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(HealthNewsDigest.com) – More than 170 life-saving drugs are in short supply in the United States. While drug shortages are nothing new to the health care system, the sheer number currently in shortage is new. And the amount of shortages seems to be rapidly growing, with three times more drugs in short supply this year than in 2005.
The shortages are particularly significant because they are occurring in categories of drugs that can be hard to manufacture. In 2010-11, 80 percent of the 127 studied shortages involved drugs delivered to patients by sterile injection, including oncology drugs, antibiotics, andelectrolyte/nutrition drugs
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As manufacturers, wholesalers, group purchasing organizations (GPOs), Congress and the media debate
the cause of the shortages, one group is helping hospitals meet the needs of their patients despite
setbacks – small distributors.
Why drugs are in shortage
The consequences of the shortages have not gone unnoticed. Hospitals, manufacturers and the U.S.
Food and Drug Administration have all reported the issue and the fallout from it. On Oct. 31, 2011, Pres. Obama weighed in on the problem, issuing an executive order in an effort to ameliorate the shortages.
While it’s easy to pinpoint what happens when a critical drug is in short supply, it’s not as easy to understand what has led to the shortage. According to the White House executive order, the leading reasons for the reported shortages were problems at the manufacturing facility (43 percent), delays in manufacturing or shipping (15 percent) and active pharmaceutical ingredient shortages (10 percent)
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A recent American Medical News article chronicling the continuing drug shortage crisis linked shortages to multiple disparate factors, from manufacturing problems and supply disruptions to industry consolidation and even out-of-touch Medicare pricing for pharmaceuticals
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Regardless of the cause of the shortages, the fact remains that patient lives are at stake every day due to lack of lifesaving pharmaceuticals.
Getting medicine on schedule – wholesalers
Drugs are generally delivered to hospitals via one of two channels – through wholesalers or secondary
distributors. Three major wholesalers – McKesson, AmerisourceBergen and Cardinal – serve the health
care industry. Wholesalers fulfill orders for medicine and supplies under GPO contracts, and deliver billions of products each year to hospitals and other health care providers according to a regular schedule. Because they deal in vast quantities of products, wholesalers are able to deliver goods for a very small profit and still make money.
While wholesalers fill an important need and they provide cost effective products to hospitals, their
business model doesn’t work in every situation. To maximize efficiencies, these companies deliver
products on a regular schedule and generally are unable provide products at non-scheduled times. In
addition, wholesalers focus on selling to urban areas, where hospitals are concentrated, and require health care providers to buy a minimum amount of product from them (often $20,000 per month or more) to have an account set up in their system.
Delivering during drug shortages – secondary distributors
Secondary distributors, by comparison, are often small, family-owned businesses. The companies
obtain products from the manufacturer, a wholesaler or from other small distributors.
Secondary distributors, so called because they fill a need when a hospital’s primary wholesaler cannot
fill it, are a beneficial, integrated and official part of the health care supply chain. Focused on customer service, the distributors often deliver products to hospitals with short notice, in the middle of the night and on the weekend. They utilize relationships with wholesalers and other distributors to supply pharmacies too small to contract with wholesalers by themselves. And some small distributors have even located and transported medicine for children in critical need overseas.
This flexibility is vital in times of shortage. When a small distributor receives a request for a drug in short supply, it is able to utilize its networks of verified distributors and wholesaler contacts to track downmedicines that health care providers and wholesalers cannot. Small distributors have to pay higher, noncontract prices for drugs, which must be passed along to the health care provider, but they are able to deliver critical medicines when they are needed most.
Comparing the requirements of wholesalers and small distributors
Both wholesalers and small distributors must adhere to stringent regulations set by the Prescription
Drug Marketing Act (PDMA), U.S. Food and Drug Administration (FDA), state boards of pharmacy and
the Drug Enforcement Agency with regard to product handling and distribution, and are subject to
inspection at any time.
In addition to being licensed by state and federal authorities, many small distributors are certified as a Verified Accredited Wholesale Distributor (VAWD). VAWD is an official accreditation issued by the National Association of Boards of Pharmacy (NABP) that is designed to help protect the public from drugs that have been contaminated, diverted or counterfeited by ensuring that the facility is licensed in good standing, and employs security and best practices for safely distributing prescription drugs from manufacturers to pharmacies and other institutions.Small distributors are the only companies in the pharmaceutical distribution chain that are required to provide full pedigree on all of the medicine they sell. If a small distributor tries to sell a product without a pedigree, it can lose its license.
The complexities of drug distribution
The drug distribution system is a highly complicated market.Primary and secondary distributors eachplay a vital role in ensuring that quality medicines reach a patient in the safest, fastest and most costeffective way possible.
But until the drug shortage problems in this country are solved, small distributors will continue to fill an essential niche – providing hard-to-find pharmaceuticals to hospitals in need, and ultimately saving lives in the process.
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http://www.whitehouse.gov/the-press-office/2011/10/31/fact-sheetobama-administration-takes-action-reduce-prescription-drug-sh
The White House, Office of the Press Secretary: “Fact Sheet: Obama Administration Takes Action to Reduce Prescription Drug Shortages in the U.S.”
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http://www.amaassn.org/amednews/2011/12/12/gvsa1212.htm
American Medical News: “Interest building for drug shortage solution: Government officials point fingers at drugmakers, but some market observers say federal price controls may be a big factor.”
Patricia Earl, Principal/CEO, Secure Pharma Distributor Network
Secure Pharma Distributor Network leverages principal and CEO Pat Earl’s more than 25 years of
pharmaceutical industry experience to bridge large and small distributors and manufacturers to small
distributors. Earl is an industry veteran, having worked as a senior executive in pharmaceutical
wholesale distribution for over 26 years primarily at AmerisourceBergen.
Over the past five years, she has worked closely with small, independent distributors to establish guiding principles for keeping the supply chain safe and secure from adulterated, contaminated and counterfeit pharmaceuticals. As a result, Pat along with five premier independent distributors, have founded the Secure Pharma Distributor Network (SPDN). Earl’s vision is for SPDN to change the way pharmaceutical manufacturers, group purchasing organizations and the large national drug wholesalers see the small, independent pharma distributors.
Earl is also a pharmaceutical industry consultant and has served as expert witness in recent pharma
distribution court cases.
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