FDA Releases Report on Drug Shortages and Encourages Manufacturer Quality Rating System

The Food and Drug Administration (“FDA”) Drug Shortages Task Force recently released a report, entitled Drug Shortages: Root Causes and Potential Solutions, which includes some suggestions about how to address drug shortages, but ultimately concludes that more study is needed.

The FDA gathered data from stakeholders, published research, and an economic analysis of market conditions affecting drug shortages, and identified the following three “root causes” for drug shortages:

Manufacturers lack of incentives to produce less profitable drugs;

The market does not recognize and reward manufacturers for “mature quality systems” that focus on continuous improvement and early detection of supply chain issues; and

Logistical and regulatory challenges make it difficult for the market to recover from disruption.

The report also provided the following recommendations to address shortages:

Create a shared understanding of the impact of drug shortages on patients, and the contracting practices that may contribute to shortages;

Develop a rating system to incentivize manufacturers to invest in quality management maturity for their facilities; and

Promote sustainable private sector contracts (e.g., wi05th payers, purchasers and group purchasing organizations) to ensure a reliable supply of medically important drugs.

The report concludes that “there is no simple solution for addressing drug shortages,” and that the “root causes of shortages involves economic factors that are driven by both private and public sector decision making.” The report also indicates that further study is needed as “[a] fuller characterization of the true costs of shortages and more comprehensive and reliable information about their effects on patients and the health care system would be an important component, as they would better enable purchasers to factor the costs of shortages into their buying decisions.”

Separately, Janet Woodcock, MD, Director of the FDA’s Center for Drug Evaluation and Research (“CDER”) proposed a quality rating system for manufacturers that would rate their “ability to reliably make the product in sufficient quantities and with sufficient speed to ensure that supply consistently meets demand over sustained periods of time.” Woodcock notes that, in the modern pharmaceutical market, purchasers focus solely on price. However, this proposed quality rating system would allow purchasers also to choose a manufacturer based on reliability of production. Thus, “purchasers … might be willing to pay more for a medicine from a manufacturer with a proven track record of prompt and regular delivery of product, in order to avoid shortages.” This in turn would provide an incentive to manufacturers to establish mature quality management capabilities.

It remains to be seen if Woodcock’s proposal will get any traction. The industry has generally not been receptive to FDA proposals regarding quality metrics programs.