account for the majority of the drug shortfalls, the FDA says. Because most generics are older drugs that have been around for many years, they tend to be made in older facilities that have not kept up with the latest standards, making them more vulnerable to violations of FDA requirements. “The reality is that many of these facilities are getting older,” says Dr. Margaret Hamburg, the FDA’s commissioner. “These are not brand-new drugs and manufacturing facilities, so as the manufacturing facilities age, that creates new opportunities for quality and manufacturing concerns.”

The Generic Pharmaceutical Association (GPhA), however, says that in recent years, inspections have become harder to pass. “From the industry’s perspective, the FDA has been much more aggressive in their inspection formats over the past two to four years,” says David Gaugh, senior vice president for regulatory sciences at GPhA, who has had experience at a generic manufacturer.

Further, generic-drug makers say that once the FDA inspects a plant and leaves company officials with a list of items that don’t meet its specifications for quality and safety, the company has 15 days to respond with a plan to address the deficiencies. But the FDA does not always respond with a timely green light for the plan, leaving companies with difficult decisions to make about how much to invest in changes and whether to shut down production lines in the interim.

The good news is, that situation has been changing, and drugmakers say the FDA has recently become more open and communicative about efficiently addressing quality and manufacturing problems. But the ongoing buildup of shortages suggests that the problem goes deeper than sluggish communication during the inspection process.

Why, for example, are the shortages hitting certain kinds of drugs hardest, including those that have to be kept sterile and are made in injectable form? The FDA and drugmakers say it’s because these drugs are more complicated to make, and requirements for ensuring that they remain sterile, and free of any contaminants or foreign objects, are more stringent than they are for punching out pills.

Other observers point once again to the economics, noting that it costs more to manufacture sterile injectables — which include methotrexate and the flu vaccine — while their selling price remains relatively low. They also note that drug shortages are more common in the U.S. than in Europe or other countries, owing primarily to the smaller profit margin for generics here. In the U.K., for example, generic drugs often cost more than brand-name medications because the government health system is the primary purchaser of pharmaceuticals, and their negotiated price for brand drugs are far lower than they are in the U.S.

That also leads to the siphoning of generic drugs from the U.S. supply, which may also contribute to the shortfalls. “Because the profit margin is higher for generic drugs in Europe and outside the U.S., it’s rare to see a shortage in these drugs anywhere but here,” says Kantarjian.

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Sylvia Bartel, vice president of pharmacy at Dana Farber, says, “I have never seen shortages like this before, especially for drugs that have been around for a really long time that we would not have thought were difficult to obtain. I think a lot of it does have to do with the economics around generics.”

The FDA is confident that it has resolved the immediate emergency around the shortages of methotrexate and Doxil (a brand-name medicine). But will it be enough?

Stay tuned for Part 2 of Healthland’s investigation into drug shortages: “Scrambling for a Solution”

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