Prescription
for Trouble
While prescription drug manufacturers reap record profits, widespread drug shortages are raising health care costs and threatening patient care.
BY ANDREA ADELSON

These days, emergency physician Brian D. Johnston is not sure what to expect when he orders a drug for a patient at White Memorial Medical Center, east of downtown Los Angeles. One day in June, the hospital pharmacy was out of Demerol—as were hospital pharmacies across the nation. The month before it was Lasix, another time Compazine, and another time phenobarbital. They are all commonly used, frequently life-saving drugs. There were no extraordinary "runs" on these drugs as occurred with Cipro during the height of last year’s anthrax scare. "You never know what pharmaceutical agent is going to be missing next," says Dr. Johnston.

For the past 18 months, a record number of drug shortages has had doctors and pharmacists, particularly at hospitals, scrambling to find alternate medications, delaying surgeries, and even resorting to gray-market sellers to keep supplies from running out. Last year there were nationwide shortages of at least 73 drugs, including tetanus, rubella, and mumps vaccines, anesthetics, injectable steroids, and heart medications.

Sometimes, it’s just a simple case of drug manufacturers being unable to keep up with demand. Other times, a shortage may be triggered by an interruption in production (for example, if the Food and Drug Administration shuts down a factory because of quality control problems). But neither of these reasons can account for what is being called an impending epidemic of drug shortages. "We are seeing random shortages of drugs that ought to be produced at expected volumes," says Julian Gold, M.D., co-chair of the anesthesia department at Cedars-Sinai Medical Center in Los Angeles. "There’s something going on."

Rooting Out the Cause
It’s no secret that drug manufacturing is big business. And like any other business, it is subject to market forces and influenced by profit-driven corporate decision-making. But unlike most other businesses, drug manufacturers and their decisions affect the health of millions of Americans every day. Still, the FDA makes no effort to regulate the production of critical drugs or life-saving vaccines. The agency does not even monitor the supply of these drugs, so that it might reliably warn health care providers of a pending shortage. Is this any way to run a modern health care system? "Usually CMA does not advocate more government oversight," says CMA CEO Jack Lewin, M.D. "But in this circumstance, government needs to take more action to protect patients."

Not even trade groups representing drug manufacturers know (or will admit to knowing), what’s really behind the shortages. "We’re not supposed to know," says Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America, a lobbying group for 80 member companies. "It is up to each individual drug company to conduct its own business strategy. We cannot dictate. It’s their business decision. If there is a perceived shortage, it’s something the government should be involved in."

Unfortunately, imposing rules on drug makers, such as mandating production levels or requiring disclosures of looming production stoppages, is beyond the FDA’s authority. "Companies are in no way required to warn us [of shortages]," says Dr. Mark Goldberger, director of the FDA’s Center for Drug Evaluation and Research. The only exception is for drug makers that are the sole manufacturer of critical drugs.

As a result, the FDA rarely intervenes in the event of a product shortage, although it did so recently, to assist the introduction of a Canadian product as a substitute for a narcotic-reversing agent that was domestically in short supply. Dr. Goldberger describes that action as a good public-policy decision rather than a regulatory one.

Medical Economics
The medical community is quick to conclude that economics are behind some of the shortages: For instance, many point out that drugs no longer protected by patents are most often scarce, while newer, presumably more profitable substitutes are readily available.

Another theory points to an industry-wide reduction in drug inventories by producers, distributors, and buyers, which have adopted "just-in-time" inventory management strategies. Pressure from managed care companies to cut costs has led them to keep stock room shelves bare. Drugs are ordered only on demand. When the strategy works, it can save hospitals and pharmacies a lot of money; rather than spending on drugs that will just sit on the shelf, they can use the money for other purposes. But when there’s a glitch in the supply chain, it leaves patients vulnerable. "Before, a hospital could dip into its reserves," says Denise M. Jones, a spokeswoman for the American Society of Anesthesiologists in Park Ridge, Illinois. "Hiccups in availability were almost imperceptible. Now there’s no cushion anymore."

Where Are the Generics?
What remains a mystery to some is why enterprising generic manufacturers fail to step in and fill the breach. "There is demand, but there’s no supply," says Deffenbaugh of the pharmacists' society. "So what’s not working?"

One possible explanation: Available supplies of generic drugs are diverted to buyers willing to pay higher prices. If this is true, supplies could be steered away from hospitals, whose buying groups often demand deep discounts from drug manufacturers. "Supplies of generics are going to the highest bidder, just like on eBay," says Joel W. Hay, Ph.D., a professor of health economics at the University of Southern California.

San Francisco-based McKesson Corporation, one of the nation’s largest drug distributors, won't respond to questions about supply being diverted to big spenders. "McKesson does not discuss pricing or contractual issues with outside parties; therefore, I cannot comment on the premise raised by the USC professor," says Patrice Smith, a McKesson spokeswoman, in an emailed reply.

A Legal Gray Market 
Yet Hay’s highest-bidder hunch might explain the recent emergence of a legal gray market, where authentic products end up in the hands of unauthorized distributors that sometimes resell the goods at inflated prices. Sales pitches come by fax to hospital pharmacies, sometimes from out-of-state retail pharmacies, offering hard-to-find name brand and generic medications from local distributors.

"There always had been a clear pipeline between manufacturer and distributor," says Tamra Kaplan, pharmacy director at Anaheim Memorial Medical Center in Southern California. "Now, the gray market is in the middle." For years, other manufacturers, such as makers of cars and golf clubs, have unsuccessfully tried to use the courts to muzzle unauthorized sales by gray market rivals.

When pharmacy buyers at Anaheim Memorial contend with a shortage, the hospital chooses to authorize isolated gray-market purchases rather than force the rescheduling of procedures or risking the ire of physicians, who inevitably ask, "Why does the hospital down the street have it?"

"For some drugs, the price is worth it," says Kaplan. Still, shortages have become so frequent they now consume 60 percent of the workload of her buyer, whose first inkling of a probable shortage comes from contacts with a distributor. Instead of occasional supply crunches in a typical year, now each week a different item becomes unavailable, Kaplan says. To keep Anaheim Memorial’s staff informed about what next will be hard to find, she has started an in-house drug-shortage newsletter, which suggests substitute medications.

"In general, most drugs in short supply are relatively inexpensive and widely used," says Kaplan. Many substitutes are often newer, pricier brand-name drugs. "I see a lot of people having to go to drugs that aren’t as effective or are more expensive," says Loren A. Johnson, ER director of Davis-based Sutter Davis Hospital and California chapter president of the American College of Emergency Physicians. "It alters my practice and takes away my options and power to do the best for my patients."

Scarcity's High Price
The shortfalls are costing patients and hospitals significant sums. Rita Shane, Cedars-Sinai's pharmacy director, estimates that shelling out for substitutes alone has cost the hospital $28,000 per month since last October. A case in point: Compazine, the widely used antinausea drug frequently administered after surgeries, has been unavailable since last fall; it had cost as little as 60 cents per dose. One substitute was the subject of an FDA "black box" warning, and its use has since been discontinued. As a result, the only available alternative is Zofran, which costs $25 per dose. "I’ve never seen anything like this in my career," says Shane, a 20-year pharmacy veteran.

To keep Cedars’ staff up to date, news of new shortages is now posted on an internal Web site. Meanwhile, "the labor costs [from the shortages] are huge for everybody," says Shane. Forced to conserve supplies, hospital pharmacists are sent scrambling to retrieve medication stocked in nursing stations on each floor and in elective surgery centers. Inventory is reallocated in the pharmacy based on greatest need. Critical drugs are sequestered and typically reserved for critical-care floors, such as cardiac units and emergency rooms.

Then pharmacists start hunting for suitable alternatives. Frequently, within weeks the substituted drug is also in short supply.

Scant Solutions?
So far, all the early alarm bells have gone largely unheeded. And at this point, solutions seem as scarce as the drugs themselves.

With online lists of some hard-to-obtain drugs, such as the one compiled by the pharmacists' society (http://www.ashp.org/shortage) and another by the FDA (http://www.fda.gov/cder/drug/shortages), doctors can at least determine if their predicament is isolated or widespread. And pediatricians might take some solace from a proposal under consideration by a U.S. Senate committee to require vaccine makers to give a year’s advance notice of production halts for pediatric vaccines.

Still, doctors remain frustrated by the lack of certainty now in the supply chain and fume over the absence of timely notifications about scarcity. "There’s no plan to deal with a potential shortage of critical drugs that ensures supply," points out anesthesiologist Gold. He believes public-health considerations should impel manufacturers to disclose, for instance, a potential factory shutdown, even absent a regulatory mandate. Clearly, the courtesy of forewarning would at least permit some stockpiling of substitutes: "It’s not brain surgery," he says.

Cynics suggest the impetus for a real solution will only come when patient care is compromised and blamed on unavailability of a needed drug— hardly a desirable way to bring about change.

Andrea Adelson is a Laguna Beach-based freelance writer.

Glossary....................................................................................................
Compazine (prochlorperazine) is given to help control and/or prevent nausea and vomiting, particularly after surgery and chemotherapy.