Economic, Contracting Decisions Drive Oncology Drug Shortages

Although there was an acute oncology drug shortage in 2023, drug shortages in oncology have been occurring for approximately 10 to 15 years, Julie R. Gralow, MD, FACP, FASCO, chief medical officer and executive vice president for the American Society of Clinical Oncology (ASCO), explained during a panel discussion at the 2024 ASCO Annual Meeting. Further, the panelists explained that although many shortages may result from a single bottleneck that occurs because of the brittleness of the supply chain, they are economic in nature overall.

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Specifically, panelist Alex Oshmyansky, MD, PhD, cofounder and CEO of Mark Cuban Cost Plus Drug Company, explained that as his organization began to manufacture and compound chemotherapy products, he learned that there were few family-run businesses in the United States that manage the supply of the starting materials for all these products. “As you go all the way down [the supply chain], you find that even if the active pharmaceutical ingredients are made in high-regularity jurisdictions, such as Western Europe or North America, a lot of the key starting materials common to all of them are generally made in the same facilities in China,” Oshmyansky said. “There was a shortage this past year [that was the result of] 1 machine breaking in a facility in central China, [which] just cascaded throughout the entire world. The brittleness of the supply chain becomes more apparent the more you learn about how it’s structured. At the moment, it doesn’t seem like it’s changed over the past 10 to 15 years.”

Marta E. Wosińska, PhD, senior fellow at the Center on Health Policy at the Brookings Institution in Washington, DC, explained that what has risen to the surface over the past 10 to 15 years of drug shortages is an awareness that it’s economic factors that are driving these shortages. “Thisis not temporary, and it’s a matter of time before another shotage comes up,” Wosińska said. “Until we solve the systemic market forces and try to address those, we’re not really going to tackle [the problem].”

Robert Califf, MD, commissioner at the FDA, agreed with these points, noting that the United States is far too dependent on China for materials for generic drugs. Additionally, Califf noted that there are market failures in the system currently because of how contracting has been “Health systems and cancer centers have been unwilling to pay a fair price for a product that is needed,” Califf said. “It’s sort of amazing how that has worked.”

However, Califf explained that not all outsourced manufacturing is being done in China, as the FDA has become accountable for facility inspections in India, which is where the largest proportion of generic drugs are now being made. According to Califf, this means there is oversight in certain countries with less stringent regulations that are manufacturing products being used by the US health system, but that oversight is conducted by the FDA.

“We’ve had a major set of discussions within the government as a whole about this, and there is now a position paper from the [US Department of Health and Human Services] that says exactly what [Wosińska and Oshmyansky] said,” Califf said. “Now the question is, what do we do about it?”

Califf noted that it may be beneficial for ASCO to look within itself and see how its leadership can affect the contracts for generic drugs so they pay a fair price. In turn, this would allow for people to make these drugs within a system that pays them fairly for their work.

“There’s a general relationship [between] the lower cost of a drug and the greater likelihood of a shortage,” Califf said. “That happens when the price of the product is below the cost of making it.”

According to Allan Coukell, BScPharm, chief government affairs and public policy officer at Civica Rx, shortages are an output of the way we buy generic drugs. “If we don’t change our behavior, we will continue to have shortages,” Coukell said. “By any measure, [shortages] are worse now than they’ve ever been.”

Coukell explained further that it is also not necessary to wait for Congress to make a decision before changes are made to address these shortages. “We can move in that direction now, but we’re not seeing as much movement as we should,” Coukell said.

Michael Sargent, senior director of policy at the Association for Accessible Medicines (AAM), says that when AAM looks at shortages data every year, it becomes clear that more than 80% of the products in shortage are multisourced generics and more than 50% of those are priced at $1 or below per unit. “When you talk about trying to create a sense of stability and sustainability across the marketplace, we see that the most acute shortages with the greatest impact on the health system are the ones where there’s a really low concentration or consolidation across the marketplace,” Sargent said. “[In these cases], you have a high number of approved generics but a low number of manufacturers. From our point of view, that has everything to do with pricing and contracting.”

Gralow added that many of the shortages in oncology are generally generic sterile injectables and a few oral drugs that are all priced below the cost of making the drugs. “Drug shortages are mostly a market and economic issue,” Gralow said. “[Although] we can make some legislative and regulatory changes, that is not the major problem here. We need to fix how we purchase and rate drugs.”

Additionally, Gralow noted that oncology professionals can influence purchasing decisions for their cancer centers and health systems. “We may not all think we do, but we have influence over our institutions,” Gralow said. “We should use that influence.”

Califf countered that he believes it is primarily the leadership at cancer centers and health systems that can influence purchasing decisions and contracting for these drugs, rather than individual oncology professionals. “The [leaders] control the contracts. Now they do control it through an intermediary, typically a [group purchasing organization], which is an old idea of consolidating across institutions for purchasing power. But it seems that the people running the institutions have outsourced the contracting to parts of their institutions [that] are rewarded for getting the lowest price as opposed to a balanced contract,” Califf said. “If the bosses of your institutions decided to contract differently, they could change this fairly quickly.”

Reference

Gralow J, Califf R, Wosińska ME, Oshmyansky A, Coukell A, Sargent M. Solving decades of drug shortages in oncology: what, who, and when? Presented at: 2024 American Society of Clinical Oncology Annual Meeting; May 31-June 4, 2024; Chicago, IL.