The US Food and Drug Administration (FDA) has proposed a new regulation that would require pharmaceutical manufacturers to provide the agency with advance warning of impending drug shortages, the latest in a string of efforts by FDA to curb stubborn shortages of essential drug products.

Background

Drug shortages emerged as a major issue in 2011 and 2012, with many generic sterile injectable drugs experiencing supply shortages. Investigations into the matter brought to light a number of reasons for the shortages, including:

• gray market pharmacies purchasing drugs experiencing low stock, and then re-selling them at massive markups
• government reimbursement policies not allowing for prices to match market demand
• low profit margins causing companies to cease manufacturing older drugs in favor of newer, higher-profit-margin ones
• quality manufacturing problems experienced by many manufacturers of sterile products
• overly aggressive inspections by FDA

In response to these challenges, FDA has taken a number of actions intended to mitigate the effects of drug shortages over the course of the last year. Among them:

• allowing the import of certain unapproved drugs to ease especially dire shortage situations
• asking manufacturers to notifyFDA of any impending supply problems or disruptions
• working one-on-one with manufacturers experiencing problems
• approving novel manufacturing agreements for some facilities to allow them to release some products for further processing or quality checks-a significant deviation from the usual quality-by-design parameters of current good manufacturing practices (CGMP)
• expediting the reviews of substitute medications
• formulating a strategic plan on drug shortages, as required by Title X, Section 506D of the Food and Drug Administration Safety and Innovation Act (FDASIA).

Limited Authority

When FDA released its draft guidance for industry, Notification to FDA of Issues that May Result in a Prescription Drug or Biological Product Shortage, it observed that it was hamstrung in its ability to act. It did not at the time have sufficient authority to promulgate regulations that would require pharmaceutical manufacturers to alert it to potential drug shortages, and accordingly asked them to do so on a voluntary basis. Since then, language to that effect has also become standard in Warning Letters issued by the agency, which asks companies to keep FDA informed of any issues that could impact the supply of a product.

But under Title X of FDASIA, "Drug Shortages," FDA was given the authority it had so long asked for. Specifically, Section 1001, "Discontinuance or interruption in the production of life-saving drugs," permitted the agency to require companies to give FDA at least six months' notice "prior to the date of the discontinuance or interruption" or "as soon as practicable."

Notably, those requirements only apply to drugs that are considered life-supporting, life-sustaining or intended for use in the prevention or treatment of a debilitating disease or condition.

The information obtained by FDA is then to be distributed to the public "to the maximum extent practicable," the law adds.

Drug Shortage Regulation Issues

Now, FDA is out with its long-awaited regulation on the topic, Permanent Discontinuance or Interruption in Manufacturing of Certain Drug or Biological Products.

In it, FDA explains that the proposed rule would require some marketers of drug and biological products (those defined in the section preceding this one) to notify FDA electronically of a permanent or temporary interruption that would lead to a "meaningful disruption in supply."

The rule applies to drugs and biological products, including recombinant therapeutic proteins, monoclonal antibody products, vaccines, allergenic products, plasma-derived products and their recombinant analogs, blood or blood components, and cellular and gene therapy products.

Disruptions in manufacturing can include business-related decisions, delays in acquiring active pharmaceutical or inactive ingredients, equipment failures, manufacturing shutdowns for maintenance, a company being bought out, or a disruption that affects one product but not a larger part of the market.

Companies will not be required to report unexpected events like power outages or expected/planned events like routine maintenance that do not affect supplies meaningfully.

Punishment?

A manufacturer must-even if they cannot offer warning six months or more in advance of the disruption-give FDA notice within five days of being made aware of the potential disruption. Failure to do so will result in FDA issuing a "public noncompliance letter" to the company.

"In our experience, even if it is not possible for an applicant to notify the Agency before a permanent discontinuance or an interruption in manufacturing occurs, it should generally be possible for the applicant to provide notice within a day or two, and it should always be possible for the applicant to notify the Agency no later than five days after the permanent discontinuance or interruption occurs, even in the event of a natural disaster or some other catastrophic incident," FDA wrote.

FDA may grant "good cause" exemption to this requirement, it said.

The regulation is perhaps notable for how little it offers in the way of punishment. The agency seems to have adopted a "name and shame" approach for noncompliant manufacturers, likely knowing that fines or other punitive measures could well exacerbate shortages further. A company subject to a large fine, for example, could decide to simply shut down a factory rather than fix it given the mounting costs of compliance.

Costs to FDA are High

The rule also contains a piece of interesting information regarding just how much FDA is spending to avert drug shortages. Just to support the drug shortage notification regulation, it plans to spend $441,000 per annum. The full cost of its mitigation strategies is estimated at between $2.44 and $7.84 million-no small amount for an agency that has been hit with budget sequestration and no increases despite being saddled with significant new responsibilities. However, FDA said the net societal benefits more than outweigh its efforts, coming in as high as $86.77 million despite most of the benefits being unquantifiable.

FDA said those efforts have more than halved the number of shortages in 2012 (117) compared to 2011 (250).

FDA Proposed Rule on Drug Shortages