Life Science Compliance Update

May 01, 2017

Drug Shortages, Pricing, and Regulatory Activity


In a paper titled Drug Shortages, Pricing, and Regulatory Activity, Christopher Stromberg of Bates White Economic Consulting examined “the patterns and causes of shortages in generic non-injectable drugs (e.g., tablets and topicals) in the United States.” The paper explores factors such as regulatory oversight, possible market failures in pricing/reimbursement, and competition. Interestingly, a regression model run using FDA data on inspections and citations indicates a statistically significant relationship between these activities and drug shortage rates.

Drug Shortages, Pricing, and Regulatory Activity

Stromberg notes there is a distinctive and similar pattern “in the average length of ongoing drug shortages over time for both injectable and non-injectable drugs.” He also notes, “Theories that rely on Medicare reimbursement policies — such as ASP-based Medicare Part-B reimbursement — may serve to explain level differences in shortage rates, but simply don’t apply to noninjectable drugs and aren’t likely to explain the consistent pattern of change over time. Similarly, theories that rely on the specifics of generic injectable production don’t apply to non-injectables.”

Stromberg’s study looks at other explanations that have an influence on both markets. Section 3 of his article explores whether changes in quality monitoring by the FDA can be connected with shortages. He notes this “has not been given rigorous empirical treatment in the past.” But does note that there’s unlikely to be one singular cause of drug shortages, even though they mainly impact generic medications.

Effects of FDA Inspections

Later in the article, Stromberg investigates the link between FDA inspection and detection rates on shortage rates. In his previous section, Stromberg outlines changes in regulatory activity as one of the elements that is expected to have an impact on shortage rages. This is especially true in the short run because manufacturers are expected to adjust to “a new equilibrium.” Stromberg concludes that the models “presented in this section suggest a connection between FDA inspection and citation rates and drug shortages that cuts across both parenteral and non-parenteral drugs.”

FDA inspection and citation data comes from publicly-available databases on the FDA website. Specifically for this study, the database of inspections includes information on 102,160 FDA inspections. The Center for Drug Evaluation and Research (CDER) accounts for 11,410 inspections. 55%, a majority of the inspections, involves the food safety center of the FDA (CFSAN). The majority of CDER’s inspections (8,348, 73% of the 11,410 total) are listed in the “Drug Quality Assurance” (DQA) project area. The next most prevalent project area is “Bioresearch Monitoring”, which accounts for about 21% of CDER’s inspections.

“Within CDER’s DQA inspections it is worth noting that over 50% result in some kind of regulatory action. Although only 4.8% (401) of these inspections result in an ‘Official Action Indicated’ outcome, another 48% (4,011) result in ‘Voluntary Action Indicated’ — suggesting some kind of corrective action is needed, according to the FDA,” notes Stromberg.

Data was then combined with parenteral and non-parenteral shortage data, then pooled into a dataset with 300 total observations. Ultimately, the model suggests a potential effect for the relationship between FDA activity and drug shortages. Stromberg explains the “models are designed to be predictive in nature, and are used to determine if current and past FDA activity has an effect on new drug shortage reports.”


Stromberg offers three possibilities are offered as potentially cross-cutting explanations for shortages: market structure, regulatory activity, and pricing. One of these, regulatory activity, is explored empirically. The regression models presented in this paper identified a consistent and statistically significant predictive relationship between FDA regulatory activity in the drug market (i.e. drug quality inspections and citations) and the incidence of new drug shortages. The models tested indicate that the pattern of this relationship is generally shared across both parenteral and non-parenteral drugs. This result suggests that changes in regulatory activity may be one of the cross-cutting factors contributing to the ongoing wave of drug shortages.

Stromberg does caution against over-interpreting the results. For example, some of the models show only modest correlations. It suggests that the models may be predictive, but there is a fair amount of variation in new shortage starts which remains unexplainable by one single factor. Also, because other factors that may be important are not accounted for in these models, caution is advisable when interpreting the results presented. It is also important to recognize the economic and regulatory context of this result. Changes in FDA oversight activity may signal attempts to reestablish quality thresholds that may have eroded or that have been applied unevenly as the industry has evolved.

December 13, 2013

CME Coalition Questions Pew Taskforce on COI Recommendations as “Irresponsible” and Potentially Dangerous to America’s Health

This week, the Pew Charitable Trust Prescription Project released a small task force report for academic medical centers which included recommendations around continuing medical education (CME) that, if followed, could eliminate one out of every three dollars that are invested in accredited medical instruction for America's doctors today. On the basis of three studies, from 1988, 1992, and 2001, the Pew recommendations merely restate their longstanding condemnation of accredited CME: that any financial support from commercial interests—no matter how stringent the restrictions on its use—renders the curriculum irrevocably tainted.

Unfortunately, Pew's attempt to point out a problem creates more harm than good. Andrew Rosenberg, Senior Advisor to the CME Coalition stated, "Once again, the absolutists at the Pew Trust have staked an utterly irresponsible position that, if taken seriously, would literally jeopardize the health of every American due to an undocumented belief that a doctor's judgment can be bought for the price of a sandwich."

What is missing from Pew's report is an analysis of the benefits of physician-industry collaboration, or a middle-ground at all. The vast majority of collaborations between physicians and industry have added considerably to improved patient care. Industry has the resources and expertise to:
Discover new therapies and devise medical procedures;

  • Take these discoveries through the painstaking processes of basic research, clinical development and eventual production;
  • Deal with the related scientific, regulatory, legal, financial and manufacturing issues; and
  • Complement the skills and contributions of its academic and clinical partners. 

Criticism over collaboration has stemmed from several high profile cases, usually involving physicians who were conducting research for companies, but failed to disclose the financial relationships either in a medical journal or to their institution. Bias is certainly a legitimate concern. A successful collaboration proposal would recognize those potential harms, but not at the expense of physician education.

As it stands, Pew's report is an unbalanced set of recommendations that would severely limit physicians' exposure to new diagnoses, technologies, and procedures. Patients deserve physicians who are as up-to-date as possible on the best medical technologies. Cancer patients in particular want physicians who understand all aspects of therapeutics, and have received ongoing advanced medical education rather than potentially obsolete generic treatments.

Today, approximately one-third of the support for accredited continuing medical education is borne by commercial benefactors, and the projected need for CME is expected to rise considerably in the coming years along with expanding patient needs. Although the Pew Trust fails to cite meaningful evidence that commercial support for CME results in inaccurate physician instruction, or manifests any negative impact on patient outcomes, Pew does prescribe a "remedy" that would eviscerate funding for physician education.

Pew recommends that "In general, continuing medical education should not be supported by industry." It is worthy of note that the Accreditation Council for Continuing Medical Education (ACCME) Standards for Commercial Support ensure that CME programs carefully avoid explicit commercial interests concerning specific products and observe strict balance when products are discussed.

 ACCME stresses financial disclosure, confirmation that supporting companies have no influence over the content and choice of speakers, and a procedure for resolving conflicts of interest should they arise. Despite the fact that Pew references no data on conflicts of interest in the ten years since ACCME adopted its Standards for Commercial Support: Standards to Ensure Independence in CME Activities, they argue that "where industry funding is nonetheless being considered, academic medical centers should implement additional safeguards beyond compliance with the ACCME." This includes:

  • Creating an undesignated, or blinded, pool of money contributed by multiple companies for the purpose of supporting an institution's CME program.
  • Requiring that commercially funded courses be supported by at least two companies and that no single company contribute more than 50 percent for a given program.
  • Requiring that physicians personally contribute some money toward industry-supported courses.
  • Requiring that industry-supported courses take place in non-resort locations.


The Pew report concludes by stating that "strong policies will maintain the quality of medical education and support patient trust in the medical profession." Pew has made a painful step in the direction away from patient trust by ignoring the opportunities for improved health outcomes through discovery and innovative solutions that collaboration offers. The Pew taskforce was funded by the a grant from the Oregon Attorney General Consumer and Prescriber Education Grant Program, which is part of the Pfizer Neurontin settlement from 2004. It is notable that that grant also supports the AMSA scorecard of academic medical centers.

"It is astounding that a respected institution such as Pew could continue to promote such an irresponsible approach to CME," Rosenberg said, "and that these so-called experts are so willing to sacrifice the ability of doctors to avail themselves of the latest science out of a groundless distrust of physicians and their ability to put patients' interest first. These recommendations should come with a Surgeon General's warning; they are nothing short of dangerous to America's health."

December 11, 2013

ProPublica Criticizes Prescribing Brand-Name Drugs with Little Consideration to the Benefit


A recent ProPublica article and prescriber checkup database are designed to attack physicians for prescribing brand name drugs, and criticizing Medicare for failing to consider this prescribing practice. "Medicare is wasting hundreds of millions of dollars a year by failing to rein in doctors who routinely give patients pricey name-brand drugs when cheaper generic alternatives are available," ProPublica states.

ProPublica takes issue with Medicare's low income subsidy, which they argue encourages "wasteful name-brand prescribing" by keeping co-pays cheap for qualifying low-income patients. By merely stating the fact that generic drugs cost less than name-brand drugs, the article simplifies three issues: (1) Medicare patient's choice in the prescriptions, (2) the actual medical effect of brand-name drugs, and (3) the overall economic effect of name-brand prescription if lost wages and expensive hospitalizations are factored in.

In a somewhat more balanced article, ProPublica interviewed several doctors about the reasons for prescribing name-brand drugs. Several stated that patients often request or demand name-brand products. Others commented on the actual efficacy of the name-brand drugs. Dr. Alexander Gershman, a Los Angeles urologist stated that "[i]t would be wrong to say to physicians, 'You have to all prescribe generics' because I think this will tremendously limit the quality of the drugs to the patients." 

ProPublica's article hiding behind Medicare savings is overlooking the potential benefits of brand name drugs. One only has to look at the patient communities in areas such as HIV, Heart Disease and Cancer to see the overall benefit from brand name drugs overtime and that eventually all drugs become generic.

Doctors should feel comfortable advising patients about brand and generic medication options, and, they should prescribe the more effective choice if the patient can afford it.

However, the article's broad scope skirts the issue that each Medicare patient has a unique set of needs. Jumping to the conclusion that physician-industry collaboration is the root of the problem, as ProPublica often does, is, once again, not the answer.


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