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November 30, 2022

2022 Q4 Rx Newsletter: Drug Supply Shortages

Cheap and effective drugs, but in increasingly short supply.

One of the longstanding challenges of the US healthcare system is the continuing risk of various drug shortages. While most patients are unlikely to encounter one, for those impacted the effects can be devastating.

Drug Shortage Trends

Currently, there are two primary categories of drugs in shortage. The first and largest being drugs that are being discontinued by manufacturers. This is primarily caused by low profit margins on drug lines, of which there are currently 261 according to the FDA. The second drug shortage category are those drugs impacted by supply chain challenges, unexpected increases in demand, or manufacturing problems.

According to historical data provided by the FDA,

  • As of October 2022, 165 drugs have been reported to have a supply shortage. This is double the amount of reported drug shortages for 2021.1
  • While COVID-19 did cause significant disruption in drug supply chains, there is still notable unrelated COVID annual drug shortages being reported and averages to about 30-50 new drugs per year.1
  • Through the executive intervention of the FDA and other partner agencies, an additional 317 drug shortages were prevented in 2021.1

Surprisingly, the primary drugs typically reported to be in shortage are not high cost, orphan condition drugs, but are instead low cost, generic therapeutics.

“Economic Forces are the Root Causes of Drug Shortages”1

According to the FDA, the primary driver of drug shortages in the US are business decisions revolving around economic forces.

  • Due to the enormous price pressure, referred to generic manufacturers as the “race to the bottom” on pricing, there is little to no incentive to continue to manufacture older, generic, low-cost therapies.
    • Between 2013 and 2017, 163 drugs in shortage were sampled by the FDA. They found that the median per dose price was $8.73 for all shortage drugs.2
    • Injectables reflect the higher end of the spectrum with a median per dose price of $11.05.2
    • Orally administered drugs had a significantly lower median with $2.27 per dose ($68 for a 30 day supply).2

Unfortunately, this low-cost alternative shortage trend does not appear to be easing anytime soon. Until the incentive and pricing structures change, the FDA’s ability to intervene via executive authority will continue to be the primary impediment against drug shortages.

Contact us to learn more about how drug shortages may or may not affect you and your business.

 

*Orphan condition drugs are defined as drugs used to treat rare diseases that affect less than 200,000 people in the United States, making sponsors reluctant to develop such drugs under usual marketing conditions since these drugs are not profitable to produce without government assistance.3

Sources:

  1. “Drug Shortages for calendar Year 2021,” Food and Drug Administration, accessed October 18, 2022, https://www.fda.gov/media/159302/download
  2. “2019 Drug Shortages Report,” Food and Drug Administration, accessed October 18, 2022, https://www.fda.gov/media/131130/download
  3. “About Orphan Drugs,” Orphanet, accessed November 30, 2022, https://www.orpha.net/consor/cgi-bin/Education_AboutOrphanDrugs.php?lng=EN