Drug shortages

GAO report calls on HHS to improve drug shortage response

Thu, 10 Apr 2025 14:34:56 -0500

The Government Accountability Office yesterday released a report calling for the Department of Health and Human Services to improve its efforts responding to drug shortages. The report found that although drug shortages have decreased since 2020, shortages are lasting longer. HHS responded to the GAO report, informing the GAO that its coordinator position overseeing medical product supply chains would be eliminated in May, leaving HHS without leadership to coordinate its drug shortage activities. The GAO recommended HHS implement a method to formally conduct any drug shortage activity and collaborate with other federal agencies.

AHA Urges Administration to Grant Exceptions for Tariffs for Medications and Medical Supplies

Wed, 05 Feb 2025 07:54:44 -0600

February 4, 2025

The Honorable Donald J. Trump
President of the United States of America
White House
1600 Pennsylvania Avenue
Washington, D.C. 20500

Dear President Trump:

America's hospitals stand with you in seeking ways to prevent the ravages of illicit drug use in this country. Every day, the doctors, nurses and other caregivers in our hospitals and health systems treat those suffering from addiction. They work tirelessly to prevent deaths from overdoses of fentanyl and other addictive drugs. We commend your focus on this issue in the first few days of your second term. We are, however, concerned that the approach of using tariffs may inadvertently put others' lives at risk by jeopardizing the availability of vital medications and essential health care devices.

We ask that you consider granting exceptions to the current and proposed tariffs for medical devices and pharmaceuticals made in Mexico, Canada and China that are essential to the provision of safe, effective care in America's hospitals, clinics, and other settings. It is especially critical to have these exceptions for products already in shortage and for which production in the countries subject to increased tariffs supply a significant part of the U.S. market. We are aware, since the announcement of the potential tariffs, conversations with the leaders of Canada and Mexico led to a delay in the imposition of tariffs on products made in those countries, but we believe the principle still prevails.

Despite ongoing efforts to build the domestic supply chain, the U.S. health care system relies significantly on international sources for many drugs and devices needed to both care for patients and protect our health care workers. Tariffs, as well as any reaction of the countries on whom such tariffs are imposed, could reduce the availability of these life-saving medications and supplies in the U.S. For example, U.S. providers import many cancer and cardiovascular medications, immunosuppressives, antibiotics and combination antibiotics from China. For many patients, even a temporary disruption in their access to these needed medications could put them at significant risk of harm, including death. Carefully planned chemotherapy treatments and antibiotic schedules are essential to giving patients the best chance of overcoming their disease. Similarly, the provision of necessary cardiovascular medications must be continuous to preserve their cardiovascular health.

Beyond the use of these finished products, many raw ingredients for pharmaceuticals come from China. These are commonly known as active pharmaceutical ingredients (APls). These chemicals are the most important components of any pharmaceutical manufacturer's supply chain. The U.S. gets nearly 30% of its APls from China, meaning that these tariffs may also limit the availability of U.S. drug manufacturers to produce critical drugs here in the U.S.¹

China is also the source of many medical devices. Some of these devices are single use devices designed to protect the patient from infection, such as single-use blood pressure cuffs, stethoscope covers and sterile drapes. Others are small devices used ubiquitously in hospitals, such as anesthesia instruments, cautery pencils, needles and syringes, pulse oximeters and blood pressure cuffs. Disruption in the availability of these instruments would curtail hospitals' ability to perform life-saving surgeries and keep patients safe from contagion and greatly reduce our ability to effectively diagnose and monitor patient conditions.

Finally, the protection of our health care workers from infectious diseases is vital to their health and the ability of the health care system to continue caring for patients. Health care workers need gowns, gloves, face masks, respirators and other equipment, much of which is manufactured in China and cannot be easily replaced by domestic manufacturers. In 2023, Chinese manufacturers provided the majority of the N95 and other respirators used in health care. Additionally, China was the source for one-third of the disposable face masks, two-thirds of the non-disposable face masks, and 94% of the plastic gloves used in health care.² The lack of this essential equipment will not only put patients at risk but also threaten our health care delivery personnel.

Thank you for your consideration of our concerns on this important matter. We welcome the opportunity to discuss how to preserve access to essential pharmaceuticals and devices with your team. Please feel free to have your designee contact me or Nancy Foster, AHA vice president for quality and patient safety policy, at 202-626-2337 or nfoster@aha.org.

Sincerely,

/s/

Richard J. Pollack
President and Chief Executive Officer

Neils Graham, Atlantic Council, April 19, 2023; The US is relying more on China for pharmaceuticals and vice versa.
AdvaMed presentation 2023

Download the letter PDF

AHA submits comments on draft drug shortage legislation to Senate Finance Committee leaders

Fri, 07 Jun 2024 15:34:21 -0500

The AHA June 7 submitted comments on a discussion draft of the Drug Shortage Prevention and Mitigation Act, bipartisan legislation proposing to provide Medicare incentive payments to hospitals. This program would support long-term contracting, financing for private sector buffer stock and transparency provisions that would provide hospitals and other providers with increased insight into drug manufacturers’ supply chains and quality management practices. In the letter submitted to leaders of the Senate Finance Committee, the AHA expressed appreciation for several provisions in the bill, including efforts to incentivize greater manufacturing reliability and quality for generic sterile injectable drugs. The AHA also supported the voluntary nature of the program.

The AHA expressed concerns about impacts the bill would have on the 340B drug pricing program, such as the inability for a 340B payment-eligible provider participating in the Medicare Drug Shortage Prevention and Mitigation Program to access 340B pricing for units of a generic drug included in the program. Also, the bill would allow the secretary to reduce or waive the inflationary rebate for applicable drugs in shortage under the Medicaid Drug Rebate Program. AHA noted that this would likely result in increased drug prices and impact the determination of the 340B ceiling price, which would impact all 340B providers.

AHA Comments on Senate Finance Committee’s Drug Shortage Draft Legislation

Thu, 06 Jun 2024 16:59:09 -0500

June 6, 2024

The Honorable Ron Wyden
Chairman
Senate Finance Committee
United States Senate
Washington, DC 20510

The Honorable Mike Crapo
Ranking Member
Senate Finance Committee
United States Senate
Washington, DC 20510

Dear Chairman Wyden and Senator Crapo:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, and our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the �� Association (AHA) thanks the Senate Committee on Finance for the opportunity to comment on its draft legislation, the “Drug Shortage Prevention and Mitigation Act.”

America’s hospitals and health systems have long been concerned about increasing shortages of essential drugs required to treat patients, particularly shortages of generic sterile injectable drugs (GSIs). Shortages can adversely affect patient care by causing delays in treatment, increasing the risk of medication errors and requiring the use of less effective alternative treatments.

When a drug is in shortage, hospitals must find an alternative drug to use in treating patients. This process of finding, procuring and safely administering an alternative drug can result in significant costs to the hospital. There are numerous complicated steps to manage changes in products, doses, concentrations and routes of administration. This includes just-in-time training for staff on how to use the new drug and what its side effects might be. It also requires changes in the hospital’s electronic health record so that dosage, allergies and drug-drug interactions and other safety precautions are updated. One study estimated that drug shortages result in at least $359 million annually in additional labor costs to hospitals.¹

Due to the increased cost and necessity of treating patients in a timely manner, especially in cases of cancer and other serious illnesses, it is important to ensure the pharmaceutical supply chain is protected and priority drugs are identified and given special attention to protect uninterrupted patient access. It has become increasingly clear that our national pharmaceutical supply chain is fragile, and this fragility poses significant risk to the patients and communities served by America’s hospitals and health systems. Various businesses make up the pharmaceutical supply chain, including suppliers, manufacturers, distributors and group purchasing organizations (GPOs). A disruption anywhere in the chain can create prolonged difficulties in pharmaceutical supply acquisition for providers, which can directly affect their ability to treat patients.

The AHA welcomes the committee’s continued attention to the issue of generic drug shortages and its willingness to receive stakeholder input. We also appreciate that the committee, recognizing that a more reliable, resilient and sustainable drug supply chain is necessary, has drafted bipartisan legislation intended to provide Medicare incentive payments to hospitals that would support long-term contracting, financing for private sector buffer stock and transparency provisions that would provide hospitals and other providers with increased insight into the manufacturers’ supply chains and quality management practices.

Below we review in greater detail aspects of the draft legislation that we support, as well as parts about which we have concerns or recommendations.

PROVISIONS AHA SUPPORTS

The AHA believes that the proposed Medicare Drug Shortage Prevention and Mitigation Program is a step in the right direction because it seeks to address core economic challenges associated with the increasing numbers of GSI shortages. In particular, the low prices for these products and the Food and Drug Administration’s (FDA) limited authority to enforce manufacturing quality reduce drugmakers’ incentive to adhere to good manufacturing practices. The resulting quality problems often lead to recalls, production stoppages and ultimately shortages.

The AHA appreciates the draft legislation’s focus on resolving these shortcomings by requiring participating generic manufacturers to enter into Manufacturer Reliability Agreements with program participants (such as GPOs, wholesalers and hospitals). These agreements would include requirements that manufacturers provide supporting evidence on why they have the capabilities to meet program requirements, relevant supply chain reliability and quality information, an attestation of compliance with the FDA’s rules related to quality and shortages, and an agreement to provide timely information to program participants and submit to audits.

The AHA strongly supports efforts to incentivize greater manufacturing reliability and quality for GSIs. We believe that these agreements, with stakeholder input into their components and proper oversight by CMS and FDA, could help spur drugmakers to improve their quality management systems and manufacture their products and source their active pharmaceutical ingredients (API) in a manner that would diversify and strengthen the pipeline for GSI manufacturing, with the goal of achieving a better balance between domestic and trusted international sources. Moreover, including this enhanced level of transparency into where and how GSIs are manufactured is something for which the AHA has long advocated. We are hopeful that these agreements will provide hospitals with an improved ability to determine which manufacturers can best guarantee a reliable and steady supply of high-quality GSIs.

In addition, we support the voluntary nature of the program, including both voluntary hospital participation and selection of applicable GSI(s) to be included. This will help ensure that the participants are fully committed to the program’s intent to incentivize improvements in the supply, quality and resilience of GSIs. Moreover, we are also pleased that the program would not only include GPOs, wholesalers and nonprofits as coordinating entities on behalf of the payment-eligible providers, but also would permit providers to participate directly if they so choose. This differs from other recent drug shortage proposals which did not address the critical role of these intermediaries.

PROVISIONS ABOUT WHICH AHA HAS CONCERNS

340B Program Concerns

The AHA has two primary concerns as it relates to the bill’s interaction with the 340B Drug Pricing Program. First, the inability for a 340B payment-eligible provider to access 340B pricing for units of a generic drug subject to the Medicare Drug Shortage Prevention and Mitigation Program undermines the very purpose of the 340B program. Second, the ability of the secretary to reduce or waive the inflationary rebate under the Medicaid Drug Rebate Program (MDRP) is likely to increase drug prices and has important consequences for the determination of the 340B ceiling price, which would impact all 340B providers. Below, we detail our specific concerns with these provisions, their potential impacts and suggestions to improve the bill language to mitigate any harm to 340B providers.

Subsection (b)(3)(G) of the draft requires that all program participants annually submit “pricing stability certifications” attesting to the fact that the provider did not seek or accept any discounts on units of applicable generics, including any 340B discounts. The inability of 340B providers who volunteer to participate in this program to receive 340B discounts on these drugs is counterproductive to the purpose of the program. As Congress has previously recognized, the purpose of the 340B program is to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”² By prohibiting 340B providers from accessing these discounts, it would reduce their 340B savings and could jeopardize their ability to maintain, improve and expand access to care for the patients and communities they serve. In particular, many hospitals use their 340B savings to help offset the costs required to manage drug shortages and ensure patients are able to access their needed medications. Denying the ability of 340B providers to access these savings would contravene the goal of mitigating the impact of drug shortages.

Even if the program’s incentive payments can help offset some of the 340B savings losses that are bound to occur, the fact that the hospital is unable to purchase the drug at the upfront 340B discounted price presents cash flow and budgetary concerns for the hospital. As a result, this provision alone could create a catch-22 scenario for 340B providers — the hospital wants to participate in the program to mitigate drug shortages and make those drugs available to patients but cannot participate because the inability to access 340B discounted pricing presents an insurmountable challenge to purchasing the drug. Ultimately, this provision alone could make it difficult for 340B providers to participate in the program, which would ultimately reduce the value and effectiveness of this program. The AHA recommends that Congress remove the following language, “including discounts under section 340B of the Public Health Service Act,” and preserve the ability of payment-eligible 340B providers to access 340B pricing for generic drugs under this program.

Section 3 of the bill allows the secretary to reduce or waive inflationary rebates under the MDRP for applicable generic drugs in shortage. These inflationary rebates serve as important disincentives for drug companies to raise the prices of their drugs indiscriminately, particularly those in shortage. One example that highlights the value of the inflationary rebate is a provision of the American Rescue Plan Act that removed the previous cap for the inflationary rebate of 100% of the drug’s average manufacturer price (AMP) and went into effect Jan. 1, 2024. In effect, this meant that if drug companies were particularly egregious in raising drug prices, the inflationary rebate could far exceed 100% of the drug’s AMP. As a result of removing this cap, many drug companies have recently responded by reducing prices for insulin and other drugs because the threat of an uncapped inflationary rebate has acted as a successful disincentive against unrestrained price increases.³ The inflationary rebate is also important because it is well-documented that drug companies increase the prices of their drugs consistently, with many drugs experiencing price increases well above inflation. A report by the Assistant Secretary of Planning and Evaluation found that between January 2022 and January 2023, over 4,000 drugs experienced price increases, of which approximately 2,000 experienced price increases that exceeded inflation, with an average price increase of 15.2%.⁴Therefore, the almost certain result of any reduction or waiver of the inflationary rebate will be unfettered increases in drug prices — a cost that will be borne by patients, the government and hospitals — and far outweighs the marginal possibility that drug companies’ lessened rebate obligations would result in more adequate supply of these drugs.

Of particular concern to the AHA is that the removal or waiver of this inflationary penalty will have serious implications for 340B pricing. The 340B ceiling price of a covered outpatient drug is determined based on two components: the AMP and a unit rebate amount (URA) as determined under the MDRP. Specifically, the 340B ceiling price is equal to the AMP minus the URA. The URA for generic drugs is set at a statutory minimum of 13% but can increase significantly due to the inflationary rebate. As a result, the 340B ceiling price, which is the minimum discounted price that any 340B provider can acquire a covered outpatient drug, is directly affected by the inflationary rebate under MDRP. Any waiver or reduction in the inflationary rebate for a generic drug under the drug shortage and mitigation program would reduce the URA and thereby increase the 340B ceiling price for all 340B providers, regardless of their participation in the voluntary program. In effect, the waiver or reduction of the inflationary rebate would penalize all 340B providers and reduce their 340B savings while incenting drug companies to increase drug prices. We believe the almost certain harmful effects of this provision for 340B providers far outweighs the marginal possibility that drug companies increase supply of generic drugs in shortage.

Therefore, the AHA strongly urges Congress to remove this provision or add specific language that: (1) ensures that any removal of the inflationary rebate will not apply for the purposes of determining the 340B ceiling price; and (2) that drug companies be required to use savings from any reduction or removal of the inflationary rebate for a given generic drug in or at risk of shortage to ensure that the drug is made available with adequate supply.

The 340B program is an important tool for participating hospitals to overcome the operational and financial impact of drug shortages. Reducing the program’s benefit will harm 340B hospitals’ ability to manage drug shortages and will endanger patients’ access to the many programs and services that are supported by 340B savings. As a result, the AHA urges Congress to address the concerning provisions as we have outlined above and maintain its support of the 340B program.

Holding Hospitals Responsible for Standards and Measures Outside of Their Control

Hospitals should only be held accountable for meeting measures, including advanced standards and outcome measures, over which they have some control. The draft legislation includes several incentive and bonus payment measures which are outside of the hospital’s control. The AHA is concerned that including such standards and measures as a basis for rewarding hospitals will unnecessarily complicate the program and disincentivize provider participation, particularly as they attempt to calculate whether the risks and costs of participation (e.g., audits, administrative and reporting burden, loss of rebates, discounts or other price concessions, including 340B discounts) outweigh the potential benefits of the program’s incentive payments and bonuses.

For example, one of the program’s outcome measures would hold hospitals accountable for the applicable generic manufacturer’s failures to meet its program attestations, including legal and regulatory requirements related to redundancy risk management plans, current FDA Good Manufacturing Practices, and drug shortage notification requirements under the Federal Food, Drug, and Cosmetics Act. These are basic requirements all manufacturers are already required to meet and for which the FDA has established regulatory and legal remedies. As such, we strongly encourage the FDA to hold manufacturers responsible for these failures, not hospitals. To the extent that an applicable generic manufacturer’s agreement to meet the terms of its Manufacturer Reliability Agreement is a legal and binding contract, the committee may consider creating an additional layer of accountability for generic manufacturers that fail to adhere to these terms.

In addition, under the program, a provider could be eligible for bonus payments where the provider’s primary or secondary supplier for an applicable GSI uses an advanced manufacturing technology, as defined by the FDA, for a substantial portion of the manufacture of the GSI. While the AHA strongly supports the adoption of advanced manufacturing technologies by drugmakers, as appropriate, hospitals have no control over manufacturer decisions in this area and little ability to assess the appropriateness of different manufacturing techniques for a given drug. Moreover, many manufacturers use traditional manufacturing techniques and are still able to provide a stable supply of quality products. Therefore, we urge the committee to reconsider adding this as a program participant advanced standard, and instead, potentially add it as a separate incentive program for manufacturers via grants or tax credits.

Ultimately, we are concerned that some of the incentives included in the draft legislation are unlikely to work because they are too indirect and may not motivate manufacturers to improve or update their processes. Hospitals should not be held accountable for shortages induced by manufacturer action or inaction.

Repercussions Related to DEA Oversight of Quotas for Controlled Substances

It is likely that among the GSIs included in this program there will be Drug Enforcement Administration (DEA) regulated controlled substances, such as surgical anesthesia drugs, which are essential to hospital-level care. If many eligible hospitals suddenly begin to order larger volumes of such GSIs for purposes of creating a buffer stock, drug manufacturers could encounter quota problems with the DEA. We urge the committee to add language to the discussion draft requiring CMS to consult with the DEA regarding the provisions of the program, particularly about the impact that the buffer stock requirements would have on manufacturers’ quotas to reduce the likelihood of demand-driven shocks and resulting shortages of these critically important drugs.

Other Considerations

We are hopeful that the final legislation will include provisions that appropriately incentivize hospitals and their GPO partners to participate and encourage manufacturers to take responsibility for developing better quality products and a more resilient supply. However, as noted above, we are concerned that such market-based proposals may inappropriately place the onus of preventing shortages on hospitals and other health care providers, rather than on the manufacturers that have the ability to make needed investments and quality improvements in the supply chain.

Therefore, the AHA also supports additional measures to mitigate shortages by improving the overall pharmaceutical supply chain, including:

On-shoring and near-shoring domestic manufacturing capacity of essential drugs and diversifying, and where possible, on-shoring or near-shoring critical APIs and key starting materials (KSMs) production.
Increasing inventories and incentivizing additional cushion across the supply chain.
Requiring the development of quality ratings for drug manufacturers to enable hospitals and GPOs to choose to do business with more reliable manufacturers.
Requiring drug manufacturers to disclose to the FDA the locations where their products are manufactured, including contract manufacturer locations, as well as the locations from which they source APIs and KSMs used in their finished products.
Requiring drug manufacturers to notify the FDA regarding unusual spikes in demand for essential drugs, which would allow the agency to take steps to mitigate or prevent any impacts on availability and prevent potential shortages.

Finally, we note that in the past year, the AHA has supported multiple bills in the Senate that address drug shortages and shore up the pharmaceutical supply chain, including:

The MAPS Act (S. 2364), which would create a plan for the FDA and the Department of Defense to map the pharmaceutical supply chain.⁵
The Pharmaceutical Supply Chain Risk Assessment Act (S. 1961) that would require an interagency risk assessment of the pharmaceutical supply chain.⁶
The RAPID Reserve Act (S. 2510), which would award contracts to eligible generic drug makers that require them to maintain a six-month reserve of critical generic drugs and their active ingredients to prepare for shortages.⁷
The Drug Shortage Prevention Act (S. 2362) that would require manufacturers to notify the FDA of increased demand for critical drugs and disruptions in the supply chain.⁸

The AHA thanks you for the opportunity to submit comments to the Senate Committee on Finance regarding the “Drug Shortage Prevention and Mitigation Act.” We look forward to continuing to work with you on this important issue.

Sincerely,

/s/

Stacey Hughes

Executive Vice President

__________

¹ https://newsroom.vizientinc.com/en-US/releases/new-vizient-survey-finds-drug-shortages-cost-hospitals-just-under-360m-annually-in-labor-expenses
² H.R. Rep. 102384,102d Cong., pt. 2, at 12 (2d Sess. 1992). https://protect340b.org/wp-content/uploads/2018/05/HRReport-102-384-II-p-12.pdf. .
³ https://www.kff.org/policy-watch/what-are-the-implications-of-the-recent-elimination-of-the-medicaid-prescription-drug-rebate-cap/
⁴ https://aspe.hhs.gov/reports/changes-list-prices-prescription-drugs
⁵ /lettercomment/2023-08-10-aha-letter-support-mapping-americas-^{pharmaceutical-supply-chain-or-maps-act-2023}
⁶ /lettercomment/2023-08-10-aha-letter-support-pharmaceutical-supply-chain-risk-assessment-act-2023
⁷ /lettercomment/2023-08-10-aha-letter-support-rolling-active-pharmaceutical-^{ingredient-and-drug-or-rapid-reserve-act-2023}
⁸ /lettercomment/2023-08-10-aha-letter-support-drug-shortage-prevention-act-2023.

Drug Prices and Shortages Jeopardize Patient Access to Quality Hospital Care

Wed, 22 May 2024 08:27:34 -0500

The inability of many patients to obtain needed drug therapies due to either high prices or shortages has negatively affected patient outcomes.¹ Nearly 30% of Americans say they haven’t taken their medication as prescribed due to high drug prices, and it is estimated that more than 1.1 million Medicare patients alone could die over the next decade because they cannot afford to pay for their prescribed medications.²^,³

The high prices for drugs and shortages of many critical drugs like chemotherapy and IV saline bags also impact hospitals’ ability to provide a range of services to their communities, contributing to wider problems with access to care. Hospitals are major purchasers of drugs for use in patient care, and acquiring costly medicines and securing alternative therapies during a shortage are consuming a larger share of hospitals’ finite resources. As drug prices continue to rise, hospitals have fewer resources available to finance other parts of their operations, such as paying staff and purchasing other supplies needed for patient care.

In a recent AHA report, we highlighted the range of cost-related challenges that hospitals and health systems continue to face that have created sustained headwinds for the field. These cost-related challenges include labor, medical supplies and administrative costs related to dealing with private insurance denials and prior authorizations. But of particular concern is the alarming and worsening three-part trend of rising prices for existing drugs, new drugs being introduced at record-high prices and shortages for many critical drugs.

A new infographic highlights these recent trends and the extent of the challenges that hospitals and health systems face related to their drug costs.

1. In 2023, drug companies continued to introduce new drugs at record prices while existing drug prices skyrocketed and consistently outpaced general inflation.

The median annual price for new drugs was $300,000, an increase of 35% from the prior year.⁴ A recent report by the Department of Health and Human Services Assistant Secretary for Planning and Evaluation found that between 2022 and 2023, prices for nearly 2,000 drugs increased faster than the rate of general inflation, with an average price hike of 15.2%.⁵ The January 2022 to January 2023 increase of 15.2% translates to an average of $590, more than a three times the previous year’s increase of $172.

2. Drug shortages were the highest in a decade exacerbating hospitals’ challenges.

In 2023, there was an average of 301 drugs in shortage per quarter, an increase of 13% from the previous year. More than 99% of hospital and health system pharmacists reported experiencing drug shortages in 2023, with 85% of respondents describing the severity of drug shortages as critically or moderately impactful.⁶ These shortages have been caused by many factors, including fractured global supply chains and an unavailability of raw materials. Generic drugs are estimated to make up as much as 83% of shortages due to decisions by drug companies that lack incentives to produce low-margin medications.⁷

3. Managing drug shortages adds as much as 20% to hospitals’ drug expenses.

Drug shortages have forced hospitals to expend additional resources, including staff time to find, procure and administer alternative drugs. Often when a particular drug needed by a patient is unavailable through their traditional suppliers, hospitals have been forced to find other suppliers, renegotiate contracts, undergo additional training to ensure medication safety using alternative therapies and undertake other time-consuming and costly processes.⁴ In some cases, hospitals have needed to acquire another alternative drug, often at higher prices, to administer to their patients. Together, these strategies alone have increased hospitals’ drug expenses by as much as 20%.⁸

Though the problem of high drug prices is not a new issue for hospitals and health systems, the rate at which drug prices are increasing combined with the problem of drug shortages is becoming unsustainable for the field and having a direct impact on patient outcomes. Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients’ access to needed care.

Download the 2024 AHA Costs of Caring Report

Drug Prices and Shortages Increase Hospitals’ Costs and Jeopardize Patient Access to Care Infographic

Wed, 22 May 2024 08:00:15 -0500

Download the Infographic PDF

Download the 2024 AHA Costs of Caring Report

ASHP reports record high number of drug shortages

Fri, 12 Apr 2024 14:53:57 -0500

ASHP tracked a record 323 active drug shortages during the first quarter of 2024, surpassing the previous record of 320 shortages in 2014.

“Some of the most worrying shortages involve generic sterile injectable medications, including cancer chemotherapy drugs and emergency medications stored in hospital crash carts and procedural areas,” said ASHP CEO Paul Abramowitz.

In a statement submitted to the House Ways and Means Committee for a February hearing on chronic drug shortages, AHA recommended Congress enact legislation to diversify manufacturing sites and sources for critical pharmaceutical ingredients; support an increase in end-user and supply chain inventories for critical medications; develop a rating system for drug maker quality management processes; identify essential drugs needing more domestic manufacturing capacity; and require drug makers to disclose where their products are made and when demand for essential drugs spikes.

HHS proposes policies to prevent drug shortages

Tue, 02 Apr 2024 16:01:00 -0500

The Department of Health and Human Services April 2 released a white paper proposing policy solutions for Congress and others to prevent drug shortages and mitigate supply chain vulnerabilities, including collaborating with the private sector to develop and implement programs to assess and incentivize resiliency in manufacturer and hospital purchasing behavior. The paper focuses on generic sterile injectable medicines used in inpatient settings, citing their importance and relative risk of supply disruptions.

AHA recommends legislative action to address chronic drug shortages

Tue, 06 Feb 2024 16:01:00 -0600

In a statement submitted to the House Ways and Means Committee for a hearing Feb. 6 on chronic drug shortages, AHA recommended Congress enact legislation to diversify manufacturing sites and sources for critical pharmaceutical ingredients; support an increase in end-user and supply chain inventories for critical medications; develop a rating system for drug maker quality management processes; identify essential drugs needing more domestic manufacturing capacity; and require drug makers to disclose where their products are made and when demand for essential drugs spikes.

“When a drug is in shortage, hospitals must find an alternative drug to provide their patients,” AHA wrote. “This process of finding and procuring an alternative drug can result in significant costs to the hospital. An analysis published in 2019 estimated that drug shortages result in at least $359 million annually in additional labor costs to hospitals. This comes on top of the estimated $200 million annually that hospitals and health systems spend paying higher prices to acquire alternative therapies. Due to the increased cost and necessity of treating patients in a timely manner, especially in cases of cancer and other serious illness, it is important to ensure the pharmaceutical supply chain is protected and priority drugs are identified and given special attention so that continual access is ensured for patients.”

AHA Comments before House Committee on Ways and Means on "Examining Chronic Drug Shortages in the United States"

Tue, 06 Feb 2024 14:05:02 -0600

Statement
of the
�� Association
for the
Committee on Ways and Means
of the
U.S. House of Representatives
“Examining Chronic Drug Shortages in the United States”
February 6, 2024

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, and our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the �� Association (AHA) thanks you for the opportunity to submit comments to the House Committee on Ways and Means regarding the important topic of drug shortages in the United States.

America’s hospitals and health systems have long been concerned about shortages of a wide range of drugs used to treat patients. Of particular concern to hospitals are the cascading impact of drug shortages on patients and the heightened stress on scarce hospital resources. Shortages can adversely affect patient care by causing delays in treatment, increasing the risk of medication errors and requiring the use of less effective alternative treatments. As a result, diseases that are curable or manageable for most patients, such as childhood leukemia, may not be able to be treated effectively.

When a drug is in shortage, hospitals must find an alternative drug to provide their patients. This process of finding and procuring an alternative drug can result in significant costs to the hospital. An analysis published in 2019 estimated that drug shortages result in at least $359 million annually in additional labor costs to hospitals.¹ This comes on top of the estimated $200 million annually that hospitals and health systems spend paying higher prices to acquire alternative therapies.² Due to the increased cost and necessity of treating patients in a timely manner, especially in cases of cancer and other serious illness, it is important to ensure the pharmaceutical supply chain is protected and priority drugs are identified and given special attention so that continual access is ensured for patients.

However, it has become increasingly clear that our national pharmaceutical supply chain is fragile; this fragility poses significant risk to the patients and communities served by America’s hospitals and health systems. Various businesses make up the pharmaceutical supply chain, including suppliers, manufacturers, distributors and group purchasing organizations. A disruption anywhere in the chain can create prolonged difficulties in pharmaceutical supply acquisition for providers, which can directly affect their ability to treat patients.

Exacerbating these difficulties is the “lean” or “just-in-time” framework of supply chain operations. There is effectively little buffer when disruptions occur. Distributors, manufacturers and health care providers have pursued this just-in-time supply chain approach with the goal of more affordable health care by lowering costs; however, during large scale emergencies and other disruptions in supply, the risks and added costs of such a strategy is clear — when those disruptions occur, providers often have little or no notice and can be left scrambling to acquire products necessary to care for the sick and injured.

A 2019 report from the Food and Drug Administration’s (FDA) Drug Shortages Task Force found there are three major root causes for drug shortages.³

Lack of incentives to produce low margin drugs. Manufacturers of older generic drugs, in particular, face intense price competition, uncertain revenue streams and high investment requirements, all of which limit their ability to invest in resilience.
The market cannot identify and preferentially buy from those with better quality management practices. All manufacturers must meet regulatory requirements for adherence to the FDA’s Current Good Manufacturing Practices (CGMP), which set expectations for company processes to be allowed to do business in the U.S. marketplace. Some companies do more than simply conform to these requirements. They take additional steps intended to ensure a reliable supply of the drugs manufactured at their facilities. Currently, purchasers, including hospitals and health systems, have only limited information to assess the state of quality management of any specific drug manufacturing facility and have little information linking the drug products they buy with the facilities where they were manufactured. The lack of information does not enable the market to reward drug manufacturers for mature quality management, back-up manufacturing capabilities or risk management plans, nor does it penalize manufacturers that fail to invest in modernization of their equipment and facilities to ensure a reliable supply.
Logistical and regulatory challenges make it difficult for the market to recover after a disruption. Over the past two decades, the drug supply chain has become longer, more complex and more fragmented as companies have located more production overseas and increased the use of contract manufacturers. Although typical markets would respond to a shortage by increasing production, the complexity of the supply chain, and logistical and regulatory challenges, can limit the ability of drug manufacturers to do so. When companies wish to increase production, they may have to obtain approvals from multiple different national regulatory bodies and/or find a new source of active pharmaceutical ingredients (APIs). If a new manufacturer wants to enter the U.S. market and start selling a drug in shortage, the manufacturer must first develop and file an application with the FDA and await its approval.

To mitigate these challenges, strengthening the supply chain is crucial. A focus on increasing manufacturing redundancy, diversifying where raw materials are sourced and where products are manufactured, and “fattening” the overall supply chain will provide significant improvements. It will allow the supply chain to withstand expected and unexpected fluctuations in the supply of, and demand for, pharmaceutical products and protect it against future public health emergencies and natural disasters.

Supply chain issues can adversely impact patient care by delaying treatment, worsening patients’ health outcomes or requiring patients to switch to non-optimal treatment regimens. Congress should act to strengthen the ability of the pharmaceutical supply chain to respond when there is an emergency that creates a sudden rise in demand for medications or a significant disturbance in the supply chain that threatens the availability of critical medications. We recommend that Congress consider providing additional authorities to the FDA to mitigate and prevent drug shortages, such as by developing and disseminating manufacturing quality ratings that could enable hospitals and Group Purchasing Organizations (GPOs) to choose to do business with more reliable manufacturers, sending a market-based signal to support a reliable supply chain, and expanding the agency’s authority to require manufacturers to notify the agency about unusual spikes in demand of essential medications. Congress could also consider expanding the authority of the FDA to require manufacturers doing business in the U.S. to have an emergency response plan that anticipates likely disruptions in the manufacture of critical drugs, describes what steps would be taken to rapidly restore production and to run drills practicing putting those steps in place. These could be embedded in the CGMP requirements.

Specifically, the AHA recommends that Congress enact legislation including:

Diversifying manufacturing sites as well as sources of critical raw materials to ensure supply chain sustainability. Currently, the U.S. relies heavily on both China and India for the API and key starting materials (KSMs) necessary to manufacture pharmaceutical products. Further, many manufacturers of these products utilize manufacturing facilities located in both China and India. The overwhelming reliance on a limited number of countries for these pharmaceutical products necessary to care for patients in the U.S. raises serious concerns and poses significant risks to patients and burden on health care workers should a disruption occur. Congress should encourage redundancy in the supply chain through policy initiatives focused on spurring diverse sites of production, including where possible, onshore or near shore manufacturing of critical API and KSMs.
Increasing end-user inventories and incentivizing additional cushion. The current just-in-time approach to supply chain logistics functions creates a hazard that becomes a reality during a significant supply chain disruption or emergent need to surge care delivery. Steps need to be taken to “feed” the supply chain with the goal of ensuring enough product is available, or capable of being made available, when demand increases. For example, supporting an increase in end-user inventory of critical medications as well as supplies held across the existing manufacturing and distribution infrastructure in the U.S. will help add necessary capacity to deal with interruptions in the availability of a critical drug. These actions may decrease the need for large national and state stockpiles, which can be difficult to manage and maintain, and present significant operating costs, product expiration and waste issues.
Requiring the FDA to develop ratings of the quality management processes of drug manufacturers which are predictive of supply chain and manufacturing vulnerabilities and make these quality ratings publicly available.
Requiring drug manufacturers to disclose to the FDA the locations where their products are manufactured, including contract manufacturer locations, as well as the locations from which they source KSMs, API and excipients used in their finished products, in order illuminate the extent of vulnerability for a product and to allow the development of targeted supply strengthening measures.
Requiring drug manufacturers to notify the FDA of unusual spikes in demand of essential drugs to allow the agency to take steps to mitigate or prevent any impacts on availability and prevent potential shortages.
Requiring the FDA to identify those essential drugs, including their KSM, API and excipients and component parts, that should have increased domestic manufacturing capacity to improve the resilience of the U.S. drug and device supply chain and make recommendations to incentivize their production.

The AHA has been supportive of several bills that have sought to address supply chain issues which we believe will help address the issue of drug shortages. For example, this year, the AHA supported the Mapping America’s Pharmaceutical Supply (MAPS) Act (H.R. 6992) in the House, which would require the Department of Health and Human Services to update its essential medicines list and create a database to help predict vulnerabilities in the U.S. pharmaceutical supply chain.⁴

We thank you for the opportunity to submit comments the House Committee on Ways and Means regarding drug shortages and look forward to continuing to work with you on this important issue.

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¹ https://wieck-vizient-production.s3.us-west-1.amazonaws.com/page-Brum/attachment/c9dba646f40b9b5def8032480ea51e1e85194129
² https://www.fiercepharma.com/pharma/drug-shortages-cost-u-s-care-providers-at-least-200-million-annually-pose-patient-safety
³ https://www.fda.gov/drugs/drug-shortages/report-drug-shortages-root-causes-and-potential-solutions
⁴ https://matsui.house.gov/sites/evo-subsites/matsui.house.gov/files/evo-media-document/matsui_038_xml_v4.pdf