Public Meeting on Identifying the Root Causes of Drug Shortages and Finding Enduring Solutions November 27, 2018

Speech | In Person

• Speech by: Scott Gottlieb, M.D.

Remarks by Scott Gottlieb, M.D.
Commissioner of Food and Drugs
Public Meeting on Identifying the Root Causes of Drug Shortages and Finding Enduring Solutions
Washington, D.C.

(Remarks as prepared for delivery)

Good morning.  I want to thank you for attending this important meeting. Today, we’re bringing together a broad range of stakeholders and members of the public to discuss the public health challenges posed by the continuing shortages of critical medical supplies.  I also want to take a moment to thank Keagan Lenihan -- FDA’s Associate Commissioner for Strategic Initiatives and External Affairs. She’s done an exceptional job heading up our Interagency Drug Shortages Task Force.

We formed that Task Force in response to some pressing public health problems that we face with respect to the persistent drug shortages. Drug shortages that we’ve seen for a few decades now, when it comes to some of our most critical medicines.

Different drugs have gone in and out of shortage in recent years. But there are some common threads that link all of these challenges. Many of the critical drugs that we find in shortage are sterile injectable drugs. They are parenteral medicines, meaning that they’re meant for injection. And most of these drugs are old, generic medicines that are relatively cheap.

Cheap, that is, when they’re not in shortage. And the question we constantly get is this one: Why are some of the oldest and most important medicines -- drugs that used to be very cheap -- suddenly subject to very short supplies, where the prices often get hiked sharply, if the medicines can be gotten at all?

It’s question borne of a lot of appropriate frustration, from doctors, patients, and policy makers. And despite a lot of focus on these problems, we don’t have very good answers.

And we certainly don’t have easy solutions, or we would have fixed this problem a long time ago. But it’s gone on too long. The risks have mounted. The frustrations have reached a tipping point. Mine as well. We need to commit to fix things for good.

In my view, it’s a problem borne of failures of economics and policy that span many years. And the extended failings of policy have left us with a sticky morass of protracted woes related to the way these products are manufactured and the way they’re reimbursed; which sometimes leaves very little margin for error.

In some cases the prices reimbursed on these drugs have been driven down to such low levels, that it makes it hard to manufacture them profitably, and have enough margin left over to invest in modern manufacturing upgrades.

For some of these drugs; the cost of making them, and the cost of the inputs, isn’t trivial, either. They can contain commodities like platinum that are subject to their own price escalations.

All of this has left the manufacturing of many sterile parenteral drugs vulnerable to shortfalls and shutdowns.

And the problems mounted. The bad economics compounded still more shortcomings. The problems beget more problems.

To produce these drugs profitably, manufacturers had to gain scale to try and make up in volume what they couldn’t achieve in margin. That led to a lot of consolidation among the companies that manufacture these sterile parenteral drugs.

So now, when problems arise at a single manufacturing facility, it isn’t just a single drug line that goes down.

It could be an entire portfolio of sterile drugs.

Here’s the rub.

Now I’ve focused a lot of our policy efforts in recent years on proposals to promote competition and access in branded drug markets where many argue that the prices are too high. And I’m not debating that premise. Especially when it comes to list prices and patients who are paying out of pocket for their drug costs.

But there’s an ironic addendum to that premise. We have drug prices that are too high. But we also have markets where the prices may be too low to sustain reliable supply and the high-quality investments in manufacturing that patients deserve.

But I’m not in a position to diagnose the full scope of this problem, or to offer workable and complete solutions.

There are so many facets to these issues; it requires a sustained, comprehensive, expert examination. And that’s the purpose of the expert panel we’ve convened and today’s meeting.

Earlier this year, we received letters from Congress signed by more than 150 members. They asked the FDA to commit to a process to conduct a full examination of these challenges, and to find enduring solutions. That’s our goal. Our aim is to look at every facet of this problem and develop a comprehensive set of proposals for addressing these protracted woes.

And our recommendations will look beyond just the regulatory issues that fall within our scope at FDA. We’ll also examine the reimbursement challenges and other market failures.

Here’s the charge I gave our FDA team: cast a wide net. We’ll delve deeply into these issues, to identify the underlying problems, and to propose comprehensive, enduring solutions.

The Task Force has already held numerous listening sessions with a broad range of stakeholders. These have included meetings with pharmacies, hospitals, drug manufacturers, think tanks, GPOs and distributers, patients, and many others.

These sessions have given us important input and new insights that will help us find common ground and lasting change.

I want to thank those of you participated in those meetings. And I want to acknowledge everyone who’s here today -- especially our federal partners from the Centers for Medicare and Medicaid Services, the Federal Trade Commission, the Department of Defense, the Department of Veterans Affairs, and the Office of the Assistant Secretary for Preparedness and Response.

As I’ve noted, finding a new framework that will help more permanently solve these protracted problems will require us to look across the full range of reimbursement and market challenges. And the participation of this diverse group is going to be a key to evaluating these aspects of the problems.

We appreciate your contributions, and we look forward to your input. Let me assure you, we’re listening closely to everyone.

And I remain optimistic that we’ll come up with impactful new plans on how to address these challenges. Our past efforts in these areas have met with some success. Thanks to the FDA’s focus on these problems, combined with new authorities given to FDA under FDASIA, we’ve seen a decline in the number of shortages from the peak years of earlier in the decade.

But we still face persistent shortages, especially when it comes to parenteral drugs. One year it will be one product. Next year it will be a different medicine. But the list will almost always include a troubling complement of important sterile medicines.

What’s more, many of these shortages can last for years at a time. And the problems that give rise to one shortage can impact a broad range of medicines, and can complicate medical care in each of the many settings where these drugs are administered.

This is a critical public health concern. When these shortages take hold, they threaten the stability of our health care system and can spur a public health crisis. They present an immediate and serious risk for patients. They can lead to delayed or canceled treatments or procedures. They can force providers to have to rely on medicines that are less effective because substituted drugs may not offer the same benefits as the medicine that’s in shortage. And these problems can be global.

So where do we go from here?

Today, people will share proposals on how we can start to better address these problems. In the first session, some of the Task Force Members will give an overview of the history of drug shortages and the FDA’s current efforts. We hope this overview leads to some new ideas on how to tackle the root causes.

Other panels today will consider some of the economic drivers and the economic consequences of these shortages; as well as the challenges faced by manufacturers, suppliers, and consumers. We’ll also discuss where we go from here. At the FDA, we’re all focused on the feedback from today’s sessions.

During these listening sessions, we’ve already heard some new ideas on diverse areas of this problem.

For example, we’ve heard ideas on how we can increase public awareness of drug shortages and the supply reliability of particular products, which -- it’s been suggested -- can increase accountability by suppliers. And we’ve heard ideas on how the system can help improve the profit margins on many of the critical parenteral drugs, particularly generics, where there’s a public health imperative to avert supply disruptions. We’ve also heard suggestions about eliminating some of the barriers manufacturers can face when they’re trying to enter the market. These barriers, it’s been suggested, can make it harder for new entrants to more efficiently file new applications – or ramp up existing production lines – to address shortages. And we’ve heard suggestions for adding language in contracts between suppliers and providers that could help prevent shortages; for example, by strengthening “failure to supply” clauses.

At the FDA, we’re focused on doing our part as well to look at our own regulatory policies, and how we can address these challenges. We’ve already engaged in a number of efforts to help strengthen and stabilize the manufacturing sector to better address some of the underlying causes of shortages.

One new program we recently launched will make the inspection of sterile drug facilities much more efficient and make the quality standards that we inspect for much more transparent and predictable to drug manufactures.

To take another example, our Center for Drug Evaluation and Research has developed an emerging technology program that engages companies to encourage the adoption of new production technologies such as 3D printing and continuous manufacturing.  Eventually, these could help prevent drug shortages caused by reducing product quality and manufacturing problems.

Two other new efforts are focused on quality metrics, which can make it easier for manufacturers to monitor and improve their quality control systems and processes. We’re also looking at whether we can use the information we glean from these efforts to help identify drugs at greater risk of shortage, so we can intervene before a disruption occurs.

But a lot of questions remain. And a lot of problems are unsolved. And we still don’t understand all of the issues that contribute to these persistent problems.

That’s why we’re holding listening sessions and public meetings. We need to get at the root causes of these woes -- the underlying regulatory, marketplace, and economic problems that impact product quality, coverage, and a stable supply chain.

In short, we need a different policy, regulatory and business model to govern this space. It’s a model that’s going to require broad collaboration and dialogue among the many different parties who play a role. And a model that’ll require new ideas.

Only in this way will be address the substantial public health challenge we face, and ensure that we achieve a high quality and stable supply of the critical medical products that patients need.