The International Pharmaceutical Federation defines a medicine shortage as ‘a drug supply issue requiring a change. It impacts patient care and requires the use of an alternative agent’. While medicines shortages are not a new issue, Australian hospital pharmacies have endured an unprecedented burden of drug supply shortages in the past 12 months.

In the USA, new drug shortages almost quadrupled from 70 in 2006 to 267 in 2011. The total active medicine shortages rose from 152 in 2010 to 300 in 2013. More recently in Australia, the Society of Hospital Pharmacists of Australia (SHPA) identified 365 medicine shortages in its April 2017 survey entitled ‘Medicines Shortages Prevalence Study‘. Similar to the USA, most active shortages in Australia are in antimicrobials (20%), analgesia/anaesthetics (12%), chemotherapy (9.5%), cardiovascular medicines (10%), endocrinology (10%), and central nervous system medicine (9%).

In 2010, Premier Healthcare Alliance in the United States estimated that drug shortages cost US hospitals US$416 million, which consisted of US$200 million to purchase costly alternatives and US$216 million in extra procurement workload. Although such data is not available in Australia, the recent survey conducted by the SHPA has pointed out that to manage drug shortages issues, hospital pharmacists and pharmacy support staff are spending a significant amount of extra working hours away from clinical pharmacy services. Hospitals’ pharmaceutical budgets are also consistently elevated as they are forced to purchase the more expensive and sometimes less effective alternatives.

Drug shortages occur when a range of interconnected factors disrupt the balance in drug supply and demand. This article examines some of the most common causes of drug shortages.

Factors affecting drug supply

Manufacturing difficulties
Some of the important drug manufacturing variables that determine the ability of drug companies to increase production include the age of manufacturing hardware, manufacturing technologies and complexities, the size of the manufacturing facilities, funding availability, and formulation changes. Vaccines and antibiotics, for example, have complex and time-consuming manufacturing processes which render these drugs more vulnerable to supply interruption. Many drug manufacturers also use the same production equipment for multiple drugs, limiting their ability to upscale production of one drug without affecting the production of other drugs.

Shortage of raw materials
India and China have recently emerged as two of the biggest global suppliers of pharmaceutical raw materials. Often, multiple drug manufacturers are reliant on a single supplier of raw materials. This reliance on very few sources increases the risk of widespread drug shortages when one supplier experiences delays or discontinues production. The complex global supply chain can be broken by several factors including ‘armed conflicts, political upheaval, trade disputes, animal diseases, degradation or contamination during transport, climate or other environmental conditions, or a decreased crop yield of plants that are a source of raw materials.’

A major drug recall, whether voluntary or mandatory, can rapidly wipe out drug supply from the market. This is especially true when there are no alternative brands available. Recalls usually affect specific batches of a drug and may be due to a variety of reasons including product safety or quality concerns, legislative compliance, manufacturing errors, etc.

Act of God
Stockpiles of finished drug products may be destroyed by natural disasters such as fires, floods, or hurricanes. If manufacturing plants are damaged or destroyed by an act of God, long-term drug shortages can result. In late 2016, the supply of Marcain® with fentanyl solution was disrupted for at least six months as its manufacturing plant in Europe was destroyed by fire.

Business Decisions
Manufacturer’s business decisions can adversely affect drug supply. Manufacturers may scale down production of certain drugs temporarily or permanently or discontinue supply altogether.  These decisions may be influenced by diminishing profit margins, patent expiration, increased competition among generic products, projected market demand, drug approval status, stricter regulatory requirements, unforeseen manufacturing problems, product recalls, mergers and acquisitions.

Diminishing profit margins are affecting many drug manufacturers, especially generic drug companies. The profitability of generic medications is generally low, thanks to fierce competition in the generic market. To make the matter worse, limited health budgets are driving generic drug prices down globally, threatening the ability of generic drug companies to keep their manufacturing plants running. In Australia, the Pharmaceutical Benefits Scheme (PBS) price reductions agreement has made multiple generic products unprofitable, causing some manufacturers to exit the market. This has left the remaining manufacturers unable to meet the increased demand. Manufacturers have recently been campaigning for price increases to maintain product sustainability, with limited success.

A recent boom in mergers and acquisitions (M&A) activity among pharmaceutical giants has fueled astronomical growth among a handful of pharmaceutical companies. Their massive growth in revenue and market shares via M&A deals are made possible via slashing overlapping pharmaceutical divisions, consolidating manufacturing plants, multiplication of drug distribution scale, and more importantly, a rapid boost in share prices. The major drawbacks of such activities are the reduction in the number of drug manufacturing plants and thinning of buffer stock in the supply chain. This can cause supply interruptions and in some cases, drug discontinuations. Mega M&A deals such as Novartis’ part acquisition deal with GSK in 2014, Pfizer’s acquisition of Hospira in 2015, Actavis’ acquisition of Allergan in 2015, and Allergan’s divestiture of its global generic business to Teva Pharmaceuticals in 2016 may be partially linked to the recent increase in the frequency of drug shortages.

Recent shortages of important antimicrobial injectables including metronidazole, vancomycin, acyclovir, and fluconazole are likely the direct results of the factors above.

Procurement practices
The common use of “just-in-time” procurement practice by drug manufacturers, distributors, pharmacies, and health facilities improves cash flow and minimises unnecessary stock holding. Although advances in transportation and communication technologies have allowed this practice to be capitalised, diminishing buffer stockpile has weakened our defense against drug shortages.

Other procurement practices that may contribute to drug shortages include stockpiling in advance of price increases, withholding drug orders just before the next cycle of PBS price reductions, and stock hoarding in response to shortage announcements.

Increased Demand
Sudden demand changes or fluctuations can lead to medicines shortages. Some of the common causes of increased drug demand include approval of a new indication for an old drug, changes in therapeutic guidelines or local treatment protocols, spread of infections, natural disasters, and marketing tactics.

The recent shortage of Bexsero®, a meningococcal B vaccine, began in mid-2016. Locally, this shortage was mainly caused by increased awareness of the dangers of meningococcal B disease in babies, children, and young adults. Both public and privately funded marketing campaigns have alerted Australian parents of the importance of Bexsero® vaccination. Globally, this shortage was amplified by clinical recommendations for the routine use of Bexsero® in many European countries in 2014. This increased demand was further compounded by the United Kingdom’s decision in 2015 to include Bexsero® as part of their national immunisation program.

The current shortage of fentanyl for injection (a tremendously potent opioid narcotic), has a rather different story. In 2016, the Food and Drug Administration (FDA) in the USA announced a national shortage of fentanyl injection, allegedly attributed to increased illegal demand in the black market. This shortage has since hit Australia in early 2017.

Recommendations from health authorities

Advanced notifications by drug manufacturers and systematic drug shortage mitigation strategies can often help minimise or even avert the risk of drug shortages. Available data from the USA suggests that early drug shortage notifications helped the FDA avert 38 drug shortages in 2010. Major health authorities, including the World Health Organisation, International Pharmaceutical Federation, Canadian Pharmacists Association, and the Society of Hospital Pharmacists of Australia have all come to a consensus that the frequency of drug shortage notifications from manufacturers is low. The SHPA recently reported 365 drug shortages, only 54 of which were listed on the Therapeutic Goods Administration’s website. A similar trend of under-reporting is observed in the USA. These major health authorities have, therefore, recommended mandatory advanced notification of current or impending shortages by drug manufacturers.


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