In a recent report, the FDA has warned of significant drug shortages in the U.S. These shortages are affecting approximately 130 drugs that are commonly used in the treatment of medical conditions or used in surgical procedures. The report titled “Drug Shortages – Root Causes and Potential Solutions 2019” provides some compelling insights and warnings for supply chain executives.
The FDA report states that “56% of hospitals reported they had changed patient care or delayed therapy in light of drug shortages”. The report also states: “Having high quality quantitative data would help determine which strategies or combination of thereof would prove most useful in addressing the problem”.
In a recent NBC news broadcast a lead story addressed the drug shortage by referring to a meeting of the Emergency Preparedness Team held last week at Massachusetts General Hospital. One of the physician’s in attendance at the meeting stated that this was the fourth time in two years that they have had to activate the Emergency Preparedness Team due to drug shortages.
The pharmaceutical supply chain has multiple players. This includes the manufacturer, distributor, pharmacy benefits manager, hospitals, pharmacies, physicians (who provide the scripts) and of course consumers. Assuming manufacturers are motivated to produce these pharmaceuticals, what can be contributing to these increasing shortages?
I had a debate with Joe Yacura about this, and his thought is that poor data quality or data governance contributed to this crisis. He asks the questions of whether pharmaceutical companies, distributors or hospitals/[physicians changed their systems, migrated data bases, changed their product codes, changed their ordering or scheduling systems, etc, such that data is being lost in the system.
I have another possible explanation. I spoke to a panel of executives at a recent Resilinc conference, and the panelists included a PBM, as well as a manufacturer. They suggested that the drugs most impacted by shortages are generic drugs, which are often produced in low cost countries. Generics sell for literally pennies a pill, and the profit margins are very low for these drugs. As a result, finding reliable suppliers is tough, and in many cases, capacity allocated to these “commodity” items may be limited, with suppliers not seeing a return on their capital investments. If we want to alleviate drug shortages, maybe we need to be paying more for our generic medicines.
Given the severity of this crisis, Joe and I agreed that a complete supply chain data audit could help identify the specific drugs that are facing shortages, and also identify any concern regarding poor data quality or data governance from contributing from this crisis. In the meantime, consumers may start hoarding their generic medicine!