Drug Shortages: Danger and Opportunity? 
Posted by Carlos on Feb 12, 2014

IV drug shortages


Are we the only ones shocked by this?

Despite efforts by the Obama administration to ease shortages of critical drugs, shortfalls have persisted, forcing doctors to resort to rationing in some cases or to scramble for alternatives, a government watchdog agency said on Monday. The number of annual drug shortages — both new and continuing ones — nearly tripled from 2007 to 2012.

We’ve done some work in the parenterals space (see here, for example), and indeed we are aware of some facilities in the US being closed.

But the size of the problem really stunned us.

Consider this:

“We are at a public health crisis when we don’t have the medicines to treat acutely ill patients and we don’t have the basics like intravenous fluids,” said Erin Fox, a drug expert at the University of Utah whose data was used in the analysis. The most acute shortage now is that of basic IV fluids, she said.

Curious, we decided to take a brief look at the report discussed in the article.

The PDF is available here.

The report, prepared by the Government Accountability Office (GAO), is a detailed study of the problem.

Here are a few items we found interesting:

1. Active shortages are those which exist for 1 year or less. Ongoing shortages are for one year or longer. What’s really alarming is the number and growth rate of ongoing shortages.

This suggests that manufacturers are simply existing these markets for economic reasons. One would think that if the economics were strong, the manufacturing problems would be resolved. But this does not appear to be the case.

Active Drug Shortages

This is an alarming growth rate.

The GAO arrives at the same conclusion:

GAO also identified potential underlying causes specific to the economics of the generic sterile injectable drug market, such as that low profit margins have limited infrastructure investments or led some manufacturers to exit the market.

2. Sterile Generic Injectables account for 44% of the shortages from 2011-2013, with an additional 18% of shortages come from oral generics. Interestingly, certain therapeutic areas, such as anesthetics, anti-infectives, cardiovascular, and nutrition account for significant numbers of drug shortages.

3. Patient care is directly affected by these shortages. Consider this shocking statement:

During a shortage, providers may have to cancel or delay procedures, which can have detrimental health effects on patients. Providers may also have to ration care by prioritizing the patients who have a greater need for the drug. For example, provider association representatives said that if a drug is used in patients across age groups, but is essential for the care of newborns, a hospital may institute a policy that the drug can only be administered to newborns and will no longer be administered to adults.


There are other side effects from these shortages which directly impact patient care. For example,

…emergency service providers have reported significant difficulties finding alternative medications for stopping seizures and are concerned with the viability of alternative therapies in certain emergency situations….when effective alternatives are identified and located, medication errors may increase because the dosage of the alternative drug may differ from what providers are accustomed to using.

Some health care providers are turning to internal compounding (which has its own issues) or even “grey market” suppliers. These are manufacturers who are not authorized to manufacture or sell these products in the US.

The root causes of these shortages are complex.

Product Quality – According tot he GAO report, 40% of shortages are due to manufacturing quality concerns, such as particulate matter or plant maintenance issues.

Capacity constraints – When manufacturers have a problem, then sometimes close the facility entirely. But for those who decide to remain open, a shutdown in one area can cause temporary, but long-term reductions in plant output.

API shortages – As one can imagine, fewer manufacturers of finished product results in reduced demand for API. However, API shortages appears to be less of an issue.

Can this problem be resolved? Are there opportunities for manufacturers or even new companies to enter the space and address these problems?

We’ll discuss some potential solutions in a future post.


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