Kristin Caparra’s 23-year-old son missed a vital dose of methotrexate, a critical drug in his chemotherapy regime for a rare, aggressive bone cancer, at Pennsylvania Hospital in Philadelphia due to shortage. Methotrexate, used extensively in treating childhood cancers, is irreplaceable in most cases. Numerous patients are left with the only choice of using less effective drugs which often leads to worse patient outcomes due to these shortages.
However, medicine shortages are not a unique incident. In fact, they peaked in the US in 2021, hitting a 10-year high and record-breaking levels were noted across Europe. There were reports of shortages from national pharmaceutical bodies in 26 European countries in both 2022 and 2023, seeing a decrease in availability compared to previous years.
The pharmaceutical industry seems to have a preference for innovative drug development as they can sell these patented drugs at a higher cost while also covering research and development expenses. Off-patent generic drugs like methotrexate, which form the backbone of pharmaceutical care, are often overlooked. Despite accounting for 91% and 70% of US and European prescriptions respectively, they and their biosimilar counterparts often face limitations due to manufacturing challenges, precarious supply chains and poor pricing.
These contributing factors create what industry insiders and analysts call a “broken market”, which renders these vital medications less appealing to produce and susceptible to supply disturbances, quality defects or demand surges. Rob Moss, a hospital pharmacy consultant from Utrecht in the Netherlands, explains that the system relies on a just-in-time principle that, when disrupted, causes downstream shortages. The stringent regulations and high quality standards make it more challenging for alternative suppliers to fill the gaps compared to other sectors.
A case in point is the UK, where the availability of 99 generic drugs was affected in January, double the shortage experienced two years earlier as per the British Generic Manufacturers Association. This has impacted the provision of treatments such as hormone replacement therapies and medications for ADHD, partly as a result of escalating demand.
Limited information is available regarding drug shortages in countries that have a low to middle economy. The competition for lower prices with affluent nations often puts these countries at a disadvantage. “In situations with a scarce supply of a particular product, the highest bidder almost always wins,” states Claudia Martinez, the head research official at the Access to Medicine Foundation, a non-governmental organisation based in Europe.
Ultimately, it is the patients who suffer due to these shortages as it typically leads to less effective medical treatments. A recent 2021 study in Pakistan showed that a lack of medicine often meant delayed treatments and fatal diseases complications. In contrast, wealthier countries have more robust systems to handle such shortages by either procuring drugs from different sources or opting for alternative treatments. According to a survey conducted last year, about 75% of pharmacy groups in Europe confirmed that shortages had negatively affected treatments, with 15% reporting increased side effects.
Dario Trapani, an oncologist at the European Institute of Oncology in Milan, was deeply concerned upon hearing about the shortage of a drug widely used to treat breast cancer, paclitaxel, in Italy. Trapani is also the head of the cancer medicines committee of the European Society for Medical Oncology, and notes that over the last six months, there have been reports of shortages of common, inexpensive drugs across Europe.
The production of drugs involves two phases. The first phase is the creation of active pharmaceutical ingredients (APIs) from various chemical compounds, whereas the second stage involves converting these APIs and other inactive agents like preservatives into consumable doses. This usually occurs in different facilities before the finished product is sent to distribution centres.
This two-phase production process relies heavily on factories in India and China due to their lower production costs and skilled workforce. However, Mujaheed Shaikh, a professor of health governance at Berlin’s Hertie School, explains that this dependency on distant producers increases the risk of medicine shortages. Numerous factors can affect the production process and delivery of the medicine to the final distribution point, adding a degree of unpredictability.
Persistent antibiotic shortages in Europe in 2022 were in part due to dependence on Chinese factories for active pharmaceutical ingredients, compounded by the zero-Covid policy in China. Adding fuel to the fire were issues at an Indian factory creating dosages, leading to notable scarcity of methotrexate for the Caparra family.
Different reasons exist for each shortage, but the case of methotrexate emphasises several issues plaguing the generic drug industry. Originally used in 1949 for paediatric cancer treatment, methotrexate now treats a range of conditions like psoriasis, rheumatoid arthritis and Crohn’s disease. However, larger doses, particularly those used in cancer treatments such as non-Hodgkin lymphoma and acute lymphoblastic leukaemia, undergo short supplies more frequently.
In a notable twist, approximately 80% of the methotrexate API originates from Europe, according to Jürgen Bank, general manager at German drugmaker Excella, a large producer of the drug. Bank states, “There is, and was, no shortage for methotrexate API.”
Intas, an Indian pharmaceutical firm, through its subsidiary Accord Healthcare, is a prominent source of methotrexate dosages to the United States. In 2022, Accord accounted for 35% of the US supply of methotrexate, along with over half of the supply of other crucial cancer medications, carboplatin and cisplatin.
During an FDA inspection of Intas’ Ahmedabad plant, which manufactures methotrexate and other oncology medications in November 2022, inspectors discovered a “cascade of failure”, where an employee hastily sought to discard data sheets before their arrival by destroying them with acid.
Following the audit, Intas put a pause on production to address the identified deficiencies. This halt led to a frantic search for the critical cancer drugs produced at the plant within six months. This triggered a domino effect of shortages across global markets as the US looked elsewhere for methotrexate supply.
As of August of the past year, the European Medicines Agency confirmed 11 EU countries were experiencing methotrexate shortages. Monica Dias, who oversees supply and availability of medicines and medical devices at the agency, attributed the scarcity to manufacturing issues at several European producers rather than the production stop at Intas.
The incident disclosed underlying structural deficiencies in the market for sterile injectable drugs, such as methotrexate, according to Vimala Raghavendran, a specialist in pharmaceutical supply chain from the American NGO, US Pharmacopeia.
In December 2022, the price tag for a methotrexate injection in the US was $21.80, as observed by FDA inspectors visiting the Intas facility. This was a decline from $26.30 at the outset of 2019. The listed price of methotrexate has since escalated to $28.40 for each dose whereas the average sterile injectable medicine is priced at $90.
Meanwhile, the prices in Europe are considerably lower. For instance, the standard Dutch price for 50mg is approximately €10, according to Moss; this aligns with other European prices, which have remained stable despite recent inflation.
While Intas has recommenced the supply of cancer drugs to the US, shortages persist because the company and its rivals are finding it challenging to rapidly upscale their capabilities, according to Valerie Jensen, associate director of the drug shortages staff at the FDA. It is expected that these shortages will not be fully addressed for several months.
Pfizer, which supplies methotrexate to 40 nations, is expanding production in Australian sites. However, this necessitates a substantial investment in additional workforce, specialised machinery and production capacity, which can take between 12 to 18 months to influence the drug supply.
You have a meltdown as soon as an issue pops up, be it a quality recall, manufacturing problem or insufficient supply to meet demand.
Low pricing has also contributed in squeezing out competition and setting up barriers for new entrants into the market. Richard Saynor, CEO of Sandoz, a generics manufacturer that split off from Novartis last year and doesn’t produce the drug, said that the awful pricing has deterred potential investors from venturing into this sector.
The drug shortage has provoked an investigation into the procurement methods of healthcare systems. The Federal Trade Commission (FTC) initiated an investigation last month into the role that group purchasing organisations, which acquire generic drugs for American hospitals and other healthcare institutions, may have in the scarcity. FTC chair Lina Khan described them as “opaque drug middlemen”, and the FTC aims to ascertain whether their behaviour discourages generic suppliers.
A majority of systems in Europe are reliant on a tendering process to obtain drug supplies, where contracts are frequently awarded to the lowest bidder, notes one anonymous industry executive. These contracts often run on a sole-price basis or operate as a “winner takes all” scenario which can form a monopolistic market dominated by a single company, states Shaikh, causing potential disruptions when facing issues like a recall due to quality, manufacturing hiccups, or an inability to meet demand.
While the intensity of the methotrexate shortfall has lessened recently, experts caution that without addressing the root causes, more individuals could likely be impacted by medication scarcities in the near future. In the wake of the Covid-19 pandemic, there has been a significant drop in international plant inspections conducted by the FDA. Jensen mentions no specific target for foreign inspections by the FDA, however, several experts anticipate a bounce back to uncover more quality-related issues.
The increased prevalence of chronic conditions combined with an ageing population is expected to place an additional burden on drug supply chains in the longer term. Current projections suggest more than 6% of prescription sales are set to lose their patent protections by 2028, the highest proportion since 2015 as per the data provider Evaluate.
With clinicians voicing concerns over the impact of supply chain chokepoints on patients, and manufacturers pointing to the poor profitability of generic drugs, policymakers are turning their attention to the geopolitical implications of obtaining supply from China and India. One forthcoming measure, The Critical Medicines Act from the European Union, is aimed at shifting some elements of production back to Europe and boosting drug stockpiling.
Current circumstances offer little motivation for manufacturers to sidestep inexpensive factories in Asia relying on just-in-time supply approaches. Diederik Stadig, a healthcare economist at ING, a Dutch bank, finds it curious that the discourse around “strategic autonomy” in Europe focuses on digital technologies and chips, but rarely includes drugs. To bring manufacturing home, healthcare systems will ultimately need to accept higher drug costs, even as national budgets face mounting pressure.
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