Planet Money: Why Do Hospitals Keep Running Out of Generic Drugs?

Podcast Title: Planet Money
Host/Author: NPR
Episode: Why Do Hospitals Keep Running Out of Generic Drugs?

Introduction

In the latest episode of Planet Money, hosted by NPR, the persistent issue of generic drug shortages in hospitals is explored in-depth. These shortages pose not only logistical challenges for healthcare professionals but also serious risks to patient care across the United States.

The Personal Impact: Jared Sibit’s Story

The episode opens with Sally Helm introducing Jared Sibit, a nurse with 14 years of experience in emergency, ICU, and flight medicine. [00:24]

Jared Sibit:
"I've been working in emergency and ICU and flight medicine for about 14 years now."
[00:34]

Sibit recounts the frequent shortages of common, inexpensive drugs essential for treating conditions like nausea, anxiety, infections, and pain. He describes a whiteboard at his hospital perpetually marked with the names of out-of-stock medications, including ondansetron, epinephrine, lorazepam, and ceftriaxone. [01:53]

Sibit:
"It has been so constant. New ones don't even register unless the shortage lasts more than a few months."
[01:53]

The Scope of the Problem

These shortages are not isolated incidents but a widespread issue affecting hospitals nationwide. When a generic drug runs out, healthcare professionals like Sibit must devise improvised solutions, such as substituting IV dextrose with a solid form of sugar or diluting epinephrine concentrations, which introduces additional risks and complexities in critical situations. [02:10] - [03:10]

Helm:
"Trying to do that kind of math while someone is in cardiac arrest. It does not sound like a good situation."
[03:10]

Root Causes of Drug Shortages

Manufacturing Challenges

The episode delves into the complexities of producing generic sterile injectables, which are high-stakes, cost-sensitive medications requiring stringent sterile manufacturing environments to prevent contamination. [06:13] - [08:09]

Marta Vosinska, Senior Fellow at the Brookings Institution:
"These drugs are made in super sterile factories. It's expensive. There's really no room for error."
[08:24]

Issues such as factory closures, recalls due to contamination, and stringent FDA inspections often lead to supply disruptions. [08:44]

Economic Dynamics and Pricing Issues

A critical factor is the low profitability of generic sterile injectables. Ned McCoy, running the nonprofit Civica Rx, explains that these drugs are generally cheap, making the market unattractive for manufacturers.

Ned McCoy:
"They tend to be older, and they tend to be really cheap, and other people have quit making them. I don't recommend it."
[11:31]

The low prices result from intense competition, especially after generics enter the market post-patent expiration. However, as more manufacturers enter, prices drop, often to unsustainably low levels where maintaining production becomes economically unviable. [12:10] - [13:13]

McCoy:
"It's on the market. It's a proprietary drug. Novo owns all the patents. When the patent expires, several generic companies do the development to do their own generic injectable."
[12:21]

Group Purchasing Organizations (GPOs)

Hospitals often join Group Purchasing Organizations (GPOs) to leverage collective buying power, securing lower prices from manufacturers. While beneficial for cost-saving, this practice intensifies price competition, pressuring manufacturers to reduce prices further or exit the market. [20:03] - [21:03]

Marta Vosinska:
"They negotiate contracts on behalf of hospitals, not just for drugs, but for gloves and beds and just anything that a hospital buys."
[20:16]

Impact on Healthcare and Patients

The cyclical nature of these shortages means that hospitals frequently scramble to find alternatives, often resorting to suboptimal substitutes that can compromise patient care. Long-term shortages disrupt consistent treatment protocols and can lead to increased mortality rates. [06:50]

Sibit:
"This has been a part of healthcare as long as I've been there. We've had rolling drug shortages... it's been so constant."
[01:27]

Proposed Solutions

Enhancing Supply Chain Resilience

Marta Vosinska suggests redefining incentives for both manufacturers and hospitals to prioritize reliability over sheer cost.

Vosinska:
"There is a gap, that hospitals could be doing more, paying attention to it more."
[23:38]

Her proposal includes:

1. Incentivizing Hospitals: Reward hospitals for purchasing from reliable manufacturers, allowing these manufacturers to charge higher prices that ensure sustainable production.
2. Government Intervention: The government could provide financial support to upgrade manufacturing facilities or maintain larger stockpiles of essential drugs.
3. Improved Information Systems: Hospitals need access to accurate information about manufacturer reliability to make informed purchasing decisions.

Nonprofit and Legislative Initiatives

Civica Rx represents a non-profit approach by committing to long-term contracts and focusing on stable, reliable drug production without prioritizing profit margins.

McCoy:
"They have built their own sterile factory to make these generic sterile injectable drugs."
[10:58]

Additionally, proposed legislation aims to modify market incentives to encourage manufacturers to maintain production of low-cost generics.

Conclusion

The episode concludes by highlighting the systemic issues within the drug supply chain, where economic incentives, regulatory frameworks, and purchasing practices collectively undermine the stability of essential generic drug supplies. Vosinska emphasizes the disparity between the value of supply resilience to patients and the collective willingness to invest in it.

Vosinska:
"There is a value to resilience. And I think the value of resilience to patients is much higher than the willingness to pay for resilience by all the other stakeholders."
[27:20]

Helm:
"It's just hard to get people to prioritize the long term health of the system. And as Marta is saying, the people who are really hurt by that are the patients, all of us."
[27:42]

Notable Quotes

• Jared Sibit:
  "This has been a part of healthcare as long as I've been there. We've had rolling drug shortages of different medications at different times and for seemingly different reasons."
  [01:17]

• Ned McCoy:
  "They tend to be older, and they tend to be really cheap, and other people have quit making them."
  [11:31]

• Marta Vosinska:
  "When you look at the actual financial implications for hospitals and you compare it to the life and death consequences that it could have for patients... There is a gap."
  [23:54]

Final Thoughts

The persistent shortages of generic sterile injectables in hospitals reveal a complex interplay of economic pressures, regulatory challenges, and systemic weaknesses in the healthcare supply chain. As Planet Money unpacks these layers, it becomes clear that resolving this issue requires coordinated efforts from government bodies, healthcare institutions, and the pharmaceutical industry to realign incentives towards ensuring reliable and affordable drug supplies for all patients.