Economic Analysis of the Causes of Drug Shortages. Background


The prescription drug and vaccine market is characterized by sporadic shortages of individual drugs and occasional periods during which many drugs in a class are in shortage.  In the early 2000s, for example, influenza vaccine was in short supply for an extended period.  In recent months, the issue of drug shortages in the U.S. has once again received increasing prominence.  The Food and Drug Administration (FDA) reports that, in 2010, there were 178 drug shortages recorded at the Agency.  Currently, shortages are concentrated in the area of sterile injectable drugs, 132 of which are now in shortage[1].  In 2011, FDA has continued to see an increasing number of shortages, especially those involving older sterile injectable drugs, including cancer drugs, anesthetics for surgery, drugs for emergency medicine, and electrolytes for intravenous feeding.

Drug shortages have been having significant impacts on healthcare providers and patients.  In June, 2011, drug shortage surveys were released by American Society of Health-System Pharmacists (ASHP) and the American Hospital Association (AHA).  ASHP surveyed 353 directors of pharmacy in U.S. hospitals and estimated that annual labor costs to manage shortages are approximately $216 million nationwide.  AHA found that almost 100 percent of 820 hospitals surveyed had experienced at least one drug shortage in the past six months and nearly half experienced 21 or more shortages in this period[2].  In November, 2010, the Institute for Safe Medication Practices (ISMP) presented results of a July-September 2010 survey of 1,800 healthcare practitioners (68 percent pharmacists).  A majority reported problems with drug shortages, including the use of less desirable, often more expensive alternatives and the potential for medication errors and poor patient outcomes[3].  FDA works closely with industry, health care providers, and patients to prevent and mitigate shortages of “medically necessary” medicines — the Drug Shortage Program (DSP) at FDA considers to be used to treat or prevent a serious disease or medical condition for which there is no alternative medicine available in adequate supply.

This report examines the underlying factors that lead to periods of shortage in the prescription drug market, and particularly the underlying market factors that have contributed to the current shortages in the area of sterile injectable oncology drugs.  It complements the accompanying FDA report, “A Review of FDA’s Approach to Medical Product Shortages”, which focuses on the FDA’s role in monitoring and responding to shortages. []

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