Identifying the Root Causes of Drug Shortages and Finding Enduring Solutions

– Everyone for being so prompt and getting in your seats
right on time this morning. Good morning everyone I’m Mark McClellan, I’m the Director of the Duke Margolis Center for Health Policy and I’d like to welcome all
of you to today’s workshop on identifying the root
causes of drug shortages and finding enduring solutions which we at Duke Margolis are convening under a cooperative agreement with the FDA and the inter agency drug
shortages task force. As you all are well aware
shortages of a range of important generic drugs
have been a very challenging issue over the past decade. While some of the acute
shortages of 2010 and 2011, when this issue first
really made headlines were resolved as a result
of actions by stakeholders and policy makers, a number
of persistent shortages in recent years I think
indicate to all of us that serious issues involving shortages of certain important drugs remain. In some cases based on the
perspectives you hear today may be getting worse. The shortages impact patients and the provision of healthcare, severally limiting treatment options forcing the use of alternative treatments, risking otherwise
avoidable adverse outcomes and adding to healthcare costs. In response to these persistent shortages and upon request from members of Congress, FDA commissioner Scott Gottlieb established the inter
agency drug shortages task force in July 2018 to
identify the root causes of drug shortages and to
propose enduring solutions. Our workshop today is
intended to inform that work by bringing together
stakeholders to share information on the patient impacts and the underlying economic drivers of shortages with an eye on multi
stake holder next steps. Speakers and panelists
will discuss shortages and their drivers and impacts throughout the pharmaceutical supply chain from the perspective of upstream API and raw ingredient
suppliers to manufacturers, compounders and distributors to wholesalers, group
purchasing organizations, pharmacists and ultimately to patients. At the end of the day we
hope to identify areas that need additional focus and to consider next steps to prevent and
mitigate drug shortages. These areas might
include more transparency and other improvement
in the important efforts undertaken to share information
related to shortages, further regulatory actions involving FDA and other agencies to help
reduce the cost and time for bringing needed generics to market. Other policy steps that could
affect pricing and competition for drugs with high shortage risk, and further actions the
private sector can take to improve the quality and robustness of the generic drug supply. As well as further public
and private approaches to work together to address
these shortage issues. So today’s important step
in this overall process, and we’re very much looking forward to the discussion today and
all of your participation. Just a few quick notes
before we get started. We’re going to have time
any session for discussion with the audience participants. Those of you who are in
attendance there are microphones located around the room
that will give you a chance to make comments during the day. We’ll be tweeting about this
meeting using the handle @dukemargolis and the
hashtag #drugshortages Wi-Fi information is available
on the registration tables in the foyer outside the meeting space and for those of you who
are joining by Webcast, welcome to you all as well. And we encourage you to
participate in the days discussion. If you have a question for
a panel you can send it to [email protected]
and we’ll try to address as many of those
questions as possible too. I want to remind everyone
that this is a public meeting, the event is being broadcast live online, so everything you say
will be part of the record for this event. For those of you in the
room today feel free to help yourself to coffee,
beverages right outside. Lunch is gonna be on your own, I’ll have a little bit more information about that later, we have maps available at the registration desk of the
many restaurants in the area and a final reminder that
although this meeting is being convened under
cooperative agreement with the FDA it’s not a Federal advisory
committee or a full part 15 hearing, we will not have
votes or consensus et cetera. The meeting will be a
success if there’s an open exchange of ideas and a
frank and open discussion. We’re gonna begin with opening comments from the Commissioner of Food and Drugs Dr Scott Gottlieb who has made addressing drug shortages an important priority among many major initiatives
at the FDA these days. Scott is going to set the
stage for today’s discussion, he’ll provide some further context and overview of the drug shortages task force goals for the meeting. Scott thanks for being
with us this morning. (audience applauds) – Thanks a lot, and thanks
for joining us today. This has been an important
effort for the agency and we’re very grateful for the input from so many people over
the course of the last number of months. I want to just start by thanking everyone who’s attending online and the folks who are here today also. Want to thank Keagan Lenihan, FDA’s Associate Commissioner
for Strategic Initiatives and External Affairs. She’s done a really exceptional
job leading this effort inside the FDA and the taskforce, and advancing these efforts for us. We formed this taskforce
as Dr. McClellan mentioned in response to some pressing
public health problems that we face with to respect
to persistent drug shortages. Drug shortages that we have
seen for a few decades now when it comes to some of
our most critical medicines. Different drugs have gone
in and out of shortage in recent years but there
are some common threads that link all of these challenges. Many of the critical drugs
that we find in shortage are sterile injectable drugs,
they’re parenteral medicines, meaning that they’re meant for injection, and most of these drugs are old, they’re generic medicines that
should be sold very cheaply. Cheap that is when
they’re not in shortage, and the question we
constantly get is this one, why are some of the oldest,
most important medicines, drugs that used to be very inexpensive suddenly subject to very short supplies where the prices often get hiked sharply if the medicines can be gotten at all. It’s a question born of a lot
of appropriate frustration from doctors, from
patients and policy makers and despite a lot of focus in recent years on these problems we don’t have a lot of very good answers, and
we certainly don’t have easy solutions or we would have fixed this problem a long time ago. But it’s gone on too long, the
risks have mounted over time and the frustrations have
really reached a tipping point, mine as well when it
comes to these issues. And so we need to commit
to fix things for good. In my view it’s a problem born of failures of economics and policy
that span many years. The extended failings
of policy have left us with a sticky morass of protracted woes related to the way these
products are manufactured, and the way they’re reimbursed,
which sometimes leaves very little margin for error. In some cases the prices
reimbursed on these drugs have been driven down to such low levels that it makes it hard to
manufacture them profitably and have enough margin left over to invest in modern manufacturing upgrades. And for some of these drugs
the cost of making them, and the cost of the inputs isn’t trivial. They can contain commodities like platinum that are subject to their
own price escalations. All this has left
manufacturing of many sterile parenteral drugs vulnerable to short falls and shut downs, and the
problems as I said have mounted. The bad economics, compounded
still more short comings, the problem begat more problems. To produce these drugs profitably manufacturers had to gain scale
to try to make up in volume what they couldn’t achieve in margin. That lead to a lot of consolidation among the companies that manufacture these sterile parenteral drugs,
so now when problems arise at a single manufacturing facility it isn’t just a single
drug line that goes down, it can be an entire
portfolio of sterile drugs. And here’s the rub, now I focused a lot of our policy efforts in recent years on proposals to promote competition and access in the branded
drug markets where many argue prices are too high, and I’m
not debating that premise, especially when it comes to list prices and patients are out of
pocket for their drug costs. But there’s an ironic
addendum to that premise, we have drug prices that are too high but we also have markets where
the prices may be too low to sustain a reliable
supply and high quality investments in manufacturing
that patients deserve. But I’m not in a position to diagnose the full scope of this
problem or to offer workable and complete solutions,
there are so many facets to these issues, it requires a sustained comprehensive, expert examination, and that’s the purpose of the expert panel we’ve convened at today’s meeting. Earlier this year we received
letters from Congress signed by more then 200 members, they asked the FDA to commit to a process to conduct a full examination
of these challenges and to find enduring
solutions and that’s our goal. Our aim is to look at
every facet of this problem and develop a comprehensive
set of proposals for addressing these protracted issues. And our recommendations will look beyond just the regulatory
issues that fall within our scope at FDA, we’ll also examine the reimbursement challenges
and other market failures. Here’s the charge I gave to the FDA team, cast a wide net, we’ll dive
deeply into these issues to identify underlying problems and to propose comprehensive
enduring solutions. The taskforce has already
held numerous listing sessions with a broad range of stake holders, these have included
meetings with pharmacies, hospitals, drug
manufacturers, think tanks, GPO’s and distributors,
patients and many others. These sessions have
given us important input and new insights that will
help us find common ground and lasting change. I want to thank those
of you who participated in those meetings and
I want to acknowledge everyone who’s here today, especially our federal partners from the centers for
Medicare Medicaid services, Federal Trade Commission,
the Department of Defense, the Department of Veterans Affairs and the Office of the Assistant Secretary for Preparedness and Response. As I’ve noted finding a new framework that will help more permanently solve these protracted problems will require us to look across the full
range of reimbursement and market challenges
and the participation of this diverse group is
gonna be a key variable to evaluate these aspects of the problems. So we appreciate contributions and we look forward to your input. And let me assure you that
we’re listening very closely to all the input that we receive, and I remain optimistic
that we’ll come up with impactful new plans on how
to address these challenges. Our past efforts in these areas
have met with some success, thanks to the FDA’s
focus on these problems combined with new
authorities given to the FDA under FDASIA we’ve seen a decline in the number of
shortages from the peekers of the earlier decade, but we still face persistent shortages
especially when it comes to these parenteral drugs. One year it will be one product, next year it will be a different medicine but the list will almost always include a troubling compliment of
important sterile medicines. What’s more many of
these shortages can last for years at a time, and
the problems that give rise to one shortage can
impact as I’ve mentioned a broad range of medicines
and can complicate medical care in each of the many settings where these drugs are administered. This is a critical public health concern and when these shortages take hold they threaten the stability
of our healthcare system, and can spur a public health crisis. They represent an immediate
and serious risk for patients and they can lead to delayed
or canceled treatments or procedures, they can force
providers to have to delay, to have to rely on medicines
that are less effective because substituted drugs may
not offer the same benefits as the medicines in shortage and these problems can be global in scale. So where do we go from here? Today people will share proposals on how we can start to better
address these problems. In the first session some
of the taskforce members will give an overview of the
history of drug shortages and the FDA’s current efforts. We hope this overview
leads to some new ideas on how to tackle the root
causes of these challenges. Other panels today will consider some of the economic drivers and
the economic consequences of the shortages as well as the challenges faced by manufacturers,
suppliers and consumers. We’ll also discuss where
we go from here at the FDA and we’ll be focused on the
feedback from today’s sessions. During these listening
sessions we’re already heard from some new ideas from new folks on adverse issues that we face with respect to these problems. For example, we’ve heard
ideas on how we can increase public awareness of drug shortages and the supply reliability
of particular products which it has been suggested
can increase accountability by suppliers, and we’ve
heard ideas on how the system can help improve the profit margins on many of the critical parenteral drugs, particularly generics where there is a public health imperative
to avert supply disruptions. We’ve also heard suggestions
about elimination some of the barriers
manufacturers can face when they try and enter the market. These barriers it has been suggested can make it harder for new entrants to more efficiently file new applications or ramp up existing production
lines to address shortages. We’ve heard suggestions
for adding language in contracts between
suppliers and providers that could help prevent
shortages, for example, by strengthening failure
to supply clauses. At the FDA we’re focused
on doing our part as well to look at our own regulatory policies and how we can address these challenges. We’ve already engaged
in a number of efforts to help strengthen and stabilize the manufacturing sector to better address some of these underlying
problems that cause shortages. One new program we recently launched will make the inspection
of sterile drug facilities much more efficient and
make the quality standards that we inspect for much for transparent and predictable to drug manufacturers. Take another example, our
Center for Drug Evaluation and Research has developed
an emersion technology program that engages
companies to encourage the adoption of new production technology such as 3D printing and
continuous manufacturing. Eventually these could
help prevent drug shortages caused by reducing product quality and manufacturing problems. Two other new efforts are
focused on quality metrics to make it easier for
manufacturers to monitor and improve their quality
control systems and processes. We’re using the information
we glean off these efforts to identify drugs at
greater risk of shortage so we can intervene before
supply disruptions occur. But a lot of questions remain and a lot of problems are unsolved. And we still don’t
understand all of the issues that contribute to these
persistent challenges. That’s why we’re holding
listening sessions and public meetings, we need
to get at the root causes of these problems and
the underlying regulatory marketplace economic issues
that impact product quality, coverage and stable supply. In short we need a different policy, regulatory and business
model to govern this space. It’s mild it’s gonna
require broad collaboration and dialogue among many different parties who play a role in these endeavors, and a model that’s
gonna require new ideas. Only in this way will we
address the substantial public health challenge we face and ensure that we can
achieve high quality and stable supply of
the critical medicines and products that patients rely on. Thanks a lot, thanks for
joining us here today. I look forward to
learning about the output from today’s session, thank you. (audience applauds) – Alright, thank you very
much Commissioner Gottlieb. I’d like to now get right
in to our first session on existing federal efforts to prevent drug shortages, following on
the commissioners comments. We’re going to hear
from our partners at FDA and the drug shortages task force who as Dr Gottlieb noted
are going to review the history of drug shortages and share their perspectives and some data on continuing drug shortage issues. So I’d like to ask our
speakers for the session to come on up, that
includes Doug Throckmorton, the Deputy Center Director
for Regulatory Programs at the Center for Drug
Evaluation and Research at FDA. Adam Kresh, the Deputy
Director the Office of Program and Strategic Analysis at Cedar and Matthew Rosenberg, Operations, Research, Analyst and Economics
staff at Cedar as well and I think Doug you are
up first for comments and also Keagan as well too. So we’re starting with Doug is that right, sorry Keagan, please go ahead. – Thank you. Thank you Dr McClellan and thank you all for joining us today for today’s meeting. My name is Keagan Lenihan, I’m the Associate Commissioner
for Strategic Initiatives and External Affairs at the FDA. – [Male] Closer to the microphone please. – Thank you. I’m going to quickly outline the actions that the taskforce has taken, our members and some of the
key themes that we’ve heard over the listening sessions
that the commissioner just mentioned. As the commissioner said,
after receiving a letter from over 150 members of
Congress that were concerned with drug shortages he
announced the formation of the inter agency
drug shortages taskforce in July of this year. After pulling together
the taskforce members we decided to take a new
look at drug shortages and their root causes. While FDA has done a great
job managing and mitigating drug shortages over the past few years which my colleague Doug will elaborate on, shortages are still a persistent problem. Working together with the taskforce we launched a public docket in September and we look forward to
all of your participation. We held a series of listening
sessions in September and October and lastly
announced a public meeting that we are all attending today. Sorry. The taskforce members are
comprised of my colleagues at the Food and Drug Administration for Medicenters and Offices. The Center for Medicare,
Medicaid Services, the Office of Assistant Secretary
Preparedness and Response, the Department of Veterans Affairs, the Department of Defense and
the Federal Trade Commission. Each having their own
experience and expertise in drug shortages they have
been a very engaged partners throughout this process
and we are thankful for their participation and commitment. Due to the outpour of
interest in this topic after we announced the taskforce and in an effort to learn
more about root causes and shortages we held a
series of listening sessions. We heard from experts in this space, industry, healthcare
providers, pharmacists and health systems. We tried to hear from everyone
from the API manufacturers all the way down to patients
who are affected by shortages. The listening sessions were
a great learning exercise and many of you in this room
provided valuable information to help us understand what’s
happening in this space. Some of you left is
with even more questions which my colleague Adam will discuss. While this meeting will
provide an opportunity for you to hear some things that we heard, some of the key themes
were the enormous impact that shortages are having
on the standard of care, and compromising that standard. After hearing from providers,
hospitals and pharmacists we were surprised at the rate
of which they were seeing shortages and how much effort and cost go into dealing with them. The market factors and economic decisions that play a role in shortages,
downward pressure on price, consolidation in the market
and contracting practices, and how those decisions affect
throughout the supply chain. Additionally the overall
lack of transparency throughout the drug supply
chain, from manufacturers all the way to patients and the care that they’re receiving in a shortage. Almost all of the stakeholders engaged asked for greater transparency. Lastly the multiple government agencies and their different
authorities that can be confusing to navigate and may
unintentionally exacerbate shortage issues. We look forward to robust discussion today and a special thank you to Duke Margolis and all of our speakers. Thank you. – Thank you Keagan, next is Doug. – Thanks Scott, thanks very much. Keagan appreciate the opportunity to talk. Let me first thank everyone
for attending also, this is important and it is an
important topic to the agency in my capacity in the
Deputy Center Director for the Center for Drugs I’ve been working with the drug shortage
staff within our agency now for the last several years. There’s a reason for that,
the last time we encountered the severe levels of drug
shortages we elevated them to the center directors
office to make certain that when they have ideas,
when they needed to reach senior leadership they were
able to do that expeditiously. And I’ve had the good
opportunity to work with Val and her group since that time. What I’ve seen is improvements
and now a concerning turn to additional shortages of
consequence to the public. I’m looking forward to
everything that we hear today. We’re listening very carefully,
look forward to new ideas and as Scott said are interested in both understanding better the sources as well as what we can do to fix them. In my short remarks today
I’d like to just talk briefly about some foundational things. I’m gonna talk a little
about some definitions that I think we’re gonna be talking about a great deal today. A little bit about the FDA’s perspective beginning with our experiences
related to shortage, and some salient examples. I’m sure many of them will be familiar to those in the audience, but they reflect the important public health impact that these shortages can have. And then talk just a little
bit about the landscape that I see as we face this
drug shortage challenge. So to begin there are two
main definitions of shortages that are used, there’s a
definition that the FDA uses, focused on national availability, and there’s also a definition
that the American Society of Health System Pharmacists use
that also takes into account the voices of pharmacists,
because of the population that they serve, the
important need that they have to provide products for their patients. In the main they give similar
results as far as trends. We talk commonly with them and have a good working relationship. This is also a graph I’m sure
that many of you have seen before, it comes from
our report to Congress and it is the new drug shortages per the definition that I just showed you. You’re gonna see an
analysis in a few minutes of a different way to
think about drug shortages from one of my other panelists and I want you to note the differences. This is a curve that we’ve
reported to Congress, it shows the general trends over time. Improvements since 2012
and now a concerning uptick as we watch the trends evolve. So where is this coming from? It’s coming from manufacturing challenges as we all recognize,
whether it’s consolidation leading to a single manufacturer left manufacturing a product
leading to extreme shortages of products like the injectable narcotics, the bupivacaine and other anesthetics and other drugs or
critical shortages of drugs related to increased demands
and or manufacturing problems and here the intravenous
electrolyte salts, magnesium sulfate for
instance or calcium gluconate resulted in extreme
shortage in consequential public health impact. Shortages have also occurred
due to natural disasters. These are obviously
harder for us to predict but the consequences obviously
can be no less severe in the IV normal saline
shortage is one I know that many of us work very
hard to try to address. When those shortages
occur the FDA response is focused through the drug shortage staff but it is not solely
the drug shortage staff. There are literally
hundreds of individuals within the agency that work to respond to a drug shortages
expeditiously as they can. Whether it’s facilitating
new product development, whether it’s temporary importation, it’s whatever other forms
of activity we can take to mitigate it. Importantly though these
are the things the FDA can do and does do, and they’re summarized in the report to congress. It’s also important to
understand the long term goal is maintaining availability
which includes the development of novel products wherever
possible to fill in that need. It’s also important to understand there are many things the FDA cannot do and has to look at outside
groups to accomplish. We cannot require a
company to disclose details of why a shortage occurs. There is an obligation to report to us that a shortage may occur
but not the details. We cannot require a
company to make a drug, we cannot require a company
to make more of a drug, and we cannot dictate how much and to whom the drug is distributed
under most circumstances. These limitations are
important to keep in mind as we work with sponsors
we do what we can, they have an important role to play also. So what have we learned? First and foremost shortages matter, I don’t need to belabor that point that should be evident to
everyone that’s in this room, we have to find a long term
solution to these problems. The shortages, we know
the proximate causes we’re gonna have a longer
conversation this morning about some of the more economic factors, the underlying causes that
may be leading to shortages. And then finally recovery
from a shortage takes time. Waiting to respond until a
shortage occurs is going to lead to consequential lag to
response and prevention is absolutely preferred over
waiting until they occur to reducing the numbers of shortages. I’m gonna use my prerogative just because I’m on a podium
to make one last point and it was hinted at in some of the things that Keagan just said. One of the things we
heard over and over again in the public listening
sessions was the importance of communication, when we know when we as a larger group including the FDA, know more about the approximate
causes of a shortage, the potential impacts, the timelines, we’re all able to make better adjustments. We’re all able to manage that shortage in better ways. The FDA has received
legislation in recent years that requires a notification
to us from manufacturers where there is a reasonable likelihood of a reduction in supply. Having said that
additional details matter, additional details help
Val Jansen and her group make the important
decisions to what we can do to mitigate the potential shortages and I’d encourage anyone in an opportunity to help with that, it matters to us we can do a better job when
we know more information. So for today, two main goals. First we’re gonna have a
discussion about the root causes of drug shortages, beginning
with an economic analysis as I mentioned before. A discussion of the
impact that manufacturing and distribution factors can play. And then we’re gonna transition
to a discussion about tools. And as I said before we’ll
be listening very carefully for new ideas, this is a
very complicated space. Identifying a tool that’s both impactful and able to make a difference
in a large and complex environment like this one is
gonna be very important for us. We understand the value
of governmental incentives and are listening very carefully for ideas that we can then take
back to our leadership to see if there are ideas
that we can help forward. With that I’m going to yield the podium, and appreciate your time. – Doug thank you very much,
Adam we can hear next. – Thanks everybody and thanks Doug. Hi I’m Adam Kroetsch, as Mark mentioned I’m Cedars Office of Program and Strategic Analysis and
I’m gonna spend some time today talking about the economic
drivers of drug shortages. And my goal really isn’t to describe what all of those drivers are. I think that’s a conversation we’ll have over the course of the
day but to raise some important questions and try
and tee up that discussion for later today. So to start, in the past drug shortages have been described in a
variety of different ways, as a public health challenge,
as a drug quality problem, as a manufacturing problem,
as a regulatory problem. And it is all of those, but at it’s core it might be most appropriate
to think of drug shortages as an economic problem because the market is failing to provide an
adequate supply of drugs to meet patient demand. So we hope that by taking a deeper look at some of these economic factors that underlie shortages we can develop a better understanding of the root causes and develop solutions that
will have a sustained impact. So how do we better
understand those drivers? I think we may have, there we are, okay. So to help us it can be
helpful to take a step back and ask ourselves a few
basic framing questions about the shortage issue. And we don’t necessarily have the answers to all these framing questions but again I hope that over the course of the day we can keep some of
these questions in mind as we discuss the potential
root causes of shortages. And the first question is, why drugs? What makes drugs so uniquely
vulnerable to shortages relative to other sectors of the economy? If you Google the word shortages, at least when I’ve Googled it, right on the first page
of results you’ll see the FDAs drug shortages page,
you’ll see Cedars shortages page, you’ll see ASHPs drug shortage list. So in the world of shortages drugs really do stand out and
it’s not just Google that thinks so. We really looked deep into
the literature on this and it’s very rare, with
very rare exceptions, we just don’t see that many studies describing the kinds of
persistent, systemic shortages in other industries. So what makes drugs so different? The second question is just a refinement of that first question,
why these specific drugs? And you heard Dr Gottlieb
talk a little bit about the kinds of drugs that
are typically in shortage. And I’ll just remind you that if you look at the FDA drug shortage
list a few characteristics will jump out at you. First these are primarily
those older, generic drugs. Second, primarily these
are injectable drugs, and third these are largely drugs that are purchased for use in hospitals, particularly to treat acute conditions. Are these drugs more
susceptible to shortages? If so why? Is it possible that shortages
might increase in other drugs as well? It’s very important that
we take a close look at the specific shortages we see today and try to better understand
what economic drivers might have brought them about, and what that means for the future. The third, perhaps most
important question is why now? Immediately after my talk
Matt will be going over some of FDA’s drug shortage data in detail and showing how the
frequency of drug shortages has changed over time and I
don’t want to spoil his talk but you’ll see in his
charts that at some point around 2010 drug shortages went from being a rare and short lived
phenomenon to a common and chronic systemic problem. So what changed between then and now? So help point us towards
answers to these questions I would like to spend a little bit of time talking about a 2012 paper written by Dr Janet Woodcock and Marta Vashinska titled Economic and Technological Drivers of Generic Sterile
Injectable Drug Shortages. Although the paper is a few years old, in it the authors introduce a framework that I think can be of use to use today in thinking through some
of the critical drivers of shortages. So I’d like to spend a few
minutes just walking through a few features of that
framework and highlight some of the key insights
that we’ve drawn out of that that I hope can be relevant
for today’s discussion. So first this paper highlights this notion that supply disruptions,
including the product discontinuations and quality problems that we often talk about
when we talk about shortages are really only the proximate
causes of shortages. And these supply
disruptions typically have deeper root causes and
there’s one primary root cause that that paper highlights,
and that is the failure of the marketplace to reward
quality and reliability. So when facilities lack
quality manufacturing processes they become more prone
to failures and that in turn leads to supply
disruptions and shortages. But why the marketplace
fails to reward quality has been a really big puzzle for us and we think that understanding
this is really critical to our ability to understand
and address shortages. In our listening sessions and conversations with stakeholders which Keagan talked about have really only deepened this mystery for us. So over the course of our discussions we’ve heard different things
from different stakeholders. Healthcare providers
have told us that having a reliable supply of drug
is incredibly important to them, the drug shortages
impose significant costs, and the data bear that
out, and that they would even be willing to pay more for a more reliable supply of drugs. Yet others that we’ve
spoken to have told us that they have yet to see
real interest from buyers in the form of willingness
to pay for higher quality, more reliable drugs, although that may be starting to change. For now the market
simply doesn’t seem to be putting the premium on a
reliable supply of drugs that you would expect given the scope, scale and cost of the problem. Now this paper suggested
one major reason for this, which is that it can be
difficult for buyers of drugs to tell which drugs are of high quality and likely to be reliable. But we’ve heard there may be
other factors driving this, from the way drugs are reimbursed to the way contracts to
purchase drugs are written. So I hope that we can
think about this question over the course of the day. Why isn’t there sufficient
investment in reliable supply, and what can be done to change that? Another important insight from the paper, from this framework that
I wanted to highlight in addition to this route cause is that there are certain
contributing factors that can raise the
likelihood of shortages. Again as Keagan mentioned
at the listening sessions we’ve learned that the
marketplace for drugs has changed in a number of ways. Some of the changes, like
tightening profit margins and aging facilities can
increase the likelihood of supply disruptions. Unprofitable products
will be discontinued, and facilities may be forced to close due to quality problems. Other changes like a move
towards just in time inventories and consolidation of manufacturing can increase the likelihood
that their supply disruptions will lead to a prolonged shortage, and overall all of these
contributing factors combined might have
rendered the supply chain more vulnerable to shortages. So in today’s discussion
we hope to learn more about these industry
dynamics and these changes that we’ve heard about and how
they might affect shortages. So one last thing before I wrap up and hand over the microphone,
the clicker to Matt, I wanted to make just one
more point which is that the drug marketplace is incredibly complex and it involves a lot
of different players, many of whom are represented in this room from manufacturers to distributors to healthcare providers and more. And we’ve spoken to a lot of these players at our listening sessions and it’s clear that they all really, really
care about patient health and they want patients
to have a reliable access to the drugs they need. But it’s difficult,
and really none of them in a large and complex
marketplace can address these root causes on their own. And that raises one last question, how can we get a marketplace this complex and sometimes fractured to align and put more value on
quality and reliability? So hopefully in today’s
meeting by shedding light on the economic drivers
effecting shortages we can actually identify
new ways to work together and develop creative solutions
to address this problem. Thank you. – Thank you very much Adam. – So thanks Adam, let me
pull the mic a little closer. There we go, okay so
good morning everyone. I’m Matt Rosenberg and I’m
from the economics staff at Cedar, let me move
forward, there we go. So the purpose of my talk this morning is to share some of the
insights that we’ve developed around the scope and
scale of drug shortages using FDA’s data to help
inform today’s discussion. So just very briefly I want
to thank the colleagues of mine who’ve helped me
prepare the data in the talk. Okay, so a useful way that I’ve found for thinking about the scope and scale of drug shortages is to
measure their current and historical severity
or societal impacts. There are many ways to
capture this information and I think it can be
helpful to lay them out in terms of the lifecycle
of a drug shortage. So on the chart that you see here I’ve included the availability of the drug on the Y axis from zero to 100 percent, based on the historical
supply and on the X axis I’ve captured the passage
of time which might be months or years, depending
on the drug in question. The drug initially starts
out with enough product available to meet
demands, so shown as 100% here on the graph, then some
kind of disruption occurs and the marketplace is
unable to meet the amount of all the incoming orders,
and finally the production ramps back up and the shortage ends. So within this framework
we’ve come up with four components of shortage severity. The first two are ones that
you’ve probably seen before. The occurrence of the shortage, as in when we declare that a new or continuing shortage exists. The duration, so the time
from the start to the end. The third metric that we include here is what we’re calling the
intensity of the shortage. So this is a novel and preliminary metric we’re developing for this talk and it specifically captures
the depth of the shortage. So what portion of historical supply can’t be covered by the current supply? And finally it’s also important to capture the public health impact of a shortage. So this includes the
clinical practice changes that occur during a
shortage and the downstream effects of those changes. So this may include things
like the time and money needed to adjust a treatment regimen or even the worsening treatment outcomes that result from it. So FDA data don’t allow us
to directly measure this but they do help us
identify the types of drugs that may be impactful so
we can take a look at those and study further. So in the rest of this
talk I’m going to present the insights that we
generate in each of these four major areas. We use several data
sources to help us measure the severity metrics. So we compiled historical
data on drug shortages from archives of our public website from August 2000 to September 2018, and we combined this with information on volume sold of those drugs from the IQVIA National
Sales Perspective database. Before I show some more
information about our findings I want to very briefly give you a preview of our overall results. So in terms of occurrence we
find that ongoing shortages have become more prevalent
over the last year or so. In terms of duration there are more persistent shortages now then
we’re previously the case. In terms of intensity more then two thirds of historical volumes have
typically be unavailable for these drugs. And finally for the public health impact we use a case study to
show the potentially large treatment impacts that
occurred during a shortage. So our first major finding
as Adam highlighted is that there has been a recent increase in the number of active
or ongoing drug shortages. The broad trends in
the data largely mirror those in published
studies so I want to draw your attention in particular
to that last year or two on the graph. You can see that since mid
2017 the number of shortages has increased dramatically,
rising from about 55 on our website to nearly 110. This coincides with
recent natural disasters such as hurricanes Harvey and Maria. Our second major finding is that there are more persistent drug shortages
now then prior to 2013. We defined persistence in two ways, the blue line shows shortages
lasting two or more years and the red line
shortages that have lasted for five or more years. Whoops sorry, too soon. So you can see that although the number of persistent shortages has declined from it’s peak in 2013 that
may be a little bit encouraging there’s still more then 30
shortages that have lasted two or more years still ongoing, and more then 10 shortages
that have been ongoing for five or more years. Too far, so this table here captures the five longest lasting drug shortages over the 18 years of the data
that were presented here. And you’ll see that all
these shortages actually are still ongoing and some of them for more then eight years. These examples really
underscore the challenges that we’ve been hearing about
in our listening sessions around anticipating and coping with long lasting drug shortages. I’m now going to move
on to our next metric which is the intensity of shortages and before I present
our findings I want to briefly walk you through
how we approached this. So we calculate the
intensity of the shortage by measuring the percentage
of the historical supply that’s not available and this is actually part of how FDA does
evaluate incoming shortage notifications right now. So we implement this approach more broadly and we do that by starting with a list of all the drugs in
shortage so the same ones that you saw on the previous charts and for each of these we determine the baseline level of supply by averaging over the six months prior to the shortage. So for instance 100 units per month in the example I’ve put up here. Then when the drug enters shortage we calculate the intensity in each month. So for instance if 50 units
of the product are available the intensity is 50%, if
20 units are available, you can see where I’m going the intensity is going to rise to 80%. And then eventually the
production ramps back up and the intensity drops back to zero. So when we apply this to all of the drugs in shortage what do we see? Sorry I’m having some
issues with the, here we go. So on this chart I’m presenting
the average intensity for all shortages
beginning in 2013 or later. In each month here we
take the average across all shortages that are ongoing, and you can see that the
intensity remains pretty high for these shortages, so the
average is typically around two thirds of the market is unavailable across these drugs. This is still preliminary
work that we’ve done, so I encourage all of
you folks to continue thinking about this metric and further refining our approach. And the last finding that we have is that, sorry about that,
is that drug shortages can be very impactful from
a public health standpoint. We’ve heard from many folks
in our listening sessions about the challenges that
they face in continuing to treat patients during a shortage. Our data don’t directly capture this but we want to share a case
study that we’ve developed based on a JAMA article to help understand the potential scale of these impacts. More gentle this time. I focus on this shortage
of norepinephrine in 2011 and this drug is a
particularly important one, it’s a first line therapy
used to treat septic shock in hospitals. You’ll notice that the average
intensity for this shortage was about 30% so actually
well below the average of two thirds that we saw
on the previous slide. Good, 2017 study in
JAMA by Vale and others looks back on this shortage
and what did they find about the impacts? Alright, so what they
find is that physicians frequently switch patients to other drugs, particularly phenylephrine
which is another alternative, that’s used for treating septic shock. And what happened when they did this? Well you’ll find that
it actually turned out that deaths increased amongst
septic shock patients. So when you looked at
things in the aggregate across all the hospitals
affected by the shortage there was a 3.7% increase in deaths compared to those hospitals
that weren’t affected. So what does 3.7% look like? Well what we do is we
project this out nationally, by multiplying it by
the number of national septic shock admissions
and when you do that you find that the shortage contributed billions of dollars of health losses, and comparing this number with the numbers we’ve typically seen which is around maybe hundreds of millions of dollars in for instance switching costs and costs of purchasing other drugs you can see that we may be
dramatically underestimating the public health burdens
of these shortages. In fact it’s likely that
we’re still underestimating them even with this
number because this only includes deaths, so if there
are changes in outcomes that come just short of death we wouldn’t be capturing those. Now this is just one shortage of course but it really confirms what we’re hearing about the impacts of shortages
on health care delivery and it also shows the
challenges with looking at these metrics in isolation
that we’ve presented here. So even though this shortage actually had an average intensity that
was quite a bit lower then some of the others we’ve seen, it turns out that it
was very impactful still from the public health standpoint. We think it’s very
important for researchers to continue studying these
public health impacts of shortages and without
accounting for patient burdens we might be really
underestimating the costs and perhaps not committing the resources that we need to address this problem. To summarize what we found we’ve shown that the number of active drug shortages has sharply increased
over the last year or so. That there are more persistent shortages then we’ve typically seen in the past and that some of these
shortages are lasting for eight years or longer. That the intensity of
shortages remains high, typically more then two thirds
of the market unavailable. And that drug shortages could impose public health impacts valued
at billions of dollars or maybe even more depending on how these drugs are being used. Thank you for your time this morning and I’m looking forward to
hearing all of your thoughts as we go through the rest
of the discussion today. – Thanks Matt, and thanks to all of you on the panel for the presentations. (audience applauds) You all have heard now from
Keagen, Doug, Adam, Matt, representatives and the leadership from the drug shortages task force to provide a detailed framing and some new and more
comprehensive evidence on shortages. We’re gonna use that as a foundation for the sessions that are upcoming. So now I’d like to turn to a session focused on the economics
of drug shortages, again we are trying to get
a root causes here today. During this second session
we’ll hear presentations from some leading academic
experts who have been studying the underlying factors
contributing to shortages and the downstream
impacts of those shortages on patients and health systems. You got a taste for
that in the presentation from Matt. I’d like to ask our
presenters and panelists to come on up now so please come on up while I introduce you. First Rena Conti who’s
Associate Research Director for Biopharma and Public
Policy at the Institute for Health System Innovation
Policy at Boston University. Also Erin Fox, Senior
Director of Drug Information Support Services at the University of Utah and I’m very pleased to be
joined by Ernie Berndt as well, Ernie aside from being one
of my former professors is now a professor of applied economics at the Massachusets
Institute of Technology. We’re gonna start with some
foundational presentations for this session from Rena and Erin, Ernie’s then going to add some comments on some cross cutting
issues and then we’ll get into some time for
moderated discussion. So Rena let me turn to you first. – Thank you, I think Erin’s gonna start. – Okay then Erin, let
me turn to you first. – Alright, well thank you so much, I’m really happy to be here today. – [Mark] Make sure you get
close enough to the mic. – Okay, here we go, okay, I wanted to quickly talk about
four of the key challenges we have when we think
about drug shortages, particularly some of the economic reasons. We do have some issues with metrics, there are a lot of definitions, there are some elements
that are not yet defined. For example, how much time is wasted on some drug shortage management. It’s very difficult to
measure the amount of time that someone should be doing other things, like clinical activities
when they’re forced to be doing drug shortage
management activities. We have some key challenges
with our patient safety automation that is designed to
help keep our patients safe. This requires that we have
the same product all the time and that’s not the case. We have some clear quality deficits and if anyone has every talked to me we also have a lack of transparency. So our data from University of Utah that we share with ASHP
really do clearly mirror those that FDA has found and I don’t want this to turn into a who’s data is better, it’s just a little bit different. The types of shortages
that we’re talking about really do affect a wide
breadth of patients. So we’ve got things like
the most common antibiotics, chemotherapy agents, cardiovascular, central nervous system
drugs, things to manage pain, and then electrolytes
and nutrition and fluids. These are all extremely common
products used in virtually, except for chemotherapy
virtually every patient in the hospital and the ASHP
and the University of Utah data counts more shortages
is because we really think about how a shortage is
impacting pharmacy practice. Does the pharmacy have to change the way they are preparing or
dispensing a product? And we also do include
things like dosage forms, even devices, things like empty vials can be very disruptive
to pharmacy practice. We do frequently update the information, we also provide
information on alternatives and patient safety recommendations. This will hopefully help clinicians be able to manage through these shortages and minimize the impact to their patients. And so clearly alternatives
are not something that FDA can provide, so we think that’s one of the key differences. So one of the clear issues that comes up is we have a lot of sole source products. In many cases a single
firm produces about 90% of the total drug supply
and it’s extremely common to have only one single
source of raw materials even for multiple suppliers. That market share however
is not transparent to purchases, it’s very difficult actually for a pharmacist or a pharmacy or hospital to know which company has
the bulk of a market share. I think it’s interesting to think about what potentially limits
competition and new entrants. It may not make economic
sense for another company to come in and make a product
that has very low use. It might be a very very critical drug but we might not need multiple suppliers for a product that has fairly low use. We talked a little bit
about, we heard earlier today about mergers and
consolidation in the industry. One of the things that
we might want to consider is should the federal trade commission be required to think about
the public health implications when they’re evaluating mergers. Certainly they consider
the business issues but not potential impacts
to the public health if a merger occurred. And I think it’s also
important to think about certainly there would need to be support, economic support for
this but some medications are so critical and so
vital to hospital function that they really probably
should be considered part of our critical infrastructure. And I’m thinking of things
like fluids, saline here. So one of the things that is different now then it was even 10 years
ago is that the formulation actually really matters. All of our automation and informatics actually requires that you use the exact same product all of the time. The exact same NDC,
you can’t switch easily between a vial and a syringe. And that’s really not the
reality were living right now. Even a clinical unimportant change, suppose you have a 2mg
dose of morphine in a vial and a 2mg dose of morphine in a syringe, that simple change can
take hundreds of hours of time to change out
electronic health records, automated dispensing
cabinets, and all of the other important factors, barcode
medication administration, all of those other issues that we have to keep our patients safe. It’s impossible to keep up with. So that increased labor
is really important to try to measure. At the listening session
we heard FDA ask us about how much money is
it, how much time is it? And it’s actually a little
bit difficult to estimate this but I want to share an example,
this is what it looks like when you can lose your entire drug supply with one single recall. Hospitals would like
very much to avoid this. We need that consistent supply. Even switching, when we
had to switch IV push from small mini bags, that
required us to hand change 700 electronic health treatment plans and that was just for two drugs. So the impact of the labor
is very, very significant. And then we heard a little bit about would health systems pay
more for consistent supply? I believe that we probably would, however I would like to know
who is making that product. This is something that is not transparent, hospitals are absolutely unable right now, just based on quality. FDA does a great job of
making warning letters, and in special reports
public but if you look all of the drug names are mostly redacted. There’s absolutely no
requirement to disclose the actual name of the
company that made the product. And we can’t follow the
quality data to spend our limited dollars wisely. We also have few data available
for the 503B compounders as well, we see the
inspections but we don’t know when that circle is
closed and the companies have fixed those deficits. I also want to highlight, we talk about only having a single source of API and potential problems of contamination. We have seen an entire drug class, the safety of this called
into question this year. So in July 13th of this
year we saw almost all of the valsartan recalled due
to potential contamination with a carcinogen. We do have some health impact estimates that it’s probably a low
risk for those patients that were taking that product but we know that this class of drugs
is widely used in pediatric patients as well and we
don’t know the health impacts for those pediatric patients. We’re also still not done with this recall as we still find more and
more products being affected, just the last update was November 21st about this contamination. So just a few takeaways, drug shortages really mean that hospitals do
not have critical medications for patient care. Those who purchase medications
have very few choices due to sole suppliers and consolidation. We do have quality problems,
FDA highlighted that in their earlier presentation. These quality problems
are quite concerning but they’re not transparent
for us to try to reward that system. And last, we also really need a little bit more transparency into our drug supply. We want it to be safe,
we want all of those recalled products off of the shelves and away from harming our patients. – Erin thank you, next is Rena. – Good morning everyone,
this is joint work with Ernie Berndt seen here at the table. And also this work really
benefited from data from IQVIA from the FDA,
from University of Utah and also many discussions with Erin Fox, with Sylvia Bartell and
many others in the industry on FDA over time. So I’m going to very
briefly review three topics. The first is to make
sure that we understand what we mean by a shortage here. The second is to understand what we mean by drug manufacturer, and what
the current characteristics of generic drug manufacturers particularly in the non-oral space look like. And then lastly I’m going
to show you some data that tries to characterize how competitive the supply of generic drugs
are in the United States. Not only among those
that are in short supply but in a wider context. Okay, so in, there’s a lot of slippage in the way in which we
use the term shortage here and I want to just suggest
that really a shortage exists from an economic perspective when at any given market
price the quantity demanded by purchasers
exceeds the quantity that’s supplied in the market. In response to a shortage we
should expect prices to rise, at least temporarily and
quantity should also fall. New suppliers should enter the market and existing suppliers
should want to ramp up production in order to
frankly make more money in this product and over
time the combination of increased quantity supplied and reduced quantity
demanded as price increases should eliminate the shortage. In many cases here the
market appears to be working as expected, if demand is stable shortages should be transitory
and indeed what we’re seeing in many of the oral markets
that appears to be the case. That doesn’t appear to be the
case in some non oral markets, most notably the injectable
and other product categories. And many of the shortages
appear to have some periodicity that are shared among
them both in the oral and non-oral market which
suggests there is some kind of common cause that
has maybe something to do with demand but also maybe
something to do with supply. I would argue here that
we may want to actually characterize shortages
relative to kind of more classic shortages and
more disaster approach such as the one that we’ve
seen related to the hurricane. So I’m gonna spend the
vast majority of time talking about how supply
may be different here. And maybe changing over
time, but I want to be very clear here that demand matters. Many of the injectable drugs that are in persistent short supply
are medically necessary but that does not mean
that they do not have therapeutic alternatives that can be used. Also it’s very important to note here that demand for generics overall in the US has increased for a number of reasons. But the price at which
demand for these products exists may also be falling. What I mean by that here is
that yes we want these drugs, but actually we want them
at a lower price over time and that has something to
do with the distribution of rebates and discounts that
are existing in the market. Much of this is contractual
so we can’t actually see how demand for these products is shifting and what price point is
actually being transacted but it’s a really important
issue that needs to be better examined. Okay, so in terms of supply. Its very important that when
shortages are threatened and or occur stakeholders need to know who’s actually making
this product and which manufacturers are actually impacted by other classic shortage
issues or more disaster shortage issues. As Erin has already mentioned
this is very complicated by manufacturer
definitions and the opacity that really constrains prudent planning but also prudent research in this area. Just to put finer point on this, manufacturing of these drugs actually has two components to them, one
is the basic ingredients that go into making
this product, and second is the finished dosage form,
or the actual embodied product. Drug manufacturers may make
their own base ingredients and or outsource the production
of those base ingredients and or this finished products to contact manufacturing organizations. When submitting an
application and being approved for that application by
the FDA the sponsor files it’s own file or form specifying it’s own manufacturing method and where the product is being made and who is actually making both the base ingredient
and also the filled and finished product. But that is not necessarily public. These sponsors can list
their own facilities but also again very
much rely on CMOs to do much of this production they can also list their own facilities
but also CMOs as well. This really complicates
manufacturer definitions and therefore the counts
and the characterization of manufacturer here may
map the application holder but if the manufacturer is
made, or the drug is made by a contract manufacturing organization, the sponsor of the drug has listed the FDA and the manufacturer aren’t the same. One can be very tempted here to use the manufacturer that’s linked to the NDC here on the drugs label as
the accurate manufacturer but again because of contract
manufacturing organizations and also the prevalence and
actually increasing prevalence of repackagers in this space again, the manufacturer is not
necessarily the labeler. Furthermore, as I eluded to as well manufacturing identity and
location are restricted. Again the FDA collects this information when collecting annual
PDUFA and PDUFA user fees, it’s also on the DMF that it is filed. However, CMO relationships,
existence of where the source material for
the base ingredients are but also what the existence of backup is, is not public information. It’s not public information
at the FDAs website, you can also FOIA it. So to implement GDUFA
the FDA began collecting self-reported information on
generic manufacturing locations including both the base ingredients and also the fill and finish facilities and this data actually
provides a unprecedented window into the current structure
of drug manufacturing and it’s publicly available
on the FDAs website. Ernie and I just published a paper describing what we learned
from looking at this data, and I’m gonna just hit
the highlights here. First important take home is
that the vast majority of drugs manufactured in the US are actually made by a very small number of manufacturers. Second really interesting
and important point here is that the vast majority
of both basic ingredients and also filled and
finished drugs are made by foreign facilities. Okay lastly, how competitive
is the generic drug market? So we all have some very stylized facts suggesting that competition in this market is actually quite robust
however, little is actually known about the actual
patterns of generic manufacture and supply both in terms
of entry but also in terms of sustained supply and most importantly perhaps in this context
how much exit is there? We know a lot about how this
works in the oral market, but we don’t really know that
much about how this works in the non-oral market
and how this may relate to other performance outcomes including but not limited to shortages, how this matters for revenue,
how this matters for pricing. So in a couple of papers Ernie and I have tried to describe
this, the first paper we looked at manufacture
and supply of prevalent (mumbles) we had the advantage
of using IQVIA national sales data, here again the
manufacturer is the labeler. We did as best as could here
to kick out repackagers. And the primed market
which is very important and we’ll go through the rest of the data that I show you today is
a combination of molecule and form. Here’s what we found, the median number of stable manufacturers in this market for each drug market is two. The mean is five. 40% of drugs are manufactured
by only one supplier, approximately 50 are manufactured by either one or two suppliers. And the share supplied by one or two has been increasing over the past decade. Concentration is both about less entrance, but also about more exits. The exits actually
appear to be accelerating after 2010 to 2012 and really what we found quite interesting is that there are fewer
entrants and actionable exits among the non-oral drug space suggesting that the non-oral drug market would appear to be more
fragile in general. But it also suggests there may be again, higher fixed costs and may
even fewer manufacturers who can actually make
those non-oral products. We have a new study that
looks at incident drug cohort and also characterizes supply. Here we’re using quarterly data again, the same data source,
manufacturer is defined as the labeler and what we’re looking at is all drug products that experience loss of exclusivity between 2009 and 2012 and then we followed
them out for 15 quarters all the way through 2016,
to try to characterize who enters into these products
and how many are there. What we find is really interesting and again doesn’t necessarily match the stylized facts that we think we know about how competition
works in this market. The first is that, so 75% of the sample experienced entry over time. The vast majority of the entry happened in the first two years after exclusivity. 25% didn’t experience any entry over any of the time period that we saw. Again, the number of
entrants appears to be higher among oral products and less
among non-oral products, and there are also exits that we observe, and the periodicy of the
exits appear to occur two years and post loss of exclusivity. Many of the products have
very low quarterly revenue, both upon entry but
also exits appear to be predicted by low quarterly revenue. And many of the products that
don’t experience any entry are ones that are made
by multi product branded and generic firms. These are very large firms that appear to specialize both in
making branded drugs, but also supply generic drugs as well. Finally we believe that
this empirical work raises many other key
unanswered questions. First what product and
also firm characteristics determine entry but also exit. Are there legal rationales? Are there manufacturing
problems that potentially determine whether or not
a product ever experiences entry and if so when
they experience entry? But also to what extent gaming tactics or shenanigans, as Scott
Gottlieb likes to call it, are determining both
entry but also potentially exit here as well. Lastly, we don’t know
whether there are more potential suppliers than actual suppliers and what their characteristics are and what is there availability
over the product lifecycle. So if we wanted to pull more
entrants into this market we don’t actually know to what extent there is capacity to do
that in our existing, current configuration. I’ll stop there. – Thank you very much for the comments Rena, Ernie let me ask you
based on what you’ve heard anything you’d like to add at this point? – I think what we’ve
learned several times now is that injectables and other formulations have a very different
role and very different performance characteristics
then do the oral drugs. We see that initially we saw it when IQVIA about six or seven years
ago said that about 80% of the drugs for
which we had a shortage were injectables. That numbers gone up and down a little bit but it’s still way over 50%. And it raises some interesting questions, a study by Chris Stamberg took a look at what was the time pattern of shortages and he found that the
time pattern of shortages for injectables was very, very similar to that for non-injectables
which was a surprising result. The proportion of non-injectables was much lower in terms of shortages but the time pattern was very similar and that suggested to
him that there must be an immediate common cause
that affects injectables more then non-injectables
and he hypothesized that it was partly FDA inspection
that were driving them. Form 43 audits that were taking place that discovered after we had
some very dramatic shortages seven or eight years
ago that a fair number of manufacturing facilities
that make injectables really have a serious
safety sterling problems. And so we certainly thank
the FDA for doing their job on finding those but that
may have inadvertently lead to a fair number of
the injectable shortages. I was gonna say, my first
sentence was gonna be, I had a stroke eight weeks ago, so my first sentence was going to be it’s good to be here today. But on second thought it occurs to me that what we’re talking about
today is enduring solutions and we’ve been talking
about that for a long time for five, six, seven
years and so it’s probably not a good thing that we’re all here today worrying about that because somethings, what’s persistent and
sustained is not the solution, but the problems and I think it’s useful to think briefly about what are some of the underlying reasons? I teach at a business school
and one of the mantras we have is if you can’t observe something
then you can’t measure it. If you can’t measure it
you can’t monitor it, and if you can’t monitor
it you can’t manage it. And that seems to be our
problem with figuring out who manufactures a drug. We really don’t know
as Professor Conti and Dr Fox have discussed
already, it’s a complex manufacturing process,
there are multiple stages. It’s increasingly abroad
and it’s abroad in countries that have nascent regulatory facilities, increasingly so from China and India, East Europe and so it’s
really difficult to follow. Globalization has really
hit it extremely hard, and we really don’t know who
makes many of these drugs. The FDA has a database,
several of them actually that tries to relate to each other with some success but outside
the FDA very little is known as Dr Fox and others have said. Hospitals don’t know who makes their drugs so trying to contract
chemotherapies for clinical trials for the next two, three
years and regimens, they’d like to know who’s the manufacturer of their drug one who’s
had a safety problem. That information is not
available to hospitals or to GPOs and so I
think the first message I’d like to leave with you
is we really have to focus on finding out how we can make information more available to the
various stake holders on who manufactures a drug. The second issue that I’d
like to briefly mention is that in most markets we
have some idea of quality. Be it an airline, there are
sort of measures of quality out there, the ironic
thing about FDA drug policy is it certifies bioequivalents
but then seems to suggest that the quality is the same
across all manufacturers. And we know now that that’s not the case and yet as Dr Fox just pointed out, we don’t have public information on what this safety quality
and inspection results are from the various FDA audits
and I think if we work very hard on two issues,
one on finding out who actually manufactures
things and putting that into a publicly available database, and two developing some
metrics of quality. It doesn’t have to be an FDA measure, we’ve many other instances
of quality manufacturing certification by other organizations but I think those two
steps would probably be the most important
first two steps to make. Let me stop there. – Ernie thanks, and very glad
to have you with us today. We do have a few minutes for questions from the audience, so I
encourage you if you have one to head to the microphone. You all have emphasized,
while you’re doing that, you have emphasized the
role of transparency and Ernie just outlined
some specific transparency steps that could help
it does still strike me that most of these shortages are occurring in the injectable market in areas where there is not a small supply to bring in Erin’s comment. So anything you all would like to add on why we seem to be
seeing more of these cases in the last decade in these
big injectable markets. Isn’t that an area, where as Rena said competition would normally
expect some more input. Don’t talk about transparency, we’ve already covered that. – I do think it’s worth
saying that these products are hard to make, they’re
difficult, it’s not easy. So it’s not easy for folks
to enter into this market. And I know Rena has some comments. – Yeah so we linked Erin’s
data to the IQVIA data that we had over the past couple of weeks and we were actually unable to link about 10% of the drugs to our data and we think that is
because many of these drugs never actually enter
into retail trade at all. They really are just
pushed into the hospital where IQVIA may not actually
have full date purview. But secondly what we found
was that among the drugs that we were able to
link 20% of oral drugs go into short supply at some point over the 10 year period,
but 40% of injectables go into short supply
over the 10 year period that we were able to link
at some point in time. So that again suggests
that there’s something about the fragility of
supply in these markets that’s really quite different. I would also, I have
gotten very interested in the base ingredient issue here. I suspect that not only can very few, only can very few manufacturers
make these products, but only very few manufacturers
actually have access to the base ingredients
to make these products. And there may be some cartel behavior or some contractual arrangements that again block other
manufacturers who would want to enter into this space, who would want to ramp up production. – I appreciate the thoughtful
further additions there, we are tight on time but I do want to, if maybe both of you could go
ahead and ask your comments, let us know who you are
and we’ll see if we have some brief responses to those. – [Deborah] Certainly
so my names Deborah Drew I’m the president and CEO
of Drew Quality Group, the first non-profit 501C3
generic drug manufacturer established in the United
States in April 2014, actually up in Massachusetts area. So I have a question in reference
to drug shortages numbers and we always see the
chart that the FDA puts up with 2010, 2011, 2012 numbers
being up closer to 300, and then we know that the
law was passed in 2012 that rewrote how they
defined drug shortages. So if we looked at the drug
shortages in 2010, 2011, 2012 using their current
definition, wouldn’t we see, from my understanding that
the number of drug shortages have actually been stable as
defined by the FDAs method. Because the numbers
you’ve reported are still at the higher levels that the
FDA was originally reporting. – Brief answer. – [Deborah] It’s a really simple one. – I can’t really comment
on FDAs methodology, just because I have a
different definition. – [Deborah] I know
you’ve spoken many times with my colleague Ian Strifler. And so as part of that question
we always talk about pricing and we know that United
States about 40 to 45% of most prescriptions aren’t filled because the patient can’t pay for it. If we start saying the best way to address drug shortages is to push prices up then from an economic
standpoint aren’t we then of course creating a
situation where we will have more patients that will
not be able to afford their healthcare just from the standpoint of running economics. So I’ll just leave that on the table. – Thank you. – [Marian] I like that, very
nice because it will help with some of what I had to say. Marian Mass, I’m a practicing physician and I’m the co founder of
pPacticing Physicians of America. Out in our physician community
and our group is nationwide we’re certainly seeing a lot of this and we’re the ones that
have to go back and answer to the patients and it’s really
a naughty problem for us. So I’ve been reading a lot about this and one of the things
that you said struck me. You brought up the fact
that revenues are down, the previous woman said something about raising the prices, I can
only use this as one example but I have read in various literature where hospitals are charging
their patients bills extraordinary amounts of
money for things as simple as normal saline and when you
look at this shortage list these are things that are simple, bicarb, saline, magnesium,
things that you would think would not cost much to make, I know it’s more complicated then that but why are we not uncovering
the whole money trail? The very onset of this Dr Gottlieb said, what are the barriers to entry? So where else is the money
going because it would seem to me something else is,
if there are high costs that are being charged to the patient who else is sucking
money out of the system, follow the money. – Any comments on that,
Rena you did mention that prices seem to be coming down, net prices seem to be
coming down all the time just by some of the reasons
that you all suggested, prices might even be
higher for these complex, at least difficult to
manufacture products. – Yeah, so Ernie and I have wondered a lot about why it is that monopoly
supply of these products should result in higher prices, and or shortages should
result in higher prices, only we don’t actually see that. And we’ve wondered whether
it’s monopoly supply leading purchasers that
have very, very strong bargaining power and maybe these products are being purchased in
bundles where the prices of, the existence of
the drug and it’s price is kind of not really what’s
the main bargaining power, or the main bargaining
issue that’s on the table for these products. – [Marian] So in other
words you need to find what the main bargaining issue
is, follow the money trail. – Well it could be the brands. So again many of these
products are being manufactured by multi product firms
that are both making brands and generics and so maybe
there’s some sort of bargaining where the higher prices are
being offered for the brands and the generics are
still kind of smaller. The price of those products are
really what’s at issue here. – I want to thank you all for discussion and laying a foundation. You’re right Erin these
problems have been persistent but I think thanks to your research, research that FDA presented earlier, we have a better understanding, maybe not a complete
and full understanding of the causes of some of these shortages. Certainly a better understanding of their characteristics and futures and also, even in this discussion some
ideas about steps forward to try to address the shortage
problems that could be new. So thank you all for laying the foundation and I want to make some more progress in our next sessions on
those steps forward as well. Thank you very much. (audience applauds) A lot of the day is going to be focused on solutions and directions for building on some of the ideas and
issues that our panelists and thank you for the
questions and comments that our commentors have
brought up already this morning. In the session on the health impacts and economic consequences
of drug shortages we’re going to focus on the
impacts of drug shortages themselves, how the persistent challenges and supply of crucial medical products are effecting patients,
providers, pharmacists and the provision of quality care. To help us do this we have three panelists who I’ll introduce now
while they take their seats. Yoram Unguru who’s a
member of the Bioethics Steering Committee at
Children’s Oncology Group and Pediatric Hematologist Oncologist at the Herman Walter
Sanderson Children’s hospital at Sinai and the Burman
Institute of Bioethics at John’s Hopkins. Beverly Holcombe who’s a
clinical practice specialist at the American Society for
Parenteral and Enteral Nutrition and Malcolm Ganyo who’s the
Director of Pharmacy Practice and Quality at the American
Society of Health Systems Pharmacists and I think
we’re starting with Yoram is that right. Please go ahead. – Morning, on behalf
Children’s Oncology Group and Childhood cancer specialists thank you for the opportunity to be
part of the discussion. COG is a national cancer institute supported clinical trials group and the worlds largest
organization devoted solely to childhood and
adolescent cancer research. From across the US COG bring together more then 9000 experts from
over 220 medical centers and we care for more then 90% of children with cancer in the US. I’d like to begin by
sharing a number with you. 85, approximately 85% of
all children with cancer are cured of their diseases
using old and off patent drugs for which we have no alternatives. Typically we get one shot
to cure childhood cancer, we don’t do that it’s almost impossible. As we’ve heard many of the drugs that have been and remain scarce belong to the sterile injectable class of drugs and this is certainly true when it comes to chemotherapy
and supported care agents. Importantly these injectables
they make up the backbone of proven and lifesaving regimens not only for kids with cancer
but for adults as well. And because most chemotherapy
is given by injection oncology practices are especially affected by these shortages. And to add insult to injury,
at least off of the data that Erin showed, chemotherapy
and supportive care agents are consistent in the
top five drug classes that are in short supply. Because these standard
childhood cancer regimens are lifesaving with few
if any alternatives, shortages of these proven
regimens directly jeopardize children’s well being and their survival. Beyond the impact on
clinical care these shortages have a lasting impact on clinical research and threaten our ability to
achieve meaningful progress in improving the lives
of kids with cancer. So let me gives you some
real world examples. Over a three month period
in the summer of 2016 three chemotherapy agents, bleomycin, etoposide phosphate and wini asparaginase became in short supply and together these three drugs are
part of curative regimens for many children with
most types of cancer. And then just earlier this year, two chemotherapy agents
vincristine and etoposide became scarce and these two drugs are used to treat and cure nearly every form of childhood cancer. The consequences of drug
shortages are far reaching, beyond the associated economic costs, drug shortages result in
increased medication errors, delayed administration
of life saving therapies, inferior outcomes and deaths. To give you another example, in 2009 there was a shortage of a chemotherapeutic called mechlorethamine used
to treat some young patients with Hodgkin Lymphoma and
at the time of the shortage evidence suggested that
another chemo therapeutic called cyclophosphamide was as effective. So 40 adolescent patients who got lymphoma got the alternative. Well the two year event
free survival of those kids who did not receive the standard of care was 12.5% lower, and
while there were no deaths these kids got exposed to
considerably more rounds of toxic therapy including
stem cell transplantation, the long terms effects
of which remains unclear. We know from previous
reported data the shortages directly cause harm and we also know that they result in deaths. Also as reported by the Institute for Safe Medication Practice it’s
chemotherapy shortages more then another other class of drug that impact patient safety. Suddenly we’re using drugs
we’re not as familiar with in combination with others and
this is a recipe for disaster and this isn’t a theoretical concern. We know from published data that these chemotherapy shortages have
resulted in a high rate of both near miss and
actual medication errors. What this means is that the problem isn’t just about not having enough drugs. The downstream effects of the shortages compromise quality and
ultimately the safety of the drugs we prescribe to
the children under our care. I’ll give you another example
of that ineffective safety. As we heard over 80%
of the raw ingredients we rely upon for drugs here in the US come from places like China and India. Well in 2015 there was a shortage of yet another chemotherapy
drug, you see where I’m going, this one called doxorubicin. This is used by scores of kids and adults with cancers and US
regulators faced a dilemma. Either they allowed
patients not to receive the lifesaving chemo
they need, or they import the ingredients to make the drug from a Chinese plant that
had poor quality controls that they previously censured and that’s exactly what they did. Beyond the effect on
patients shortages cause countless problems for providers at the height of the
shortages a survey of adult or medical oncologists
found that a staggering 83% of the oncologists weren’t able to prescribe their
preferred chemotherapeutic. Over three quarters had
to make a major change in their treatment by either
picking a different regimen altogether or swapping out a drug during the course of treatment. And over 40% had to delay
the start of treatment because of a shortage. So imagine you’re told I’m
sorry Mr Smith you have cancer but oh we can’t start treatment yet because we don’t have the drug. And 70% of these oncologists said that their hospital or group
lacked any type of guidance of how to allocate the drugs. In my world of childhood cancer, two studies, one in 2015
and again just last year found that two out of
three pediatric oncologists reported their patients
clinical care was compromised because of these shortages. We cannot continue to overlook the economic records behind the shortages. Costly chemotherapy agents
with limited efficacy are rarely if ever in short supply while inexpensive, older
curative drugs are. We don’t see shortages of six
figure chemotherapy agents that may prolong lives by a few months but shortages of decades
old proven and life saving medication that costs
dollars per dose are. Where’s the logic? Recognizing some medications
are more critical then others many countries in the world have adopted the World Health Organizations
essential medicines list. An essential medicine
satisfies the priority healthcare needs of the population and these medications are
both clinically effective, cost effective and meant
to be in constant supply in appropriate dosage forms. In short access to essential medicines is a basic human right. The current WHO essential
medicines list for children includes 18 chemotherapeutics and four supportive care agents. Now it may shock you to
hear but over the past two and half years nearly two thirds of these essential medicines
for kids with cancer have been or currently are
in short supply in the US. In fact as of last week five of these 18, so nearly 30% are in short supply. And during this same
timeframe an additional seven chemotherapeutics
that aren’t even on the essential medicines
list have been or are in short supply here. Experts agree that the
single most important prognostic backer for a child with cancer is place of birth. Ironically the US, the leader
of medical breakthroughs and one of the most resource
rich countries in history is also a leader when
it comes to shortages of lifesaving chemotherapy
and supportive care agents. Over the past decade we’ve repeatedly seen the devastating and far
reaching implications of these shortages. So I’d like to wrap up with
another real world example. As I previously mentioned,
and as we heard, most of the medication
that are in short supply are these older sterile injectables. And we know that drugs
that have been developed decades ago are more likely
to be in short supply. So take an example like
acute lymphoblastic leukemia by far the most common childhood cancer, accounting for nearly
a quarter of all kids who develop cancer, has a
cure rate of nearly 90%. Well over the past decade
eight of the ten drugs most commonly used to treat and cure ALL have temporarily been unavailable. Given the continued shortages of drugs, especially generic
injectables that are essential to the treatment of children with cancer the United States should create an essential medicines
lists for pediatric oncology and other drugs. The FDA in 2013 and
again in 2018 considered such an approach to address the shortages. Solving the US drug
shortage crisis however requires more then just an
essential medicines list and some of the innovative
ideas that we’ll hear about in upcoming panels. Ultimately what’s needed
is greater involvement by government, Congress must act and grant federal authorities the ability to ensure patients in need have
access to medications. Children with cancer
should not have to continue to suffer because of an
inaction and lack of will. They deserve better, thank you. – Thank you Yuram. Yuram thank you for that
very detailed presentation. (audience applauds) Next is Beverly. – Good morning, thank you for including the American Society for
Parenteral and Enteral Nutrition, also known as ASPIN in this
very important public meeting. ASPIN is an organization
of healthcare providers that are dedicated to
optimizing clinical nutrition and metabolism. It’s an organization of about 6500 members internationally that are involved in various aspects of clinical nutrition including parenteral or
intravenous nutrition and enteral nutrition. We have initiatives in the
areas of clinical practice advocacy, education and research. And I’d like to tell
you a little bit about how shortages have affected
the patients that receive parenteral or intravenous nutrition. Parenteral nutrition is a
therapy that is lifesaving for those patients who have
gastrointestinal disfunction or in some cases complete
intestine failure as a result of their inability to eat so they’re unable to
absorb adequate amounts of nutrients and fluids, and may be on this intravenous nutrition
for short periods of time in the acute care
setting and some patients require this as life long,
life sustaining therapy to provide adequate nutrition. The patients receiving this therapy cover the entire lifespan from neonates to the geriatric area and as I mentioned may be used short term
in the acute care setting to a long term patients who
require this therapy for years and receive in through
home infusion companies at their home so it’s an
ambulatory type therapy. Parenteral nutrition is all injectable, sterile injectables, parenteral nutrition may be composed of as many
as 40 individual ingredients, it’s a very complex chemical mixture, often described as a
chemists worst nightmare. Since 2010 every component
of parenteral nutrition has been in short supply at least once and as was noted in one of
the previous presentations one of our critical
components multiple vitamins has been in short supply
for eight and a half years. So as a result of multiple shortages patients may continue to receive
ever changing formulation. Changes have to be made
because one product is in short supply or
an outage and oftentimes the amount a patient may receive
of a particular component may be completely eliminated because there was no alternative. For many of the products
there is only one source. Constantly changing formulas
or decreasing the dose of any of these components
which includes amino acids, carbohydrate dextrose, sterile water, intravenous lipids, electrolytes, many of which have been mentioned today, calcium gluconate, magnesium sulfate, sodium chloride, so many
have been in short supply at one time or the other. This complex mixture, changes can have a detrimental effect on
our patients and then it’s constantly changing,
sometimes changing to an alternative component
results in adverse patient outcomes. Some of this has occurred
and patients may develop a nutrient deficiency because
the dose has been decreased and in some cases completely eliminated like the zinc shortage that happened about five or six years ago that resulted in the death of neonates
due to zinc deficiency So it’s an ever constantly
changing formula prescription for these patients. So what effect does this
have on prescribers? Prescribers must look for alternatives or decreasing or rationing
the dose it’s one thing to have to switch from
antibiotic A to antibiotic B, but when you may have five
or six or seven components of the parenteral nutrition
formula in short supply. The prescriber has to
be constantly thinking about not one component
but multiple components, and that may result in prescribing errors. And one thing that had happened
with dealing with shortages since 2010 is that younger
clinicians, including physicians, nurse practitioners,
pharmacists, dieticians and others involved in providing this care do not know what the appropriate dose of a particular nutrient is anymore. They have been dealing
with a world of shortages and outages for their entire career. I have poled young
clinicians and they’ve never had the opportunity or the privilege of prescribing this therapy in a world where they had every
component in full supply. So that’s quite concerning
when we look at the educating and training of those who may
be prescribing this therapy. From a pharmacists perspective
there is a great risk for changing to alternative products, as Erin mentioned we
have to deal with changes in technology including our
automated compounding devices that are used for these formulations. So there’s constant change,
product made different in concentration, there’s
also a constant exchange of information when prescribers
prescribe one component and they have to switch to an alternative. We’ve had numerous errors
reported to the Institute for Safe Medication Practices or ISMP resulting with errors, suboptimal outcomes and some devastating errors as the result of changing them and
using different products as a result of shortages. This continues into the
administration process. Nurses may have to deal
with different products. The shortage of amino acids
last fall lead to many institutions completely
changing the type of product that they use from something
that was compounded to a product that is
commercially available, that included changing the
entire administration system from tubing to administration equipment. So this is, shortages have
been and continue to be quite devastating for not
only the patients prescribers as well as pharmacists that are involved in providing this care. We look forward to a time when we have a full supply of products
and the opportunity to provide patients the
appropriate care that they deserve for those receiving parenteral nutrition. – Beverly thank you very much. I’d like to turn now to Michael. – Thank you, and on behalf of ASHP I’d like to say that
we’re grateful to be here to represent hospital
pharmacists and also pharmacists in all disciplines. You’ve heard the name
ASHP, the American Society of Health-System
Pharmacists already today. We are a member, professional organization of about 45,000 members. We represent pharmacy technicians, student pharmacists. The pharmacists who serve as providers in ambulatory settings and hospitals. Our vision is that medication
use will be optimal, safe and effective for
all people, all the time. And unfortunately with drug shortages that’s not possible. You’ve heard some very compelling examples from my two colleagues here. I think it’s fitting
to have representation from nutrition support and from oncology, as those are the two disciplines outside of pharmacy who
probably have been most consistently affected
over the past decade, probably include emergency
physicians in that list. But we have continuous
examples of patient harm and reduced optimized care of our patients due to shortages so we’re here
to talk about the impacts. I will focus a little
bit more on patients, I’ll provide a few more examples because we know for sure
the suboptimal treatment we’ve heard examples of those already. Another example using a regimen of paclitaxel ifosfamide as (mumbles) a bleomycin containing
regimen with about a year, year and a half ago there
was a shortage of bleomycin. That other regimen that I just named is equally as effective but
it requires inpatient stay, has higher adverse effects. So we’re exposing
patients to any pathogens within the hospital,
increased costs associated with that stay, and more side effects. Another example removing
bleomycin from a blood cancer regimen after two cycles
to conserve it for patients who need it, so it’s not
uncommon for a patient to get two cycles of that chemotherapy, the APDV regimen and then undergo scans to see how they’re progressing and because of the shortage
have the oncologist remove that bleomycin from the regimen so they can save it for
someone who may need it. We know of increased medication errors, we’ve talked with our colleagues at the Institute for Safe
Medication Practices, we’ve already heard of
them referred to today. But we’re using unfamiliar products, we’re using routes we’re not used too, we’re switching from saline
mini bags to syringes, we’re using new equipment, syringe pumps that we’re not used to. We’re trying to program the
electronic health records to adjust for those changes
as quickly as possible. All of these things are done in a hurry because suddenly we find out we don’t have some of the basics, some of the staples of what we use to take
care of our patients. So I’ll give you an example
of a recent shortage with injectable opioids,
hydromorphone or dilaudid comes in multiple strengths,
multiple concentrations and those concentrations are
typically per one milliliter. So you may have a nurse
who’s used to administering a two milligram per one mil dose, pulls a one mil vial out
without looking at the strength, not realizing that it’s
actually four milligram because that’s all the pharmacy
could get at that time. So you can imagine a
twofold potentially even five fold increase to a 10 milligram per
one mil concentration. And we know back in 2010
during the morphine shortage that there were two fatalities associated with incorrect conversion
between hydromorphone and morphine, so these are real risks, these are real errors that occur. So I think we’ve established
the impact to patients, let’s talk a little bit about the impact to health systems and hospitals. There was a paper published in the annals on internal medicine just in September that estimated an increased
cost of $230 million per year. Those costs are only
the drugs in shortage, that doesn’t include labor
that goes into repackaging or trying to find alternatives,
it doesn’t include the cost of alternatives, that’s actually just the drug from before the shortage to the time that the
shortage has been resolved, the costs have increased by that much. Based on what we’ve heard today perhaps that’s a market correction
to what’s sustainable for manufacturers. Regardless that’s a
cost that health systems and hospitals have to absorb. In that study they observed
that the average increase in wholesale acquisition
costs went up 20%. If it has three or fewer suppliers that wholesale acquisition
cost went up 46%. If we want to talk indirect
costs we can talk about technician labor, pharmacy technicians may be taking a large vial
of morphine for example that has 50mg and you’re gonna tell them they can’t get 2mg
syringes for patient care, well they’re gonna take that 50mg vial and they’re gonna repackage that. That takes a lot of time,
it takes a lot of labor, there’s risk in compounding
manipulating sterile products and guess what at the
end of the unused date for that syringe it has to get wasted. So now we have a drug in short supply that because we were
forced to repackage it we have to waste it. So there’s increased time associated with the technician labor,
there’s increased costs associated with waste
and the cost of the waste is less triggerful then the
waste of the actual drug that’s not being used for patient care. Often during a shortage
there’s off contract pricing where health system may not have access to their primary manufacturer,
they will have to reach out to a secondary manufacturer
and if they don’t already have a relationship
with that manufacturer they’re either paying more, they’re getting in line to get a product. There’s a gray market,
there’s secondary wholesale sources all of these increase costs, increase labor it takes to get those drugs into the hospital. For those who are familiar,
503B outsourcing facilities offer a solution and the question of how much is a drug worth,
there was one example that we’ve learned about
where a traditionally manufactured product was not available and so working through a
503B outsourcing pharmacy that product was available,
however it was about 15 to 20 fold increase in price. And you know what the
health system paid it because they needed that drug to take care of their patients. So what is the value of
that drug to the facility? It’s definitely a question
that needs to be explored. And the cost to the
health system as far as just the medical staff,
the time needed to help make decisions about the shortages. The nurses who now have
to stay at the bedside to push a medication through the vein instead of letting it infuse because small volume saline
bags are not available. And then the indirect immeasurable effect on the resilience of our medical staff. We already know that there’s
a high rate of burnout among providers, among
pharmacists, among nurses. By asking them to
continually take on more risk by using these unknown
routes of administration but using less familiar products, by asking pharmacy
departments where you see the tip of the iceberg,
and I hate to use a cliche but the pharmacy departments are battling these shortages constantly, it’s daily. It is purchasing folks on the
phone with the wholesalers and with the manufacturers finding out the latest information constantly. So that decision that’s
being made by the providers, there’s a ton of activity that happens before that’s even done. So there is a toll
being taken on the staff who are managing these
shortages on a daily basis. We look forward to
working on some solutions. We know that the FIDASI legislation from several years ago was successful but we think it’s time for more regulatory and more policy change. – Great thank you very much Michael. We do have some time for
questions or comments from those of you who are
here, so if you have any again please come up to the microphones. I do want to thank out
panelists for a very effective overview of the
consequences in pharmacy and cancer care and pediatric
care and parenteral nutrition, and emergency department care. The consequences for patients
but also for the economic consequences from the shortages themselves from the costs of
compounding and repackaging and all the labor costs associated with having to do the work
around and the modifications in care processes. So thank you all for a
very effective overview of this high range of
costs and patient impacts. Please go ahead. – [Retu] Hi my name is Retu Sani, I’m an emergency physician
and EMS physician. I represent the National
Association of EMS Physicians which is an organization that represents EMS medical directors
and EMS professionals. We’re the group that provides the training and the protocols for your community. So if you call 911 we’re
taking care of you. This issue has been an ongoing issue, we’ve been in continuous
drug shortage mode for over 10 years now. The vast majority of things that I carry in my ambulances are sterile injectables. There are very few oral medications that we give in an ambulance
’cause most of what we do is time dependent so when
we look at kind of these impacts I think one of the
things that’s really important as we talk about categorizing
these medications is really looking at what I would say are the essential emergency medications and categorizing those and
tracking those uniquely because when those are
unavailable to my crew in the back of an ambulance, driving 30 miles an
hour or 60 miles an hour there’s no other choice
and these are medications that impact immediate life
threatening situations. So that would be kind of our main goal is to get those categorized. Recently we’ve had the sterile opioids, injectable opioids, so if
you’ve got a femur fracture from your ski trip and
they’re out of that, good luck driving down the mountain. In my particularly agency we could get no injectable anti-emetics
for the last three months. Nobody gets car sick in
the back of an ambulance, and we’ve had various episodes in which cardiac arrest medications
were unavailable. And again this is life
threatening and immediate stuff. The other thing that’s interesting is that we are a practice where we have other providers besides ourselves
taking care of the patient and it’s a lot different
to change out medications when I have to train in
my system 325 paramedics about this new drug that
does kind of the same thing that the old drug did but you
give it at a different rate from a different syringe,
with a different, and the risk of error is high. And we don’t get six months notice, we get a notice like today
I couldn’t order ketamine, what are we gonna do about that? And then I’ve got to put in a process for training everybody very briefly. So these happen very quickly, it makes it very difficult
for us to manage them very quickly and get them changed and it leads I think to medication errors more frequently. We don’t have the ability to
repackage in EMS typically so I can’t buy a giant vial of morphine and make little syringes. Some of our agencies are
hospital based, they can do that, that is not an option for EMS. And every time we make a protocol change the risk of error goes up and that’s why we do these thoughtfully and over time, and every time we’re
hit with a new shortage we have to do emergency changes. So you know I think the key concepts are the stakes for the
emergency side are high. We also believe that
this affects our national preparedness, if we don’t
have enough medications to take care of illness and injury without a big national problem
it’s only gonna get worse and we need to track
these essential emergency medications separately and uniquely and create solutions around them. – Thanks very much for
that comment to look at what’s at stake in emergency medicine. I do want to try to get to
the other three comments that are, the other three people that are at the
microphones so I know these are really important issues
but if you can be concise please do. – [Jessica] Sure I’ll try
and be brief my name is Jessica Hardesty I’m a
practicing obstetrician. Sorry can’t hear my name
is Jessica Hardesty, I’m a practicing obstetrician. I’m here by myself, I’m
not representing a group or any other sort of organization but just to piggy back
on some of the things that have been discussed
maternal mortality and morbidity is a real hot
button issue in my world and a lot of the medications
that we use to save maternal lives are in critical
supply or in shortage. Medications that are very
simple, believe it or not, normal saline can save somebody’s life. Magnesium sulfate, pitocin. Medications that I use
for hypertensive crises have been on shortage. We now are seeing it on the neonatal side. Like my emergency medicine colleague said, we found out that day that betamethasone which is basically the
most important medication you can give a mom who’s
expected to deliver a pre-term baby was on shortage that day. I work in a high resource
setting where these shortages you would think should not
occur but unfortunately they do. I think that the frustrating thing for me as a practicing physician out in the field is that I’m held
accountable by my patients. I hold myself accountable
for the care that I give and it’s very frustrating to be the only one that’s held accountable
in these settings. I think as we look to find
what these barriers are we need to hold more people accountable because at the end of
the day it’s the patients that are looking toward
us and it’s becoming increasingly difficult to
provide appropriate care and safe care. – Thank you very much. – [Michael] My name is Dr. Michael Read, I’m an Emeritus Professor
of anaesthesiology, critical care and a bioethics scholar at the University of Kentucky, prior to that Mass General Hospital. I would like to suggest that of everything that the speaker here said
before for emergency medicine and the other questioner
could be better addressed by the FDA if you were to also
to include in your purview the tremendous changes
in title 18 and title 19 reimbursement that are
impacting this issue. Dr Conti talked about delays and so forth. Time is money, not only for a manufacturer but for a clinician. (phone ringing) Oh how unfortunate, very bad timing. But the FDA is looking
with too much narrow angle glaucoma at the issue. Adam Smith unfortunately
couldn’t attend this session and you have to measure the full panoply of the economics, the payment structure for the pharmacy people and I had to go take a pharmacy residency
as a professor of medicine to understand why the
right hand doesn’t talk to the left hand in
the federal government. And the guys who created
the anti-trust law got blindsided by
Congress a few years back. I hope we will have some
discussion about the money side of this because it takes
money to make a drug, and not only that it takes money to make a replacement drug. I hope that this meeting
will not be an economic disconnect between the two. – Thanks for the comment
I do want to emphasize we talked about in our last session on the underlying
economics with some leading economic experts on this
topic in the country that we want, that I know FDA wants a broad range of issues raised, not just those directly in the FDA purview that are contributing to this issue and that certainly includes economics and pricing and the kinds of things that we’ve heard about
now and also this morning. So last couple of
comments and we’ll wrap up this session. – [Jim] Okay my name is Jim Grant, I’m the immediate past president of the American Society of Anesthesiologists, and if you want to talk about one group that uses injectables, that
all we use is injectables. We don’t give anything
oral, as a matter of fact we always tell you don’t put anything in your mouth before you come. But something struck me this morning when we put up that
slide about the shortage of norepinephrine, norepinephrine
is a life saving drug. Norepinephrine is not the brand drug, it’s not an expensive drug
but it is a lifesaving drug. And I have been out of practice,
in July it will be 28 years and we used to have an expression, the brand name for
norepinephrine was Levophed and we used to have an expression, Levophed or leave them dead. And when the slide came up
saying we have a shortage of norepinephrine and it said some people are choosing phenylephrine
I was sitting there saying to myself that’s like water compared to Levophed and it’s
like, how’s that working? And then the slides came
up showing the increased complications, the increased deaths in having to use
phenylephrine, then we talked about actually the economic issues and it’s like how about the
lives that are at stake. So what was it, it was
about eight months ago I sent out a notice to
all of our 54,000 members saying what drugs are you
having a problem with? A carpenter every day
doesn’t drive to work, will I have nails today,
will I have a hammer today? Anesthesiologists are walking in every day will I have local anesthetic,
will I have opioids, will I have just common basic things to do what we need to do
so in a one hour period we had 2500 anesthesiologists. I didn’t even think
2500 were reading this, 2500 anesthesiologists actually sent us specific clinical
situations they experienced in the past week with basic drugs that they needed to take care of people. Yeah we’re doing end
around, yeah we’re doing it, but this is a national
crisis that actually it’s coast to coast and it doesn’t matter if you’re in rural America, urban America, if you’re in an academic center or if you’re in a
critical access hospital, everyone is dealing with this right now and we’re just trying to make it work and we need help and
we need help to fix it as soon as possible. – Thank you, thank you very much. Last comment, and again
ask you to be brief. – [Roger] Roger Johns
another anesthesiologist at Hopkins and an academic
interest in health policy. This affects us every day I can’t remember a single day in the last five years where there wasn’t a
drug shortage in our OR. The issues of mixing up
drugs, the hydromorphone I’ve seen it myself where the resident doesn’t realize the difference because the vials look the same and they give the wrong doses. So a patient sits in
the OR for another hour after they’re supposed to wake up, the costs involved. But beyond that, the critical medicines that we can’t use, went
for over a year and half without calcium chloride
to come off bypass. But the issues here
aren’t simple economics it’s more then supply and demand because there are alternate
supplies or reimbursements to pharmaceutical companies that make this less important. I also think what’s been
implied but not stated is the huge problem of
having single source foreign suppliers in contrasting that with the enormous voice that pharma’s made against direct purchase from overseas. I think there’s a tremendous
moral inconsistency there. – Thank you very much for the comments. This has been I think a
very compelling session in terms of the importance
of dealing with these issues. I’m gonna ask you all if
you have any very brief, final comments before we wrap up and move into what else
we’re gonna do about these problems. – I think what we’re hearing
is that unfortunately drug shortages are equal
opportunity offenders, they do not discriminate. It doesn’t matter what
kind of patient you are, what kind of a provider you are, you’re going to be influenced and affected by these shortages and
there has to be some motion and movement on this. – Thank you very much,
any other final thoughts. Again I want to thank our panelists and all of you who participated, it’s been a very compelling session for why we need to move forward with what we’re gonna talk
about the rest of the day. Right now we’re gonna take a short break and reconvene at 11:15
thank you all very much. (audience applauds) – Get started if I can ask you all to start taking your seats. (murmuring and chattering) Okay we’re gonna go ahead and get started on our next session. Okay good morning, I’m Greg Daniel, I’m deputy center director
(drowned out by talking) in this next session and
session five after lunch we’re going to hear from many stakeholders about the challenges and factors
affecting drug shortages. In this next session we’re gonna focus on upstream supply side issues in the session following the lunch, so
in the next session five, we’re gonna focus more on
downstream in the supply chain and discuss purchasing, contracting, pricing issues between manufacturers, wholesalers, purchasers and payers, that’s this afternoon. So for this session we’ll
turn to the challenges that stakeholders are encountering in the upstream stages of the supply chain including manufacturing quality issues and measuring those and
communicating those, contracting challenges
between manufacturers, API suppliers and compounders, issues with steady supply of ingredients and market pressures that
lead to manufacturing challenges and other
theme points that while in isolation may not
lead to a severe shortage but can contribute to the cyclical which we’ll hear about
or systematic shortage challenges. Well begin this session with
two overview presentations, the first one from Harsher Singh, vice president and
chief commercial officer at American Regent, followed
my Martin Van Trieste, president and CEO of Simica. We’ll then hear individual perspectives from a number of panelists, Eres Israeli, chief operating officer and global head of
Generics and PSAI business at Dr Reddys Laboratories. Daniel Mato, executive vice president of injectables, commercial
and business development at Hikma pharmaceuticals. Jessica Steni, director of
group strategy and innovation, Patheon which is a part of
Thermo Fisher Scientific. John Deloretoo, executive
director of Balk pharmaceuticals taskforce and Lee Rosebush,
executive director of outsourcing facilities association. So with that I’ll ask Harsher to go ahead and start off your presentation. – Thank you so much
Greg and thank you folks for allowing us to speak today. I’ll first talk a little
bit if I can get this thing to go about who we are
and try and present you with a bit of a, shall we saw a taxonomy of what’s driving shortages
and a few proposed solutions many of which (mumbles) if that happens. Who’s American Regent? We’ve been an injectable
supplier to the US market for about 50 years, we run three sterile injectable manufacturing sites in the US with an investment
ongoing today of another $200 million, we make 99% of our products are manufactured in the
US, and we have a deep back catalog of (mumbles) products that could ease shortages. Shortages like some of the
ones that we heard Doug talk about earlier and we’ll
talk a little bit about those Let’s frame this thing first, I think all of us have said
it, the US market as I see it has a really high bar for
quality, rightfully so but strives for the lowest possible cost in the generic market. What happens when you do that is you have no redundant capacity, you have
systematic underinvestment, you have a long overstretched supply chain because they’re looking for costs and intermediaries that look for rents because they control market share and therefore the economy will scale. The impact of that is that a drug, currently a drug shortage of (mumbles) costs less then a dollar,
but this cup of coffee some of you are holding
costs between two and five. Something is wrong with that math. Ondansetron’s a good example
because I have my hand up I actually have a regular supply chain, I moved for six months
because it’s going to be short and I cannot and will not make it because I can’t at that price. So let’s talk a little
bit about what’s happening under this sort of top
line market (mumbles) Three structural causes of shortages in the injectable market
as I understand it. The first is manufacturing
sites being interrupted. Either you have a storm as
my photograph would suggest or someone had a quality
issue and therefore makes a lot less, that’s one (mumbles) Secondly the supply chain breaks down, you can’t get API, you can’t get (mumbles) you can’t get some critical part of what it is to make the drug. And third you have cyclical shortages. These shortages where the
price consistently reduces to the point where people have to exit and as they exit there’s a shortage and it comes right back,
people come back in, that’s how the competition works. Unfortunately, in the drugs, shortages. Let’s talk a little bit about
manufacturing shortages. What we’ve done in
search of cost advantages we’ve driven manufacturers
to evolve their supply chains and they’ve evolved their supply chains towards much longer chains
across multiple countries, multiple economies. Supply chains that look like that are much more likely to
break and take much longer to react to consistent demand. So if one drug is short
and that has to use another drug and someone
has to increase supply he can’t do it if his
supply chain is tapped out. So what do we do? I think there’s a couple
of ways to deal with it, one way is to actually
incentivize shorter supply chains with increased API
and (mumbles) in the US. So we can quickly respond
to market changes. The other is drive
investment in filling lines that can pivot across
products and (mumbles) If you search for cost you don’t do either of these two things. So ongoing guys where
you have the opportunity buy American because it
will actually help us be more reactive to shortages. Less flexible, more
regulated supply chains. We have more complexity
and our regulatory value has become more evolved
and that means that both throughput and flexibility, particularly for older
facilities are down. We’ve moved to isolated technologies which together with product
specific formulation needs make it really difficult to
ramp up production quickly. And you know why injectables
have more shortages then (mumbles), it’s those
reasons and the fact that our need to release,
which is the time between when we make a product and when
we’re able to send to market is much longer because we
have to test the sterility. Something in water can grow organisms and so you have to test for that. That makes us slower and more rigid. How do you be with that? Some of what we’ve got
to do is drive increased and early transparency
of potential shortages so the manufacturers can choose where to speed up production. Tell us when there’s a
483 that’s reductive, but give it to us right up front. Include remediation 483s So I’m not betting, I know (mumbles) Next the DESI pathway, many of the drugs, Doug in particular you discussed today, they’re DESIs 30% of the
drugs by my calculation and it may not be completely accurate on the drug shortage list
are market unproved products. Why are those drugs short? Some of the reasons because it costs about two million dollars to file an NDA because you have to file an NDA, which is a new drug application, not ADA, which is an abbreviated drug application. That means that you can only afford that in a generic market if
you can differentiate for new presentation, or
titrated specification or some kind of exclusivity. That means that some of those
products that we talked about, and touched briefly as an
example I can give them to you in the last five
years, next quarter but there’s a reason that
we’ve not been able to do that because of (mumbles) I think some of the things
we might be able to do and these may or may not be viable is talk about reduced filling
costs for DESI products. Is talk about consistent
guidance and implementation of unapproved marketed
drugs so that people move economics before (mumbles) Because the investment is
what’s holding this one back. Rejuvenate shortage efforts
many of us have many products that are short, (mumbles) When you have a short
(mumbles) by and large if you have (mumbles) you’ve got stuff that you need to do in
order to resonate it. You need to make sure that
you classify (mumbles) The same line it was,
you need to make sure your filling line looks the same, you need to make sure your
(mumbles) looks the same if you change the kind of glass you use. That stuff currently can
take six to eight months. My request would be, can
we try and accelerate it for some of these,
drive CB30s instead of ES5s And when there’s a history of five, allow justifications
through appropriate lab data with the right reference under (mumbles) So that’s shortage ANDAs,
next is an interesting one, inventory, if I can get my slide changed. Our inventory we have
an interesting problem. On one side we have IDF which
have grown more powerful and have consolidated (mumbles) On the other side we have
distributors who are trying to minimize cost, cash they have on hand (mumbles) stock levels because that’s how they get their cash. That means if there’s
a whisper of a shortage there’s a storm, there’s a
testing issue, there’s something the low levels of the distributor mean they either refuse it and the IBM then is programmed to pull as
much supply as they can to prevent shortage. Guess what, when you do that
you actually create a shortage because all of a sudden
now the guy who wasn’t going to run out runs out
because demand artificially spikes. So I think we need to
think through what minimum stock levels look like, how
much we ask manufacturers to keep on hand even for
multi source products and some kind of consolidated reporting on national stock levels so
that there’s less speculation particularly in the part of the IBMs. As we move forward, product
economics are an interesting one I’m going to use an example of a Medicaid rebate penalty on a product we make. We made this thing in 1970 something and it was at 31 cents, my
price today is more then three x that, my cost today. My margin structure is under
10% but I’m really old supplier so I’ve pretty good market share. My Medicaid pricing penalty
suddenly was $240,000 which means I’m pretty close to underwater with this thing, which
means I’m highly likely to be a surprise exit and
if I’m a surprise exit there’s a shortage and this is just, I think on Medicaid rebate
we didn’t think through what happens on the real old stuff where there’s a pricing penalty. So I think we need to rethink
that for sterile injectables and think through the penalty approach on these really low cost products. Let me move to the next
bucket that Rena talked to a little bit, to API supply. API supply is really an interesting one. I think the first thing
we have to realize is most of the API is made as Rena said in either India or China,
that means any global demand variation or any
change in raw materials has a global impact. Now guess who gets hit first
when there’s a global impact? It’s the guy who has the
highest regulatory yardstick and the lowest cost, that
happens to be generics. In the US we have a high regulatory bar because we want quality
and we drive low cost. That’s why we’re the
first ones off the block. Second we’re really
sensitive to geopolitics, we have the real risk of a trade war here and that is a real risk where we have 90% of our critical raw
material coming from markets where we may actually have boundaries and there may be a
structural government risk in those markets. I think as a regulator we
need to consider those, and I think we need incentives
for onshore API manufacturing which is not something we’ve been doing. As we continue FDA audits,
we all know the examples there’s many of them, for those
of us that are manufacturers I think we need more of,
many off shore manufacturers are still getting acclimatized with GMP and that can cause delays in manufacturing and documentation, sometimes
we don’t get materials. And there’s not a lot you can do but there’s a couple of things
that we were thinking about. I think the first was can
we have immediate notice of audits, rather than
the supplier telling us when he got hit, if we know
that someone’s gotten hit we can try and find a secondary supplier. Second if we can lower
the bar for actually getting a secondary API supplier onboard, right now you have to make three batches, most of which you won’t
sell, that’s a big cost. If we can just make one
batch, that would actually allow us to qualify
secondary API suppliers in some of these really low price markets. Third and we’d still have
to test three lots of API but we don’t have to
manufacture those batches. Third if we can evolve the BMF
listings to be more accurate so that we’re actually
able to look at what a real API supply is, it’s an inefficient market. API suppliers are small and dispersed and so it’s hard to find them. The last point I wanted
to make is there has been historically actions in the
market where one manufacturer has tried to tie up multiple API suppliers in order to create a barrier to entry with a variety of contract
exclusivity kind of contracts. I think as the FDC goes
forward we need to look at those contracts because
you need to make it easier for manufacturers that
have problems with one API supplier to move to another. I’ll move on, and Martin hopefully I’m not taking up time yet, I’ll move on too– (speaking off microphone) I have two minutes, alright
I’ll make one last point then jump right, we’ve talked
about these cyclical shortages and to me they resemble a spinner dolphin. And a spinner dolphin
essentially you keep reducing the price until people
exit and you come back. That problem in some part exists because we have consolidation
on the buy side. Consolidation on the buy side
means you have three buyers. If you have three buyers
who buy single source you can only sustain two or three player which means every time
one of those players fails the other guy have to scale up by 100%, that’s really difficult for us to do. You’ll have to skip all my pages. – [Greg] Okay Martin. – As soon as I find it. So before I begin I
need to introduce myself to the group because
it’ll help tell the story a little bit. So I was a retired
pharmaceutical executive, I had been retired for
two and a half years when I was approached by a
gentlemen named Dan Lequis from Intermountain Healthcare
to engage in this initiative as an advisor, somehow
leading to one night me agreeing to be a CEO and
not taking any pay to do it, pro bono and it’s because of
the mission of the company. I’m a pharmacist by
training, I graduated many, many years ago from pharmacy school. I actually became the head
of quality at the hospital products division of Abbott laboratories which eventually was spun
off to become Hospira. I left before that spin off
and went in to big pharma and big biotech after
that, and ended my career as a chief quality officer at AMGEN. And the reason I tell you that is ’cause Adam asked three questions
in the beginning, why do shortages happen with drugs? Why are they with mostly
sterile injectables? And why now? And I asked myself that same question before I joined CIVICA
because when I was at ABA then we made all the drugs
that are on drug shortage and I developed a lot
of those formulations, I was a developmental pharmacist. We never had a drug shortage
or it was very, very rare and so I’ve been asking
myself those questions as I’ve engaged in CIVICA
but I’ve also worked a lot in the supply chain, so saying that really serving patients is a privilege. And that comes with
significant responsibilities and of course every
clinician understands that and most people through the supply chain but not everybody, depending
on their point of view and what they’re doing
in the various aspects of the supply chain. And some of those most
significant responsibilities are deliver quality medicines
in a reliable manner at fair and sustainable prices. And usually we try to get
all three of those correct but typically you can
only get two of three. And so today I want to talk
about how we get all three, and why that’s important,
and I want to talk a little bit about Adam’s
question and what I think the reason is. So I’ve said this publicly before, all drug shortages are
a result of economics, and those then drive financial
and management decisions throughout the entire supply chain. And every time I say this someone comes up with an example that says,
see that’s not economics and then I quickly
analyze it and tell them why I think it’s economics. So we know about Hurricane Maria and it’s devastating
effect in Puerto Rico. So that was a natural disaster so how is that related to economics? Well first of all why
did the pharma company build a plant in Puerto
Rico in a hurricane zone, because there was an immense tax incentive by the US Government to stabilize
the Puerto Rican economy, so they chased the tax
benefit of doing so. Why didn’t a company have
redundant manufacturing to overcome the loss of that capacity, because they couldn’t afford to invest in the capacity anymore. So you can go through this
over and over and over again, that it does relate back to economics. And so what has changed since 2000? So clearly when you think about this to make sterile injectables
there’s a very high barrier to entry into the sterile
injectable market. A lot of money for
capital to build a sterile injectable facility. To build a facility
just to handle the drugs that are on drug shortage
today I would guess it would cost you in the neighborhood of one billion US dollars. The manufacturing process is very complex and requires great attention to be applied and controls to be put in
place by the manufacturer. There is a very strict
regulatory framework around making pharma with a
very tough enforcement scheme, and all of those are necessary to make a safe, sterile
injectable product. But when you have all of those necessary and you try to make
them in the environments we are today it doesn’t work
anymore, it just clashes. When we looked at that at CIVICA we said you know, we need to
think about this differently, we need to think of
these very old medicines as societal assets, we
need to think about it like a public utility that
has all those same barriers and if you think about a public utility you start to think about how
the CIVICa model will work, that I’ll describe in a little bit. So we talked about all the
reasons of drug shortage and I’m not gonna go over again because it would be redundant. I also wanted to talk
about cyclical shortages and there are products
that are on the market that went as low as $2
a vial and we started going into those cyclical
shortage with the price going as high as $2000 a vial. If you want to know the greatest predictor of the next drug shortage
look for past drug shortages because it’s most likely going
through a cyclical model. Not all of them, but most of them. So if you’re a hospital
buyer and you want to try to predict what the
next drug shortage is, just look at the history,
it repeats itself. But what we have to find a way to do and the part of the CIVICA
model is to really find that sustainable price, what
is fair and sustainable? So clearly in this model
$2 is not sustainable and $2000 is not fair, and the
price of fair and sustainable is not in the middle,
it’s towards the lower end of that spectrum but we as an ecosystem have to work together to figure that out. And the membership of
CIVICA pulled us together to do just that but every
time I talk to someone that is a member, somewhere
within the organization, and I’m not being critical
this is human nature, I do it myself, my team does it. Martin that’s great, you’ve
got a sustainable price but can’t we get it better,
can’t we get it lower? It’s built into our DNA as Americans, we have to break that cycle. So when I look at the
key processes of CIVICA that make us different and
how we’re gonna be successful is we are a non for profit
company and that takes away a lot of pressures that
a for public entity has. I have no pressure on
me to increase sales, to increase profit margin, by the way I’m a capitalist, I believe in the capitalist society but as a non-profit a
lot of those pressures are removed for me and
allow me to do things that are better for the business. We’re gonna work really hard to establish that fair and sustainable price and then we’re gonna
work with our suppliers and get long term guaranteed contract. So if CIVICA comes up with the product for three dollars a vial
or whatever that might be, our members get to opt in or opt out. They opt in they have to
give us a long term contract for half of their volume, not
all of their volume, half. And then that contract is guaranteed with take or pay contracts. We then go to our trusted
suppliers and we give them that same guarantee contract
take or pay for 10 years. And what that does, it
eliminates uncertainty in a marketplace that
has a lot of uncertainty. As a manufacturer there’s
nothing better to have as a 10 year demand that’s guaranteed, 10 years of revenue that’s guaranteed, 10 years of margin that you
know you’re always gonna have. That uncertainty allows
you now to reinvest in the capacity, the product, the people and your suppliers. Now with the reason we only want half is we want to be pro-competitive right. We only want half, no
more then half the volume, we never want to depend on one supplier, we want to have redundant
manufacturing in the network and we want to promote competition because we think the one way
out of this economic problem is competition. We have a completely
different distribution model, we have some absolutes,
we’re not gonna pay any fees or rebates to list our product. We’ll have complete price transparency and it’s one price for all. So if we say something’s $3 a vial that’s for the smallest community hospital in North Dakota that has
10 beds and the largest health system in the network, one price, everybody knows it. If we then have to go through
a different distribution system that we promote to our members because they want the convenience when it comes out the other
end if it’s not $3 but $6 they know they paid $3
for that convenience and they can decide if that’s worth the funds they’re spending. We’re gonna have safety
stocks for everything we put into the
marketplace, it’s one thing that if you looked at Hurricane Maria the companies in Puerto Rico
that did that came out better at the end, and of course that’s
a costly insurance policy. Redundancy, safety stocks, all of this is an insurance policy that costs money. And then we’re gonna be very transparent on who manufactures the product
and where it’s manufactured. I have argued too long and for too often that the FDA should require people to put their manufacturing site and the country of origin on a label. And for many reasons the agency hasn’t pushed that forward, I’m
tired of asking for help, we’re gonna do it ourselves and hopefully my colleagues at other
pharmaceutical companies will follow me because it’s clearly a way to add people to say, oh so
and so got a warning letter and it’s in that plant, it makes my drug, I better be watching out for
this as Erin talked about. So the structure of CIVICA
really is the validation that there’s a true problem
here, to me at least. So at CIVICA we have three
levels of membership. Governing members they sit
on our board of directors, we have 10 plus governing members, we’ll have about 11 at the end of the day. Founding members, they
don’t sit on the board but they sit on various
advisory committees, most importantly our
drug selection committee tell us what to do and when to do it, and partnering members and
that’s an unlimited number of partnering members. And each of them have come together, so hospitals are very competitive. I live just outside of
Jacksonville Florida and four of the health
systems all have institutions there that they compete against. You have Baptist of North East Florida, you have Mayo Clinic, you have MD Anderson and you have some Catholic
health system clients there. So they’re very competitive
but they came together to put the money in to start CIVICA and if you think about
it it’s a significant amount of money, governing members give us a one time donation of 10 million dollars, then five million dollars
and up to a million for partnering members. And guess what CIVICA
hasn’t made a profit yet, we’ve not delivered anything. We’ve given a promise
and a business model, and they’re willing to dump that much. That validates that there’s
a real problem out there, and with that I’ll just leave
that slide up on the board and we can move on. – Yeah great, thanks Martin and Harsher for bringing up a range
of issues and factors related to not just market entry and factors related to
companies leaving the space but also issues with healthy supply chain. So I’d like to turn to our reactants, I know you came with
some prepared remarks, I’d also encourage you to
also react to what you heard, not just with these presentations but this morning as well on factors that can affect the supply. So starting with our
manufacture representative, so Erez. – Thank you so much. My name is Erez I’m
representing Dr. Reddys Dr.Reddys is one of the
leading generic manufacturers and suppliers to the US
market and we are doing so for the last 30 years or so. We are proud of being very
loyal suppliers to this market and committed to develop
medicines and generic medicines on our mission to bring affordable health to hopefully billions of
patients around the world and also here in the United States. We do appreciate what shortage
means to the entire system, to physicians, to pharmacists, to buyers but most of all of course is to patients. And we do understand what is happening when you are on a drug
and you cannot get it. And I do want to provide some insight, level of experience, I’m now
26 years in this industry and working here with the
United States all this time. And want to provide a
little bit of an insight, how does it look like
from our point of view. So we need to, when we
need to take a decision of a product we normally
take it about five up to 15 years before we actually
launch the product. Now on the list I need to approve products for the years of 2032 and
2033 and this is just because of patent expiration’s
and actually there are many, many challenges
that we need to deal with. Whether it’s about
environment, where to make it, technology, what type of
excipient’s, what type of API, quotas for environment,
dealing with the laws in most of the places
you need to get actually an approval from the relevant country to actually produce a product et cetera. But the most important
challenge is after all these efforts, development, registrations, approval of the facilities, litigations, very expensive litigation
normally with the innovator you don’t know if you are actually going to sell the product. We are in a hyper competitive market in which actually the
market is full of entrants that can provide and actually not normally only three, sometimes
less then that can get actually into then market
and the rest will not. And actually we need to take a decision whether it’s economic for us to continue or not to continue with a
product and to have a very, very efficient supply chain in the system. So we need to produce it in
the most efficient manner, we need to have the most efficient API and in the case that we are
not getting the products, or not getting the
quantities that we want, we need to take a call whether to continue or not to continue with the product. Once we got that clarity and we understand whether we are in the market or not, or where we’re in a market,
if there is a shortage it’s normally because it
happens somewhere in the system. We get to know that when
it’s actually happening, and then to actually turn it around and to come with the solution takes time. There is actually takes
time and takes money, as you need to either come
up with a relevant solution whether it’s a new API or excipients or whatever is the
relevant solution it will need to recover from
requirements of authorities. And naturally to apply it
and by the time that you actually creating all these efforts or doing all of this you
don’t know if you’re actually going to sell because maybe this problem will go away or not, there is no guarantee that you’ll do that, you’re
actually going to sell it in the end of the day. And with that there are certain things that we can mitigate
naturally in order to do that. For example, to be better
integrated with our own API not to be dependent on others
because once you need it the time of shortage normally
it’s not available for you. I’ll just give you an example,
actually from this morning, there is one of our suppliers of API that happened to be, because
of shortages in China, he found himself alone in the market and he said you either
buy now API for six years committed or we are not
going to sell to you. And we have now too
massive supply on hand, naturally there are other
alternative for the market but what is happening
if this is not the case. And actually we understand
that there is no guarantee that we’ll be able to sell the six years. So this is just to share with you some of, maybe a glimpse of the shortages from our point of view,
thank you for listening. – [Greg] Thanks Erez, Daniel? – Good morning everybody
my name is Daniel Motto, I’m responsible for the
US injectables business at Hikma pharmaceuticals. I’d like to thank the FDA
and the Duke Margolis Center for the opportunity to
be here today, thank you. So in my remarks I’d like to
share some of our experiences handling and responding to drug shortages including some of the challenges we face as well as share a few
recommendations for the future. To start though I’d like to
tell you a little bit more about Hikma and I think it will help put my comments in perspective. So Hikma is not a well
known name but we are a top 10 supplier, developer and supplier of generic medicines in the US. This year marks our 40th anniversary of supplying high quality
affordable generics to patients around the world. We’re particularly strong
in the injectables segment, we’re the third largest supplier by volume and we offer almost 100
different medications to our customers. Based on AQVIA data we estimate that Hikma actually supplies approximately
one out of every six generic injectable medicines
used in US hospitals today. In this position I’m
very proud of the role that we have played in both
bringing down drug prices but also helping to alleviate
many of the shortages that are the topic of discussion today. In the last three years
we’ve launched more then 20 products in
the shortage situations and while Hikma is a for profit company we do consider it our moral obligation to do everything we can
when a shortage does occur. I think everyone in the room is aware of the issues this year with the shortages in injectable opioid products. We’ve heard many stories
about physicians in hospitals having to delay surgeries,
potentially patients who have been injured
or are terminally ill having to suffer and all this just because they didn’t have a $3 vial of medicine. So we absolutely want to
be part of the solution, when we heard of this
shortage we did everything we could to increase our capacity. We made investments, we
put employees on overtime, we added shifts, we paid
employees to work the weekends to try to alleviate the shortage. And again this was all for
a product that we sell, actually these products we sell for closer to $2.50 a unit so not expensive products. Given these experiences
there are a few things I want to highlight, we
have many specific examples and recommendations we’d
love to share at later times with the various stakeholders
but there’s three things I’ve chosen today, the
first request is really that the FDA fully leverage
it’s existing discretion to streamline the regulatory
process during shortages. While we’ve seen very good progress from the office of drug shortages we believe there’s room
for greater flexibility without jeopardizing patient safety. A good example of this
of which I think has been brought to light is many of the shortages are in these older products,
products that have been around for 20, 30 years. For us to reenter the
market we need to add a new API source, we need to
add a new manufacturing site. Right now many of these
routine changes can be classified as what’s called
a prior approval supplement which can take upwards of
six months for an approval. And if you think about
it, this can be a lifetime for a patient or a
hospital facing a shortage. If instead regulations
enable these moderate changes to be classified as CB30s
the drug can be available to doctors in a fraction of the time and this type of flexibility
during shortage situations can really have a meaningful impact. A second area where we see
further room for improvement is just simply in communication. Both across government
agencies but also the two way dialogue between the government agencies and the manufacturers. We greatly appreciate the notification from the office of drug shortages when there’s a potential for a shortage and we’re very willing
to make the investments, willing to buy extra inventory, we’re willing to increase
our inventory levels and shift capacity but we need a continuous flow of
information once these actions have been taken. An example where we
struggle are in situations where we’ve made these investments and we’ve manufactured
significant quantity of products only to then have it sit in our warehouse while unimproved products
remain on the market. We certainly appreciate the
need for these unapproved products during sever shortage situations. Obviously the patient needs to come first but these should be very
short term solutions. Allowing such extended
periods of importation can be a disingenative for
manufacturers like ourselves with FDA approved products. We also see the opportunity
for better alignment and coordination between agencies. A good recent example was
during the opioid shortage this year to address the
shortage we had to submit seven separate quota requests
for active ingredient purchasing, I recognize
there are many complex issues around opioid products but
the reality is this year we were being asked by one
agency to produce more product while faced hurdles with another agency tasked with reducing opioid production. The last area I want to
highlight and I think I’m very pleased to hear
the increasing awareness of this issue is around
the economic incentives necessary for manufacturers
to continue to produce certain essential medicines. I know this has been touched
on by several of my colleagues but I can’t emphasize
enough, I strongly believe it’s one of the key underlying issues. I do believe in free market pricing but my company is continuously faced with the simple fact that market prices do not support the cost of manufacturing some of these products. Our average selling price in the US, so this is average across
our entire portfolio is less then $3, as Harsher highlighted most of us paid more for a cup of coffee then what we sell a life saving medicine. Unfortunately my company
is faced with making very difficult decisions
to withdraw products when the market is unwilling to accept a five or 10 cents
increase on our pricing. And looking ahead we’re
seeing more and more hurdles from federal and state
reporting requirements and penalties for very
modest price adjustments, all of these things add
to the financial burden for our company. Instead as a country we
should be encouraging the use and the sale of
generics, not adding costs and creating policies that
limit their viability. I recognize there’s no one single solution to the pricing issue but I do believe it is a key underlying
driver of the shortages. These shortages will
persist without adequate economic incentives for
developers and manufacturers such as myself. At Hikma we absolutely want to be part of the solution, we’re
committed to better health for our patients and we
welcome further discussion on how we can address
these critical issues. There’s a broad range of important actions that can be taken by the
FDA and policy makers to help prevent future shortages. Today I’ve mentioned three,
the greater FDA flexibility, it’s the better two way communication and improve economic incentives. Again I welcome further
discussions on these topics and I thank you for this
opportunity today, thanks. – Okay thanks Daniel, Jessica. – My names Jessica
Settimi, I work for Patheon Which is now part of the
Thermo Fisher Scientific. Wanted to provide some clarity about contract manufacturing organizations and where we fit in the supply chain and therefore perhaps the overall solution for drug shortages. So a majority of contract
manufacturing organizations are not license holders,
we provide development manufacturing, packaging
and logistics services to license holders. And so our ability to see forecasts or to predict shortages
is often very limited based on the information
that’s shared with us from our clients, and
so in terms of solutions of say direct sale that’s not really where contract manufacturers play in this space. So again we’re part of that supply chain but definitely not directly
selling to hospital systems of group purchasing organizations, nor do the majority of us hold inventory for these products so that’s variable based on kind of business process. I do think that there’s opportunity however as a contract manufacturer Patheon provides API both small and large molecule as well as (mumbles) for steriles, oral solid dose, soft
gels, we do packaging, we do logistics, and so we have nodes in every part of the
very complex supply chain and we think that there are opportunities along the simplification
of these supply chains for some of these sterile injectables that are generics that
are on the shortage today that could alleviate
some of the complexity and certainly the reaction time if a drug does go into shortage. That being said there
are some opportunities and some restrictions
in terms of transfers so an idea has come forth several times about if there’s a
quality issue can we just manufacture the product somewhere else? Well these transfers take time, you’re looking at minimum of
12 months and that’s fast. A lot of these drugs are controlled, a lot of them are complex,
that can take upwards of two to three years to do a transfer. Obviously that takes a lot of time and is probably not the best solution in terms of ramping up for
a drug shortage situation. There may be opportunities
there with the FDA and with other regulatory
bodies to shorten that timeline because a lot of that’s due
to stability and sterility testing as already mentioned. Or to have some pre-approved facilities for certain types of injectables that would allow for quicker
ramp up of production if necessary. We do believe that there is
adequate capacity out there both within bio pharma and
within contract manufacturing organizations to take on
some of these shortages. But again our mode is
down the supply chain quite a bit and so control of this and ability to react is very
licencee holder directed but I do believe that there is a complete supply chain solution
that can be worked out but it’s going to require
that complete supply chain as well as the economic
factors that have already been talked through. – Thanks Jessica, we’ll turn to John. – First of all thank you
very much for including us I’m with the Bulk
Pharmaceutical Task force. We largely are API manufacturers,
excipient manufacturers. One of the key issues that
we’ve had from day one has been the safety of the supply chain and that’s probably the
paramount aspect of it because what we manufacture we
don’t sell to the hospitals, we sell them to ANDA holders for instance who have actually made the application, we’re manufacturing
the APIs and selling it within the industry. So there are a couple of aspects of what we’ve been talking about today. There’s one part of it I
think we haven’t talked about at all and I want to bring it up, and it has to do with the
aspect of raw materials. Because when we talk about manufacturing we probably all of you in the audience have a fairly good idea of
what we’re talking about manufacturing of
pharmaceuticals, there’s an API, there’s an excipient,
there’s a finished dosage that has to be put together or injectables that has to be, vials have to be filled. We get that, but there’s a starting point and that starting point is the chemicals. We don’t have much interaction
with the chemical industry, the specialty and fine
chemical manufacturers when we go to manufacture an
API we need a specific chemical as a starting material
we have the same problems on that end as others
do within the industry when it comes to availability of APIs. If we don’t have the starting materials to manufacture the API
or the intermediates that are part of the process then we have the same kind of problem that we do whether we’re short on the pharmaceutical because of a manufacturing issue or a regulatory issue. So there are many drivers
that are part of this and the chemical industry has similar features that the
pharmaceutical industry does and one of them is it’s
an industry that is rife with mergers and acquisitions,
we see it all the time. Companies come into existence,
some of them get sold, business lines get sold. When a business line gets
sold that was manufacturing a raw material that is used
in the manufacture of an API now you have one less supplier. Just as if you would
have one less supplier of an API. So there’s that aspect of
it that we really haven’t talked too much about. So let’s say we’re able
to find a new supplier of specialty chemical,
there may only be a few manufacturers in the world
of these specialty chemicals that are needed in the
manufacture of the APIs. Well that’s the same problem we have with the shortage of APIs themselves. So when we do identify for instance, if we have a supply of raw materials coming into the plant
and that manufacturer is no longer in existence
because there business unit has been sold or they’ve been acquired or they simply go out of business, we have to find a new supplier. Finding a new supplier,
getting them qualified, getting them making new batches, one of the suggestions
I heard before was about we’ve got to make three batches. Well the amount of API that might be made by that manufacturer might
only be one batch a year to begin with so now we’re gonna sit on three batches of material
that may not have the stability to be
able to put on the shelf that we can hold it so that at some point we can sell the material. So not only is there a
large capital investment with manufacturers of APIs,
there’s also the aspect of what can be stored, what can we use, what needs to be used right away, sold right away and what
we can put on the shelf? So there’s always that tug on the system. So the other aspect of it
is that we have to remember that a lot of the specialty chemicals that go into these
products they are also made in small batches, they
may not be a continuous manufacturing operation,
they’re not sulfuric acid where you’re making 10
million pounds a year, they might be a product that might only be a couple of kilos a year. So that becomes a challenge
to find a new supplier if you’re short on raw materials. Now as I’ve mentioned the suppliers, they can come and go very
easily in the chemical business and it’s not unusual for the lead time in finding a new supplier to be lengthy. And not only once you
identify the supplier you’ve got the regulatory challenge of getting them into the system, ANDAs need to be changed,
DMFs need to changed, there are regulatory reviews
that need to be conducted. So while we may now have availability there may be a long lead time to actually get back into production on the API side. I won’t beat to death too
much some of the things we’ve already heard today
because we’re kind of all on the same page here I think we’re seeing where some of the challenges
are but I did want to offer a couple of suggestions
about where we go from here. Certainly the regulatory side of things, if perhaps we could somehow identify those drugs that are highest priority, whether it’s based on outcomes, whether it’s based on, in
some cases national security. I know a case specifically for instance when the Heartside office
building was contaminated with anthrax, all of
the workers who cleaned that building up had to be on cipro. At that time the only
manufacturer of cipro was one manufacturer in China. Now if China was the attacker
what would be the incentive for them to now give us the
API to help our workers. So we’ve got to look at
some of these not only from outcomes but
national security as well. So there are a couple of
things that we really haven’t talked about yet that
probably should be included. I think that it’s not unreasonable to ask the federal government to subsidize the manufacture of some
of those more critical substances, those more critical APIs. I think it’s becoming
less and less of a problem of where they’re
manufactured because the FDA now has a much greater
presence around the world of inspection of facilities
and reviewing the science and what’s going on in
each of these places. So there’s no reason why
we can’t expedite reviews whenever there’s a regulatory
change that needs to be made. Anything that’s done on paper in my mind really FDA should be
looking at how they can actually attack it all at
once and make it happen. Not take four years, or two years, or eight to ten months
which is where we’re really trying to get to on generic drugs. There’s no reason why we can’t hit it hard and hit it fast. One of the suggestions I think
a commissioner made recently, I will stop shortly, the commissioner made about applications being one application that would be accepted worldwide, I think is something we should
definitely be considering. If we’re gonna look at
mutual recognition agreements where we allow inspectors to go worldwide and accept inspections of a facility in multiple jurisdictions,
I think that’s certainly helpful as well, so I’ll
leave that there for others. – Okay thanks John, Lee? – Thank you. So my name is Lee (speaking off microphone) For about 20 years at this point. For those who haven’t met me, I’m actually a pharmacist by training, I’m a pharm D, registered pharmacist in multiple states, a JD, MBA and a Masters in finance. So I come at this from a
whole lot of different angles. Overall I’m pretty blunt and
I’m a Washington DC Attorney, but I can tell you I’m
a country boy at heart and I’m a country pharmacist
and so I look at it from a whole different
angle then sort of the folks who are up here right now. To give you an idea I actually have multiple members in this room right now who have drug shortage drugs made, gone through extended shelf
lives on their shelves who can not distribute
them out to pharmacists or to the hospital aspects of it. In fact I have somebody
in this room right now who has tens of thousands of
vials of sodium bicarbonate with an extended BUDs date,
ultimately some of the issues that we have run into
relates to the exclusivity provisions in some of these contracts. So to give you an idea whether
it be from the API side for example, you’ve heard
from a misperception about some of us from
the outsourcing facility from the 503B side, we are
held to 21CFR 210 and 211 in fact the FDA has testified
such in sworn testimony in some of the bankruptcy
cases involved Cantrell. When we try and go through that process in order to validate
some of our API suppliers we run into some of the
exclusivity contracts that some of the drug manufacturers have. So one of the things that we
would love to be able to see is transparency both from a
drug manufacturing perspective as well as from an API side. And in fact I would tell you the FDA has actually taken some
of that action already. There was an August 2018
warning letter that came out against an API supplier
who supplies to the 503B’s. Inside that warning letter
what did they state? It was that in this case the
people who were supplying the powder, the API drug
didn’t provide the COA and the manufacturer that
was providing the API. So if the API suppliers are
gonna be held to 503B side we would love the transparency
on the manufacturing side. So some of you may be
saying why does that matter? You’ve heard multiple times
here that drug manufacturers will say it’s the financial,
the economics perspective why they can’t make a drug,
that doesn’t mean the APIs not available, us as 503Bs
would love to be able to step in that shoe
and make that product. We can do so at a cheaper
price, I’m not gonna lie. The problem is that if
we’re gonna be held to some of these standards we
need to know who that manufacturer is and what
there COA standards would be. And it doesn’t matter which
if you’re making from bulk or you’re making from
sterile, many a times when you’re trying to get that product for example if I’m buying
that finished product from a manufacturer a COAs not available or the manufacturer won’t provide that COA and so we’d like to see those
same transparency standards applied across the board. The second thing I would
tell you is that we as an organization, as
well as many of our members have been held to a
misperception that we are here to be combative with pharma. The last thing that we would tell you that we want to be is combative. We want to be complimentary, as an organization I could
tell you most of my members aren’t gonna be able to make the millions to billions of units that are put forward. We can make tens to hundreds
of thousands of units which can come very much in
handy during a drug shortage but we’re not here to be
combative with pharma. I understand some in the
503B area have been painted that way and I understand
there are some bad painters, and there are some bad members. As an association we
represent over 40 of the 50 in this case organizations
who are registered as 503Bs. We have a policing
mechanism, I have members who have been members
that we have thrown out and so we understand that there are people in our association, as
an association of 503Bs who may be that way but
again we do not want to be combative, we want to be complimentary. And in that perspective
as we work forward, moving with many of you we
would love to be able to help in some of these drug shortages. The problem that we have,
as mentioned by Michael earlier from ASHP, is we do
have to raise some of our prices when the initial product
comes out the reason being is just like pharma we have
to do testing and development. You have to come up with a formulation and so our initial product may not be $3, it may be 4 or $5 when a
$3 product is available but we also have to cover
some of that RD cost, but I guarantee you as was
said many a times here, as we have more market
share and as more people come into that market,
you have more people who are supplying product, those
prices are gonna come down. Now one of the things
that I wanted to mention, we’ve heard pricing come up multiple times and we as an association
understand that completely. I just wanted to read
something very quickly, to give you an idea of what
some of the modest pricing may be that you have seen. Now this doesn’t come from the OFA, for fair disparency, it says, “Investigators from the
Cleveland Clinic report “the wholesale acquisition costs, WAC, “for those that don’t know the pricing “of nitroprusside for example per 50mg “rose from $27.46 in
2012 to $880.88 in 2015.” That’s a 3000% increase, it keeps going. “While the price of isoproterenol per mg “increased from $26.20 to $1790.11.” That’s a 7000% increase we can keep going, there’s a JAMA article out there for those who have read our, my
specific comments to the FDA related to vasopressor’s and endo, again that’s over a
3000% increase in drugs. I’m happy to provide that information, we keep track of that as an association as what price increasings go on to. Obviously not per members,
we obviously don’t talk about member pricing for obvious reasons, but we do keep track of
what shortage drugs go on and what ultimately is
going on for some of this. For the cyclical reasons
that was just mentioned. The other side that I would tell you is that you’re heard multiple times that there needs to be
certain different regulatory standards or regulatory
changes that need to occur. It’s interesting because one
of the solutions are 503Bs and I say that because
there doesn’t need to be a regulatory change associated with this. It doesn’t matter what
you think about 503Bs or outsourcing facilities,
it doesn’t matter whether you think we
should be able to compound from sterile or from bulk,
there is an exception inside the DQA for shortage drugs. Congress has already addressed that. From an operations and
productions perspective, as I have told you we have members here who have thousands of vials
of drug shortage drugs currently available so the
operations and productions already happen without any
regulatory changes whatsoever. Our issues become when
the distribution side and the back end, it’s
the exclusivity contracts that prevent hospitals
for example who face rebates and discount
incentives or disincentives to buy from outside for
example GPO based contracts. And I know from an association,
we’ve had conversations with the FDA, we’ve also had
conversations with others that can talk about some of
those exclusivity provisions related to what a rebate
discount ultimately means and purchasing outside
of that GPO contract. But I can tell you
painting it in different issues and saying that
we’re unsafe when we’re held to the same standards as mentioned by sworn testimony from the
FDA or some of the other aspects behind this, we
can meet those standards, we can provide those
drugs, and as I mentioned they’re available here today
from some of our members. – Okay great, I’d like to
thank all of our speakers and panelists for some great comments. We will reserve some time
at the end of the session to get to all of your
comments and questions to the extent that we have time. But I do have a few questions to the panel as a whole and Lee, picking up on something that you
mentioned about transparency more in the context of exclusivity
provisions in contracts. Harsher you also mentioned
in one your recommendations this sort of increased transparency. I’d like to get the panels thoughts on transparency does keep coming up, what should be more transparent
and is this possible? Why aren’t we making progress
in this topic of transparency? – I’ll kick off so I
think API I don’t see them in this room but anybody who’s bought API knows there’s actually
a bunch of middle men that connect you with API
because API is remarkably hard to find, because
it’s actually an industry that’s not tightly consolidated. There’s consolidation by drug
but not huge consolidation with these massive players. What that means is it’s
very difficult to know all the players that can supply a specific API and as a result anybody that’s able to
get that information uses that information to
create structural boundaries. Those boundaries may be to
titrate the specifications, other API manufacturers can’t beat it, or to have multiple exclusive contracts. I think if we simply
know who all of the API suppliers out there are
it becomes really easy to monitor who’s tied up
and how many are tied up by a single manufacturer. The issue right now is we don’t know how many guys there are
out there as a market. – [Greg] Okay Lee? – Sure I’ll tell you it’s two from the transparency
side, first being from the manufacturers side
as we talked about before if we knew who the
manufacturer was we could buy the API from we’d be much
more able to address this. The perfect example is
a lot of our members will watch the ASHP list,
the reason being is ASHP will come out with a
drug shortage perspective and they will say there’s a
drug that’s going to happen to be because the ASHP list,
no offense to the agency is quicker then, recognizes
more shortages quicker then and so we can see
a drug that’s coming. Unfortunately we may not know who the API suppliers of those are and we have to go out and
do some of that validation aspect associated with that. If we knew who some of these transparency and who the API suppliers were we could take that ASHP list, go
to those API suppliers and start that process so when it does hit the drug shortage
list we’re ready to run. – Great, and I’d also like
to dig in a little bit about differentiation,
market differentiation among manufacturers and
we heard a lot about the sort of cyclical
nature, really good examples of extreme prices, good
examples of too low prices and how that is effected. So harsher you opened up with this buy American
is one sort of thing that maybe can appeal to
purchasers potentially but also we heard a lot
earlier this morning about quality, manufacturing quality, manufacturing efficiency,
things that would tend to decrease the
likelihood of a shortage. How can manufacturers better differentiate themselves potentially and I’d like to get manufacturers responses too on this. Is if possible to measure, how
can this be differentiated? – I think this is a two sided coin. We said something much
earlier in the discussion about 80% conversion within
two years to generics and that drives cost down
in the system substantially. That only exists because the FDA has done a really good job of
driving a common quality bar so that the market
believes that the generic is as high quality as the innovator. Now we have to be very
careful to maintain that because if we lose that
we’ll actually lose generic conversion which is the largest single cost saving element of the market. Now having said that, whatever
I say we have to manage forgetting that, having said that I think within the generic market we can solve for how dispersed is your supply chain? Are you making it yourself? Do you have redundant capacity
across redundant sites? And how are you managing for your API? That last one being probably
the most complicated because if you say you
have to have your own API most people have API
produced somewhere in India, China and it sort of pay per ownership and so you’ve got to manage
for that last one carefully. But those four elements which is how short is your supply chain? How much of it do you control? How redundant are you,
and do you control API? So for me those would do it. – Those would do it if
that was communicated more to purchasers. Any other comments maybe
from the manufacturers perspective? – Yeah I completely agree with you and for us as a policy
and this is the best way by the way to manage
costs, service, quality, safety etcetera is to
control from the (mumbles) So even though the API it’s sometimes way steps before there are
certain APIs that it takes actually anything from five
to 50 different chemical steps you actually want to control
those from the (mumbles) all the way to the ANDA. If you do that at least
you have a good control of your destiny. – I do want to comment
I think this is an area we disagree and I think
Harsher knows that. Is this buy American, as a company we strategically believe it’s important to have some US manufacturing
but I can assure you that just having US manufacturing does not guarantee you quality or
reliability of supply. I’ve seen many facilities
elsewhere in the world that are a heck of a lot
better then facilities here in the US, so I think
we need to be careful about making that. – [Greg] With the most important point being the responsiveness and ability to quickly
react to pending shortages. – And with the great policies and culture you can get that same
responsiveness elsewhere. So again just a point
of disagreement here, but it’s more around making sure you have the flexibility of
manufacturing, high quality and the right company culture to supply products consistently. – [Greg] Great, Martin your perspective. – Yeah so I’m gonna
disagree with my colleagues. So yes the FDA creates a bar
but that bar is the minimum to get into the game
and like every industry you have people who exceed the bar and people who strive
just to hit the minimum. And it doesn’t mean generic versus branded because that happens in
both the branded industry and the generic, there are great companies in the branded industry
and not so great companies. Same in the generic space,
it’s not US based or foreign based, I can find just as many unethical players running
around branded companies made in the United States,
because it’s the minimum bar and it’s about the only
product you purchase as a consumer where you don’t know the difference between
quality you cannot make an informed decision,
and I have always said when the consumer can
make an informed decision it drives competition
in the right direction and everybody increases their game or they go out of business. So I fully support the FDAs efforts to do something around quality
metrics and publish those and not only I but a gentleman
by the name of Dr Ridley at Duke University is doing
a lot of work in this space and before I left the
industry in retirement I did a lot of work around quality metrics and developing a
pharmaceutical score card. I’ve turned all that
work over to Dr Ridley and he has a team going on this full time. So I think somethings coming. – [Greg] Lee. – I actually totally agree with that, from a transparency perspective
from the quality side we would encourage the FDA to continue to push those quality metrics. A great example is on the 503B side if you look at the FDAs
compounding website right now they list by company all the different actions that have occurred against us. We would encourage the
same type of actions for manufacturers as well. – Okay, great so we have
about nine or 10 minutes left for this session so
question over here on this side. State your name and organization. – [Bill] My names Bill Swier, executive director of a pro bono group called Physicians against Drug Shortages. Our website is we have about 140 members of
mostly very angry doctors, anesthesiologists, oncologists,
emergency physicians, infectious disease, the whole
gammit who after learning what the real root cause
is are not just angry, they are outraged. I’ve been following this
issue now for seven years, I’ve written Op Eds
for the New York Times, most recently the Wall Street Journal. I have a deep long standing familiarity with the anti competitive practices of hospital group
purchasing organizations. And what I’m hearing today
just makes my blood boil. Fortunately I have good
insurance and lisinopril is not in short supply as far as I know. What I’ve been hearing today
is just a regurgitation of these forums that have taken place over the last since around 2010, only the graphics have changed. People who really know
what the story is here are just not speaking up but
we’re not afraid to speak up. Listening to these folks
today one would get the sense that somehow the shortages
of these medications are among the great unsolved
mysteries of the universe. They’re not, this is a very
simple matter, it’s about money. Let me just, since I
wasn’t allowed or invited to make slides, made up some of my own. It’s a get out of jail free card. In 1987 Congress in it’s infinite wisdom enacted a statute called the
1987 Medicare anti kickback safe harbor for group
purchasing organizations. What that did was to exempt
GPOs from criminal prosecution for taking kickbacks from
suppliers including drug makers. For 80 years group
purchasing organizations had been saving hospitals money by working operating on a coop
basis and buying drugs, supplies, band aids, devices in bulk. The first one started down the
street from me in Manhattan. It was called Belle Vue Hospital,
worked fine for 80 years and then GPO lobbyists persuaded Congress that somehow they could save more money if the vendors paid the fees. So what this did it turned
into a pay to play scheme where basically GPOs instead
of being the servants of hospitals they became
the servants of vendors, they sell market share. The interesting thing about this, they say this themselves okay. You can go to our website,
most of what I know comes right out of their own mouths. So basically this turned into a scheme for unlimited kickbacks,
rebates, prebates, payola, golf junkets, share backs. The reason the hospitals
go along with this is because they get share
backs as a percentage of the kickbacks paid by
the vendors to the GPOs. They’ve said this okay, there’s a fix that’s called in 2005 former senators Cole and Dwine who conducted four senate anti-trust hearings on
the anti competitive practices and self dealing
and conflicts of interest and rebates and the kept
better safer cheaper medical devices out of the marketplace. This was well before drug shortages were even on the radar screen. And they introduced this bill
to repeal the safe harbor and restore an open
competitive marketplace. – Let me just interrupt up you, really appreciate your
comments and this is great, we do have a few additional
comments that I want to go to before the end of the session. – I came down here at my own
expense, I’m gonna finish. – Well let me just remind you that we also have a session at the end of the day. – What’s that? – We also have a session
at the end of the day focused on public comments. – No this is just, let me
just read you a statement. This is an article in
Associated Press July 12th in which reporting on the
FDAs more aggressively tackling disrupted drug shortages by setting up a drug shortage task force. And the reporter is
interviewed Dr Gottlieb, Commissioner Gottlieb and she says, “A key issue is that generic drug makers “increasingly are squeezed by middle men. “Hospital group purchasing organizations “and prescription benefit managers “paying rates barely above
their production costs “or even less.” Now you might thing here
that gee they’re trying to get the best deal for
hospitals, that’s not true. What’s going on here, you go
to another set of documents and people send me stuff
in plain brown envelopes because they know about
my interest in this issue. We talk about transparency
here, I have documents from a company called
Benvenue at the first Senate anti-trust sub
committee hearing in 2002. The United States senate,
senator Cole and Dwine requested reports from
Novation, which is now Visian, the largest GPO, which
Erin Fox is associated with on their excess fees, this
was all very confidential. And as far as I know
this is probably the only documentation on the fees that GPOs extort and I use that term, I
don’t use that term loosely but that’s what’s going on here. They submitted a report that showed that, and this is dated because
the GPOs have done and many of them are represented here, have done a very good job of making sure that this information never gets public, but they were forced by the sub committee to reveal this and what
we have here shows that in 1998 and again it’s dated
but this is all we got, but it shows exactly what’s going on. Novation was extorting 56.25%
of the total annual revenue from Benvenue for Tiltiacyn, I didn’t know how to pronounce it until some
of my doctors corrected me. And that drug is in short supply. So basically and then, we
have an inspection report that the FDA inspectors did in 2011. – I do appreciate your
comments I want to be fair to the other people who want to get — – No I’m gonna finish. – Can you be brief. – I know you don’t want
to hear what I’m saying. – I do but I just want
to be brief to make sure that we have time for the other people. – They can talk later. – We do have a public comment
session at the end of the day. – I have an inspection
report here from Benvenue in which the FDA inspectors
went into Benvenue and they found a 10 gallon bucket of urine and they got a 483 and they were forced to shut that company down, or as they say, voluntarily shut down. When they shut down they were one of the sole providers,
manufacturers of the generic chemotherapy drugs that Dr
Unguru here is talking about. After they were forced
to shut down because they couldn’t afford to maintain
their plant and equipment methotrexate and all these drugs suddenly went into short supply world wide. So and I also should add,
this has been known for years. The GAO did a report
in February 10th 2014, mandated by congress
in which they reported that GPOs are the
underlying cause or a key underlying cause of this
problem and the only solution to this problem is to restore
open competitive markets, free market competition by
eliminating the kickbacks the bribes, the rebates, the payola and that’s what has to happen. (audience applauds) – Okay appreciate the comments. I know we had a quick question over here, I would like to get to your question but Yoram do you have
something, a brief comment. – Oh I forgot one thing. – No please. – There’s an article just came out in Detroit Business
Magazine, Medical Monopoly and you can go online about it and a bunch of other articles in the works. This is gonna be on primetime television, I’m gonna get with the producer next year so it’s all gonna come out
and there’s gonna be a lot of people that disseminate
this false narrative that somehow this is all complex and multifactorial, it is not. – Great, thank you, look
forward to that coming out. Thanks for your comment, Yoram. – Thank you, thank you to the panel, just more of an observation
rather then a question. Something to consider for the group that’s currently up
there as well as the rest of the audience, this is complicated. I would ask that a few, to my mind, relatively obvious things be kept in mind. I understand that this is a business and that the panelists have shareholders who they’re responsible for as a clinician when I hear our customers I
understand what that means but I would ask you at the
same time to keep in mind your customers or clients
are also patients. I would ask the group to keep in mind also that this is largely a US problem. It’s not to say that shortages
don’t happen elsewhere, I don’t need to tell anybody, we’ll hear from our Canadian colleagues as well. But we own this problem and
the last thing I would say is again putting on my
bioethics hat sorry, ivory tower, this is not a cup of coffee. It trivializes, it minimizes,
these are lifesaving medications for which there
are often no alternatives. And again thank you all for your time. – Great thanks Yoram, also
thanks to our panelists and presenters we’re gonna
go ahead and break for lunch. We’ll come back exactly at
1:30 for the next session. There are several restaurants close by and if you’d like a list
of the nearest restaurants we have a list at the registration table. Thank you and see you again at 1:30. – During out fifth session we’re going to continue the discussion of what some of the economic and
environmental and other sort of challenges that we’ve seen that have given rise to the
issues with drug shortages. Prior to the lunch we talked
about the supply side, now we’re gonna turn to
moving more downstream in the supply chain to the purchasing, contracting and
importantly as we’ve heard, price issues that are at
play between and among the contracts, between
and among manufacturers, wholesalers, health
systems and payer groups. For this particular session
we have a few panelists who have brought slides to share so we’re going to begin
with a broader perspectives from our GPO and wholesaler colleagues, then hear more specific
examples from the manufacturers. I might challenge all
of our panelists also to reflect what you’ve
heard earlier this morning and anything that you’d
like to respond too. And then we’ll close with thoughts from our payer and health
system representatives. So come on up, join me
up here on the stage, Blair Child, Senior Vice President of Public Affairs at Premier. Heather Zenk, Senior Vice President, Replenishment and manufacturing operations at Amerisource Bergen Corp. Marcy Mclintic-Coates, head
of global policy at Mylan, and Navin Ketyal, general
manager of Pfizer injectables at Pfizer, Estee green vice president
pharmacy programs Blue Cross, Blue Shield of North Carolina and James Martilon, Senior
director of pharmaceutical contracting and formulary
management at the Mayo Clinic. So we’ll kick off with Blair
with some opening comments. – Thanks Greg. Let me find the right slides here okay. So let me begin with just a
quick overview of Premier. We are an organization
that is principally owned and work closely with
hospitals and health systems to improve quality and
reduce costs in healthcare. We also aggregate about 60 billion dollars in supply chain spend and
while we work principally with the health systems
we also work closely with manufacturers and distributors as well as with government. So we provide a unique
perspective on what’s going on in the supply chain and
we have been working intensively on this issues
of drug shortages since 2010. Because frankly, obviously it impacts our owners and members, but it also means that if there’s drug
shortages we have no business. So it does impact us
economically getting back to the earlier discussions. So our goal overall is to
eradicate drug shortages. And this has been and as
I said, we’ve been working very hard at this for eight years and it’s been a very intractable problem. We are beginning to see some progress but we also have some very
exciting opportunities that we’re working on right now, some new partnerships with manufacturers that I think will help
us address the shortages in a different and new way. So some very exciting opportunities there. We’ve also been doing a
number of other things to try to address drug shortages overall. We created an allocation
system that we employ with our members when
there’s a drug shortage. We also inspect 503B facilities,
we actually currently supply, fully supply our members with drugs that are on the
FDA drug shortage list 59 skews that we currently provide, and we also multi-source
many of our products because of the issue of consolidation in the manufacturing sector,
as well as with the GPO and wholesale side of the equation. So when we analyzed, what
we did for this presentation here is we analyzed shortages
over the past eight years. We looked at them very
closely and looked at what the root causes of each
of those shortages were, and we have put together some points about where these shortages occurred, what caused them. We summarized our key points here, which is we think that
the sustainable solutions really has to address drug shortages from the standpoint of
the time and cost barriers to market entry. So let me just skip to this here. So when I start going through
the causes of different drug shortages I’ll just
highlight what these are, give some examples and
then go to the solutions. I would just say that
we have very complete information on these
slides, I would encourage you to take a look at these
after the presentation. They’re not available obviously here, I’m just gonna skip over
a number of the slides. But the first cause of shortages which has a number of
different permutations essentially comes down
to one, a manufacturer reduces or undercuts the market price it’s generally on a
high demand product too, three it’s so as to secure market share and drive competitors from the market and four it takes advantages
of the barriers to entry into the market to
restore the lost margin. There’s been numerous examples of this, piperacilin, taxobactam,
asocilin, amoxicillin subacum are just some of them. There’s also been other instances where overseas manufacturers have come in and undercut the market. Another example of this pricing phenomena has also been with DESI drugs. There was a discussion about this earlier but there’s roughly 3000 or so older drugs that do not have the
same safety net efficacy studies as drugs introduced after 1962. So as to incentive
manufacturers to conduct studies on these drugs FDA established a policy that requires other
manufacturers to exit the market when a manufacturer goes
through the expensive process of completing a new drug application. These older drugs are
a major problem area, a source of the problems and in many cases they’re very low prices,
and then when there’s a manufacturer that enters the market and others are excluded from the market the prices can go up dramatically. A third cause of shortages
that has been widely documented is manufacturing production quality issues that have arisen and cause a sudden or
significant loss of production needed to meet market demand. This has ranged from
recent market disruptions in the availability of C2
pain management products as well as local anesthetics. Another precipitating problem has been disruption of API suppliers
which was mentioned earlier, or similarly a change in API requirements. Examples of this has been in API impurity which lead to the recall of valsartan. And in update of the USP
monograph which precipitated a shortage of potassium chloride. Finally we also identified other factors that magnify the impact of drug shortages, specifically the gray
market in which some players in the system, one buy up
large quantities of products in the market, then two
significantly hike up the market prices and three, resell
the products to hospitals. Because we have this program where we are making drugs available that
are on the drug shortage list we have seen some of
these drugs get picked up by this gray market
overall and we have seen prices increase 300 to
1600% for those drugs. Another outgrowth and factor that impacts drug shortages and
continues their existence in the marketplace is hoarding. It’s understandable but
it does obviously exist and it’s a byproduct of providers learning about the shortages, at least to return unused products in lieu of
being used in patient care. So as I mentioned we have a
lot of detail in these slides, I encourage you to take
a look at these overall. So when we then put together
all of the different recommended solutions and I’m
gonna highlight some of them, I sort of grouped them into
three major categories. And virtually all of our
recommendations kind of fall into these categories. And they’re on this slide
that you can see there. So on our proposals to address the time and financial barriers to market entry that we recommend greater flexibility which was discussed on one
of the earlier panels here. Greater flexibility and use of expedited parallel processing by FDA to speed review and inspection of manufacturers
with newly submitted ANDA or in some cases
NDAs for drugs in shortage as well as for active
pharmaceutical ingredients. Two development of a
mechanism to both reduce a manufacturers KDUFA fees and incent getting a new ANDA or NDA to market. Fix the loophole in the competitive generic therapy pathway
so that a manufacturer that is first within
ANDA and first to market with a drug shortage product is guaranteed six months exclusivity. Create incentives to encourage
onshore manufacturing of API and raw materials. Refine the unapproved
DESI drugs compliance policy initiative to permit the use of real world evidence to demonstrate efficacy and streamline
and simplify the filing requirements for DESI drugs. Our proposals for the
second point is about empowering FDA with greater
information and insight and authority, this has been eluded too in a number of different presentations but we would like to see a requirement on manufacturers to provide
FDA with more information on API sources, production locations as well as information on the duration of an expected shortage. This will help protect against decisions that by FDA with unintended consequences such as shutting down a manufacturer or API production or
understanding potential disruptions from natural catastrophes. Secondly to the extent possible FDA should inform the market
based on the information that they glean about
the scope and magnitude of the shortage and three,
establish a drug shortage point person most likely
housed at FDA to improve cross agency coordination
on drug shortage issues among HSS, DEA, FEMA, VA, CMS, DOD, and other stakeholders. This has also been suggested by others. And then finally on our proposals to address supply chain
issues that increase or perpetuate a shortage they include timely implementation of the drugs supply chain security act,
track and trace requirements. Require national wholesalers to implement checks and balance
systems for shortage drugs similar to suspicious order
monitoring requirements for controlled substances. So as to identify potential
diversions of shortage drugs to the gray market. And finally promote the
reporting of gray market offers to hospitals to the FDA office of criminal investigations and impose CMPs on these entities and share these reported incidences with the FTC. That concludes my thoughts, thank you. – Okay thanks Blair, Heather. – Thanks everybody, my
name’s Heather Zinc, I’m with Amerisource Bergen,
pharmacist by schooling so don’t take that against
me or for those clinicians in the room, got your back. With that said sticking
kind of with the theme of some oversight here I won’t reiterate a lot of the topics that
were already covered at to the reasons. I will say though that
we at AmerisourceBergen we sit in the middle of the supply chain so we receive from manufacturers typically in full case
or pallette quantities. We then break that down to a unit level and ship to health
systems, retail locations, any location in the United
States that have the capability to legally receive
pharmaceuticals in the market. So we have a unique vantage point being in kind of the middle of
the supply chain here. So we’re gonna share some data about what we’re actually seeing. One topic that I do
think we want to discuss ahead of time that hasn’t
been specifically hit upon has been, I know we’ve all
talked about the economics changing for the generic manufacturers and why price point is
one of the major concerns here in driving a lot
of the drug shortages. One of the ones that hasn’t
been touched on yet to date has been the generic cliff. So what we called it,
is I think years ago. Again, I think someone mentioned, I always say I started when
I was 10 but with that said I think back in 2010, 2008,
we had large generic launches. We had large brand name
molecules that went generic, particularly in the solid
tablet dosage phase. We don’t have those types
of large launches anymore and that was one of the ways
that a generic manufacturer became viable from an
economic point of view. So without that economic
and thank you for nodding, without that economic
incentive they’ve been scrutinized more so with what’s happening in their economic portfolio. So going forward with a few other facts that, like I said I won’t call
attention to all of these. We are seeing irregular buying patterns, so in the event that we do
see something go on shortage we are seeing entities
be very savvy and quick to snap as much as they can. I’ll go into a little bit later what AmerisourceBergen or what wholesalers have the ability to do so we don’t have an unfair advantage. I think one of the other
things that we hear frequently and I’ll say this in Heather terms. I have five cookies, I have 100 people that want those cookies, no
matter how I splice and dice or set up a system for
allocation as mentioned or other types of product
allocation we’re never going to please everyone. So every entity thinks
that somehow my algorithm or whatever I design is not fair to them, and they’re absolutely
right because I just don’t have enough product to service the market. So what we will go into are
some pretty hard facts here. This is for all generic
product that we currently have. On average I have 33% on back
order at this point in time. So what that means if I order 100 units, I’m only getting 30 to 35 of those units. This is dollars that we’re talking in, and I’ll say I think
why you see the little draw down at the end, I know all day we’ve been talking specifically
about generic injectables that are the older
products that are just as, if you will easy to produce
as we’ve been saying but have been this long
sore spot for the industry but we’re seeing it across
the board in generics. It is not just attuned and attested to the generic injectables
that is the more acute market where we’re
feeling it the most but we have significant fears that the way the economics are going
for the generic market solid tablets doses are right behind this as a potential concern for the market. The reason that you see
a drop off at the end where I think we tend
to get overly excitable that this may happen, I
think we’re gonna continue to look at trends. Some of the reason we’re
seeing that trend go down is because we’re having
manufacturers either deliver less frequently,
or tell us thank you I understand your demand is 200,000 units I can ship you 50,000 can
you please just order 50,000. We’re seeing the same thing, so this graph just represents the
generic injectable products and what is a bit horrifying
is this is the service level that we have to provide
to our health systems so Erin and her colleagues
are feeling this every day. All of the physicians in the room this is an emotional issue,
we have a dedicated team of drug shortage market analysis team that every day are fielding
calls from healthcare professional, patient care advocates that are either in tears, nearly in tears or very angry about the
fact they cannot obtain the amount of product to if you will do a procedure, have a patient
have a positive outcome. So we’re feeling this and
these are facts and data right out of our system. A few other things just as clean up here for what we’re seeing, a lot of it is, we get asked and this is data that we show to our partners that are our customers which would be pharmacies, health systems, what can we do? So we can try to massage some of this, we can daily review what they’re out of, we can set up systems that we have that allocate effectively to the broadest amount of customer base
that we can get product too but when we’re seeing,
we saw a 432% increase from April of ’17 to
September of this year in the dollar amount
of generic back orders. We have seen service
levels from injectable range from 60%, which means
60% of what a health system or a pharmacy is ordering in
the generic injectable space I can actively deliver
because I have inventory. We are now down to a 50% service level. And like I said this is very emotional and I won’t go into all of
the details that we have but we do actually have
logic and algorithms in the backend of the system so when I am only getting
5% and I really appreciate this morning we talked
somewhat with the FDA about the severity of these initially. The severity is getting
worse, so in times past I might have had for
example, I ordered 100 and I get 80 units over
the course of time. Now I’m ordering 100 and
I’m getting 20 units. So the severity has been
much greater and much longer and I do feel for our manufacture partners because you’re looking
at an entire market, again five cookies 100 people. Last but not least I
think a few other things just to keep in mind that might be unique so I don’t repeat content
is every single molecule has its own story, every
molecule has a reason as to why it’s on the shortage. I know generally we can
kind of group these into generic injectables that are
DESI that we have been doing but every molecule has a
story which then leads into the valsartan which
then impacts other items and that is a cycle. The other thing that we are seeing is state policy, so I know
we’re talking a lot about the federal agencies
working better together but we’re also seeing some state policies that really is not putting
this in incentivizing way for the manufacturing community
to attempt to recover. And some of those have to do,
we’ve seen price gouging laws that have been passed
particularly I believe in the state of Maryland,
Oregon, I think California where if a manufacturer takes more then a, I think eight to 10 percent price increase they need to report that
to the state agencies and there is a tad bit of a fear factor that that would be made an example of but a 10% price increase might
be from a dollar to $1.10. So there are some state
policies that we’re seeing that are negatively
impacting the industries ability to recover, the
other one tends to be around opioid tax and opioid assessments. We’re seeing various states
due to the opioid crisis want to take care of citizens that have significant disease state and then they’re taxing the industry to receive that and that’s all incremental costs that a manufacturer hadn’t
been accountable to pick up in times past. So again sorry I went so quickly but we do have some content there
and I’ll give my panelists some more time, thank you. – [Greg] Okay great,
thanks Heather, Marcy. – Hi there, good afternoon,
and thank you for having me. My name is Marcy McLellan
and I’m with Mylan I’m a regulatory attorney by background and I’ve been with Mylan
for almost 12 years. So for those of you who may now know Mylan we are a manufacturer of
many generic medicines and also one of the largest portfolios of biosimilars as well, both here in the United
States and around the country. And just jumping in quickly,
the comments that I will share are more from part of a number of industry working panels so my comments are more manufacturers across
the board then specific to my own company per se. And these are some of the observations and discussions that we’ve been a part of. So if you step back and
you look at generics in the United States we have the highest generic utilization rate in the world, 90% of all prescriptions
filled in the United States are filled with a generic medicine. And even though we’re 90%
only 23% of the total cost actually comes from our medicines. And the association
for accessible medicine recently released a white
paper on sustainability efforts for generic industry
and in it they noted that just the top 100
most dispensed by volume generic medicines serving
the medicare program are on average sold by manufacturers for 10 cents per unit. So if you think that’s an
average that obviously means that some of those are
cheaper then 10 cents per unit and obviously some above. So that’s a really astonishing
figure as a starting point in terms of generics and
you’re looking at the filling of around four billion
prescriptions a year that are coming from generics. So obviously a ton of
value that generics offer the health care system and to patients but despite this value that generics offer and the critical role that we play for the healthcare system
there are multiple pressures on the industry that are
threatening access today and in the future. So even though last year
we saved just shy of 280 billion dollars to
the health care system through generics if you look at this scale that’s off kilter here
on the left hand side it really represents sort
of the downward pressure of deflationary model, it’s
a very simple economic chart this scale but on the right hand side of rising cost to operate. And when you have that off
kilter then a very natural and any economic condition
is shortage of supply, market exits and so forth. And so I wanted to just kind of hone in on those two baskets,
where some of the downward pressure points and obviously
none of these things in isolation are a key
factor but if you really start to look at these
two conflicting pieces it’s an important inflection
point to look at them. So there’s a lot of pressure
from buyer consolidation, it has been mentioned, so
today according to IQVIA over the last year there are
200 generic manufacturers that sell medicine into United States and those 200 manufacturers sell to predominantly three buying groups. So you have a tremendous
amount of manufacturers that are now into three consolidated buying groups for 90% of all prescriptions in the United States
for the retail market. I think there were some comments earlier about some of the larger
ones within that 200 segment according to IQVIA data 10 manufacturers make up about 50% of that. So you have a large
number of manufacturers and the way that it works for generics is typically only a handful right, that you have one generic that’s typically supplying each of those contracts. So that obviously creates a
lot of pressure for the good, for pricing to come down but it also makes things very
challenging when you have one player exits and
you’re in that remaining 10% category and you now need to step up and replenish for that or vice versa. So that certainly creates some complexity as we all try to step in for each other to address disruptions in
supply given those dynamics. The second point, while
overall a good thing in terms of more approvals
coming out of FDA and I’m a two time FDUFA negotiator so I love seeing more approvals coming out of FDA but to that end in terms of more approvals
to the forth, fifth, sixth, seventh, eighth, ninth, tenth generic that also creates
a more downward pressure that’s on here. And speaking of approvals,
this is the last point on the slide, less uptake
for first complex launches. This is a really important point. FDAs doing a great job of
getting out more approvals but there’s a problem
whenever these new approvals are not making there way
into the hands to patients. So I want to talk about
that for a quick moment and thank you for your reference about all the talk about the (mumbles) And how much opportunity
is there for generics. So with 90% generic utilization how much generic opportunity’s still out there? Well a lot, 25% of the costs today are born by 2% of
prescriptions in the country and they all lack competition. If you look at the top
20 most expensive drugs in Medicare today only
three of them have generics and so when you look at that
spend that is put on those medicines there’s a number of these and why do I raise this? Well for new complex generics
that are launching today when you get an approval
historically the practice has been the generic comes onboard,
you launch the product, you’re cheaper, you
automatically go on formulary and you go into formulary teir position that’s most favored that
defaults to the generic. This is how we get to
90% generic utilization. For big launches today,
for complex generics that companies, generic
companies are spending 100 to 200 to 500 million
or more for a generic to take on the development. The legal costs involved,
a year later you’re seeing generic uptake at 15%, 80% of part B plans may not even have the
generic on the formulary. This is a big problem
is generics are not able to replenish for new
launches to actually get to the hands of patients,
so we’ve submitted comments, I know we’re short
on time to the presidents blueprint on some
reforms at looking at CMS and particularly
rescinding a 2016 guidance that gave rise to mixing formularies and making sure that generics are favored to do launches. It was also touched upon regarding various state laws that target
generics and so if increases are happening, if you
happen to move your product from 10 cents to 20
cents because you’re at a negative margin capacity
then that may trigger reporting or even advanced notice. And then last but not
least medicaid CPI penalty in 2015, a penalty was extended
to the generic industry that has historically never existed. So in that instance of a price increase, and tentative if your prices are going up above the CPI, the consumer price index then you would pay
penalty back to medicaid. Well the way that that formulary is set up generic manufacturers are
paying millions in penalties to the government even
though our prices remain flat or are actually decreased
the way that formula is set up for the branded side is being applied to generics. So of course in the aggregate
these things obviously, are driving up cost to operate. So on the driving up costs to operate side as I mentioned to you
there are increasing costs to manufacture, I believe
it was an IBM study that came out and said
it’s a additional 25% cost to operate in CGMP,
that’s constant investment in your production, the legal challenges that are involved, millions of dollars with patent abuses from
things like for example we spent millions of dollars last year fighting to make sure that patent rights could not be transferred to a
Native American Indian tribe to avoid sovereign immunity
protection to challenge a patent to REMS abuses,
those things over time add up considerably. County and state wide take back programs that are 90% born by
generics and the new NAFTA trade agreement actually
ends additional exclusivities that will make it longer and harder for generics to come to market, and two billion in new user fees. You put these two equations together and these are some quotes from, just in the last several months of some of the industries earnings caused, talking very specifically around companies not being able to sustain this. Companies are needing
to move out of products where they’re the sixth, seventh,
eighth or tenth competitor it’s just no longer sustainable for them. Discontinuing low value products, 80% of products were the
top supplier of generics. So they were planning to get
out of plants shutting down because of that and so as we look forward to what can be done there
are a number of things looking at this, I would
just highlight the first and foremost is access
to affordable medicine for the formularies and
so forth, that is critical and we’re partnering with
CMS we need to encourage generics and when generics
are coming out there that success of having that utilization when companies, generics cannot become really the stalking horse to invest and spin hundreds of million
to bring a new product to market as they’re heavily rebated and dispenses rent and so forth, they’re not having that same uptick, that’s a real threat to the future. And certainly new policy proposals be it CMS, be if Federal or state should consider this
shortage impact as mine and revisiting things like the CPI penalty that Bates White just
issued a study saying it’s absolutely contributing
to the shortages along with the abuses. So I’ll turn over to my colleagues, thank you for being here today. – Okay, thanks Marcy, we’ll turn to Navin. – Okay great thank you,
good afternoon everyone and thank you for inviting
Pfizer to participate in today’s incredibly
important discusssion. So I’m Navin Katyal and I lead the Pfizer injectables business. I’ve been with Pfizer for 12 years and appointed the lead of
the injectables business in the US last year. Before I share Pfizers perspective I want to first do one
thing which is really just underscore the
importance that we’re placing on our recovery with our
injectables portfolio specifically. Our first and foremost
priority is patients, we understand the
criticality of the products in our sterile injectables portfolio, specifically to patient care and that’s really driving our urgency both in the short term and in the long term, our patients are a north star and
that’s really what that is. We also recognize that there’s
not one single solution or one single actor in health care chain that’s gonna solve this
problem more broadly. And that’s why we are
committed to being here today but also in the future working
across the healthcare chain with both public and private stakeholders to truly get at the heart of the issue and really address it. As many have discussed
today majority of shortages are in the generic
sterile injectable space, and at Pfizer in our efforts to really get to the root of this,
and really understand the ways we can take to
drive and address shortages what we found is that
shortages in this space are driven by two things, really the confluence of two things. The first is as we talked about today, the complexity inherent
in the manufacturing and the regulatory environment
of sterile injectables but second is a commercial
model that commodities these particular products
and forces that race to the bottom. So these are generic products right, these are generic sterile injectables but I would say and
argue that these are far from commodities,
they’re often life saving as we all know, and they’re
frankly the cornerstone of critical care in
hospitals and other settings. And they’re, as we discussed,
incredibly complex to make and costly to make as well. For example, when you compare the manufacturing of sterile injectables to the manufacturing of solid oral dose, pills and tablets you need
highly specialized equipment to ensure that every single
part of the manufacturing process is sterile. You have highly complex
change over processes because many of these
sterile injectable products are made on the same line. You have much lengthier and complex testing processes compared to the pills so when you release these you have to do that lengthy testing process
to ensure that sterility before it makes it to
the market and ultimately the patients and of course
all of this complexity, all this complex equipment
and processes needed require highly skilled colleagues, highly trained and specialized operators in the plants, as well as significant investments to sustain all of this. And in the regulatory
landscape is equally complex, the requirements for sterile injectables are especially stringent
for very good reason but then when you incorporate a really, introduce this environment
into this commercial model that we have in the US
with the injectables where you have a highly
competitive bidding environment that really creates a race to the bottom on profit margins, you’re
left with really a market that is prone to the
volatility that we all see for years and years, and frankly a market that is unsustainable. So the fact is that this market requires those complex, long term investments but it’s driven by a contracting model in which there are rarely fixed and firm price and volume commitments. And ultimately those types of arrangements of fixed price and volume commitment is what would ensure a
level of predictability and a level of certainty to
support those investments as others have eluded too today. In fact when I stepped
into this role last year my biggest aha moment I would say, as leader of this business
was when I started to take a look at the
contracts that we have. When you think about
a multi year contract, you think about just that,
a multi year contract. But what you have in
this industry in the US, essentially are multi year contracts where on day one of those contracts your business is potentially at risk and that is due to a mechanism which is essentially a price challenge
from another manufacturer. So on day one of that
multiple year contract, a manufacturers business
and that certainty that you would like as a
manufacturer is not there. So upon receiving a price challenge which could happen at
any time from the day you sign that multi year contract a manufacturer is left to
make one of two decisions. Either one match that lower price and follow the price down,
follow the profit margin down. Sometimes to little profit,
or no profit at all, or even negative margins. Or the other option you have is to simply forego that contract, forego that volume and let go of that business. And as you can imagine it
is incredibly difficult for any manufacturer to operate in that environment, what
sets a low level of certainty or predictability around profitability. And it’s that high degree I would say of uncertainty in future profitability that just impedes the ability
for manufacturers in general to make certain investments. Investing hundreds of
millions of dollars of capital in redundancies or excess capacity or what have you where
you have value or volumes which could quickly and rapidly
erode is frankly daunting for any manufacturer. And then in addition to
this contracting model we also have a current reimbursement model that we also believe plays
into some of the instability or unsustainability and the incentives that add to that dynamic
in the generic sterile injectables space. So we all know that we have hospitals who are under tremendous, tremendous financial pressures and
therefore must aggressively manage costs under really a decades old reimbursement system where you have a capitated bundled payment
for hospital services. These pressures force
hospitals to just basically focus principally on
looking for that lowest cost versus also including that drive for, and seeking for quality. And we’ve seen over the
years as others have said multiple manufacturers
who have exited production of incredibly important therapeutic areas or in the worst case exited, a
plant for example completely. So that is due to that uncertainty that we’ve talked about, that uncertainty of being able to recoup investment costs in today’s current commercial model. So despite all of these pressures Pfizer is all in, Pfizer is committed to the injectables market, year to date we’ve invested 800 million dollars in our injectables
manufacturing network alone. And we also have over 1.4 billion planned over the next several years,
but when you take that over two billion dollars of investment that we have over these next several years and you contrast that with the fact that on an annual basis the 600 million units of injectables that we
make, two thirds of those 600 million units cost
either at or less then an average price of a
gallon of milk in the US. So when you contrast that
two billion dollar investment with that fact it really puts this notion of market instability and unsustainability into perspective. So we believe that we have
to find new strategies and we have to find new policies to achieve that sustainable market that we’re all after. We’re committed to partnering with FDA and other stakeholders to get there. On the regulatory front we believe that if we could look at the structured benefit risk framework that has
worked so successfully in the new drug approval
space and if we could apply that too the enforcement space, particularly when weighing
the public health risk of an enforcement action
against the potential supply disruption for
patients, that would be a large step forward. In terms of the commercial
model we absolutely must find ways to enable
price volume commitments and contracts with purchasers
to give manufacturers that greater predictability that’s needed to make those capital investments towards sustainability whether
that’s excess inventory, redundancy, additional capacity. We also believe that we need
additional reimbursement reforms to give hospitals
and other providers the ability to principally focus on seeking quality versus
primarily on the lowest cost. An example of this potentially
could be to consider add on payments for
generic sterile injectables borrowing from the idea of the end tap or the new technology add on model in order to ease that burden,
that pressure on hospitals. And then lastly to the extent
that a critical drug list is created we must ensure that incentives are in place around those medicines and are making it on that list. We have to ensure that
there’s incentives to place and encourage manufacturers to participate in making those medicines
rather than simply creating additional rules
that could in fact discourage participation and production
of those medicines. An example could be to
create a stockpile program but linked too price
and volume commitments for those specific products. So that you could encourage
the predictability and certainty needed to make investments for those critical drugs. So those are just a few of the ideas that have been floated,
that have been talked about to address the root
cause of the shortages. As I said earlier there
is no single entity or solution that’s going
to address this problem and so we look forward to working with other stakeholders both in
the public and private sector to address it. Today’s been a wonderful step forward and we look forward to
continuing to be part of the dialogue, thank you. – Great, thanks Davin, really good points and I think I’m actually gonna come back to some of those to get some thoughts from the rest of the panelists on but until then we’ll turn to Estay – Good afternoon, I’m Estay
Greene from Blue Cross, and Blue Shield North Carolina. I’m here today representing
more the payer side so I’m gonna basically focus on the retail prescription drug side and
how we reimburse pharmacies and monitor shortages that
happen in that supply chain. So first some background definitions, wholesale acquisition
costs, WAK, that seems to be what everything is based off of, especially when we move on to AWP, average wholesale price. That is how I reimburse
every single pharmacy, retail pharmacy in the
United States is based off of an average wholesale
price which is basically 20% more of WAK. Rebates which were brought up earlier, as a health plan we only receive rebates on branded products because that’s where we can drive market share and use from formulary development. We receive no rebates in the
generic manufacturer space. And those rebate totals are tied to WAK as a percentage of WAK. Next is the maximum allowable cost, also known as a MAC,
that’s how I reimburse pharmacies on multiples
generics, so if there’s nine or 10 manufacturers that’s when the price
discounts get very deep. Somewhere upwards of AWP minus 98%. A single source generic is that right when that product launches during those first six months of exclusivity where we do see very high prices right
now in this marketplace. And then finally is the
generic effective rate. Again with negotiations
that go on with retail pharmacies sometimes we put a cap on what we were reimbursed for generics. That way those purchasers also know we’ll reimburse them in the future. So first the generic
conversion coverage evolution, first there was a lot of education around the safety earlier on in my career that’s where all of
mailings were tied too, that these products
work and members needed to take them to save money. Which had us design a
two tier benefit design so initially some of these incentives only took five dollars in
reimbursement differential between a brand and generic to get members to actually use the
generic over the brand. We also did other free
samples and planned designs such as free generic initiatives to basically again encourage
that use of generics. And then finally now we’re into the place of dispensers written penalties. Everyone knows these products work, so basically what happens
here is if a member chooses to receive a brand name product as an example right now. The member could be responsible for the price differential
between the brand and the generic which
would be a hefty penalty to pay if you want to
receive that branded product. Ultimately this lead to results of upwards from a prescription drug side on prescription drug benefit for us ranges in the upper 80 percentile now of generics on our medicare program. Almost 92% of the
prescriptions are generic but again it makes up very low cost around that 20% of our total cost. But to do that we’ve had a lot of success, the market has kind of changed. When these products did launch, especially as was mentioned earlier around 2010 to 2012 we
actually saw some stabilization in the marketplace, some of it was due to the great recession, some of it was due to the product launches
on the generic side. It actually brought down
a prescription drug spend, whatever drugs like
Lipitor did go generic. It brought down the cost and also from 2005 through almost 2014 the generic launches almost mitigated the trend of the rising specialty drugs that we started to see come
into the pharmacy space. So basically we’re able
to hide these new products for better terminology
but then also with those lower costs we are seeing access issues and I’m gonna dive in
to three examples here. So right now what we constantly do is we are monitoring the
supply chain with our PBM which basically leaves
the reimbursement changes. So basically what this leads
to is basically a MAC change so basically a discount
could be on a product one day and we have to change
it one way or the other, either up or down due to what’s
going on in the marketplace. Usually where we’re getting
the angry phone calls from the pharmacy that’s for whenever they’re basically being reimbursed less then what they can
currently purchase it for. But then also that causes member confusion from one month to the next, especially as high deductible
health plans have arisen that leads to member calls and complaints. So if you adjust the price from possibly $10 for a months supply up
to $20 to cover that shortage that member is calling
because they could be paying two dollars now instead of only one dollar if they had a 10% coinsurance. And members do call about
that slight fluctuation in the price. Most recently we saw that
with Tamiflu last year, I guess earlier this year back in that January, February timeframe
where the suspension was impacted. They had pharmacies compounding
with the oral capsules to make suspensions,
the only thing it took was about a one week
time frame from actually one of my peers to reach out to me and ask why he paid double for one of
his daughters prescriptions from one week to the next. One daughter went in and had the flu only paid $60, next week
they went in, had to pay $100 for the same suspension. That was due to the shortage
and what we had to do to adjust the price and
how we were reimbursing the pharmacies. One from several years
ago was ADHD medications, there was a shortage,
some of the bulk product was bought by some of
the brand manufacturers, so the generic manufacturers
came up a little short in manufacturing the product. Basically this rose
the cost of the generic but of course the brand manufacturer was there with product for
us to offer us a rebate if we’d add it back to the formulary. Ultimately because we
needed price predictability and we needed stable market for members we actually ended up
working out a long term deal with that brand manufacturer to continue to cover that brand even today because it is actually the
lowest price for our members. We also start to see less manufacturers right now in creams and ointments. Generic topical steroids
used to be something that we weren’t concerned
about in the managed care industry, it now is
something that we monitor on a somewhat quarterly basis. I also use this example
because it also impacted my own family whenever
I sent my son a letter because actually he was
on a topical steroid cream that again the physician, pediatrician probably thought was very inexpensive and it actually ended up costing
around $500 for that tube. The emollient version of
that same steroid cream only cost $50, so basically we had to put a prior authorization
step therapy in place for that steroid cream
to make sure we pushed the emollient generic over
the non-emollient generic to save about $450. Again it didn’t show up
at the pharmacy counter it was the end of the
year, it actually was quote unquote free, because
our high deductible plan was met, we had no co-insurance, didn’t think anything
about it until my son got a letter at home signed by me that he had to change his drug. (audience laughing) Usually gets a laugh that’s why
I always include it as well. And the final one is what we refer to now as a patent-cliff strategy and I’ll show an example
here on the next slide of where we start to utilize this the most was actually whenever the
product Nexium launched. So this is one of high
cost for generic comes out, typically we only see about a 20 to 30% price reduction from the
brand to the generic. And some of the brand
rebates have gone up, basically the net cost thing goes up. If we were to cover that
generic at the launch at that price. What we’re able to do on
the commercial benefit is actually charge a copay that’s actually the generic rate, so basically
if it was sitting in a brand tier we charge a lower tier, or on a high deductible health plan we actually point to what we’d
reimburse for the generic. So if an example would
be the brand was 200 and the generic is 150,
we’d still have the consumer only pay $150 for that branded product, because we know we’re
steering them to that and we don’t want them to pay
more at the pharmacy counter. So next this is an example
of what we’re looking at several years ago whenever we’re looking at our medicare part D benefit. The top slide is during
that initial coverage phase, this was kind of a
standard plan design we had at the time, there was no
deductible on this plan but as you can see the gross cost, these are kind of fictitious numbers but ratios are about the same. The gross cost there
for the branded product was 200, the single
source generic was at 160. Again that member cost share,
that was up to us to decide because that’s a tiering
product at that phase of the benefit, we were still promoting the branded product at that point. But ultimately once we
factored in the rebate the net plan liability was only $60 compared to $100 for the generic. So our net savings as a plan was $40, which also meant we had a lower premium, which also meant the government paid less so us as taxpayers paid less. But then we move into the coverage gap, also known as the donut hole. Here we’re using those same costs actually at that point in time
due to the generic pricing the member was benefit by only paying $95 for that branded product compared to the high cost generic
so the member wins by 2020 in that scenario. Again the plan liability kicks in but again that rebate is still valid so again the net plan
liability on this one claim is negative $95 that again gets put back into a reinsurance and
other type of claims which again saves not
only the plan dollars but also those tax payers dollars as well. So the net plan savings
on that transaction is around $140. So in conclusion we see
limited impact right now on the RX benefit but we
are becoming concerned. If inflation of prices do go up, generics is what keeps
our inflation numbers down so we can continue to cover new innovation and especially pharmacy
area, and also we have concerns around biosimilars. We have a bunch of product
launches coming out later this year, early into next year. Will the supply be there,
and hopefully the mistakes we’re creating right
now on the generic side do not occur in the
biosimilar side as well. – Okay thanks Estay. – Thank you, I’m Jim Martella
and I do the contracting for Mayo clinic all the
pharmaceutical side. I kind of relate to
everybody on this panel because I not only do the purchase side which is aided by my GPO but I also do the managed care side
because we’re a large employer, we manage, we’re self insured
manage our own claims. I also have to manage
the wholesaler contract. I’m trying to retire but
nobody wants to take my job. (audience laughing) I have a different definition
of what a shortage is. At Mayo clinic physicians view a shortage as when they can’t prescribe
what they want to prescribe for their patient. The buyers consider a shortage
when they can’t order it and the economic order quantity and they don’t have enough quantity to put them at all the
locations in the medical centers that they want too and the administration, their definition of
shortage is when they can, if they have enough products
so they can sleep at night. The reason why I say
that is because we hear a lot about the costs of the generics, well I keep on running
the numbers and we use about 80 million dollars worth of generics in the average year, but
that’s on a 1.1 billion dollar drug spend so a cost
of my generics has dropping constantly. Now I don’t think it’s because
the cost of the generics have dropped, just because
the price of everything else has gone up so high. And so trying to manage my generic spend wastes a lot of money for us,
we just, it’s a real problem and I get more leverage
out of trying to figure out how to create leverage and
manage my single source products and that’s why the clinic administration gave the management of the
formulary to supply chain which is part of finance,
rather than to the clinical side because they wanted to have a little more fiscal responsibility in there. Now having said that and before you think that Mayo clinic has all of a suddenly become very mercenary I
do have five pharmacists within supply chain and I
have a bunch of physicians on my payroll and we
created a formulary system. We essentially took the formulary away from 18 PET committees 15 years ago, and created a formulary system where the formulary committee
just creates policy but it’s the specialty sub groups that do all the clinical heavy lifting. So we do have physicians
and the clinical pharmacists heavily involved in looking
at how to manage the drugs, and it’s not all about cost, it’s how to deal with
safety, efficacy, cost and reimbursement, so
there’s a lot of components to this. I only bring that up because once a week we have the Mayo clinic
drug shortages committee and they meet every week,
it’s now my formulary managers day after that meeting they
get two to three requests for prescribing algorithms
from the formulary committee. A prescribing algorithm is kind of a Mayo, nice politically correct Mayo term for how do we ration a drug and what kind of therapeutic alternatives can we use? Those formulary managers
have to turn around a statement within 48
hours after consultation with the specialist and
give guidance to all the other clinicians at
Mayo clinic as to what they should be doing, or
what they should expect to be having done to them. And this is, but there’s cost to all this. I don’t have direct costs,
like Erin talked about it’s kind of hard to figure
out how much it costs us to manage this, I suspect
that we’re spending dollars to manage pennies. I know that our supply
chain people reviewed the IV solutions after we
recovered from the hurricane and we got IV solutions
back, and they told me that it cost them a
million dollars to manage the IV solutions. My question was after that, I said well, what was the cost of the
IV solutions to begin with that you’re managing? And they had to go
back, and they came back and they said seven million dollars. So it doesn’t take a whole lot of review to sit there and say we’re
spending way too much trying to manage this size of drugs. We just think that the effort
expended is very expensive and we understand and we appreciate what our wholesaler does and
what our GPO does for us. But it didn’t take a whole lot of effort for the board of trustees to
serve up 10 million dollars as a donation for Civic
RX, just to make sure we had enough that we
could manage the shortages and sleep better at night. Thank you. – Okay Jim, thanks for
bringing up the complexity of your job and these
contracts and given the perspectives on this
panel I’ve got a question about these contracts, both how are they, why are they part of the problem, and how can they be better
designed to address these issues. So if you think about the
many different contracts that are involved between
suppliers and purchasers, how are they the cause of
the problem in one respect. Also how can we get them
to be part of the solution? To any of the people who
want to respond to that. – Well I think the problem
started because of Ober 90, it was very interesting, prior to Ober 90 the kind of costs that we
paid in the institutional side were fairly low for
pharmaceuticals but Ober 90 did one thing that we hadn’t seen before and that’s the federal
government came in as buyer as a purchaser of drugs. Before that it was all
voluntary drug companies would serve up a price to
FSS and those sort of things. But now the government comes in and says we spend way too much, we’re
the largest buyer of drugs in the country, we need
to come up with a more organized way of looking at this. So they created average
manufacturers price and said we’re gonna pay,
I think it was like 3.1% off of AMP or something
like that to begin with, by the way I think it’s 23.1 now, they keep on adjusting
it every time we have a financial crisis and so they entered in, and they said oh by the way if you’re giving somebody a better price
we want to have that price. Well guess what overnight
the pharmaceutical industry raised the prices to all the hospitals and there was Mayor Aliodo called it the pharmaceutical drug relief act of 1990 because it allowed them to do something that otherwise justice
department would come across as an anti-trust action. And so we’ve been paying
for it ever since, and that has been one of
the causes why institutions are paying more for those. I’m not gonna debate it
one way or the other, other then that that’s
just a reflection of life. – Blair go ahead. – So I think that first
off in our business the contracts have evolved
quite a bit in terms of how we structure them but I would say that a few things have occurred now that it was interesting what
Adam and Matt said from FDA about the economic drivers and their point about the lack of concern
about the sustainable high quality marketplace. That ultimately there isn’t
enough commitment to that by the purchaser and I think that’s been the case historically. And I think that’s really changing, Civica RX helps speak to that. Certainly what we’re
doing with our members speak to that as well. I think where health systems
are coming from today is and Jim eluded to this as well. Is we need to get a more defined
market aggregated purchase understand it, understand the price point. Let’s not just keep reacting
to every market reduction that occurs because that’s
sort of what has happened historically is that a purchasing agent will look to save money
and will just react to the price going down by a competitor. And I think now there’s
a much greater sense that we need to be working
more collaboratively, keep prices at a reasonable level and assure the manufacturers their success as well as the hospitals
long term success. So I think this is what’s evolving, the marketplace is
moving in this direction, this is what we’re actually
helping to facilitate. I would say Civica RX
speaks to that as well, we’re doing this very definitely but that’s one of the ways
the contracting is changing. – Navin? – Yeah, as Blair was saying
I think fundamentally that uncertainty that still exists, while it’s evolving it still exists and that’s a key barrier right. So ultimately the best
way to spur investment in our view is to drive
more predictability, and more, you can’t
have pure full certainty in any business and I
think we recognize that but the level of uncertainty involved that currently exists with
that race to the bottom is unsustainable so if we can evolve there to Blair’s point, the Civica
model that Martin talked about with a level of commitment both
on the price and the volume points is key because to
the extent that you have that level of certainty
you’re more willing to make the investments
that would be needed. – Okay, so I guess
building on that question and we heard a lot this
morning about quality and reliability of the manufacturing. So how can we design these contracts so that we can compete more on quality and reliability versus lowest costs now. – So maybe I can start, I
think the other piece of this is as I mentioned earlier there’s not one lever that’s gonna solve this
so I think if we think about that predictability notion in addition to looking at ways to evolve reimbursement. That can be sort of a
twin force if you will that can get us there. Right now as I said hospitals are going to look for the
absolute lowest price, amps, syringe, vial what have you because they have to squeeze every penny under this capitated DRG payment scheme. If there are ways to look at that model and maybe borrow from some
other successful models like NTAP where you say,
while these are generic products that have been
around for multiple years, decades even, because of
the situation that we’re in is there an opportunity
to revisit how we look at reimbursement so that
that force that’s acting on price erosion can be abated. – Well as a follow on, but
also any other comments from the panel on this
sort of line of questioning around getting us to change
our framework if you will on incentivizing
purchasing based on quality and reliability versus
the lowest cost now. So you’re suggesting maybe
some reimbursement reform which might come from the
payer to the purchaser might have some impact on
incentivizing purchasing decisions based on
quality and reliability. But how would we do that,
what’s gonna sort of move the needle on that,
any thoughts or suggestions? – I’m sure we all have
different perspectives on this, one thing I think
also sort of forward looking in terms of value as
you’re looking at the newer medicines coming on there
was a lot of mention about specialty drugs and the percentage of those that often go
into shorter supply. And if you look at specialty medicines that are out there, I
think that more then 60% of the top 20 drugs today
are specialty medicines that do not have any
generic competition yet. And these are at a high barrier complex, you’re looking at tens of
millions to hundreds of millions of dollars to bring a generic alternative for these medicines. And from a contracting
perspective I’m more so speaking from a medicare perspective
then a commercial. But this is, a lot of the
specialty meds for medicare are into that bucket, as it stands today when a specialty medicine
generic comes on the marketplace you’re going onto a
formulary tier at the exact same footing as the brand
whereas historically when a generic has come onboard you’re in a looked more
favorable then position of the brand versus the generic. I think you walked us through back in time with the full five dollar difference. There needs to be enough differentiation to draw toward that generic. That’s really critical for
a lot of the investment that industry had made for these complex generics that continue to
cost a lot for consumers that lack competition to date, important to replenish
to make more companies want to go after them. And absolutely vital for us,
for the biosimilar industry that is so very nascent to date and to meet the goals that
(mumbles) has outlined regarding creating a vibrant industry. So how do we address more incentives for these specialty ones, in particular we’re looking at contracting
from the medicare lenses (mumbles) – Blair? – I would just mention Greg that it’s hard to compete on quality
in that you’re talking about a generic drug and so
there’s other competitors, FDA creates a bar over
which everyone has to get. So there’s an assumption about
the quality of the product so it’s hard to make that the motivator. The motivator has to be
what people have been, the pain that people
have been going through over the last number
of years where there’s all the cost and shortage
consequences that have occurred. And I think this is why I really emphasize the barriers to entry and how important it is to get the barriers to entry down because the reality is that the backlogs were 4 to 5 years to get
a product through FDA. And FDA has done an incredible job in reducing that backlog and it’s, but I would say there’s
a direct correlation, and a point was made
by an earlier presenter about the tougher inspections
as well as the backlog back in 2010, that
timeframe, 2009, 2010, 2011, that period that really was a major factor in driving the shortages
and then the market has started to just
become so price sensitive now that it does react. So we have got to I think
create different partnerships that’s again what we’re
working on, different systems to manage consistency
and a focus on assuring consistency in the market because that’s what’s gonna differentiate,
it’s the consistency over time not so much the quality. – Go ahead. – I think we’re very
concerned about the quality. I think we have definite concerns around the compounding industry
and what does that look like from sterile to sterile compounding versus a bulk to not, we have
serious concerns about that. I don’t think that we want to take a manufacturer that might have
a 483 and a quality concern and then push everything
over and have another life challenging situation for patients. I think the other thing
that we as consumers and patients and also
decision makers have to do is, and I’ll be honest,
how do we incentivize the manufacturer to be transparent? I don’t think that we
necessarily do all the time. I think when a manufacturer comes forward and says shoot, I stubbed my toe, I’ve got a three month period of time where I need to shut production down and get my quality higher,
what does the industry all do? They move away from that manufacturer, so they take away the stability
that the manufacturers craving and that consistency
without a path back and I know that puts the other, if you will, generic
manufacturers for that molecule in a tough spot but we
don’t create consistency and I think that again goes
back to the conversations we have to have and the decision making we all have to challenge ourselves with around patient access,
patient care and quality to that patient again and again, and I don’t think we do that every day just to be brutally honest with the group. – Okay, I’ve got one more
question and then I’ll turn to the audience ’cause I
just can’t pass this one up. So we talked a lot about
the purchaser consolidation or concentrations this issue and I’d like to hear from the panel, I
didn’t hear much of this but to what extent does
this sort of consolidation create an opportunity to address better some of these shortage problems, or conversely is it just
essentially part of the problem? Thoughts from the, does
anybody want to take that? – So I would say in
terms of the opportunity, obviously we worked at
Pfizer incredibly closely with our partners whether that’s a group purchasing organization
or a trading partner. And one of the opportunities
working with a large player provides is being
able to disseminate messages as quickly as we possibly can. So our goal where we can’t
supply due to a supply issue is to supply information and so we try to supply information as
quickly and as transparently as we can so to the extent that we have a large group purchasing
organization trading partner who has a large
communications infrastructure that enables speed and
efficiency of information. I do think though that
we have to find ways to make the commercial model sustainable. And so if there’s ways to
work with large players to get the predictability
that we don’t have today that would be an upside
that doesn’t exist. – We feel pressure on both sides. I see manufacturer
consolidation and also we see payer consolidation and we also see health system consolidation
and retail consolidation. And I say this in the kindest of ways, every patient, for us every
patient is AmerisourceBergen patient, how do we make
sure that regardless of the name I’m either
buying from or selling too and how prestigious that entity might be how do we make product
available and what do we do? I need to be able to sleep at night, I have a doctorate of
pharmacy, I went to school I want to be able to sleep at night, how do I make sure that, and I grew up in South
Dakota so how do I make sure my resident South Dakota
entities that in a town of 400 people have access to product. One of the tenants we
have is product access and I think we see that
struggle and we are always wanting to treat every entity
that we do business with as special and every customer
and every partner is valued. But at the same time how do we become fair which turns into maybe
an equal disappointment for everyone but also
it affords us I think a moral place where I can sleep at night around the product availability
that we have access too. – Okay, go ahead to a question. – [Philip] Hello my
name is Philip Trapskin. I represent the University
of Wisconsin’s health system UW health, I’m a pharmacist by training and have a role similar to Jims in that I’m kind of at the nexus of
trying to get the drug in but also working with
clinicians on the back end to distribute that as equitably as we can. And I’ve heard a number of times today, especially with this
panel that if we had more predictability that would solve things or at least be a step
forward and I’m not an expert in the space but I know that every year I’m asked about certain
drugs, how much do I want to buy over the next year. I send that information in, in an effort that that
then can be contracted to have that supply
available for the next year. And even though we do that
the drug still goes short. We’ve also had manufacturers who have increased their price by threefold and we’re about to sign
a seven year contract and they say this three fold increase is needed to invest in infrastructure so that we can continue
to provide new product. Well five years later they go short, where’s the infrastructure
it hasn’t started, some of those types of things. So I think we’re, I
said as a health system I’m definitely willing to pay a fair price for those medications but
there’s no mechanism for me to make an arrangement with
the wholesaler or manufacturer to make that investment
because if I work with Pfizer and say I’ll buy all my generics from you it still has to go through Amerisource or one of the competitors
and you might not give me all of what I’ve committed to because you’re gonna distribute it equitably to everyone so that falls short, and then how do I know that in five years paying that extra price
is getting invested in infrastructure? So it’s kind of this weird trust matrix that I think everybody
wants to do the same thing but we haven’t figured
out a way to agree to it and reward those that
are willing to opt in. Obviously the Civica model is very unique but hard to scale that
across the country quickly. And so I think that might
be, the quickest win is how can we re-engineer the
way this contracting works in a way that incentivizes those
that are willing to pony up and not be on the back end of it. And from a quality issue real quick for me the quality issue,
I know that I’m gonna get a sterile product from manufacturer, that part I feel pretty confident about. For me the quality issue is
how often do they go down? Because how often am I
gonna put all my eggs in that basket and then I have
no eggs at the end of the day and so if I knew that quality track record of down time and other
things was transparent that would make me more comfortable and trusting to get into
that kind of relationship. So hopefully this day will result in maybe some early adopters to kind of
make a model that would work and not turn things round overnight but in the next five years
kind of get to a place where you have the predictability, we have the predictability and everyone sleeps I guess. – Yeah great, thanks for that comment, it’s always great to
have fellow pharmacists in the room, any comments on that at all? – I just want to say on
this issue of trust is key. Part of this model that
I was talking about where we aggregate the
demand and we have a large amount that we can bring to a manufacturer and then we do talk to the manufacturer about being transparent
about actually sharing information about costs and so forth because we’re in it with them. And ultimately that’s
where our model is evolving and that’s the direction
we’re going in right now in terms of our work
with our manufacturers. It’s a very different model
then it’s been historically. And this kind of gets
back to that last question you were asking about consolidation because consolidation
is first off the market is still just very competitive. But there has been consolidation, consolidation probably is
in many ways advantageous I would argue because it does allow for that aggregation of the
demand and then be able to bring it to a manufacturer
in a more predictable way. So to get trust you need predictability and you need to have honest terms and that’s what we’re trying to move to in terms of our model. – Okay, great so I’d like
to thank our panelists and presenters, unfortunately
we don’t have time to get to other questions but
we do have a whole session later today for the public comment. We’re going to go ahead
and take a 12 minute break and come back at exactly three o’clock for our next session, thank you. (audience applauds) – Alright I know it’s been a very busy and full day and I appreciate those of you who are sticking with
us to this next session on strategies and next steps to reduce adverse clinical and economic consequences and safeguard public health with regard to the drug shortage issues
that we’ve been discussing today, this final panel
is intended to give us an opportunity to hear some reactions from again a wide range of perspectives to the days discussions and hear about ideas for next steps forward to address these issues. I heard a lot of comments
today that I think are quite insightful
on possible next steps for this set of issues. As you know the goal today has been to get to a reliable supply of
quality generic injectables with a particular
emphasis on shortage drugs used in hospitals and
despite many efforts to date there are still a lot of
cases where the market for medically crucial generic products are fragile and not functioning well. You heard this morning
that the goal for today was to hear discussion from
a wide range of perspectives on the root causes and
based on those root causes what steps could help to address them. Steps by FDA and other parts
of government more broadly, also actions by a range of stakeholders that could help and that’s what we’d like to follow up on in this
session since we’ve heard a lot of different views on those topics. I heard a number of ideas
related to regulatory steps, reducing entry barriers,
otherwise improving marking performance, there
was a lot of acknowledgement of many steps that FDA
has taken to improve regulatory function while maintaining that safety standard
for these complex drugs. As well as some further
suggestions on reducing the time and the uncertainty
of responding too concerns about manufacturing processes and to facilitate entry by
additional manufacturers. There was some discussion
about global regulatory harmonization and mutual recognition of regulatory standards as well. But very importantly, and as we expected, a lot of comments emphasize
that this is not just an FDA set of issues,
there are other regulatory changes discussed that
could address practices that could be contributing
to the problems. These include pricing
issues such as potentially unintended consequences of regulations like medicaid rebates and
penalties for price increases on generic drugs, discussion
of the anti kickback exemption for GPOs and potentially
unintended consequences there. Other issues in government programs, there were a number of comments related to increasing the transparency
of these generic drug markets building on the steps that
have already been taken, a lot of acknowledgement for
the tracking of shortages but may be ways to do
it more comprehensively, at least for crucial
or high risk products. Maybe having more knowledge
at FDA or elsewhere about manufacturers, their
capacity, their inventories while recognizing proprietary concerns. Also a note that these
issues about transparency to improve market function
also apply to APIs, not just the final products. And then also on the private sector side, in terms of things that stakeholders outside of government can do to address some of these challenges. A number of issues came up
including on the last panel about different approaches to contracting. So maybe not just focusing on getting the lowest possible
price on a generic drug or generic product right
now but for example some ideas around longer term contracts over the notion of building trust and longer term relationships, multi source contracts,
contracts that are tied to additional indicators of quality beyond just the sterility
and chemical properties of the product itself
getting into reliability of product supply and
availability of inventories contracts that promote
efficiency and reliability in all parts of the production
and distribution process. So a lot of ideas, we’d
like to follow up on those on this panel, starting off with some comments from our academic
experts on what they have taken away from today’s discussions. So we’ll hear first from Rena
Conti and Erin Fox again. And then we’ll hear a
range of other perspectives on this panel and then we’ll
have some time for comments from all of you and then
a public comment period to end up the day today. So let me first turn to Rena and Erin for their reactions and
thoughts on today’s discussions. Rena do you want to start. – Sure thank you, this has
been a really fantastic day, thank you again. So I have three comments,
the first is about asymmetric information, it is very obvious throughout the day that a lot of people who are quite sophisticated don’t appear to know much about what’s
going on in this market. In part because clearly the distribution chain is very great, there are
some definitional challenges but also frankly so much
of this is contractual, and therefore it’s shielded
from any public transparency. So I guess my question with
that is we know a lot about how this market is
opaque and we know a lot about how that frustrates
different actors in this market. But markets that are
this severely asymmetric in their information,
there must be reasons why there are so much
asymmetric information. And there must be masters
that that asymmetry of information serves,
and we didn’t really hear that much about that today but I think that is a key
in moving forward here. Exactly why do we have such
asymmetric information, who’s interest does that
serve, and are there potential alternatives or substitutes to serving those interests
in a way that actually furthers public health? The second piece that I learned today and that I think a lot of
people touched on is price. And I would have, some
people were much more direct about this then
others but ultimately this is a business
decision that is being made by multiple complex actors acting on their own economic incentives. Then economic theory suggests that it’s revenue maximization that they’re after not cost minimization. So they’re not looking
to minimize costs here, they may want that but
what they really want to do is make as much money as possible. So that seemed to me to kind
of open a couple of doors. The first is, maybe the pricing
signal doesn’t work here and maybe the pricing is,
the signal doesn’t work here because there are numerous policies that either dampen the pricing signal or allow certain people to make money that don’t get all the way
through to manufacturers. And so I wondered a
lot about CPI penalties how 340B may work here, how DRG payments that bundle drugs with other
things in the hospital setting may actually matter
here, and to what extent relaxing some of those constraints could actually pull more
supply into the market. And then again we didn’t
hear that but I would love, we did hear a little bit of it, but I would love to
hear more about exactly which prices might matter
to pulling more suppliers into this market or pulling
more capacity into this system. And then lastly supply is so, supply of both the base ingredients and also the fill and finish
products are so constrained in this market and again
we don’t know that much but what we do know is that
these are multi product firms that are making these products. Why are multi product
firms that are largely making brands and probably
making most of their money on brands, but also making generic, still making generics at all? If their revenue that
they’re gaining off of them is so little, and that
also suggested to me that if we don’t know, if
supply is so constrained here and that there aren’t
maybe any more willing manufacturers in these markets either for the base ingredients or for the fill and finish drugs
that maybe we have to think really outside the box about
other potential suppliers that might be willing
to enter that are not in the market now. And that could come from importation, but that could also come
from alternative suppliers that maybe the universities
or contracting the DOD in some others ways to
produce these products for certain types of national
security reasons anyway that we may want to put on the table. I’ll stop there. – Great thanks very much for again putting some further
provocative ideas on the table. Erin? – Thanks so much, so one of the things that I think we heard a lot about today was transparency and I
think people are excited about transparency really
only because of the shortage problems that we have. If we didn’t have so many
shortages I’m not sure I would actually care who
actually made the drugs. The reason I want to know who is actually making our products is because
we have so many shortages and I want to try to make
a plan to be proactive and prepare plans for our patients. So really that’s the why of transparency, I know it might be difficult
but in no other thing that we purchase do we
know so little about. Think about how much money
we spend on our medicines and we know so little
about where they’re made, where they come from,
it’s an enormous expense to just put on faith
that it’s gonna be okay, and you’re gonna have a routine
supply for your patients. The other thing that we did
hear a little bit about today are concerns with API,
talking about the safety of our API, where it comes from, potential contaminants,
I do think that we need to start thinking about our sources of API as part of our national security. This is our drug supply,
if we let other countries control our API we may be at risk and I hope that folks
are thinking about that as part of our national security. And then last I think
we really have talked about price today, one of the reasons why hospitals always want the lowest price is because hospitals are
under enormous constraints with our GRG payments. So in many cases we don’t
actually even get paid for many of the supportive care products like saline, like anti-emetics. Sure they go on a bill, a bill has no part of the reality of what
patients actually end up paying from a hospital so I think
it’s probably worth a look at those GRG payments and some kind of reimbursement model. So those are kind of the three things that struck me the most, and thanks again for the opportunity to be here. – Erin thank you as well. So now I’d like to turn
to a range of different perspectives for reflections
on the days discussions. We’ll hear first from
Todd Ebert, the president and CEO of the healthcare
supply chain association. Then David Goh, who’s
senior vice president for sciences and regulatory affairs at the association for
accessible medicines. Craig Frost, the assistant vice president of clinical pharmacy services at Catholic health initiatives. Robin Yewing, manager for
the drug shortages unit, the health product compliance directorate of the regulatory
operations and regions ranch at health Canada. Canada has taken some steps
to address drug shortages as well and can provide some
interesting perspectives, and Ashley Bohme director
of the office for policy for pharmaceutical quality at Cedar who is here on this panel representing the drug shortages task force. So Todd, let me start with you. – Thank you Mark and we appreciate the opportunity to be included
in today’s discussion. This is a very important
topic that I think we’ll all agree is complex and we all have a vested interest in finding solutions. I have three goals
today, one is to provide a high level overview of GPOs, two to talk about the
actions that GPOs undertake to mitigate drug shortages and three, we participate in a
informal provider based, drug shortage working group that has met on a number of occasions
and we have some ideas and suggestions that we
have shared with the FDA that we’ll share with this group as well. So that’s our plan for
today and oh by the way, as Mark said I do represent the group purchasing organizations, I am a pharmacist, I have
been a practicing pharmacist for a number of years, hospital pharmacy as well as retail and I
also have been engaged in group purchasing for a number of years as well as being a CEO of a national GPO for a number of years as well. We’re the critical sourcing
and cost savings partners to hospitals long term
care, surgery centers, clinics, home health care,
those types of agencies, those organizations
throughout the country. What we do is we leverage
the purchasing volume of our customers to lower
prices on health care products and services. And what that does, it
lowers cost to patients, hospitals, payers, medicare and medicaid, and tax payers, we are on the
front lines of healthcare. When there are issues we hear about them almost on an immediate
basis from our customers, our hospital members or our other members. We work alongside with
them to help patients combat difficult challenges,
and some of those challenges would include drug shortages and every GPO is actively engaged in working to help mitigate drug shortages. Generic drug price
spikes, natural disasters, you know we’ve heard about Maria, Harvey, the fires in California. Every GPO has customers in that areas has been actively engaged in working with the providers to make sure
that they have the products and services they need. And then also cyber
security threats at others. The mission of GPOs is to
reduce healthcare costs, increase competition and innovation. GPOs want a robust and
competitive marketplace with strong manufacturers. We support transparency,
every GPO that’s part of the HSEA association
belongs to the health group purchasing industry initiative
which is a transparency and ethics initiative for GPOs. If you don’t belong to it you don’t belong to our association. And then we also work
very diligently on proving healthcare processes and outcomes
for the patients we serve. Virtually every hospital
and the vast majority of not acute care facilities
in the country use a GPO. Why? The value proposition. On average we save approximately 13% by organizations using
a GPO, we provide value. The average GPO contract
administrative fee ranges between 1.2 to 2.25% average, 2% and this has been validated by the GAO. GPOs are competitive and GPO membership is completely voluntary
and this goes for suppliers as well. No one requires, no one
makes an organization belong or utilize a GPO, it’s their choice. And many times they do have the ability to cut their own deals
or contracts as necessary and they do so in drug
shortage situations. In 2017 we had the former
chairman of the FDC John Levowitz and a
senior economic advisor from the FDC Dan O’Brien take a solid look at the industry and they
found three important things. GPOs save money, we do,
we operate in a very competitive environment,
unconcentrated environment with organizations, large
systems able to contract on their own that’s a very
unconcentrated marketplace. And the funding model supports lower cost and increased competition,
the GPO model works. And GPOs are industry
leaders in preventing and mitigating drug shortages. As I said, literally on a daily basis, when I was a CEO of an organization we had a 24 hour hotline where
members could call in asking for help to identify
where there’s problems, how we could help them source products and services relative to drug shortage. So that we’re actively engaged
in mitigating drug shortages. Now let’s talk about
what GPOs do to work with and mitigate drug shortages. We work very closely with manufacturers, distributors, regulators, to make sure that they understand what the issues are and what the needs are,
and to see if we can get product where it needs to be. We’ve taken a number of innovative steps to avoid generic price spikes and to mitigate or eliminate
prescription drug shortages. Some of the key things we do is GPOs are extremely efficient at tracking data and understanding where
there are shortages and there’s a need for
action or information to be filtered in to the
FDA or other organizations to help supply and provide products. Hospitals help source and safely migrate to alternate products. Every GPO when they
suggest alternate products will have information to
help them use those products as well, so they can use them safely. One of the things that GPOs
do in the contracting process is they use member advisory committers or member advisory boards. These are pharmacists
or pharmacy purchasers that sit with the GPO to help make those contracting decisions. What’s interesting is the discussion that’s gone on today we’ve talked about quality and we’ve also
talked about the ability, the reliability of sourcing. As these discussions take
place and decisions are made those are two of the top
issues that are on the list, on the mind of these
advisory board members. To make sure that we
have high quality product and that it is a reliable
source of supply. After all you may get the best price in the whole wide world
but if you don’t have a reliable supply or can’t get the product it’s not worth anything. So many times decisions
are made on the fact that high quality product, reliable supply and it may cost a little bit more but those decisions
are made simply because you want to make sure that your customers have the product they need. We many times will help identify
additional manufacturers for products and shortages,
we coordinate supply chain operations during natural disasters and emergencies as I said. And that we’ve been actively
engaged in some of the policy advocacy efforts relative
to expedited FDA review in drug shortages and price spikes closing rams loopholes which
we’ve talked about today. The uptake of biosimilars
and annual production limits for injectable narcotics. We were actively involved this year relative to the shortage
of injectable narcotics. We all know them, hydromorphone, morphine, demerol and fentanyl. And what we found was
one of the manufacturers had difficulty providing those products yet we had manufacturers that were willing to make more product but they didn’t have the allocation. At that point in time we
had to work with the FDA and the DEA to make sure
that the manufacturers had the allocation they
need to make the products that are necessary. Some of the other things that we do from a contracting standpoint, there are failure to supply
clauses and contracts. Not in all contracts,
because as you’ve heard today in some situations where
there’s a concern about the ability to supply
product that maybe you have two or three contracts
for a particular SKU or product line and you want to make sure that the products are available. In those situations you don’t have a failure to supply contract. We work with manufacturers and others so that we can identify volumes so that they’re predictable
and our goal is to have established fair value based price points, that’s a key thing. We communicate provider needs in advance to the manufacturer from a
manufacturing perspective and also in the interest of time I’ll keep moving on a little bit faster. But in the shortage situation we ensure that hospitals and
providers, other providers have the ability to contract on their own for other products and
use other manufacturers. There’s nothing that says
in a shortage situation that you have to use a GPO contract, if the product is not
available you have the ability to go out and look for other product yet we’re working with
those manufacturers as well. Now in the final minute that I have we work very closely participate in the drug shortage working group. As I said it’s a group
of providers that has come up with ideas and
recommendations to help mitigate drug shortages. Some of the key things that
we’ve learned are this. Communication is important, if the FDA, as I have understood in
listening to the dialogue we’ve had with the FDA for manufacturers the FDA can be your friend,
they do not want to see manufacturers shut down,
they want to work with you. So early and effective
communication does work. We encourage the FDA to work
closely with other agencies within the federal
government such as the DEA so that if there are
situations we can get those situations remediated quickly. We want and we’ve heard this before, more transparency in the requirement of drug shortage information. Where’s the product made, who’s making it? Many times contracting
decisions can help manufacturers relative to sourcing product
and where we get that product. So transparency is important. We think that the FDA should integrate, or work more closely with
the University of Utah ASHP and their drug shortage list. They come from two different directions, one the FDA list is
primarily manufacture driven and then two the ASHP list comes from a lot of the providers and the suppliers. And there’s good
information in both lists, can they work more closely together to provide more information
for all of us to use. Finally we think we need
to have more strength in the title 10 notification. We need more information,
we need manufacturers to give us that information as shortages begin to occur. And then finally to get
down to the last piece, is we also believe that manufacturers, everyone has a plan A when
everything works well, what’s your plan B? What do you have in your back pocket if everything hits the
fan and you’ve got to do something differently rather than say let’s sit down and do it. And think about it now, have it prepared and ready to go, we think that’s something that should be required. Finally from my standpoint and the group purchasing organization standpoint it’s all about taking care of patients, making sure that they
have high quality products to have the best care
that they possibly can that is reasonably priced, thank you. – Thanks Todd, and next up is David. – Thank you Mark and thanks to the FDA and Duke Margolis for
putting this together. I’m very encouraged by this meeting, in the break Val Jenson and I were talking and this is probably the 10th year I’ve sat on a panel
like this and have heard the same thing year after year, after year and we’re back here again. The difference for me is the
engine behind this is the FDA. So I really think we
really have the opportunity to get where were need to get too. That said I think an
important fact that we need to understand, this is a
multi stakeholder issue. It’s not one issue, FDA
or the manufacturers or the GPOs or whatever it is. From the beginning of a product, whether it’s the
development of the product, the approval of the
product, the manufacturing and release of the
product the distribution, going to the pharmacy, dispensing and finally to the patient, all of that is an issue that raises different points throughout the process and if we don’t all get together we’re
not gonna solve this. I mean it’s just that
simple, but with that said and I have listened very closely today with some things that were raised and some recommendations I
guess that I would put forward for people to consider. Transparency and communication
is absolutely important. I might have a little
bit different opinion on why it really matters where
the manufacturing site is, but that’s, everybody has an opinion but transparency and
communication is very important between manufacturers and the FDA. If we don’t have a heads up clue about when our approvals
are going to occur or when our PAS process
is going to be approved we can’t go into the
manufacturing stream to do that. And those manufacturing streams, especially in the sterile
generic injectable is usually somewhere four to six months at the very least and more
like six to nine months to make it happen. So if you don’t have that heads up, the day you get notified
you’re months and months away from actually making the product and getting it onto the market. So I think it’s very important to do that. FDA should also further
enhance and improve the existing expedited resolution
pathway we heard earlier today about prior approval
supplements versus CBE30. If we could get to a
place where we could agree in a drug shortage situation
that a CBE30 could work at least in that situation
to get the product to market that would help significantly. You look at drug shortage
when it goes completely into drug shortages
there is no other option, we do go external, external
to the United States and import products in. Those products are not
fully approved by the FDA through the review process, they do go in and inspect the facilities
and they do meet safety needs, that’s an important fact
but it’s almost like a CBE30 process if you will. So if we can do that when we’re importing, why aren’t we doing that
for our products here? New and updated guidance, so the FDA can and should continue
to update guidance’s because standards in both
the brand and generic drugs change frequently. The issue is, do we need
to hold up an application because a guidance changes in the middle of that application. So if you have a guidance that’s changed, excuse me, if you’ve
developed a product under one guidance you submit it
and the guidance changes because we find new information, holding that product up
for review and approval because that guidance
changed is not necessarily important as long as it’s
not safety and efficacy reasons that we made those changes. So if there are some other
changes like compendium or labeling or bioequivalence changes, those might be able to be handled in a post market review. If I have two identical products, one is approved out in the market, one is going through the approval process, once that happens the
one that’s being approved will be held up because of the guidance that has just changed into a draft form. The product that’s on the
market will stay on the market, won’t be pulled off, but
will have to go through a post market review. So if we could look at something like that as an option that could
help us get products in drug shortage to the market faster. New GMP requirements or
enhancements to GMP requirements should be provided by
a guidance rather than through 483s. So many times when the
FDA makes a change in how they are doing their inspection process it is on a guidance change, it’s I’m gonna use the word
state of the art change which we don’t disagree that
those should be in place but a lot of times one manufacturer doesn’t learn about that change except that they saw a 483
that another manufacturer got and they realize oop
this is the new standard, I need to make an adjustment. But you don’t know for
sure that you need to make that adjustment until you get inspected and then it’s too late
at that point in time. So if we look at putting
those item changes in a guidance that would be very helpful. Cedar should meet with a
sponsor for a drug shortage product upon request so
once we have an inspection for example and we respond
to the 483 with our response which is required within 15
days there should be a meeting that would occur so there
could be a conversation, a communications and a
transparency if you will between the manufacturer and the FDA. Should be able to move
quickly through that process and then get a re inspection in place in a very short period of time. We addressed some of this in GDUFA too but we didn’t necessarily address all that and we need to do that. We talked about manufacturing redundancy, implies or not manufacturing redundancy. We don’t find that in the brand world and you don’t find it in
the generic world either one but in the generic world
it’s even a tighter perspective because of the
finances that are in place. You can’t have, or it’s
very difficult financially to have a manufacturing
facility sitting idle, waiting for what if. Oh by the way when you approve a drug, or the FDA excuse me approve
a drug they approve that drug on a specific manufacturing
line and every line you approve on you have
to run the product, do the testing and get it
approved on multiple lines. In the generic world we
just can’t afford to do that for multiple lines to sit idle. So we need to look at other opportunities and other options, one of
those could be in having the HHS and FDA consider
instituting a program that would provide targeted
federal grants or contracts. So that the federal government help in the production of these facilities. And then of course as
we need to move products from one line to another line we would need the FDA to help
with that process as well. That redundancy could help, and we did see some of this in the 21st century cures along continuous manufacturing. Contingency planning, HHS
and FDA could help develop a supply contingency plan,
this would be along the lines of the strategic national
stockpile program. They already exist today
for some specific products like products that are used
against their drugs et cetera so something like that that we could have the critical drugs and
FDA is talking about having a critical drug list. So on that critical
drug list we could have some of those products
that are made ahead of time and stored and the government
could help with that process. Market force is another
area that we need to look at and better understanding
the role of purchasers. So we’ve heard already
about the consolidation. If you look at the industry, so the FDA approved 1000 applications
last year, record number, over 1000, a record number of applications of those and we reviewed this
with our member companies only about 50% actually
made it to market, why? Because there just
wasn’t a market to go to. When you have the wholesale
distributor and retailers combining to just three
markets that limits very much who can come to the market, and the market dynamics. Some people say, well the
industry, generic industry is consolidating too. That’s true, we are but
in last years application those 1000 I was talking
about they were over 120 companies that that was the first time they had ever filed an application. So while there is some
consolidation going on there’s a lot of new players
coming into the market and we need to look at
opportunities to bring them about. So with that and in
conclusion I would just say that it’s very
important again that we look at a process that pulls us all together and we work together to get the solution, we don’t aim fingers at one another, who’s causing a problem. Thank you very much. – Thank you David, and next is Craig. – Alright thank you Mark,
very happy to be here this afternoon. I want to give a little bit
of a provider perspective to the shortage crisis
that we see everyday. And I too agree with some
of the previous commenters that the root causes of this in my opinion really are economic if
you look in any direction it is an economic issue
that has caused this. And so just short of
framing it up in the world of acute care hospitals,
the organization I work for, Catholic Health Initiatives we manage 102 acute care hospitals across 18 states with many hundred other sites of care. And I spend in the
neighborhood or $1 billion a year on drugs. And so in that world
we’re really judged on how we do expense
management because I think most people in the room understand that in the acute care
space you’re reimbursements capitated, it doesn’t matter
how much money you spend on supplies or drugs or other services you get a fixed payment
based on a DRG rite. So one of our goals is to
minimize those expenses wherever we can and so we
do do that and we are judged and compared to other
systems I think the metric that most of us use is
percent supply spend per net patient services revenue. So we look at that number
and track it very closely, look at the competition
to see how they’re doing, and there’s really just
a few ways you can manage that spend in pharmacy. One of those is through utilization, it’s through managing
clinical use of drugs, through having good
evidence based protocols for the use of those drugs and minimizing the necessary use. The second really is around contracting. So it’s around price that
you get for those drugs and making sure that you get the most, the best price that you possibly can for everything that you buy. And in my world most of
our contracting efforts despite everything
we’ve been talking today about generic injectable
drugs is around branded drugs. That’s where the biggest dollars come in, is contracting for single cell source, sometimes dual source drugs
in trying to negotiate those prices because
they’re the most expensive per unit drug that we can buy. Certainly generic injectable
drug contracting occurs, our GPL partners help most
health systems manage that but there’s not a whole of
time and attention spent to that it, it just
sort of works the prices have gone down, we don’t
spend a whole lot of time thinking about it until
there’s a shortage. Until single line items like those drugs used in surgery,
pyridostigmine, succinylcholine, other drugs all of a sudden have several thousand fold increase and
it catches our attention when all of a sudden I’m
spending 20 million dollars more a year then I thought I was on drugs that have been around for decades. So certainly I think
provider organizations hand in hand with GPOs
we’ve sort of contracted ourselves into a corner. On some of these generic
drugs it’s been well described by the economists today that
really some of the prices just cannot sustain a
market for these drugs. And that’s really what lead CHI and others to this novel concept of a not for profit sort of provider demand
guaranteed organization like Civica. And the one thing I
wanted to drive home today to kind of convince everybody in the room that this truly is an economic issue is that all these large organizations that are participating with Civica are guaranteeing volume
without knowing price. So just think about that for a moment. What kind of contracting
space do you guarantee volume without knowing what
price you’re gonna pay. So we are doing that in our
cooperative relationship with that organization, it
hopes that it will really be market moving. I think this could be the beginning of a really market transforming step in the generic injectable
space to really reset where everything, where all the prices lay and where the access is for these drugs. So really our primary goal with being part of that consortium is
access, it’s not price. We’re not agreeing to price up front, we want access to these drugs because in our business
it’s all about the patient, we cannot provide care to patients without accessing these drugs. I think the shortage that
drove it home most for me was the IV solution
shortage from two years ago when we couldn’t procure what
we always feel is a commodity. The obvious solution is
just salt water, sugar water in a bag, almost never
medicated in those bags so it’s just a sort of a commodity until you don’t have it. Until you have to change
practices and clinical protocols to cope with it, I’m quite
sure that there have been numerous adverse drug
events both recognized and unrecognized because
of that kind of a shortage. So really treating those
contracts like a commodity has really not served us well. I think another speaker
commented on the price of coffee, well you can’t live without drugs. Some would maybe argue you
can’t live without coffee either but we cannot treat these
agents as commodities. I think that’s clear
that we need to change our contracting practices, and hence the promise of Civica RX. And then lastly I would just like to echo other commenters with respect to creating a central list of drugs
that is really managed by a government agency
whether it’s the FDA or another agency, certainly
I think David you mentioned that we have other examples
of the federal government with the national stockpile for different national security reasons. I would argue that some of these drugs, generic injectables used in hospitals have a similar national security interest. If we cannot perform surgeries, if we cannot take care of our population we will have a national
emergency on our hands and have come pretty close
I think in many hospitals to that across the United States. And cancellations of elective surgeries and delaying access to these meds and changing to subpar
therapies in some cases. It is absolutely something
that I think providers would all advocate for is
creating some incentives around an essential med list
where maybe it’s table stakes for manufacturers to get access
to reimbursement contracts from the government, or
to purchasing agreements with the VA and other
parts of the government. That they agree too
transparency and production of some of these vital
generic medications. With that I’ll pass the mic. – Craig thank you very
much for your comments and Robin, thanks for coming. I appreciate hearing your perspective from the standpoint of health
Canada on all these issues. – Great thank you Mark and
I will take this opportunity before I get started just to thank the FDA as well as Duke Margolis
for inviting Health Canada to this event. All in all I think this
has been a very meaningful and information session so
thank you for inviting us. So just a little bit of background before I dive into the presentation. So I manage Health Canada’s
drug shortages unit and we have a number of
different responsibilities one being compliance verification. So we engage in compliance verification activities to ensure
that regulator parties in Canada are complying with the mandatory reporting requirements for drug shortages and discontinuations. We are also engaged in drug
shortage case management. So we work very closely
with a wide variety of stakeholders to share
information on drug shortages but then also to identify and implement mitigation strategies. And another one of our responsibilities is with respect to stakeholder engagement and under that hat we actually
serve as the secretariat for Canada’s multi
stakeholder steering committee on drug shortages. I think perhaps my slides are not loaded, might be a bit slow, I’ll move ahead. So today I will be providing an overview of steps that Health Canada has taken to facilitate a coordinated
approach to drug shortages in Canada, and I’ll also
be providing details with respect to Canada’s multi stakeholder steering committee on drug shortages. I’ll also be sharing some information on the mandatory public reporting of drug shortages in Canada
and last but not least, I will be sharing some
highlights on successes as well as some current
challenges that Health Canada is facing on drug shortages. There we are. Oh that’s very sensitive, back one. So just to provide a
little bit of background on drug shortages, 2012
was very pivotal year for Health Canada on drug shortages. It was very apparent at that time that drug shortages had
become a complex national and global problem and
a serious ongoing issue for Canada’s healthcare system. In early 2012 Canada
experienced some of our most widespread and significant shortages. One of our largest
generic drug manufacturers made a business decision that resulted in many national critical shortages. And this really sparked
significant concern in Canada and resulted in an emergency debate in our house of Commons and
also a standing committee on health report. So as a result of what transpired in 2012 Health Canada partnered
with other key players to clearly define rules
and responsibilities for the various parties that
are engaged on drug shortages. In terms of governance
in 2012 Health Canada together with the province of Alberta, so the Alberta ministry of Health established the multi
stakeholder steering committee on drug shortages and this committee has a diverse membership. So on that committee
there are representatives from government, so the federal
government is represented. They’re also representatives
from provincial government as well, industry is
represented on the committee, we have industry associations as well as group purchasing
organizations that participate. And there are also health
care representatives on that committee, so we have the Canadian medical association, the Canadian pharmaceutical association, the Canadian society of
hospital pharmacists also holds a seat on the committee. There’s also the best medicines coalition on the multi stakeholder
steering committee and the international coalition
of patient association. So there views are also
represented on the committee. And together we work as a team to implement a more coordinated approach to drug shortages in Canada. So the MSSE which the
committee is more commonly referred to as is supported by the work of several groups, so
there is Health Canada’s drug shortages unit, and we’re responsible for drug shortage case management, compliance verification
and stakeholder engagement. There’s also the
provincial and territorial task team on drug shortages
and this is comprised of representatives from various provincial ministries of health. And that group is really, one
of their primary functions is to coordinate with
the healthcare system to confirm and to assess drug shortages. And then there’s also
the federal, provincial and territorial working
group on drug shortages which is a newly formed
group that is mandated to further clarify rules
and responsibilities, as well as to develop processing tools to support drug shortage case work. I may have skipped a
slide there, there we go. So the multi-stakeholder
steering committee on drug shortages has developed a suite of publications on drug shortages that are publicly accessible,
they’re available online. You can access them by visiting or as well. So one of those documents is the protocol for the notification and communication of drug shortages and this
sets clear expectations in anticipation of, or in
response too drug shortages. There’s also the multi-stakeholder toolkit which describes the
Canadian drug supply chain but more then that it
really clarifies the rules and responsibilities of
key players and identifies tools and strategies to
address drug shortages. We also have the guidance
document to mitigate drug shortages through
contracting and procurement. This is a very industry focused document that outlines best
practices on contracting and procurement, and then there’s also the preventing drug
shortages, identifying risks and strategies to address manufacturing related drug shortages in Canada. So this document proposes
strategies to reduce and prevent specifically
manufacturing related causes of drug shortages in Canada. So I did want to touch a little bit today on public notification of drug shortages. On March 14th 2017 amendments
to the food and drug regulations came into force
that make it mandatory for drug authorization holders to publicly report drug shortages and discontinuations to a third party website. That third party website
is, and we also have a mobile application that accompanies that site as well, if you’re interested in downloading it. Under mandatory reporting
Health Canada priorities include compliance verification. So we receive signals of
potential drug shortages from a wide variety of sources, whether they be health care professionals, industry, Canadians, the public as well. They might report to us
that they tried to access a product but were
unsuccessful, and they were told that the drug is in
shortage yet it’s not listed on the website. So what we do is, we follow
up on all those signals and verify that the
regulated parties are in fact meeting their regulatory
obligations and posting both anticipated and actual
drug shortages on the website. Another priority for us
is website enhancement so we’re continuously
identifying, developing and releasing enhancements to the website. And that is all done in
consultation with stakeholders. So really making sure that the website is meeting the needs of the community that use it, so that’s a
big component of our work. Also data visualization and monitoring is a priority for us,
we’re always thinking about how to best present the
data on the website. How to present it in a
manner that’s informative and clear and also we’re
now shifting our attention to how we can use that data. So looking into data
analytics, seeing if we can identify any trends through
that data analytics. Maybe there’s a mechanism
by which we can improve upon our ability to be more proactive and predictive in our approach. And I will just do a little bit of a plug. Recently we did enhance the website to include an application
programming interface and API. And I’m told that that
is an excellent feature if you’re looking too
access the data for academic researcher purposes,
it makes data analytics just that much more easier. So finally just on
successes and challenges overall I would say the multi-stakeholder steering committee has
been a success for Canada through the work of
MSSC we’ve made progress on a number of key areas. We have increased
multi-stakeholder collaboration on the identification of strategies to mitigate and prevent shortages. I will say it’s not uncommon
for us to bring together stakeholders when working on a specific drug shortage case. So we’ll bring together
the market authorization holder, GPOs, pharmacy associations, even patient associations as well. We’ll all come together
and have discussions about the issue, exchange information and discuss potential
mitigation strategies as well. Also through the good work of the MSSC we have clear roles and responsibilities and process for the work
that we do on drug shortages. Another success for us is
the mandatory reporting on It does enable the drug supply chain as well as the healthcare
system to respond appropriately to minimize
impact on patients. So we view that website
as an overall success. In terms of challenges,
it is often difficult for Health Canada to acquire timely and accurate information on supply from within the supply chain
and the healthcare system. Visibility into the supply
chain remains a challenge for us but that said we are
addressing the challenge so the Federal, provincial
and territorial working group is currently working on tools and process with respect to information gathering. So hopefully increasing
efficiency in that area. Another challenge for us
is that it’s sometimes difficult to encourage, or
challenging to encourage stakeholders to collaborate
in managing supply situations. Discussions on supply, on
root cause, on market share, on the ability to fill a gap in supply. Those are all sensitive conversations and sometimes there is a
reluctance from stakeholders to participate in those discussions. But that said, since
the creation of the MSSC we have seen a real
strengthening in relationships in the drug shortage space and an overall increased engagement from all stakeholders on the case management work. So we do believe that
that is a sign that we are moving in the right direction. And with that, I will say thank you. And I look forward to any
questions that you may have. – Robin thank you very much, and next, Ashley thanks for your
work on the drug shortages task force, looking forward to
your perspectives on the day. – Thank you Mark,
appreciate the opportunity to be here, I’m with the
Office of Pharmaceutical Quality and the Center for
Drug Evaluation and Research but have worked with
colleagues across the center as part of these efforts
related to drug shortages. Just pull up the slides, would be great. You’ve heard from folks in today’s meeting as we’ve heard from folks
in our listening sessions with a call to put
together some sort of list of drugs, essential
drugs, necessary drugs, important drugs that we
should be paying attention to because of the risk of
shortage for those drugs. And so I want to share with you today some initial work that we’ve
been doing in the agency and instead of really
looking at a list per se we’ve been looking at this
as more of a set of criteria that could be applied,
and one reason for that is that lists change and
they can change very rapidly and so trying to create a list means that then you also have to have a mechanism to maintain and timely
update that kind of list and so we’ve approached this
from a criteria perspective. So I’ll share some of
what we’ve done today. So as we’ve looked at this issue, really across the agency and within CEDAR we have a couple of goals here. One is to develop a set of
criteria that would allow any individual manufacturer
to readily identify whether a drug they make would
meet the set of criteria, and be considered at risk for shortage. A second piece to this would be to look at these criteria and be able
to use them to identify eligibility for certain targeted FDA or other stakeholder
actions to help prevent or mitigate shortage. And so as a part of this we’ve looked at a variety of risk factors
or vulnerabilities, those include national security related came up recently, some
product specific type issues as well as manufacturing
facility related issues. The challenge here is to
develop a set of criteria that would be sufficiently predictive but yet not overly inclusive. We need this to be
practical and able to be used within existing FDA systems and so we need to not just
establish a set of criteria but make sure they’re
practicable for our use. So thinking about national security, one way to look at this might
be to look at vulnerabilities for drug products that are necessary under emergency conditions to mitigate an average impact on the public health. So that if there’s a shortage of these it could impact our national security. Two categories that might readily fall in this category are those
used in emergency response. We’ve heard a lot about those today. A little less about drugs used in response to certain specific threats,
chemical, biological or radiological. The nice thing is that
there are organizations who have put together a body
of work to help identify drugs that might fall in
each of these categories. So we’ve listed some examples
here by outside organizations as well as FDA that have
already started to develop or have published lists
of drugs that might fall into these categories
that we would consider critical for national security purposes. Then if we think about
product related risk factors. So this is really about
trying to determine what drugs are important to focus on, medically necessary is a
term that get’s used a lot and different organizations have defined medically necessary or
essential, WHO defined essential. CEDAR has a definition
for medically necessary that takes into account when alternatives are not available. But for the purposes of trying to capture a set of drugs at risk we’re
looking at the definition that exists in the statute that calls out those products for
which manufacturers have a notification obligation to the agency for certain types of supply disruptions. And those are life
supporting, life sustaining, or drugs intended for
use in the prevention or treatment of a debilitating disease or condition including any such drug used in emergency medical
care during surgery. So then the second thing we looked at from a product related perspective is where we have some
information already available to us that helps us
understand drugs at risk. And kudos to Martin Van Trieste who called this out
earlier, maybe you snuck a peak at my slides, but
looking at the history of drugs that have been
on the drug shortage list. So our colleagues and our econ staff did some work with our
drug shortages colleagues to look back at drugs that have been on the drug shortage
list and we found that for drugs that had been
on the drug shortage list if you look back three to five years they have a 15 to almost
20% risk of reappearing on the shortage list within a year. So this really does appear
to be a solid risk factor we should take into consideration. So we’ve also looked at
manufacturing facility related vulnerabilities and you’ve heard a lot of discussion about manufacturing facility issues today. So one piece we would look
at is where the component supply chain has limited capacity, and this might be
defined as those products where there’s a single API facility or single finished dosage form facility that’s approved or qualified for use. We’d also look at manufacturing facilities that have had a history
of violative inspections. So in FDAs lingo this would be official indicated type inspections,
especially when that facility is the only approved to
carry out an essential, critical manufacturing operation. We have looked at a
number of other factors in the work we’ve conducted thus far. One early factor we
thought about was the idea of market share, so if a
particular drug product had a very significant market
share went into shortage that might be something
we’d be concerned about. However when we did some further analysis looking at market share we
found that this particular factor may not be
sufficiently discriminatory and might actually end
up putting a very large number of drugs in this bucket or meeting this set of criteria. Because we found actually
that there are many marketed products that are sole source. We also looked at the question of volume thinking that the impact of a shortage might be more impactful if the drug is widely used across the population. But we found that this
could be hard to determine both given the variation
in how drugs are packaged in terms of unit dose but also in terms of how they’re administered. We also looked at the fact
that even for those drugs for which there are not many prescriptions written in the course of
a year, for those patients who need those drugs a shortage
can be just as critical. So we ruled out volume. We also looked at environmental factors, those have been mentioned
today that natural disasters, geopolitical conflict, these
can be difficult to define sufficiently for self identification, and can also be difficult to predict. So in terms of our ongoing work we’re doing some more
work given the factors that we’ve identified to date to see how predictive they might
be given the shortages that we know have occurred, and we’re also trying to refine the criteria to help us understand how we might use those within our existing processes, and how those could be easily integrated into the work that we
do and into potentially ideas that are coming out
of meetings like this. So with that I’ll close, and
thank you for your attention. – Great, thank you very much Ashley for the new steps that you’re describing related to these potentially
critical drug shortages. We do have a few minutes
now for clarifying questions for our panelists, then I
want to make sure we get too as soon as possible
comments from all of you about perspectives and
ideas for next steps. Let me start with one, we heard from Robyn about the multi-stakeholder
task force approach that Health Canada is
taking, I’d like to ask the other panelists and experts up here is there a place for something like that in the US response, would
that be helpful here too. Kind of going beyond
the very important role that the drug shortages task force from within government is playing now. – I’ll jump in and thanks
that’s a great question. That’s something that we
spent some time discussing with the FDA. All stakeholders from my perspective and our perspective should be engaged in the drug shortage task force. They all have a component related with it. I know that the FDA
listens and Kaptin Jensen gets phone calls from
everybody about drug shortages but to have some type of
a formal working group that represents all the
players in the market place I think would be very helpful. – Totally agree in my opening remarks. I think it’s a very important factor that we have all stakeholders at the table and at the table working together. – Thank you all, and then Ashley, one follow up question for you. I know this is very much work in progress that you’re describing in
terms of the essential drugs at risk, I was struck
by the recurrence factor that you pointed out that
seems to be a particular subset of drugs, even
a subset of injectable generic hospital delivered drugs that are disproportionately involved
in the drug shortages that have been observed
over the past decade. Any early insights as to what makes those particular drugs so distinct and risky? – I think some of the
factors we’ve heard today, the sterile injectables
certainly as a common factor but I think we’re still trying to build more predictive models looking
at some of the specifics about the drugs that continue to appear. What I think potentially the good news is, is that if we develop
solutions that help address those products that are
on the shortage list now it’s likely to have a more lasting effect because since the same drugs
seem to keep popping up over and over again on the shortage list if we can successfully address the factors that have put them on the
list in the first place they’d be less likely to show up again. – [Yoram] Thank you all, very
insightful I’d appreciate the comments and especially
some of the new ideas. This notion of transparency is huge. A study that was just
published earlier this year in cancer showed that only
16% of the US adult population is aware of cancer drug shortages, and that extends to our colleagues. People in this room, we know about it, we’re invested in it, we care about it. But so many of our
colleagues, I mean I had lunch a few weeks ago with a colleague from the department of
radiology, a physician and he said, drug shortages, huh? And so I think this requires
a culture shift on our part. We know from the
medication error literature that patients actually
appreciate and value, and there’s less law
suits for those people who care about those types of things when we’re honest and transparent,
oops, I made a mistake, sorry. And I think we need to
have a similar paradigm culture shift in terms of it’s okay for cancer centers, for hospitals, for emergency room
physicians to post the data we have shortages because
a large population, a large segment of the
population excuse me, still isn’t aware of this
and I’d be curious to hear what some of the stakeholders
have to say about that. I mean we all know that
stakeholder engagement is important and they need
to have a voice at the table but I think it’s incumbent
on our organizations to own that and to be able to
share that upfront, thank you. – Any response to the question? I see heads nodding, so that’s
general agreement, thank you. Yes over here. – [Mark] Good afternoon everybody, my name is Mark Walsh, I’m
the Director of Clinical Pharmacy Strategy at Health Trust. Prior to that I was a Director of Pharmacy at a hospital in Florida
and I think that’s where this question’s coming from. Quality kept coming up today a lot, in trying to contract a quality
and have greater insight into that, and I think
the folks in this room have an idea about what that looks like but practitioners and providers see the FDA stamp of approval
as the quality metric and that’s it. If it’s FDA approved it’s
good enough for my patients. And so is there any
opportunity for third parties, similar to what happens in hospitals, a group like Leapfrog who
goes in and investigates and works with an organization to evaluate their systems and grades
them based on the information that they provide to
see whether they think that they meet their own
specific quality metrics and apply a similar logic to manufacturers and supply chains so that can be used to maybe differentiate
between organizations who are FDA approved for specific products but there may be differences in redundancy in API supplies and things like that. – There certainly was a lot of interest in getting more of that
kind of information. – [Male] Not to plug something
I don’t actually belong too but there is a group called
RX360 that’s sort of involved in that when it comes to
auditing API supply chains. So I’m not sure how
much that is accessible to hospital groups or other buyers. Nor how beneficial that would be to them, given that this is still stuff that ultimately belongs
to the license holder and isn’t directly mediated
between the hospital and a wholesaler. – [Mark] Yeah I think
having that information available to providers and practitioners in an easy to digest way will help a lot because I think the ability to read a 483 isn’t universally available to folks. They may not know what
the differences are, a 143 is not the same as another, and so having an organization
to be able to take all this information and
turn it into a digestible format for practitioners and providers I think will help with
that idea of contracting the quality and making that
transparent throughout. Because I think we talk
about it at a very high level and that doesn’t make it all the way down to the ground level. – I mean improving the availability of that kind of information
both to the hospitals and organizations involved in contracting with the manufacturers and more widely is something that has come up today and I think will be an important issue for the taskforce to consider. Is what’s the best way to
advance that information with the least burden? Thank you, and thanks for answering. Oh sorry you have a comment yeah. – A couple of times
today questions came up about more then just 43s,
outcomes of inspections, I did want to share
that FDA has a publicly available database that
includes all of our inspection outcomes, so
not the 43 but the final inspection outcomes after
we’ve looked at the firms response and decided. The website includes an
explanation of what the outcomes mean in terms of those
facilities, and so you can look up any manufacturing facility
and see it’s most recent inspection, it’s updated every 30 days and it includes drugs, human drugs, veterinary drugs, medical
devices and biological products. So that is available, so if you know that there’s a particularly
facility you’re looking for, or a particular companies
set of facilities it’s easily searchable and
it’s available to the public on our website, so I
did want to make that, because it came up a
couple of times today. So thank you Mark. – Actual drug names are
redacted though in those forms. So if you’re looking for. – The facility name is there. – Sure but if you don’t know what drugs are made at the facility. And then I just wanted to quickly say your comment about some
kind of a rating system I think is very fair, you
know CMS applies star ratings to hospitals, certainly
I think we could have star ratings for manufacturers. – Great comments, so a
question for the panel here. – [Gill] Yeah, I hate to
say it’s more of a comment then a question but that’s. – Keep it brief please. – [Gill] I will, my name’s Gill Roth, I’m the president of a
pharma, biopharma, outsourcing association in the non-profit trade group that represents about three dozen of the contract manufacturing
organizations out there. So our members work with
branded and generic companies, bio and small molecule et cetera. I just wanted to talk
about when it comes to the role we can help play with alleviating manufacturing related
shortages we would love to work with FDA, we’ve developed an idea for something called shortage
manufacturing establishments where essentially sites
that are pre-qualified based on criteria we
would work on with FDA, number of tech transfers,
number of PIAs et cetera within particular dosage
forms could be considered available through a
publicly available database if company X knows that it’s drug is going to go into shortage they
can look on that list find CMOs who are
available, who have capacity and that good inspection status and try to contract with
them and try to develop a, well working with FDA
have a streamline process to help alleviate
disruptions and shortages. I’ve got a whole proposal about this stuff that I’ll submit to the docket later on but I did just want to bring that up as something we’ve been working on and a way for just those
manufacturing specific shortages to try to help fix those
or at least keep them from creating too much damage. – Thanks for the comment,
this issue of having, knowing about available
manufacturing capacity, and having it available
publicly did come up earlier and I appreciate that comment. Any comments from the panel, thank you. Please, question. – [Jim] My names Jim
Thomas, I’m a radiologist so some radiologists
know about this problem. Couple of questions,
number one for Canada, you have GPOs I understand
and do the GPOs get kickbacks or safe harbor things like
they do in the United States? – I wouldn’t be able to comment on that, it’s an area that sort of
falls outside of the purview of what we do but we do
work very closely with GPOs but I’m not familiar
whether or not they would be receiving kick backs. – [Jim] Okay thank you, and one
of the reasons I asked that, we’re all here for
shortages, and GPOs and PBMs are really supposed to be
combating the shortages so we know that some
how they’re not working. So lies the question, what’s the purpose? I’m a graduate of the Wharton school and Zeke Emmanuel was asked recently, about a year ago what’s the
purpose of the GPOs and PBMs, and his answer was well, congressional and senatorial campaigns
are very expensive, and that’s on a state and local level. And the GPOs and the
PBMs actually contribute quite a bit to both sides of the aisle. They make 200 billion dollars a year and don’t manufacture
anything, 200 to 400 billion dollars a year is what I think he said, and don’t manufacture anything. That’s what they’re for, next question, and so I thought that was intriguing. A gentleman named John
Skully who’s a former CEO of Apple came to Whorton
just a few weeks ago and he started a company
called the RX Advantage, are you familiar with this company? But it’s a PBM that
doesn’t take the kickbacks because he’s also familiar,
he’s the former CEO of Apple, and he says I don’t take the kickbacks. So do we have to kind of
re-evaluate what the GPOs and PBMs actually do and is Zeke Emmanuel correct? – I might jump in on that
question if you don’t mind. I think it would be absolutely fair to outline the GPO safe harbor and what we’re required to do. The GPO safe harbor was cautified in 1987, it requires that GPOs
do a number of things, number one, we have to have a contract with each organization that we deal with. They know precisely that
we connect an admin fee. They know where to look
for the information and number two, each GPO has to disclose what the admin fee is per contract. If it’s 3% or less it just
has to say 3% or less, if it’s above 3%, let’s say it’s 3.05221, you have to explicitly
identify what that is. Thirdly you have to
report on an annual basis what the fees collected per contract, per organization that you work with. So on an annual basis if you collect X number of dollars of fees
from a particularly contract, and you have hundreds of contracts, thousands of contracts
that your customers use you have to provide them
a report that expressly identifies how much fee the GPO earned, and how much share back they get as well. So they know exactly what it is. Fourthly and also extremely important the GPOs upon request
from the secretary of HSS has to provide that information. We haven’t been asked for that information but if indeed we do we will. Fifth, the other thing
that we do as an industry, we will send a notification
to everyone of our customers that says if you are required to fill out a CMS cost report on an annual basis make sure you use the appropriate GPO data that has been provided you so that the CMS can calculate the appropriate
reimbursement rates for your organization. And as I said the JO has
looked at the GPO industry a number of times, the
average admin fee is 2%. It ranges between 1.25,
2.25, but the average is 2%. So that’s how it works,
and it’s very clear, it’s very transparent, and
every GPO has to make sure that if they belong to our association they belong to the transparency initiative which is managed by
Congressman Phil English and former Senator Byron
Dorgan, and we go through a very clear publicly available document relative to our contract principles. Processes and ethics,
it’s very transparent. – Thanks, any other
comments from the panel. I’d like too– – [Jim] Can you provide that. Could the gentlemen, I
understand he’s never been asked for that
information, is it possible, HSS said I’m not sure exactly who it is but nobody’s ever asked
for that information or contract, or things
could he provide that for the group, thank you very much. – If the secretary of HSS asked for it, we’ll provide it to them. – Question for the panel? – [Phil] Actually, another
answer, sorry to have to be the skunk at the tea party again. – It’s fine if you just keep it brief so that we can go into the comment period. – [Phil] I’ve been collecting
a few points here that– – But is it for the panel? – [Phil] Huh. – You want the panel to respond? – [Phil] Yeah. – Okay then please keep it brief. – [Phil] Todd, you’re
saying you disclose those to your hospital members,
your administrative fees, is that correct? – That is correct? – [Phil] Yeah, how about to the public? – Our requirements, and
you can hear me Phil. Our requirements are to
disclose it to out membership, that’s what we do. – I’ve never seen anything
disclosed to the public, except what I got in fact– – You have access to the GAO reports which specifically describe what it is. – I’ve got Mark McLellans name on it when he was head of CMS
where a study was done by HSS and CMS that found
that the share backs, the patronage fees that the
GPOs pay to the hospital members were not properly
reported to Medicare as required by law. Mark McLellan January 19th 2005, the fact is that because the GPOs charge a percentage of the total contract value for any given product, drug or whatever. The higher the cost of those products, the more money the GPOs make and then the hospital administrators
and one of your own internal publications
has actually reported that CEOs of GPO shareholder hospitals count on the share backs as a percentage of their annual compensation. So they’re fine with
higher administrative fees. The other thing that you
failed to mention Todd is that the rebates, after
my Wall Street Journal Op Ed came out I got a flood
of calls from hospitals and manufacturers and other people telling me that there may
be a 3% administrative fee but that doesn’t reflect the rebates that they’re forced to repay the GPOs. And that one manufacturer won’t say who, if he has a contract he would lose it, but his all in fees amount to 18 to 20%. So this money is going to your companies, to Premier, to Vision and this is nothing but a money laundering scheme. (speaking off microphone) The next point I need to
make is Todd also mentioned that the GAA found in
a report that the fees average around 2%, well
if you go to that report August 10th I believe, August 2010, what the report really says
is that you’re industry provided them with that information, they didn’t find it on their own. You gave them that information. I have a question for David, David you were a senior
contracting officer for Novation during the
period where Novation was charging Benvenue double digit fees for, and according to the documents I have from the United States Senate
anti-trust sub committee, double digit fees for
all these generic drugs. Were you part of that
process of determining what fees Benvenue would pay? And of course you went to Benvenue, you were a vice president
when Benvenue collapsed, is that correct? – So that’s the question. – [Phil] Is that correct? – We are out of time. – No that’s not correct. – [Phil] You were a vice president there and then much later after
Bienvenue closed down you walked away from that train wreck and became a spokesman for
the generic pharmaceutical association, I got a bunch of other stuff. – I know you’ve got more, thank you, we are out of time for this panel. I would like to thank
all of you on the panel for your thoughtful contributions
to today’s discussion and really appreciate your efforts to move forward on this very challenging but very critical set
of public health issues. Thank you very much. (audience applauds) Now I’d like to provide all of you here, who have other issues
that you’d like to raise that you haven’t heard about already, or that present a different perspective then what we’ve heard
during the day to provide those comments right now. This is very important part of the input in addition to everything
that has happened so far today for the drug shortages task force efforts. So we have some time for that. I’d like to ask you to keep
your comments at the microphone as brief as possible under three minutes if possible so that we
can get to as many people as possible during the time we have. I do want to emphasize that
while we want to focus, I’m sorry you all are
dismissed, and free to go. I’m sorry, thank you again. I do want to emphasize that FDA and the drug shortages task force want the more detailed thoughtful
additional information that you may not be able to
fit in to some brief comments this afternoon so please
submit those in written form to the task force, please try
to focus with your comments today on the key points,
salient, actionable ideas but especially things
that we have not already covered that provide a
different perspective on what we’ve already covered today. And thanks to all of
you who have commented and participated in
this very frank I think, very useful overall exchange of views and perspectives on these
drugs shortage issues today. So please go ahead. – [Michael] Thank you Mark,
thank you for the event today. Michael Gable with (mumbles)
this is my own sort of personal observation. I think in terms of thinking about how to re incentivize the
market place a data point that I haven’t heard much about today but I think it would be
helpful trying to ascertain is the health care spend as a
result of the drug shortage. So whether that’s Medicare
spend, Medicaid spend, private insurance spend,
I think it would be very helpful to know how much
we’re spending in the space as a result of drug shortage problems because I think if we
think about the spend and reallocating it in
a way to minimize risk for those who are trying
to enter the space it could perhaps go a long
way to solving the problem. – Qualitive evidence on
the issue presented today suggests it could be
significant too, thank you. – [Michael] Michael Reed,
University of Kentucky, Emeritus, question is
about regulatory authority ping pong and I am referring to the issue of what doctor Woodcock
of the FDA testified under oath in a criminal
trial last week in Boston, Federal trial in which he said that the New England compounding
center was a manufacturer masquerading as a compounding unit. Clearly the issue was between
the authority of the FDA to regulate these kinds
of issues and the pharmacy board of Massachusets. Now I’ve been listening to
this issue for about 25 years between people accusing
the FDA of intruding on the state authorities
and clearly in Massachusets there was a failure of the pharmacy board which has resulted in the
death of many patients and hundreds of others with meningitis because of this no mans
land of regulations. How is the FDA proposing to look at this if it really wants to
deal with the shortages. The shortages that occurred
in the Dexamethasone issue concerned a
frightful loss of necessary adjuvant to prevent infection
that was not provided by that compounding pharmacy. So is the FDA gonna
grow up or are we gonna have to deal with this no mans land? – Thanks for raising that,
that is an additional issue, raising the question of the role of state pharmacy boards and interaction with FDA. Thank you for raising that comment. – Other comments? – [Dan] Thank you, good
afternoon, my names Dan Kisner I lead the
Pharmacy program for Vizient. I’m also a pharmacist
by background as well. Now I just wanted too,
again if you’re not familiar with Vizient we are the nations largest healthcare performance improvement company and I wanted to thank
the FDA, the taskforce along with the stakeholders
in this room for today. I will tell yah I spend most of my time with leadership from our
hospitals and healthcare systems, we are owned by our hospitals. And there are continued frustrations because of drug shortages. And so I’m confident
there’s not a silver bullet to solve this but these
are the right people in the room to figure it out
and put a solution together, working together. I just wanted to reiterate one comment that probably the leading
expert on drug shortages Erin Fox made earlier around
the provider community. So I would just ask the
taskforce and any of those involved that the key provider community at an important state, again the patients the most important
stakeholder but our hospitals are under immense financial pressure with the continuing
declines and reimbursement. Along with scrutiny on
programs on the 340B program that help them serve their patients and the communities they belong too. So I would just ask the taskforce and all those involved
to keep that in mind, and when you talk about paying more just understanding where those pressures are gonna trickle down
to other stakeholders. So thank you again for the meeting today and I look forward to continue to engage to solve this problem. – Thank you. – [Karen] Hi there, my
name is Karen Hershfield. My name is Karen
Hershfield, I’m a director of regulatory compliance
at Johnson and Johnson. I’m also on the ISPE drug shortages team and I was hoping that
there’d be more emphasis on the prevention aspect
of drug shortages, particularly when it
comes to manufacturing and the GMP world since
many of the drug shortages are due to GMP deficiencies. It really comes back to
investing in that quality and the reliability of the drug supply. And I know that the industry
organization like ISPE, have developed tools, gap assessments, and they do have a plan
to prevent drug shortages that any manufacturer
can use to help assess their own organization to make sure that in their own manufacturing facility to make sure that they’ve identified potential problems and they
know how to address them. So there are those tools out
there, I was happy to hear that Health Canada has a toolkit to help with that
identification and prevention. And I would hope that the
sharing of best practices within each of the
organizations also occurs. So if they know that one problem occurred for a particular root
cause that they would also share it with their
members, so it could be GPOs or anyone else that they would really emphasize that prevention
of drug shortages. – Thank you for the comment. Other comments? Alright well I want to thank all of you. It has been a very full day today, a lot of perspectives, I know not everyone agrees on these issues
but I’d like to agree with many of the
commentors who highlighted the interest and emphasis
of FDA on addressing drug shortages from the root cause level and trying to put an
emphasis on prevention as well as effective management and how that can I think have an impact on these issues going forward. We were very fortunate to
have such a distinguished and wide ranging group of experts not only up here on the
panels but in the room people have been thinking about and working on these
issues for a long time. And I want to particularly
thank our colleagues at the Drug Shortages
Taskforce and all of the other FDA staff who contributed to the efforts to help put together this event. As you can see there’s a lot going on, much of it still in process
to try to understand and effectively address the root causes of drug shortages, it’s a
strong commitment from FDA. A strong recognition that there are other government actions involved
and other stakeholder actions involved that will
be needed to have a full and comprehensive
prevention oriented approach to the drug safety challenges. All that came out very clearly today thanks to your input. I know that the Drug Shortage
Taskforce would value further comments so
there is an opportunity for written comments on these issues. If it helps I want to emphasize that this has been a public meeting, the meeting and the meeting materials, slides et cetera will be available on the Duke Margolis
website which might help you in further thoughts and
ideas for next steps to understand and address the challenges of drug shortages so I
hope you’ll take advantage of that too. And last I want to
acknowledge the individuals at Duke Margolis who helped in planning and carrying out this event. Morgan Romine, Nicholas
Harrison, Elizabeth Murphy, Sarah Subsiri, Greg
Daniel and Patty Green, and most of all thanks to all of you for making this public meeting
so insightful, thank you. (audience applauds) And safe travels back, I
know it’s cold out there.


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