Once again, a certain pharmaceutical and drug supply chain has become highly visible for shortages of critical life-saving medicine. This time, the causes relate to natural disaster, federal government response, and industry-wide manufacturing and distribution practices.

In October of 2017, Supply Chain Matters alerted our readers to the initial pharmaceutical and drug supply chain disruption impacts due to the devastating effects of Hurricane Maria on the island of Puerto Rico. Readers will likely recall that the island’s total electrical supply infrastructure was literally destroyed by the hurricane which struck in September.

Baxter International was one of the first drug manufacturers to communicate to impacted customers that “multiple production delays” were delaying its ability to restore supply of two medicines that were already characterized as in a constrained supply condition.  The products were noted as the intravenous fluids used to treat critical hospital patients. The drug manufacturer indicated that it was still assessing hurricane-related damage to its production facilities in Puerto Rico.

In an update blog published in late October, we updated our readers to the fact that upwards of 23 drug manufacturing facilities in Puerto Rico were dependent on reliable supply of electrical power and most all were still running on back-up, diesel-powered generators with limited production capability. Once more, workers were still reeling from the effects of the catastrophic storm on their own residences and families.

We again warned that as in many prior cases of supply chain disruption, the real effects of such incidents are not evident until hours, days, or weeks after the initial event, when existing supply networks are scrutinized and analyzed for component and production supply impacts. Other subsequent events that spike product demand also add to the impacts. In late October, our estimate was that the industry will begin to truly understand the full impacts of critical shortages by the latter part of November.

Such impacts have now come to the light of major business media.

In a front-page article, The Wall Street Journal reports that the U.S. is facing a nationwide shortage of intravenous bags just as the large-scale influenza outbreaks have spread across the country.  Some hospitals reportedly have very limited supply and now worry on the ability to handle an added influx of sick patients requiring Saline IV infusion treatment. Some hospitals are now reportedly administering medications via syringes instead if IV bags, which is likely very uncomfortable for patients, and more time-consuming to administer on the part of care-givers.

To no surprise to this platform, the principle supplier was noted as Baxter International and the supply disruption was attributed back to the hurricane devastation on Puerto Rico. Baxter indicated to the WSJ that two of its IV bag production facilities are now connected to the electrical grid, but that power is “intermittent” requiring additional diesel backup generator assistance. Baxter indicated an intent to return to more normal supply levels “in the coming weeks.” Meanwhile, as always tends to be the case in these circumstances. Certain hospitals and healthcare institutions becomes hoarders, as do unscrupulous operators.

The WSJ added another perspective to the ongoing disruption, namely that shortages of the IV solutions have persisted on and off for quite some time. Reported was that Baxter made an SEC filing in May suggesting that the U.S. Justice Department was investigating possible collusion among manufacturers of intravenous solutions, and whether communications among manufacturers had any effects on pricing or product shortages.

Regarding the ongoing critical shortages, Federal Drug Administration(FDA) commissioner Scott Gottlieb has indicated that the current shortages will improve over the next two months.

Major healthcare associations and industry groups are also urging the U.S. Congress to investigate whether drug manufacturers should be allowed to produce any single medication in a single plant, and whether more manufacturers should be allowed to produce specific critical high-volume drug supplies such as IV Saline solutions.

Since our inception, this blog has highlighted many high visibility nationwide drug shortages of critical life-saving medications. Frankly, we have heard this chorus before, in the shortage crisis involving the life-saving IV drug Heparin in 2008-2009, and in various life-saving drugs administered to treat cancer conditions since.

The causes were varied but the origins always stemmed from a major disruption in supply, either by choice or by uncontrolled events. In the latest case of IV Saline, it is an obvious combination of circumstances.  A major electrical power infrastructure unable to reliably perform for five months is an obvious disgrace to its citizens and to the manufacturers who sustain the economy of Puerto Rico.

As was the case with other incidents, the disruption will likely continue for many additional weeks and the visibility of regulators, doctors, and healthcare care givers will deservedly be honed-in on specific manufacturers. However, federal, and local government officials can no longer be the bystanders. The patterns of supply network disruption are becoming far too-obvious.

Bob Ferrari

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