Navigating the Drug Shortage Crisis in American Healthcare

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Navigating the Drug Shortage Crisis in American
Healthcare

• Coleen A. Cherici, RPh, MBADirector of Pharmacy
  Consulting
• FailuretoSupply_at_premierinc.com

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Drug Shortages - National Crisis in Healthcare
89 Drug Shortages Reported in First Quarter of
2011 by University of Utah Drug Information
Service, greatly exceeds the rate experienced in
2010
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Objectives

• Describe the major environmental and economic
  root causes of drug shortages
• Describe the major clinical and operations impact
  of drug shortages
• Describe the key strategies for avoiding a crisis
  mode when dealing with drug shortages
• Describe best practice in avoiding drug
  misadventures that might be caused by drug
  shortages

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The Problem

• Multifaceted industry wide problem with many root
  causes
• Member operations are impacted clinically and
  financially
• In 2010 77 of drug shortages - injectable drugs
• Premier Survey (January to February 2010)
• 311 acute care respondents
• 90 affected patient care
• 82 delayed or caused cancellation in patient
  care intervention
• 100 resulted in a higher cost of drug cost and
  staffing
• Institute of Safe Medication Practices (ISMP)
  Survey (July to Sept 2010)
• Large survey looking at risk to patient care and
  safety
• American Hospital Association (AHA) July 2011
• Demonstrates that the Premier data collected 6
  months accurately quantified the impact to acute
  care
• Major impact continues to worsen

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Drug Shortages - National Crisis in
HealthcareTop Categories by Dollar Impact
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Quantify Impact on Pharmacy Expense
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Quantify Financial Impact of Drug Shortages

• Most respondents have not measured financial
  Impact
• Only 19 hospitals in the survey were able to
  quantify dollars spent as result of drug
  shortages
• Those that could did not have a common
  methodology
• A review of the Premier data allowed for an
  extrapolation of cost for generic drugs that had
  a replacement substitute in the distribution
  channels
• Cost to ALL Hospitals in the US is 200 Million
  in 2010
• This cost does not consider the expense
  associated with clinical and operations labor
  needed to control the work associated with a load
  increase needed to safely control the shortage

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The Causes

• Raw material quality issues
• 42 of sterile injectable drug shortages in 2010
• 9 raw material Active Pharmaceutical Ingredient
  (API) concern
• 5 manufacturing plant shutdown due to quality
  issues
• Manufacturer economic issues
• Financial decisions to discontinue products and
  limit volume of manufacturing volume in
  particular low margin products
• 18 of shortages in 2010 were due to product line
  discontinuation
• FDA enforcement of GMP and Plant inspections
• The Nation expects high quality pharmaceuticals
• Cost of maintaining requirements cuts into
  product margins
• Unapproved Drug Initiative (2006) mandates
  submission of a New Drug Application containing
  clinical trial data to prove the safety and
  efficacy of products that were brought to market
  prior to more stringent approval processes

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The Causes

• Just-In-Time Inventory Processes
• Results in leaner inventory levels
• All Supply Chain points for reserve are affected
• Manufactured product runs
• Distributor/wholesaler inventory on hand
• End User inventory on hand
• API License ownership
• Gray Market Supply Intrusions
• Drugs in short supply emerge in the gray market
• Costs are tracked at 100 to 1000 times the normal
  price
• Supply availability when approved distributors
  have no stock
• Change in Drug Use Patterns
• Shortage for one drug may cause anothers demand
  to increase
• Shift in demand is not picked up by other
  manufacturers
• 4 of 2010 shortages were as a result of this
  concern
• Hoarding by end users

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How Can Premier Help Members Navigate Through the
Drug Shortage Crisis?

• What is Premier doing about this growing problem?
• Review data on backorders by supplier and drug
• Published backorder status reports in Pharmacy
  Weekly Update
• PharmacyConnect Website on Drug Shortages
• Resource contracts when possible to manufacturers
  that can supply
• Premier and Members meeting with and other
  Professional Organizations
• Premier Research Survey and Navigating the Drug
  Shortage Crisis Published in Economic Outlook
  Spring 2011
• Study the Unauthorized Gray Market that is
  proliferating as result of the deficiencies in
  the supply chain
• Develop tools to measure expense and Impact on
  Pharmacy Expense
• Development of an Advocacy Platform on Drug
  Shortages
• Support of S 296
• Support GAO investigation
• Help to Share Knowledge and Just-inTime Solutions