Life Science Compliance Update

February 15, 2016

US Continues to Face Drug Shortages

Once again we are facing national shortage of key drugs, including anesthetics, painkillers, antibiotics, and cancer treatments. We have written several times about previous drug shortages, all resulting in little to no beneficial long-term action.

The American Society of Health-System Pharmacists maintains a list of drug shortages, which is currently 150 drugs and therapeutics long. The 150 drugs are at inadequate supply levels for a multitude of reasons, ranging from manufacturing problems to federal safety crackdowns to drug makers abandoning low-profit drugs. While the shortages have long been public knowledge, what hasn't been in the public eye as much is the rationing that results from the shortages.

Why Does This Continue to Happen?

While there are a multitude of reasons behind the continuing saga of drug shortages, one such reason is that many drugs are made by only one manufacturer, so production or safety problems at just one plant can have huge ramifications. For any other company to begin making comparable drugs and getting them approved by regulators requires a magic equation of manufacturing capabilities and economic incentives.

Other reasons may include product quality concerns, difficulty in acquiring component parts or active pharmaceutical ingredients (API), increases in demand, and shipping delays, among many other things. Another reason is in the US there are Medicare Price Controls on generic injectable drugs under Medicare Part B.

Drug Rationing

Choices as to who receives the drugs that are in short supply have been made in different ways at different institutions, sometimes resulting in contradictory conclusions, murky ethical reasoning, and even medially questionable practices.

While some institutions have formal committees that include ethicists and patient representatives, other institutions rely on individual physicians, pharmacists, or even drug company executives, to decide which patient will receive the necessary drug.


The decisions made by hospitals, individual providers, and pharmacists have real consequences to the individuals who are not considered "better qualified" for the drug. For some shortages, the effects of rationing are immediate, such as increased pain or nausea, when the drugs that are typically used to control symptoms are withheld, or patients who have to undergo invasive surgery to control cancer when anti-tumor medicines are delayed.

Studies have associated alternative treatments during drug shortages like this with higher rates of medication errors, side effects, disease progression, and deaths. While many physicians say that many of the changes they make seem to do no harm, they acknowledge that no one is really tracking outcomes in patients who get a drug versus those who get a substitute or delayed treatment.

A study published last year in Anesthesia and Analgesia, a medical journal, surveyed patients at the Mayo Clinics in Arizona, Florida, and Canada about their preferences when it comes to drug shortages. The study found that most patients wanted to know about a drug shortage that might affect their care during elective surgery, even if there was only a minor difference in potential side effects. Many said they would even delay surgery, if they knew of a drug shortage that would affect them.

When the study was published, the journal published an accompanying editorial that urged healthcare professionals to disclose any drug shortages, and their implications. The editorial stated, "[p]atients want to know and they should know. There is no ethical ambiguity."

The Future

Surveys performed in 2012 and 2013 showed that 83% of healthcare professionals who regularly prescribed cancer drugs reported being unable to provide the preferred chemotherapy agent at least once during the previous six months. Being unable to provide the preferred chemotherapy agent led to forced "difficult decisions about which patients to exclude."

Dr. Peter Adamson, the Chair of the Children's Oncology Group, has assigned his organization to set priorities, saying, "[w]e've been forced into what we think is a highly unethical corner." The priority effort is being led by Dr. Yoram Unguru, a Baltimore oncologist, who recommends that the drugs be rationed based on the ability to save lives or years of life, including how curable the child's cancer is and the importance of the drug in improving chances.

The FDA has previously asked for comment on how to improve the continuing drug shortages, and Congress has previously taken a stab at fixing things their way. Neither approach has gotten anywhere, nor have any new ideas been populated by either branch of government.

We once again argue that we believe one of the reasons these drug shortage problems continue to happen is because the market does not sufficiently reward quality. Buyers – including hospitals and clinics – tend to consider generic products as perfect substitutes, giving manufacturers little room for differentiations. The FDA has previously acknowledged this, in a report written in part by Janet Woodcock, MD, the director of the Center for Drug Evaluation and Research at the Food and Drug Administration. In that report, Woodcock and other FDA officials argued that "the fundamental problem with injectable shortages is insufficient market reward for quality (including reliability of production) stemming from the buyers' inability to observe it." Such a situation gives manufacturers strong incentives to minimize quality system investments, especially when faced with other pressures, such as new production opportunities, aging facilities, and the economic downturn that has not fully rebounded. Until new incentives exist for manufacturers to improve quality, it is unlikely that drug makers will adequately address quality issues.

December 29, 2015

FDA DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised)

The Drug Supply Chain Security Act (DSCSA) requires most of the entities along the drug supply chain--from manufacturers to wholesale distributors to dispensers (primarily pharmacies)--to comply with new requirements regarding product tracing. The intent of the law is to enhance the FDA's ability to protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful by improving detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S. consumers. The development of the system will be phased in with new requirements over a 10-year period. The DSCSA mandates that the FDA develop standards, guidance documents, pilot programs, and conduct public meetings, in addition to other efforts, to support efficient and effective implementation.

Starting in 2015, manufacturers, wholesale distributors, dispensers, and repackagers are required to provide the subsequent purchaser of certain prescription drugs with product tracing information. The trading partners are to obtain product tracing information and maintain the applicable information for at least six years following the date of the transaction.

The FDA had previously issued a Compliance Policy on July 6, 2015, which stated that the FDA did not intend to take action until November 1, 2015, against dispensers that accepted ownership of product without receiving the product tracing information, or dispensers who did not capture and maintain the product tracing information as required by law. This essentially gave dispensers a "free pass" and a bit more time to get their procedures in compliance with the law.

With the November 1 deadline rapidly approaching, last week, the FDA issued a new guidance, DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised). The new guidance "addresses the readiness of dispensers in the pharmaceutical distribution supply chain to comply with the provisions in section 582 of the Federal Food, Drug, and Cosmetic Act ... related to the exchange of transaction information, transaction history, and transaction statements (product tracing information)."

This most recent guidance announced that the FDA will extend the previously issued Compliance Policy grace period from November 1, 2015 to March 1, 2016 because some dispensers have expressed that they needed additional time to comply with the law. The FDA does not intend to take action against dispensers who, prior to March 1, 2016, accept ownership of a product without receiving the product tracing information, under section 582(d)(1)(A)(i) of the FD&C Act. This compliance policy, however, does not extend to the requirements under section 582(b)(1), (c)(1), and (e)(1) that other trading partners (manufacturers, wholesale distributors, and repackagers) provide product tracing information to dispensers.

This new compliance policy also does not extend to transactions in which dispensers must provide the subsequent owner with product tracing information, including transaction history, as required by section 582(d)(1)(A)(ii).

As a result of the FDA not taking action against most dispensers who accept ownership of a product without a transaction history, transaction information, and transaction statement, the FDA does not intend to take action against dispensers who do not maintain the product tracing information for a minimum of six years as required under section 582(d)(1)(A)(iii).

However, the grace period was extended by only four months and it is uncertain if the FDA will continue to extend the grace period. Therefore, if a dispenser has not received product tracing information prior to, or at the time it takes ownership of a product, the FDA recommends that the dispenser work with the previous owner to receive this information to ensure complete compliance with the law.

It is important to note that this guidance does not change the current requirements for manufacturers, wholesale distributors, nor repackagers. This guidance only affects dispensers who do not need to provide a subsequent owner with product tracing information. All other dispensers, or manufacturers, wholesale distributors, and repackagers are still required to obtain and maintain tracing information as required under the FD&C Act.

October 29, 2015

Turing Pharmaceuticals – Compounding Pharmacy Fights Back

Turing Pharmaceutical's purchase of Daraprim from Impax Laboratories in August 2015 for $55 million was followed by a huge frenzy in the news media. Daraprim, which is used to fight toxoplasmosis, was previously priced at 13.50 per tablet. Once Turing purchased the drug, they raised the price per tablet to $750.

Turing's rationale behind the price jump was to place the additional money into research and development, to develop better treatments for toxoplasmosis, with fewer side effects, and to invest in marketing and education tools to make people more aware of the disease. Martin Shkreli, the founder and CEO of Turing, stands by his decision to raise the price of the drug, stating, "This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business."

While Shkreli believes he and his company are doing a service to the pharmaceutical industry and patients as a whole by reinvesting in R&D, the Infectious Diseases Society of America and the HIV Medicine Association estimate that it would cost $336,000 a year to treat someone with toxoplasmosis at the $750/pill price. Both organizations believe that "this cost is unjustifiable for the medically vulnerable patient population in need of this medication."

Dr. Judith Aberg of Mount Sinai said that some hospitals will now find Daraprim too expensive to keep in stock, possibly resulting in treatment delays. Mt. Sinai will continue to use the drug, but each use of the drug requires special review.

After the initial outcry over the price hike of Daraprim, Shkreli responded by stating they would lower the price of the drug to an unidentified price, which would still allow the company to break even or even retain a small profit. To date, they have still not noted the new, lower price of Daraprim, but a spokesman did state the company is capping patient copayments at $10.

Recently, however, Imprimis Pharmaceuticals a compounding pharmacy claims they can make a close, customized version of Daraprim for just $1 a tablet. Imprimis Pharmaceuticals is known of mixing approved drug ingredients to fill individual patient prescriptions.

Imprimis CEO Mark Baum states, "While we respect Turing's right to charge patients and insurance companies whatever it believes is appropriate, there may be more cost-effective compounded options for medications, such as Daraprim, for patients, physicians, insurance companies and pharmacy benefit managers to consider."

Not only is Imprimis working on a more cost-effective tablet for fighting toxoplasmosis, but they are also "forming a new program called Imprimis Cares, which is aligned to [Imprimis'] corporate mission of making novel and customizable medicines available to physicians and patients today at accessible prices."

Imprimis says their version of the tablet, which would have to be compounded to order, has something extra known as leucovorin. "According to the Centers for Disease Control and Prevention, pyrimethamine [Daraprim's generic name] works to block folic acid synthesis in the parasite T. gondii, the cause of toxoplasmosis, and leucovorin helps to reverse the negative effects on bone marrow caused by the mechanism of this action," according to Imprimis. Imprimis is planning to sell their form of the tablet in oral capsules starting as low as $99.00 for a 100 count bottle.

Compounded drugs are typically made to fill a doctor's prescription for an individual patient, sometimes because the mass-produced version is either in short supply or completely unavailable. Compounded drugs can also allow for customized patient-specific formulations or dosages. Unlike drugmakers who make huge batches of drugs on complex production lines, compounders do not need Food and Drug Administration approval to create their compounded drugs.

It is worth keeping an eye on Imprimis to see what other drugs they imitate for a lower price. Imprimis CEO Baum stated, "We are looking at all of these cases where the sole-source generic companies are jacking the price way up. There'll be many more of these" compounded drugs coming in the near future.


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