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Drug shortages are rocking the U.S. health care system. Over 300 medicines were in short supply in the second quarter of this year—more than at almost any other time in the past decade.
Policymakers agree that something must be done about this growing problem. But there's less consensus about what to do.
The first step toward developing workable solutions is to understand the complexity of the situation. The drug shortages we are facing are the product of everything from kinks in the global supply chain to inefficient government regulations to low margins that shrunk the number of manufacturers in the marketplace.
Many of the drugs we're short on today, from chemotherapy medicines to routine anesthetics,are generics that were invented decades ago. Generics are essentially commodities—any qualified manufacturer can make them. Therefore, manufacturers must outperform their competitors operationally by turning out lots of drugs at low cost, typically capturing a tiny margin on each.
Part of the way they do so is by scouring the globe for low-cost active pharmaceutical ingredients, or APIs, needed to make generic medicines. Often, that means driving a hard bargain with one provider—usually outside the United States—since higher operating costs and more stringent regulations tend to make domestically manufactured APIs more expensive.
Suppose that a single overseas supplier stops producing APIs because of a natural disaster, or shuts down due to quality concerns, as recently happened with one big supplier in India. Suddenly, a shortage is all but inevitable.
It's a careful dance, as B. Braun Medical knows well. We produce generic injectable drugs, which are particularly vulnerable to shortages.
Since these medications are injected into patients' bloodstreams, they must be sterile. That requires a great deal of costly manufacturing expertise and compliance with strict regulations. Yet manufacturers still have to keep costs down to be competitive, which is why, according to the Administration for Strategic Preparedness and Response, about "90 to 95 percent of generic sterile injectable drugs used for critical acute care in the U.S. rely on key starting materials from China and India." If manufacturing capacity in either of those countries drops, a shortage usually follows.
To improve reliability, some manufacturers are diversifying their supply chains by looking for backup API sources that are closer to home. That's difficult enough. Yet the regulatory process required to bring new suppliers online—complete with safety tests required by the Food and Drug Administration (FDA) and inspections of new API manufacturing facilities—is a costly and time-consuming process.
We at B. Braun Medical partnered with domestic API manufacturers where possible. At our plant in Irvine, Calif., we manufacture a portfolio of treatments that prevent and control seizures associated with preeclampsia and eclampsia using domestically sourced APIs.
There aren't enough qualified API manufacturers in the United States to meet the demand for most generic drugs. Until there are, drug shortages will continue to be a risk.
Congress proposed some standalone solutions for the shortages, but they don't go far enough. To end the shortages—and prevent new ones—we must adopt a multifaceted approach.
First, policymakers must partner with domestic generic and API manufacturers to review current supply needs, raw material manufacturing capabilities, production costs, and regulatory requirements. Understanding these critical factors will help officials craft policies that best address the challenges facing U.S. manufacturers.
Second, the government must approve incentives to encourage domestic manufacturing of critical medical supplies. Tax incentives and direct federal grants to upgrade manufacturing processes, along with broader infrastructure investments and workforce training programs, can help revitalize the U.S. presence in this important sector.
Lawmakers must also engage in conversations with U.S. companies that have a track record of meeting FDA quality standards on how best to streamline regulatory processes governing the supply of domestically manufactured generic drugs and APIs. A good place to start is by making the first cycle review process more efficient and successful by increasing transparency around the status of applications for these critical manufacturing facilities.
Additionally, the federal government must change its purchasing practices. By boosting the Strategic National Stockpile and becoming a more reliable, predictable buyer of domestically produced generic drugs, the government can stimulate new manufacturing investments and better prepare our country for future health emergencies.
Finally, policymakers must leverage regional trade agreements to encourage manufacturing of APIs and other critical medical supplies either in the United States or nearby. Doing so should drive down costs—and eliminate potential problems that could lead to shortages much more quickly.
Lawmakers made similar investments in other strategically important industries dealing with shortages. It's time they did the same for generic drugs. The security and sanctity of patients' health depend on it.
Jean-Claude Dubacher is chair and CEO of B. Braun of America.
The views expressed in this article are the writer's own.
