The Drug Shortage Ecosystem

  • by: |
  • 09/29/2014

I recently had the pleasure of meeting with Captain Valerie Jensen, USPHS, who has led the FDA’s efforts to tackle the problem of drug shortages in the US over the past several years. (She is officially the Associate Director of the FDA’s Drug Shortage program.)

Alas, as the tabloid press reminds us, “if it bleeds, it leads.” The media frenzy surrounding drug shortages has vanished. Why? Because, due in no small measure to efforts from the FDA, the problem is being successfully addressed and ameliorated. Unfortunately, that’s not news – but it should be. Here are some interesting points.

The FDA’s strategy in addressing the issue is to enlarge and empower a drug shortage ecosystem. Rather than seeking more Federal dollars (a fool’s errand), the FDA undertook to combine the resources of the constituent players, manufacturers, hospitals, and large-scale purchasers such as GPOs. Combined with appropriate and savvy use of enforcement discretion, the FDA has taken leadership of the drug shortage ecosystem and is driving a sustainable solution.

The drug shortage ecosystem relies on more than just FDASIA-mandated notification requirements –it’s built on trust. Specifically, that the FDA wants to work with manufacturers to solve the problem rather than simply whack them with 483s. The agency is showing more regulatory flexibility when resolving manufacturing and quality issues.

Curiously, a new cause of shortages has arisen – poor corporate planning. Shortages, for example, in Sodium Chloride IV kits have hit the agency’s radar screen. The problem isn’t due to manufacturing quality, but rather lack of inventory.  Hello?

Smart business projections must also be a part of the drug shortage ecosystem.

Speaking of business practices, there remains the 800-pound gorilla of the drug shortage dilemma -- artificially low prices are a major causational problem. And that’s not something the FDA can help fix.

It’s time for our lawmakers to revisit the legislative solution proposed in Senator Orrin Hatch’s Patient Access to Drugs in Shortage Act. There are three key codicils:

1. Price Stability

The Hatch language would change the Medicare reimbursement rate for generic injectable products with 4 or fewer active manufacturers from ASP + 6% to Wholesale Acquisition Cost in order to achieve market price stability.

2. Medicaid/340B Rebate Exemption

Exempt generic injectable products with 4 or fewer active manufacturers from Medicaid rebates and 340B discounts in order to achieve market price stability.

3. Extended Exclusivity

Manufacturers who hold an approved application for a drug that would mitigate a shortage can extend by 5 years any period of exclusivity, even if the drug is eventually moved from drug shortage designation.

So, kudos to Captain Val and her team at the FDA.

Now it’s time to enlarge the eco-system via timely and targeted legislation.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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