HHS details manufacturing role in drug shortages

About 54% of sterile injectable drug shortages are caused by manufacturing quality problems. The U.S. Department of Health and Human Services reports that "some of the largest manufacturers of sterile injectable drugs have had serious quality problems leading to the temporary voluntary closure or renovations of major production facilities."

The findings are in the report titled Economic Analysis of the Causes of Drug Shortages, which was produced by the HHS assistant secretary for planning and evaluation. The report was cited by President Obama in the announcement of his executive order Monday aimed at stemming the rise of drug shortages.

Undermining manufacturing quality are high rates of production capacity utilization. High rates make it "difficult to maintain manufacturing quality levels and any disruptions to supply can lead to cascading and persistent shortages," the report says.

API shortages, the report finds, are not as big a cause as many believe, accounting for just 5% of drug shortages. Just 2% are attributable to other component shortages.

From an economic perspective, shortages occur because drug pricing has so little to do with supply and demand--pricing is a much more important factor in most other industries, a stabilizer in the supply-versus-demand equation.

"Neither the quantity of these products needed by consumers nor the quantity of these products produced by manufacturers is very responsive to short term changes in price," according to the report. "This means that product disruptions, however caused, translate into shortages rather than simply higher prices."

A "substantial increase" in demand is another likely cause. Demand for some classes of drugs has risen quickly, with no corresponding expansion in manufacturing capacity.  "While several manufacturers are currently expanding capacity, most of this capacity will not become available for several years," the report says. 

- here's the report

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