Sur­mount­ing short­ages

GPOs work cre­atively with man­u­fac­tur­ers to avert drug short­falls

Modern Healthcare - - NEWS - By Adam Ruben­fire

When the seda­tive propo­fol was fre­quently in short­age be­tween 2009 and 2014, the scarcity forced hos­pi­tals across the coun­try to can­cel surg­eries as phar­ma­cists strug­gled to ob­tain a sup­ply. The propo­fol short­age was re­solved last sum­mer and the num­ber of new drug short­ages has dropped. But there were still 190 drugs in ac­tive short­age as of the end of the third quar­ter of 2015, ac­cord­ing to the Amer­i­can So­ci­ety of Health-Sys­tem Phar­ma­cists, or ASHP. Many of the items listed in the group’s drug short­age data­base are crit­i­cal for hos­pi­tals, in­clud­ing pre-filled ep­i­neph­rine sy­ringes placed in car­diac crash carts and vi­tal an­tibi­otics such as meropenem.

Most hos­pi­tals rely on their group pur­chas­ing or­ga­ni­za­tion to en­sure steady phar­ma­ceu­ti­cal sup­plies. But a short­age at a GPO’s con­tracted man­u­fac­tur­ers can leave the GPO and its mem­bers scram­bling to find other sup­pli­ers or al­ter­na­tive ther­a­pies. Th­ese short­ages, of­ten caused by manufacturing ca­pac­ity or qual­ity prob­lems, can cre­ate med­i­cal crises for pa­tients.

Lee Perl­man, pres­i­dent of the Greater New York Hospi­tal As­so­ci­a­tion’s group pur­chas­ing arm, said such drug short­ages too of­ten have left his busi­ness un­able to ful­fill its core mis--

sion—en­sur­ing pre­dictable sup­plies at a pre­dictable price to hospi­tal cus­tomers. It’s a big fail­ure “if a pa­tient ly­ing in bed is wait­ing for op­er­a­tions that can’t go for­ward be­cause there’s a drug short­age,” he said.

To fa­cil­i­tate a re­li­able phar­ma­ceu­ti­cal sup­ply, GPOs spend a sig­nif­i­cant amount of time look­ing for al­ter­na­tive drugs and work­ing to con­tract for those drugs. They use var­i­ous strate­gies to get around short­ages, such as promis­ing man­u­fac­tur­ers vol­ume, forg­ing longterm or ex­clu­sive deals, cre­at­ing their own pri­vate drug la­bels, and even scout­ing out raw ma­te­rial sup­pli­ers to work with man­u­fac­tur­ers on high-de­mand drugs.

Drug short­ages are es­ti­mated to cost U.S. hos­pi­tals at least $200 mil­lion an­nu­ally be­cause of the higher cost of sub­sti­tute drugs, ac­cord­ing to a 2010 sur­vey from Pre­mier, a Char­lotte, N.C.-based group pur­chas­ing and per­for­mance im­prove­ment com­pany. An ASHP re­port es­ti­mated that la­bor costs re­lated to the short­ages cost hos­pi­tals an ad­di­tional $216 mil­lion each year. Th­ese re­ports were re­leased at about the same time as the drug short­age cri­sis hit its peak in 2011.

The Food and Drug Ad­min­is­tra­tion says the three big­gest causes of short­ages are de­lays in manufacturing or other ca­pac­ity is­sues, qual­ity is­sues in the manufacturing process, and dif­fi­culty ob­tain­ing raw ma­te­ri­als. Most of the drugs on the ASHP short­age list are gener­ics. Ster­ile in­jectable drugs make up a ma­jor­ity of drugs in short­age be­cause only seven man­u­fac­tur­ers ac­count for most of the mar­ket, and the drugs are dif­fi­cult to man­u­fac­ture safely.

The Health­care Sup­ply Chain As­so­ci­a­tion, the GPO trade group, has lob­bied the FDA to use its reg­u­la­tory power to ex­pe­dite ap­pli­ca­tions for new drugs that could serve as al­ter­na­tives to drugs in short­age. HSCA CEO Todd Ebert said the FDA has the author­ity in drug short­age sit­u­a­tions to move new drug ap­pli­ca­tions to the top of the pile and help al­le­vi­ate short­ages. When faced with a short­age, GPOs look for al­ter­na­tive man­u­fac­tur­ers, or some­times con­tract for a sub­sti­tute med­i­ca­tion. But there isn’t al­ways an al­ter­na­tive, and drug­mak­ers don’t al­ways want to bind them­selves to a con­tract, said Sara Turn­bow, lead phar­ma­cist at the Min­nesota Mul­ti­state Con­tract­ing Al­liance for Phar­macy, a state-run GPO for gov­ern­ment fa­cil­i­ties.

If a GPO can’t nail down a con­tract for an al­ter­na­tive man­u­fac­turer—which isn’t un­com­mon when a drug is in short­age—it’s up to hos­pi­tals to pur­chase the drug them­selves, of­ten from a whole­saler. Re­gard­less, GPOs try to make sure their mem­bers know where they can get al­ter­na­tives, Turn­bow said. Many GPOs hold con­fer­ence calls to re­spond to con­cerns from pan­icked hospi­tal mem­bers dur­ing short­ages. Turn­bow said she dis­cour­ages her mem­bers from stock­pil­ing drugs be­cause that can be un­fair to other provider or­ga­ni­za­tions.

To keep drug sup­plies flow­ing, GPOs have had to get cre­ative, some­times turn­ing to con­tract­ing prac­tices that are con­tro­ver­sial within the industry. Many GPOs have signed con­tracts guar­an­tee­ing drug­mak­ers vol­ume—even if that means the GPO loses money when its mem­bers don’t need that much sup­ply.

Brian Romig, vice pres­i­dent of phar­macy ser­vices at No­va­tion, an Irv­ing, Texas-based GPO, said his or­ga­ni­za­tion’s pitch to man­u­fac­tur­ers is that, “We will give you some con­fi­dence as a sup­plier that our mem­bers will buy a cer­tain amount, and we’ll go at risk for that. You have the con­fi­dence to know that you can open up a line in your manufacturing fa­cil­ity to make a cer­tain amount and you know you have a buyer for that.”

Perl­man ar­gues that sole-source con­tract­ing, in which a GPO con­tracts with only one drug­maker for a par­tic­u­lar drug, can en­sure a sta­ble sup­ply re­gard­less of price. The prac­tice of­fers as­sur­ance to man­u­fac­tur­ers that there will al­ways be a de­mand for their prod­uct be­cause they won’t be com­pet­ing with other drug­mak­ers. “We need to give man­u­fac­tur­ers pre­dictable de­mand at a price that they’ll want to make it in, and we don’t need to have five dif­fer­ent ven­dors nec­es­sar­ily com­pet­ing on price,” he said.

But other GPO ex­ec­u­tives say sin­gle-source con­tract­ing is anti-com­pet­i­tive and pre­vents providers from get­ting the low­est price for a drug. And if the sole-source man­u­fac­turer re­ports a short­age, that GPO may be left scram­bling.

Ron Hart­mann, se­nior vice pres­i­dent of phar­macy at MedAs­sets, an Al­pharetta, Ga.-based GPO and per­for­mance im­prove­ment firm, said it’s best to con­tract with two

or more man­u­fac­tur­ers of a drug, par­tic­u­larly for prod­ucts with a his­tory of sup­ply is­sues. Multi-source con­tract­ing pro­vides GPO mem­bers with “the best op­por­tu­nity to pur­chase a con­tracted prod­uct at a com­pet­i­tive price at the time of pur­chase,” he said.

Hart­mann said some man­u­fac­tur­ers don’t want to be a GPO’s sole source be­cause it can put them fi­nan­cially at risk if their drug ends up in short­age. MedAs­sets has ne­go­ti­ated with a num­ber of man­u­fac­tur­ers who would rather be a part of a dual- or multi-sourced so­lu­tion for a GPO, he said.

Some ex­perts say longer-term con­tracts can help en­sure a sus­tain­able sup­ply. Man­u­fac­tur­ers have been ask­ing for longer con­tracts, and GPOs should pro­vide them as an in­cen­tive for man­u­fac­tur­ers will­ing to prom­ise a sus­tain­able sup­ply, said Bill Larkin Jr., head of phar­macy ser­vices for the Greater New York Hospi­tal As­so­ci­a­tion GPO. “Our job as GPOs is to try to cre­ate more pre­dictabil­ity in the mar­ket­place,” he said. “Hav­ing a longterm con­tract is a good thing.”

GPOs also have strength­ened con­trac­tual fail­ure-to-sup­ply clauses, which re­quire man­u­fac­tur­ers to com­pen­sate health­care providers when a short­age forces them to pur­chase more ex­pen­sive drugs. But a 2014 Amer­i­can So­ci­ety of Health-Sys­tem Phar­ma­cists re­port ar­gued that fail­ure-to-sup­ply clauses have been an un­re­li­able safe­guard when all the man­u­fac­tur­ers of a drug are re­port­ing short­ages, be­cause the penal­ties don’t ap­ply when there’s no al­ter­na­tive ther­apy.

Some GPOs have cre­ated pri­vate drug la­bels in which they con­tract di­rectly with a manufacturing com­pany to make a generic drug un­der their own brand name. This strat­egy is cheaper than buy­ing name-brand drugs, and it gives the GPO more con­trol over the manufacturing process if is­sues arise that could lead to a short­age. Such la­bels in­clude No­va­tion’s No­vaplus and Pre­mier’s PremierPro Rx.

Pre­mier Chief Op­er­at­ing Of­fi­cer Mike Alkire said pri­vate-la­bel pro­grams of­fer sta­bil­ity for the GPO, and the man­u­fac­turer can in­vest in its pro­cesses be­cause it re­ceives fund­ing and as­sured de­mand from the GPO.

But MedAs­sets op­poses the pri­vate-la­bel ap­proach. “We don’t be­lieve that pri­vate la­bels con­trib­ute to ef­fi­ciency in the mar­ket­place,” Hart­mann said. MedAs­sets cus­tomers, he said, have ex­pressed a pref­er­ence for mul­ti­ple prod­uct op­tions, while GPOs with pri­vate la­bels of­ten will only of­fer the drug through their pri­vate la­bel.

Gary Free­man, vice pres­i­dent of phar­macy at Amer­inet, a GPO that re­cently was ac­quired by Salt Lake City-based In­ter­moun­tain Health­care, said the ex­clu­sive con­tracts be­tween GPOs and drug­mak­ers that of­ten are part and par­cel of pri­vate-la­bel ar­range­ments raise prob­lems from a clin­i­cal per­spec­tive. “There’s an eth­i­cal prob­lem if I have an agree­ment with a manu- fac­turer that they’re only go­ing to sup­ply me,” he said. “They may be the only man­u­fac­turer of a par­tic­u­lar prod­uct. There are other peo­ple that need that drug.”

To ad­dress the prob­lem of ob­tain­ing ac­tive in­gre­di­ents in short sup­ply, Pre­mier has forged con­tracts con­nect­ing raw ma­te­rial sup­pli­ers with man­u­fac­tur­ers to en­sure that man­u­fac­tur­ers have long-term, re­li­able ac­cess to safe raw ma­te­ri­als.

One of those drugs is the an­tibi­otic cephalosporin. Pre­mier was ap­proached by a man­u­fac­turer that had iden­ti­fied an ac­tive phar­ma­ceu­ti­cal in­gre­di­ent sup­plier that held most of the mar­ket share for raw ma­te­ri­als used to cre­ate the drug. The man­u­fac­turer wanted to man­u­fac­ture it for the PremierPro la­bel.

This sum­mer, Pre­mier signed a six-year con­tract with both the man­u­fac­turer and the in­gre­di­ent sup­plier. A big ben­e­fit was en­hanc­ing trans­parency re­gard­ing the drug’s sup­ply chain as well as le­gal pro­tec­tions re­gard­ing the ac­tive in­gre­di­ents’ avail­abil­ity.

When a drug’s sup­ply is tight, man­u­fac­tur­ers aren’t al­ways forth­com­ing with in­for­ma­tion about their ac­tive in­gre­di­ent sup­pli­ers, Alkire said. Ac­tive in­gre­di­ent deals en­sure pre­dictable sup­ply but also of­fer Pre­mier bet­ter ac­cess to man­u­fac­tur­ers to help them re­spond to ad­verse events in the sup­ply chain, he said.

The lack of trans­parency re­gard­ing ac­tive prod­uct in­gre­di­ent sup­pli­ers and out­sourced manufacturing makes it dif­fi­cult to re­solve short­ages, said Erin Fox, di­rec­tor of drug in­for­ma­tion at Univer­sity of Utah Health Care, Salt Lake City. She said GPOs can and should push man­u­fac­tur­ers to be more open about their pro­cesses so that sup­pli­ers can be held ac­count­able.

“This is a manufacturing prob­lem,” Fox said. “Since they’re not solv­ing this very quickly, and we’re still hav­ing short­ages and pa­tient im­pact, (man­u­fac­tur­ers) should have to give up some con­ces­sions around trans­parency, and maybe not every­thing gets to be pro­pri­etary.”

Va­lerie Jensen, as­so­ciate di­rec­tor of the FDA’s drug short­age staff, said her agency wel­comes the work of or­ga­ni­za­tions such as GPOs in bring­ing more trans­parency and cred­i­bil­ity to the drug­maker sup­ply chain. “Ul­ti­mately, it’s the man­u­fac­turer that would need to fix what­ever prob­lem there is,” Jensen said. “But if out­side groups were able to work with the com­pa­nies or search out com­pa­nies that have a great track record, that would pre­vent short­ages.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.