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Will Anybody Be Making Cancer Drugs in the Future?

TOP - October 2011 Vol 4, No 7 published on October 20, 2011

I will admit that I am knowingly and willingly walking into a hornet’s nest by discussing the current drug shortage, but I feel I must. In addition to our (oncology pharmacists’) ruminations about the current drug shortage, the issue has garnered national media attention. Major newspapers, national TV networks, magazines, and numerous websites have jumped on the drug shortage story.

Yes, as patient advocates, getting “life-saving” drugs to our patients is our job, but we also must understand all the issues in the very complex generic oncolytic drug-supply chain (compassionate patient advocates we may be, business people not so much). The list of issues that have driven the drug shortage include, but are not limited to, raw material shortages (ie, active pharmaceutical ingredient), industry consolidation, importation and customs, federal regulations for new businesses, US Food and Drug Administration (FDA) regulations for generic approval, the backlog of FDA generic applications, manufacturing plant problems/changes/ inspections, drug reformulation, voluntary or FDA-mandated recalls, natural disasters, federally controlled reimbursement rates, buy-and-bill pricing/payment, industry and marketing changes, just-in-time inventory control, restricted distribution, limited drug use, and unexpected demand.

There have always been drug shortages, but not to the degree and magnitude that we have seen in recent years. How many of you have seen the movie The Perfect Storm? Because George Clooney was in it, I imagine most people have. Our current drug shortage has been produced by what I will call “the perfect storm of circumstances.”

The primary issue is money.

As with most issues related to business, the free market, and capitalism, everything comes down to money; and the current drug shortage is no exception. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) is a key component of the debacle. Buy-andbill drug payments are regulated based on average sales price plus a small percent. For example, 5% or 6% of a $4.00 generic cancer drug (eg, 5-fluorouracil) is just a couple cents. And there lies the problem. If payment for a cheap generic is controlled, market forces (ie, supply and demand) cannot work. Usually, demand would cause the price to rise and subsequently payment, making it attractive for other manufacturers to produce a drug. Unfortunately, that does not occur with generic cancer drugs because payment is set by MMA. Trying to raise the price, therefore, is problematic: You would lose money for a period of time with the Medicare payment.

Why can’t manufacturers just make more drug if there is a shortage?

Drugs are not simple widgets that can be run off an assembly line at a minute’s notice when demand increases. And delays are unavoidable. Most companies do not want to invest millions of dollars with a multiyear return on investment for a limited-distribution product that has a set payment not based on the market or production costs.

In addition, getting a generic injectable oncolytic to market can take 3 or more years. This has left us, mainly because of consolidation in the market, with just 4 major companies (Teva Pharmaceuticals, Hospira, Mylan, and Bedford Laboratories) making most of our generic oncolytics. Plus, bulk product production is outsourced to foreign countries, such as India, Russia, and China (with the extremely low profit margins, high production costs in the United States force business to be done in lower cost countries), which means delays can be expected. Even after bulk drug is approved and provided, the final product must be manufactured, and FDA good manufacturing practice requirements for sterile injectable drugs are daunting to say the least. Added to that, cancer agents are considered hazardous materials, which means that production lines are even more tightly controlled. All these steps take time, and problems and delays can occur at any point of the process. If that isn’t bad enough, inspecting production plants overseas adds another level of complexity and delay.

How about for generic cancer drugs already being produced—why the shortages?

Again, it has been a perfect storm scenario. For a drug like Janssen’s Doxil, the supply problem was the result of outsourced contract manufacturing. Ben Venue Laboratories decided to get out of the contract manufacturing business, leaving Janssen without a source of product and with months of delays expected. So for now, Ben Venue Laboratories is trying to increase production in the short term to meet market demands, and Janssen awaits a new manufacturer. Thus, the DOXIL C.A.R.E.S. Physician Access Program was set up basically to ration the limited supply of drug and will be the only way to acquire the drug until a new production line is operational.

Cytarabine has had its problems, too. In fact, 3 companies (Bedford Laboratories, APP Pharmaceuticals, and Hospira) were producing the generic drug. All 3 experienced a manufacturing problem at the same time, again causing shortages that could not just be fixed in a week. APP Pharmaceuticals and Hospira decided to shut down their lines and to no longer manufacture cytarabine (too expensive to fix for the small return on investment), exasperating the supply problem. When a production line is shut down for a problem, such as contamination, finding particulate matter, or other issue, it can take months to find and repair the problem, have the line reinspected, and then reactivate the line. Making matters worse, if one company has a production problem, it doesn’t mean the other companies can increase production. In this case, even though Bedford Laboratories’ market share of cytarabine has jumped from 50% in 2010 to more than 80% this year, the company still will not be able to meet all product needs in the short term.

There’s enough blame to go around, so how do we fix it?

That’s the million-dollar question. I don’t think asking for more government intervention is the solution. I consider the government a big part of the problem. Letting the freemarket supply-and-demand system work would be the more prudent solution, but that would take an act of Congress. Laws would need to be changed to allow payment changes for generics. With total payments for generic oncolytics being roughly $400 million (just 2% of all cancer drug costs), paying a little more for a stable supply of agents would seem reasonable. Fix the money and you will fix the supply. Everything else we do (additional legislative action, real-time drug tracking for shortages, better notification and communication from industry and the FDA, national depots, etc) will just be window dressing.


Would you like straight-shooter Jim Koeller to respond to a particular topic? E-mail your ideas to editorial@greenhillhc.com.

Last modified: July 22, 2021