Pharmaceutical Commerce - January/February 2015 - (Page 24)

Manufacturing & Packaging The quality improvement drive to address drug shortages Persistent drug shortages are mostly attributable to manufacturing quality problems, but the economics of low-margin generic manufacturing challenge the industry By Suzanne Shelley, Contributing Editor over the past decade, drug shortages have been on the rise, creating a significant public health issue. The healthcare industry has seen shortages of essential drugs such as chemotherapy agents, anesthesia drugs for patients going into surgery, parenteral nutrition products, and others that are critical to the treatment and prevention of serious diseases and life-threatening conditions. Scarcity among these drugs can delay or even deny critical care for patients, or force the substitution of less effective or more costly therapies, which reduces patient outcomes while driving up overall healthcare costs. Every year, more than a hundred drugs (and in the peak year of 2011, more than 200) find themselves in short supply in the US. Drug shortages arise as a result of many factors, including supply and demand imbalance, inadequate capacity, production delays or stoppages (due to business drivers, quality problems or regulatory issues), quality issues related to sterility (such as bacterial or fungal contamination, the presence of foreign particles and more), distribution or shipping problems, shortages of active pharmaceutical ingredients (APIs) and other components, and packaging materials, natural disasters, and more. "A big problem associated with drug shortages for a lot of lower-cost mature products is the big spike in costs they engender-either by the substitution of a higher-priced alternative, or sudden price increases by manufacturers, wholesalers and retailers," says Dana Evans, MD, director of medical affairs payer support for Genentech, Inc. (Spicewood, TX). Similarly, healthcare providers and pharmacies may stockpile sought-after drugs in an attempt to ensure availability, further exacerbating the scarcity situation. And, "we have also seen hoarding and predatory pricing by some wholesalers and retailers trying to take advantage of this situation," adds Burt Zweigenhaft, vice chairman and chief strategy officer of Onco360 Oncology Pharmacy Solutions (formerly OncoMed; New York, NY). According to data from the University of Utah Drug Information Service, in 2010, there were 211 drug shortages-nearly triple the 74 shortages recorded in 2005. In 2011, that number peaked at 267 drug shortages, and since then-thanks to concerted effort by the pharmaceutical industry and FDA-the number has begun to fall. In 2012 (the year the FDA Safety and Innovation Act of 2012 [FDASIA] went into effect), 204 shortages were recorded, and 2013 saw 140 drug shortages. Despite gains in terms of reduced numbers of actual shortages and greater effectiveness at averting looming shortages, "We are not out of the woods yet with shortages and we are facing new critical shortages," said FDA's Capt. Valerie Jensen, RPh, associate director of FDA's Drug Shortages Task Force, in remarks published on the FDA website last June. The International Society for Pharmaceutical Engineering (ISPE, Tampa, FL) has made addressing the drug shortage problem a priority for the past two years, and the effort is continuing into 2015 with new rounds of conferences and reports. A survey of member activities was conducted in 2013 and a report, the ISPE Drug Shortages Prevention Plan, was published last fall. But, rather than taking a hard, quantitative approach-say, something comparable to the Medicare Star program going on among healthcare providers-ISPE's approach seems to be consultative and enthusiastic, pushing manufacturers to establish a quality culture, supported uniformly from top management to shop floor operators. [1] Establishing "resilience" in supply chains-developing methods to address supply risks before they occur-is another broad theme. But while noting that "a regulatory environment in which manufacturers are encouraged to invest in improving their understanding of legacy products that lack quality robustness is necessary," the Drug Shortages report authors concede that "pressures from low-margin manufacture may be an issue in terms of this investment." ISPE is a "designated partner" with FDA (and numerous other countries' regulators) in collaborating on solutions. This year, it is holding a Quality Metrics Summit (April 21-22, Baltimore, MD) and a joint ISPE/FDA Quality Conference (June 1-3, Washington, DC). Supply versus demand The persistence of drug shortages is especially troubling in light of strong growth in worldwide demand for medications, with global spending projected to rise by 30% from 2013 to 2018 at a compound annual growth rate of 4-7%, to reach $1.3 trillion by 2018, according to IMS Institute for Healthcare Informatics (Parsippany, NJ). Specialty medicines will account for 40% of total global spending growth through 2018. The drug spend in oncology is expected to grow from $65 billion last year to a projected $100 billion in 2018. Meanwhile, the biopharmaceutical and vaccine production market reached $41 billion in 2014, according to 2014 data from Kalorama Information (New York, NY), which reports that existing firms are already operating near capacity for biologic development. Capacity utilization for integrated biopharmaceutical manufacturers and large contract manufacturing organizations (CMOs) is estimated at 81% for microbial fermentation and 71% for mammalian cell culture-levels that represent near full capacity. "Wi t h t i g h t m a r g i n s a n d h i g h manufacturing capacity utilization, whenever quality or supply issues arise, they ripple through the supply chain, creating drug shortages," says Dinkar Saran, principal in 24 Visit our website at January | February 2015 Reasons for Drug Shortages: 2013 source: FDA PricewaterhouseCooper's Health Industries Advisory Practice (Boston, MA). "Generics play a huge part in the oncology business and they are particularly susceptible to shortages, so one of our strategies to reduce the risk has been to gather data and forecast what we need to ensure that we have a safety stock of inventory projected out to 20 weeks, and then forecast with suppliers, wholesalers and GPOs to make sure there is enough supply," says Zweigenhaft of Onco360. "In the old days, we did not have to do these projections because there was always plenty of supply." In the crosshairs: Sterile injectables Overall demand for sterile injectable drugs increased by 39% from 2002 to 2013, according to IMS, and within that same time frame, the number of units sold by generic manufacturers increased by 57% as more of the leading drugs went off-patent. Consistently over the past decade, the majority of drug shortages have been related to sterile injectables-a whopping 80% in 2013, according to FDA; the remaining shortages were for oral solids (18%) and other types of drugs (2%). While the supply of any given drug can become quickly constrained in the short term, resolving any drug shortfall can take several years, thanks to the costs and logistical challenges associated with adding manufacturing capacity or enabling new suppliers to enter the arena. "A n d t h e b a s e o f g e n e r i c d r u g manufacturers has become consolidated to just a handful of manufacturers, each operating only a small number of facilities. Having fewer manufacturers and certified facilities, especially for low-volume products, creates the perfect storm when any shortageinducing problem arises," says Evans of Genentech. "Making matters worse, companies have not taken steps to improve their legacy products by taking advantage of advanced technologies and this lack of investment has contributed to persistent quality issues and poor yields-all of which impacts supply," adds Sam Venugopal, a director at PwC. As producers of generic medications have faced smaller profit margins in recent years, they have few, if any, financial incentives to invest in the infrastructure needed to ensure adequate or even surplus capacity (and surplus inventory) to buffer the impact of potential shortages of older, less-lucrative product. And the ability to manufacture excess capacity to create a surplus supply of certain drugs is not always possible, especially as many of today's costly specialty therapies (especially biologics) have limited shelf life or highly specialized and costly storage protocols, so their manufacturing schedules tend to follow more of a just-in-time approach. "Executives say: 'What are the incentives to invest in older product lines and older facilities if there are no financial gains to be realized?'" says Saran of PwC. Business drivers and Medicare Part B Economists say that changes in the Medicare Part B reimbursement policy that went into effect in 2005 set in motion industry-wide changes in prescribing patterns, which are now partly to blame for the sustained drug shortages-especially among generic injectables-that have persisted over the past 10 years. Specifically, the Medication Modernization Act of 2003 (MMA) changed the way in which Medicare reimbursed for drugs administered to Medicare patients in hospitals, group oncology practices and other outpatient infusion settings-those facilities that typically purchase the drugs they dispense and administer as part of their practice using

Table of Contents for the Digital Edition of Pharmaceutical Commerce - January/February 2015


Pharmaceutical Commerce - January/February 2015