Prescription drug shortages continue to plague American hospitals and jeopardize patient access to many essential medicines. Despite government and industry actions to maintain product availability, and some progress in reducing the number of new shortages, recent reports indicate that drug shortages persist in being a significant public health threat.
The U.S. Government Accountability Office (GAO) and Food and Drug Administration (FDA) both recently conducted analyses and reaffirmed that the root causes of drug shortages are manufacturing problems, quality issues, and barriers to getting new suppliers on line when supply is disrupted.
Healthcare group purchasing organizations (GPOs) have been working collaboratively with hospitals, manufacturers, distributors, the Department of Health and Human Services (HHS), and FDA to ensure that hospitals and patients have access to the life-saving drugs they need. GPOs have already taken a number of innovative steps to help their hospital partners mitigate the impact of shortages.
All GPO contracts are voluntary, which means that hospitals are free to purchase through their GPOs, but can also purchase “off contract” outside of the GPO arrangement, and frequently do.
GPO contracts with manufacturers are the product of competitive market negotiations. Contract pricing is a constantly moving target, and drug companies regularly adjust pricing of GPO contracts based on market conditions such as manufacturing capacity, raw material availability, and competitive suppliers. Manufacturers that experience shocks to production, such as higher input price, have the ability to adjust the contracts quickly to reflect these shocks. As a result, GPOs manage thousands of price changes annually.
GPOs track data on shortages, strategize with their hospital and healthcare provider members when there is potential for supply chain disruption, and communicate with manufacturers and distributors when they see problems on the horizon. GPO also help hospitals and other healthcare providers lessen their exposure to drug shortages by evaluating manufacturer reliability when sourcing and awarding contracts, and in helping providers establish best-practice purchasing procedures.
Finally, GPOs work with their supplier partners to communicate product demand from provider members. By communicating this information to manufacturers in a timely fashion, manufacturers should have more advance notice about demand to assist in planning for production capacity. When shortages do arise, GPOs work with hospitals and health care providers, where possible, to ensure prompt and safe migration to alternative products.
All healthcare stakeholders agree that drug shortages are a complex problem without an easy or overnight fix. GPOs are committed to working with policymakers and industry to protect patient access to vital medications.
Rooney is president of the Healthcare Supply Chain Association (HSCA).