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Drug Shortages—History, COVID-19, and the CARES Act

This Featured Article is contributed by AHLA's Life Sciences Practice Group.
  • June 26, 2020
  • Lindsay P. Holmes , BakerHostetler
  • Lee H. Rosebush , BakerHostetler
  • Marc N. Wagner , BakerHostetler

The U.S. Food and Drug Administration (FDA) has received 81 reports of new drug shortages[1] since January 31, 2020, the day the U.S. Department of Health & Human Services (HHS) declared a public health emergency related to COVID-19. While that number may sound substantial, it is about average for new drug shortages reported in five months in the United States. In fact, drug shortages are not a new phenomenon resulting from COVID-19 but may instead be a contributing factor to the United States’ inadequate national preparedness for a pandemic.

Drug shortages in the United States seem to receive the attention of lawmakers every time a media-worthy shortage occurs. Prior to COVID-19, most readers likely have only read about drug shortages once before, in October 2019, with the vincristine shortage that grabbed headlines. Vincristine is one of the most common chemotherapy agents used to treat pediatric acute lymphoblastic leukemia, which is the most common malignancy diagnosed in children. One of the manufacturers of vincristine made the decision to discontinue production in June 2019. Because there was one less supplier in the marketplace, a shortage arose by October. As the product is used to treat pediatric cancer, multiple media outlets reported on the drug shortage. Petitions garnering hundreds of thousands of signatures called on the White House to step in and address the shortage. With all the media attention, the manufacturer announced in November 2019 that it would resume production of vincristine. By January 30, 2020, the shortage was resolved. Vincristine is a rare example of a drug shortage that was resolved quickly. Vincristine is also an example of how the current laws and regulations to prevent drug shortages may not be adequate.

Although the vincristine shortage was short-lived, ending with a manufacturer’s commitment to corporate social responsibility, it shows how business decisions made by drug manufacturers can easily create a gap in the marketplace that may not be easily filled. For this reason, FDA is looking for new pathways to encourage adequate drug supply in the marketplace.

Regulatory Framework for Drug Shortages—Historically

The Federal Food, Drug, and Cosmetic Act (FD&C Act) defines a drug shortage as “a period of time when the demand or projected demand for the drug within the United States exceeds the supply of the drug.”[2] Manufacturers must notify FDA at least six months prior to “a permanent discontinuance in the manufacture of the drug or an interruption of the manufacture of the drug that is likely to lead to a meaningful disruption in the supply of that drug in the United States.”[3] Manufacturers must also inform FDA of the reason for the discontinuance or disruption in supply. However, when notification cannot be provided at least six months prior to the discontinuance or disruption in supply, the manufacturer must notify FDA as soon as possible.[4]

FDA has the statutory authority to expedite the review of drug applications submitted under the FD&C Act or to expedite an inspection of an establishment that could help mitigate or prevent the drug shortage.[5] To address drug shortages, in October 2019, FDA issued Drug Shortages: Root Causes and Potential Solutions A Report by the Drug Shortages Task Force 2019.[6]         

Impact of Drug Shortages

In 2019, the United States experienced 166 new drug shortages—that’s a new drug shortage almost every other day.[7] In reality, the total number of drug shortages experienced is actually much higher. From 2010 to 2015, new drug shortages represented only 44% of drug shortages on average, while ongoing shortages may span years and represent the majority of drug shortages.[8] Hospitals spend more than 8.6 million hours of additional labor annually to mitigate drug shortages.[9] Financially, drug shortage mitigation costs are close to $360 million annually.[10] Drug shortages not only increase costs and create additional labor, but also disrupt patient care and negatively impact patient outcomes.

For example, increased mortality is associated with drug shortages.[11] From February 2011 to February 2012, norepinephrine was on FDA’s Drug Shortage List.[12] Norepinephrine was recommended as the first-line vasopressor for the treatment of hypotension due to septic shock.[13] During the norepinephrine shortage, receipt of care in a hospital experiencing a norepinephrine shortage was associated with an increased rate of in-hospital mortality.[14] Norepinephrine is a lifesaving drug that experienced shortage for only one year, resulting in an increased rate of death.[15] Unfortunately, some drug shortages have lasted as long as eight years.[16]

COVID-19 Drug Shortages

On March 31, 2020, HHS issued a Request for Information (RFI)—Priority ICU Medicines COVID-19.[17] In the RFI, HHS sought information from the manufacturing community on their capacity to produce medications commonly used in the hospital intensive care unit (ICU). FDA also issued temporary guidance highlighting critical drugs for use in hospitalized patients with COVID-19.[18] Drugs used in hospitalized patients include sedatives, analgesics, antipyretics, and fluids. Unfortunately, more than 75% of drugs commonly used for hospitalized patients in the ICU with COVID-19 are in shortage at the health care provider level and there are some that have not been reported to FDA and placed on the FDA drug shortage list. The American Society of Health-System Pharmacists (ASHP) tracks drug shortages at the provider level based on clinician reporting instead of manufacturer reporting.[19] Products may appear on the ASHP drug shortage list if there are supply disruptions at the health care provider level, such as allocation, whereas this disruption may not result in reporting on the FDA drug shortage list.

Compounded drug products do not receive premarket review by FDA. However, compounding drug products is one way to increase the supply of drugs in the market. In response to reports of increased demand and supply interruptions involving FDA-approved drug products used in the treatment of hospitalized patients with COVID-19, FDA issued two temporary policies to address shortages. Because of the differing standards for compounders, FDA requires hospitals that cannot obtain adequate supplies of FDA-approved drugs and are considering the use of compounded drugs for their hospitalized patients to first contact outsourcing facilities, which are subject to more robust quality standards than state-licensed pharmacies or federal facilities that do not register with FDA as outsourcing facilities.

In the Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Outsourcing Facilities During the COVID-19 Public Health Emergency,[20] FDA outlines conditions under which it does not intend to take action against an FDA-registered 503B outsourcing facility for compounding a drug product that is essentially a copy of an approved drug, for using a bulk drug substance that is not on FDA’s 503B Bulk Drug Substances List, or for not meeting current good manufacturing practice (CGMP) requirements regarding product stability testing. All requirements of the policy must be met for the outsourcing facility to receive enforcement discretion, most notably that the compounded drug product must appear on the list of drugs used for hospitalized patients with COVID-19 maintained on FDA’s website. Outsourcing facilities compounding drug products pursuant to this policy must report weekly to FDA as well. However, the policy does not preclude an outsourcing facility from following typical 503B CGMP requirements to provide extended beyond-use dating based on stability testing. Outsourcing facilities may compound drug products that are identical or nearly identical to FDA-approved products that appear on FDA’s drug shortage list.

Similarly, FDA issued a Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Pharmacy Compounders not Registered as Outsourcing Facilities During the COVID-19 Public Health Emergency.[21] Under this temporary policy, pharmacies may compound a drug that is essentially a copy of a commercially available drug or provide a drug to a hospital without obtaining a patient-specific prescription if all conditions of the policy are followed. Like the policy for outsourcing facilities, the policy for pharmacy compounders requires that the compounded drug product appear on the list of drugs used for hospitalized patients with COVID-19 maintained on FDA’s website. Currently, the list of drugs is identical for both the outsourcing facility policy and the pharmacy compounder policy. One condition for pharmacy compounders is that they must be informed by the requesting hospital that it has made reasonable attempts to obtain and has been unable to obtain adequate supplies of both an FDA-approved drug product and a drug product made by an outsourcing facility containing the same active ingredient for the same route of administration. In addition, the beyond-use dates that pharmacy compounders may label a product with are shorter than the beyond-use dates FDA-registered outsourcing facilities may include on their product labels. Pharmacy compounders must also notify and receive permission from the state pharmacy regulators in the state where the pharmacy is located, and if the hospital that the pharmacy is supplying compounded drug product to is located in a different state, then the state pharmacy regulatory in the state where the hospital is located must also be informed and must provide notice to the pharmacy that it does not object to the practice. Pharmacies must report to FDA adverse events associated with the products produced pursuant to the policy.

Changes to the Regulatory Framework for Drug ShortageCoronavirus Aid, Relief, and Economic Security Act (CARES Act)

The CARES Act addresses drug shortages in two sections by prioritizing the review of drug applications for products that may mitigate or prevent a shortage, and by increasing manufacturer shortage reporting requirements.
 
First, the CARES Act prioritizes the review of drug applications. The CARES Act requires FDA, as appropriate, to prioritize and expedite the review of drug applications submitted under the FD&C Act or to prioritize and expedite the inspection of an establishment that could help mitigate or prevent the drug shortage.[22]
 
Second, the CARES Act strengthens manufacturer reporting requirements in response to drug shortages. Active pharmaceutical ingredients are now included in required reporting with passage of the CARES Act. Manufacturers must notify FDA at least six months prior to “a permanent discontinuance in the manufacture of an active pharmaceutical ingredient or an interruption in the manufacture of the active pharmaceutical ingredient of such drug that is likely to lead to a meaningful disruption in the supply of the active pharmaceutical ingredient of such drug.”[23] Manufacturers of drugs and active pharmaceutical ingredients must now develop, maintain, and implement a redundancy risk management plan that identifies and evaluates risks to the supply of the drug, as applicable, for each establishment in which such drug or active pharmaceutical ingredient of such drug is manufactured.[24] All FDA-registered drug establishments must also report annually on the amount of each drug that was manufactured, prepared, propagated, compounded, or processed by the establishment for commercial distribution. The amount of each drug manufactured, prepared, propagated, compounded, or processed may be required to be reported at the time a public health emergency is declared by the Secretary under Section 319 of the Public Health Service Act.[25]
 
In addition to the drug shortage reform Congress provided in the CARES Act, FDA launched a new program called the Coronavirus Treatment Acceleration Program. This program is intended to help move new medical products to patients as soon as possible. This program provides additional FDA resources to evaluate drug and biologic therapies that may be used for patients with COVID-19.

Future Drug Shortage Reform

 While the CARES Act made significant advances to mitigate drug shortages, there is still room for improvement. COVID-19 has forced Congress and FDA to focus more attention on drug shortages. FDA is utilizing outsourcing facilities to mitigate drug shortages, as contemplated by Congress.[26] FDA is also using pharmacy compounders to provide additional relief for the pharmaceutical supply chain when FDA-approved drugs or drugs compounded by FDA-registered outsourcing facilities are not available. However, incentives for FDA-approved drug manufacturers to ensure an adequate supply chain along with incentives for FDA-registered outsourcing facilities to compound drugs that are in shortage can both be achieved with additional FDA action.
 
The ability to mitigate drug shortages is closely tied to knowledge of drug shortages. FDA could obtain additional information by developing a more robust drug shortage list, for example considering health care provider-reported shortages similar to how the ASHP drug shortage list considers drug shortages at the health care provider level. Future policy must address increasing the supply of non-FDA approved drugs too. For example, FDA issued an Emergency Use Authorization for remdesivir based on limited data, concluding that it is reasonable to believe that the known and potential benefits of the product outweigh the known and potential risks of the drug for the treatment of patients hospitalized with severe COVID-19.[27]
 
Remdesivir is not an FDA-approved drug and has not undergone the required premarket review for FDA-approved drug products. Initially, the manufacturer of remdesivir donated its existing supply, earmarking approximately 607,000 vials of the experimental drug over the next six weeks to treat an estimated 78,000 hospitalized COVID-19 patients in the United States.[28] The manufacture did increase its donation to the United States by 333,160 vials of remdesivir with an expected delivery date in early June.[29] However, the United States is expected to exhaust its supply of remdesivir the week of June 29.[30] Despite increased production in upcoming months, “there may not be enough for everyone who may need it.”[31] Globally, the manufacturer donated 1.5 million doses.[32] FDA will need to continue to create alternative pathways to fulfill its mission and protect the public health of Americans by increasing the supply of remdesivir, and other drugs that may be in short supply, in the United States.

Conclusion

Drug shortages continue to occur at an alarming rate, not only increasing health care expenditures but also having an adverse impact of patients. COVID-19 has intensified the problems caused by drug shortages. The CARES Act provided much needed improvements to the regulatory framework to prevent and mitigate drug shortages, but drug shortages will continue without ongoing efforts to curb them.

 
[1] U.S. Food & Drug Admin., FDA Drug Shortages: Current and Resolved Drug Shortages and Discontinuations Reported to FDA, https://www.accessdata.fda.gov/scripts/drugshortages/default.cfm (accessed June 11, 2020). We count a drug shortage as new when a unique generic name is initially posted to the FDA drug shortage database.
[2] FD&C Act § 506C(h)(2): The statutory definition of “drug shortage” is not limited to medically necessary drugs.
[3] FD&C Act § 506C(a).
[4] FD&C Act § 506C(b).
[5] FD&C Act § 506C(g). FDA can “(1) expedite the review of a supplement to a new drug application submitted under section 505(b), an abbreviated new drug application submitted under section 505(j), or a supplement to such an application submitted under section 505(j) that could help mitigate or prevent such shortage; or (2) expedite an inspection or reinspection of an establishment that could help mitigate or prevent such drug shortage.”
[6] See https://www.fda.gov/media/131130/download (last updated on Feb. 21, 2020).
[7] American Society of Health-System Pharmacists, Drug Shortages Statistics, https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics. New shortages are identified during the year and differ from active shortages. For 2019, the number of active shortages at the end of each quarter was 276, 282, 265, and 264, respectively.
[8] U.S. Gov’t Accountability Office, GAO-16-595, Drug Shortages: Certain Factors Are Strongly Associated with This Persistent Public Health Challenge (2016). Average calculated for 2010-2015.
[9] News Release, New Vizient Survey Finds Drug Shortages Cost Hospitals Just Under $360M Annually in Labor Expenses (June 26, 2019), https://www.biospace.com/article/releases/new-vizient-survey-finds-drug-shortages-cost-hospitals-just-under-360m-annually-in-labor-expenses/.
[10] Id.
[11] See Emily Vail et al., Association Between US Norepinephrine Shortage and Mortality Among Patients With Septic Shock, 317(14) JAMA 1433, 1434 (2017).
[12] Id.
[13] R. Phillip Dellinger, et al., Surviving Sepsis Campaign: international guidelines for management of severe sepsis and septic shock: 2008. 36(1) Critical Care Medicine 296-327 (2008). Hypotension, or low blood pressure, is a life-threatening abnormality of septic shock, which is life-threatening organ dysfunction caused by widespread infection or sepsis. Norepinephrine is the preferred medication that increases blood pressure.
[14] Vail et al., supra note 11, at 1437.
[15] See id. at 1433.
[16] U.S. Food & Drug Admin., Drug Shortages: Root Causes and Potential Solutions A Report by the Drug Shortages Task Force 5 (2019), https://www.fda.gov/media/131130/download (last updated on Feb. 21, 2020.
[17] U.S. Dep’t Health & Human Servs., Priority ICU Medicines COVID-19, HHS-2020-RFI-COVID-19.
[18] See U.S. Food & Drug Admin., Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Outsourcing Facilities During the COVID-19 Public Health Emergency, Guidance for Industry (Apr. 2020); U.S. Food & Drug Admin., Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Pharmacy Compounders not Registered as Outsourcing Facilities During the COVID-19 Public Health Emergency Guidance for Industry (Apr. 2020).
[19] ASHP, supra note 7.
[20] U.S. Food & Drug Admin., Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Outsourcing Facilities During the COVID-19 Public Health Emergency, Guidance for Industry (Apr. 2020).
[21] U.S. Food & Drug Admin., Temporary Policy for Compounding of Certain Drugs for Hospitalized Patients by Pharmacy Compounders not Registered as Outsourcing Facilities During the COVID-19 Public Health Emergency Guidance for Industry (April 2020).
[22] Coronavirus Aid, Relief, and Economic Security Act (CARES Act), § 3111 (2020), amending FD&C Act § 506C(g).
[23] CARES Act, § 3112 (2020), amending FD&C Act § 506C.
[24] CARES Act, § 3112 (2020), adding FD&C Act § 506C(j).
[25] CARES Act, § 3112(3) (2020), amending FD&C Act § 510(j).
[26] See Drug Quality and Security Act, § 102 (2013).
[27] U.S. Food & Drug Admin., Emergency Use Authorization for Remdesivir (May 1, 2020).
[28] U.S. Dep’t Health & Human Servs., HHS Announces Shipments of Donated Remdesivir for Hospitalized Patients with COVID-19 (May 9, 2020).
[29] U.S. Dep’t Health & Human Servs., Office of the Assistant Sec’y for Preparedness & Response, Remdesivir, (June 1, 2020).
[30] Interview by Elizabeth Cohen and Arman Azad with Robert Kadlec, Assistant Secretary for Preparedness and Response, U.S. Dep’t Health & Human Servs (June 8, 2020).
[31] Id.
[32] Gilead, An Update on COVID-19 from our Chairman & CEO Daniel O’Day (Apr. 4, 2020).