Drug Shortages in the US-Solutions

 Acute shortages in prescription drugs in the United States are deferring and changing treatment for everything from cancer to antibiotics. Medical centers have succumbed to warehousing supplies for fear of running out. Global manufacturing and distribution centers for drugs have not kept up with demand. Pharmaceutical companies indicate there is not enough money in generic drugs to economically afford to manufacture them. Policymakers also blame the gatekeepers, the pharmacy group purchasing organizations or PBM’s, which exert outsize control over the supply of drugs by depressing the price for large employer groups. Group purchasing organizations are generally located outside the U.S. and are not subject to national regulations. Group purchasing organizations are designed to leverage volume to lower prices. Some pharmacy benefit management groups have created their own group purchasing entities. In general, PBM’s dictate which drugs the insurance plan will cover, hence driving utilization, but not necessarily the public price of drugs, whereas GPOs are all about price reduction. Clinicians and pharmaceutical companies indicate this is restricting the availability of life saving medications.

Companies that Control Drug Pricing and Supply in the US

The largest pharmacy benefit managers (PBM’s) are:

 Caremark-CVS

Express Scripts-Cigna

Optum-United Healthcare

According to the Drug Channels web site, the largest drug group purchasing organizations are:

Ascent Health Services-based in Switzerland but licensed as an LLC in Delaware. Cigna, Kroger, and Prime Therapeutics, own stakes in this company. (Adam Fein, 2023)

Emisar Pharma Services is part of United Healthcare’s Optum, headquarter in Ireland and an LLC in Delaware.

Zinc Health Services, owned by CVS is US based

 What Can We Do

Senator Ron Wyden, Chairman of the Senate Finance Committee convened a hearing on drug shortages December 5, 2023. Findings included the recommendation that Congress reform the Medicare Drug Rebate Program which encourages these large drug purchasing entities to capture up to 13% of drug costs in the form of rebates. The rebates which were meant to lower the cost of drugs are not necessarily shared with customers, instead add to corporate profits. Reform ideas include mandating the drug companies repay rebates if they raise prices faster than inflation and exempting some sterile injectables from the rebate program, which could increase supply. (Hunt, 2023) Both federal and state governments are reviewing anti-trust behavior for price collusion for these behemoth drug purchasing entities.

 The Government Accountability Agency, a nonpartisan analyst entity of the federal government convened a group of pharmaceutical company and other industry experts to discuss the dearth of generic drugs and potential causes within the FDA regulation. (Government Accountability Office, 2023)

Findings include:

1. Drug maker reformulations of drugs with minor modifications extend patents, keeping prices higher, and restricting the availability of generic drugs.

2. FDA’s rules regarding labeling also prevent generic drug manufacturers from entering the US market, even though their drugs are safe and used in other markets.

3. Half of the pharmaceutical manufacturers said the FDA needs to take a more active role in tracking generic drug-device combinations, because brand name sponsors are not required to submit information on identifying which patents are related to the device part of a drug-device combination product (example-insulin pump).

4. Half of the stakeholders indicated confusion or unnecessary delays in market entry are due to the overly broad and ambiguous codes for labeling (page 19 of the GAO report) and the FDA agreed with this conclusion.

5. Two of the participants felt that brand name sponsors may delay entry of generic drug device combination products by shifting active ingredients from older products into newer ones with patent extensions, and in some cases, remove their older more affordable products from the marketplace altogether. A literature review found that this practice led to 28 years of extended patent protection on inhalers from 1986 to 2020, which is another form of price gouging.

6. Many of the conference participants expressed concern that the FDA was outgunned by the legal resources of the pharmaceutical companies. There has not been an FDA rule change on drug-device combination products since 2016.

The American Medical Association has recently announced its support for government or a greater role for nonprofits to manufacture drugs. Of course, this would not work for the biologics, which are subject to trademark protection, but it would work for generic drugs. The federal government already provides most of the funding for initial research on drug development through National Institutes of Health grants to universities and health centers. The private market approach to supply and demand is failing at the cost of human lives. It is well known people died during Covid because they could not obtain their infusions or other drugs, but this phenomenon is still ongoing. A recent New York Times article cited severe shortages in chemotherapy even at well-funded medical centers like the Mayo Clinic. (Jewitt, 2023).

 Much of the drug supplies for the US and other nations are manufactured in India, due to consolidation and sheer economics. The Food and Drug Administration does inspect pharmaceutical manufacturing facilities offshore and in February 2023, shortages of supplies in generic drugs were directly related to a surprise FDA inspection that found numerous failures at Intas Pharmaceuticals. (Jewitt, 2023)

 The US successfully created incentives for large pharmaceutical manufacturing companies in the country to create the Covid vaccines, because the national government quickly provided funding for a national emergency. It is time we establish a government run generic drug manufacturing entity to assure supply of essential medicines for our residents. As a nation we must quit running the provision of health care like a lottery, as winner-take-all for the lucky ones and low or no treatment for others. This is no way to run a healthcare system.

 And this is the healthpolicymaven signing off wishing you a healthy new year and remember, don’t sign generic releases when you agree to inpatient medical procedures, do stipulate that for which you agree and that which you decline. Your health is after all, up to you.

This column has been in continuous publication since 2007 and is written by Roberta E. Winter, an independent healthcare analyst and journalist who accepts no money from any sector of US healthcare. Opinions are strictly her own and supported by full citations. She is the author of Unraveling U.S. Healthcare-A Personal Guide, published by Rowman & Littlefield in 2013.

https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

References

Adam Fein, P. (2023, May 24). Five (or Maybe Six?) Reasons that the Largest PBMs Operate Group Purchasing Organizations. Retrieved from Drug Channels: https://www.drugchannels.net/2023/05/five-or-maybe-six-reasons-that-largest.html

Government Accountability Office. (2023, March). Generic Drugs-Stakeholder Views on Improving FDA's Information on Patents. doi:GAO 43-105477

Hunt, S. (2023, December 8). WASHINGTON HIGHLIGHTS-Senate Finance Committee Holds Hearing Examning Drug Shortages. Retrieved from AAMC.org: https://www.aamc.org/advocacy-policy/washington-highlights/senate-finance-committee-holds-hearing-examining-drug-shortages

Jewitt, C. (2023). "I'm Scared to Death,"Behind the Shortage Keeping Cancer Patients from Chemo. New York City: The New York Times. Retrieved 12 19, 2023, from https://www.nytimes.com/2023/12/19/health/cancer-drug-shortage.html