Supply Chain Matters provides another update to our ongoing series of blog commentaries related to the continued unacceptable shortages of life-saving cancer treating drugs. Readers can refresh on this topic by referencing our prior commentaries by clicking here and here. Because this is a blog that focuses on business issues from a supply chain lens, our commentaries have reflected on the conflicting stakeholder interests across the healthcare supply chain, and on sourcing and supply decisions that have proven to be incredibly lax in insuring the reliable supply of these life-saving drugs.
We came across a publication from the Group Purchasing Organization interests of the Healthcare Supply Chain Association (HSCA) that provides alarming background and statistics related to this ongoing problem. A 2011 survey conducted by the American Society of Health-System Pharmacists (ASHP) and the American Hospital Association (AHA) reported that almost half of 820 hospitals experienced 21 or more critical prescription drugs in short supply. Many of these drugs are in the category of generic sterile injectables used for treating cancer, emergency medicine, anesthesia, and other critical ailments. All reported at least one critical shortage over the past six months. That continues to be an overt indicator of a specialty supply chain that is failing its customers, a supply chain whose mission was always to never fail the patient. The situation also leads to opportunities for others to take advantage of supply shortfalls with the addition of counterfeit and bogus drugs, or price-gouging practices.
Many of the supply interruptions have been attributed to breakdowns in quality and manufacturing control processes. The HSCA report notes that 54 percent of the current shortages are linked to these serious quality problems. Our ongoing commentaries also point to these same issues.
The situation has reached a point where many doctors, patient advocate and other group are calling for definitive action from the U.S. government. An article published on the Everything Jersey site provides one poignant example. This article describes an oncologist who has been forced to inform patients that the preferred drug to treat their cancer condition is unavailable, and that the alternative drug will not be as effective and will cause additional side effects. A profound quote from this article: “In the U.S. we’re having two conversations (with patients) that produce the same result. One is that the drug is too expensive and you may not be able to afford it and the other is the drug to too expensive to make, so we can’t get it anymore”. The latter part of that quote is an obvious indicator of the conflicting stakeholder interests and the building indictment of pharmaceutical manufacturers in their failure to be sensitized to the fact that healthcare is being jeopardized by the ongoing shortages. A pharmacy operations coordinator is described as spending between six to eight hours per day on the telephone scrounging for medicines such as methotrexate, utilized to treat childhood and other cancers. Other articles note that each of the four manufacturers of methotrexate has had some type of production issue, compounding a reliable flow of supply.
The U.S. Congress is the process of finalizing legislation headlined as helping to ease these shortages. When enacted, this legislation will require overhauls of the U.S. Food and Drug (FDA) approval process for alternative supplies and will also require drugmakers to issue timely warnings of drug shortages or discontinuation. In its recommendations, the HSCA calls for collaboration between governmental regulators and manufacturers to increase manufacturing quotas during drug shortages, and allow the FDA to define a broader definition of medically necessary drugs. Another recommendation calls for immediate allocation by the manufacturer and authorized distributors to minimize speculative purchasing or hoarding of critical drugs in short supply.
It is fairly obvious that the political and humanitarian pressures on drug manufacturers are accelerating at a rapid pace. A Minneapolis Star Tribune article observes that doctors and industry experts indicate that economics drives many of the current shortages, namely that manufacturers have been cutting back on the production of generic labeled drugs that do not earn a sufficient profit. It also references state and federal prosecutors of accusing drugmakers of “pay of delay” deals that delay the availability of cheaper generic drugs from augmenting supply chains. Keep in mind that inventory benchmarks among pharmaceutical supply chains have consistently pointed to excess inventories on an aggregate basis.
As I hear presentations from pharmaceutical supply chain and other executives, the challenge of an increased governmental regulatory climate constantly is mentioned as a barrier. Yet, one has to question whether current industry practices continue to lead to outcries for even further regulatory controls. In essence, the industry brings upon itself the need for increased regulation and oversight.
In this series, Supply Chain Matters commentaries have been focused on the supply chain business processes that are obviously contributing to the problem. We, however, are coming to the opinion that the industry, while experiencing obvious supply breakdowns, is more consumed by very real stakeholder alignment obstacles that ultimately are manifested in the supply chain. Budgets get prioritized for either new drug discovery or acquisitions of other companies, including generic drug manufacturers themselves. Profitability shortfalls lead to headcount cuts and supplier cutbacks, often directed at supply chain and production process oversight areas. That has been a consistent history, and without any major industry-wide motivation to address this issue, these problems will persist.
No doctor, and certainly no patient, should ever have to be placed in a situation where treatment is compromised because of the lack of reliable supply of a generic or branded drug. Yes, each and every one of us should be adding our voices to the fact that “This is crazy!” We continue to urge our readers to add their voice and pass along a call for concerted action.
We suspect and trust that many pharmaceutical and drug distribution supply chain professionals share in this frustration. They need the attention and support of their senior business executives to address conflicts in the goals of profitability with assuring reliable supply of life-saving drugs.
Most every supply chain text or certification exam asks the fundamental question of why does the supply chain exist? The answer is that it exists to serve the needs of customers. Needs to satisfy other stakeholder interests remain a conflict to that goal.
Proven multi-industry practices within supply chain business process and advanced technology can be directed at identifying and mitigating supply shortages. That unfortunately cannot happen without this lack of industry and stakeholder alignment.