Finding Solutions to U.S. Drug Shortages in 2023 and Beyond: A Manufacturer’s Perspective

Lindsey Thomas
Senior Vice President, Marketing Pharmaceuticals
Fresenius Kabi USA
September 20, 2023

As we move closer to the end of this year, it is unfortunate to note that U.S. drug shortages are at an all-time high. Also unfortunate is that this is not a new issue. Drug shortages have been occurring in the United States for far too long.

What’s different today is the number of stakeholders who are getting involved, and this is essential to solving the systemic issues that have led to the supply challenges and patient crises we in health care are now managing every day.

While much remains to be done to significantly reduce the record high number of shortages this year, as well as solve shortages completely, it is encouraging to know that increased engagement across the health care system in America can – and will – lead to solutions.

Where we are today
Sterile injectable medicines are essential in treating many serious conditions, and they represent one of the greatest utility values in our health care system. In many ways, these difficult-to-produce medicines are taken for granted. Developing and producing sterile injectable medicines is a complex process that requires significant investment to enter the market and more to sustain high-quality production. Yet these are also often very low-cost drugs.

The extensive media coverage about shortages throughout 2023 has helped inform people in greater detail than in the past about the multitude of reasons why the best health care system in the world can’t consistently provide fundamentally important, essential medicines for U.S. clinicians and patients without concerns about whether we will have access to these therapies.

The reasons for drug shortages range from supply chain vulnerabilities, regulatory and quality challenges, economic factors, and market forces. In response, there have been many ideas, opinions and points of view shared on how to solve shortages. Because there are many participants and elements to supplying, developing, approving, and producing sterile injectable medicines, there is also great fragmentation in trying to find solutions, with many of those participating in the process focused on their individual challenges.

A Manufacturer’s Perspective
In my role at Fresenius Kabi, a leading developer and manufacturer of sterile injectable medicines in the U.S., I lead teams that bring pharmaceutical products to customers and patients. In doing so, I have exposure to many of the participants in the supply chain of care, inside and outside of our company — dedicated people who create, purchase, distribute and, ultimately, administer these vital medicines.

I’ve been doing this for more than 20 years, so I’d like to share my perspective on shortages, what Fresenius Kabi is doing about them, and to clarify some assumptions made by others about this issue. While there are different points of view on what can be done to solve drug shortages, I know from my interactions with many of the stakeholders involved, that everyone is approaching this with the best of intentions to help hospitals, clinicians, and the patients we all serve. There is also a clear realization that it is going to take a multi-stakeholder approach to end drug shortages once and for all

What’s being done – “More in America” for sustainability
One assumption that’s been made by some in discussing U.S. drug shortages is the need for more pharmaceutical manufacturing in the U.S. While there are areas for refinement within this space, the reality is there is significant available manufacturing capacity to be utilized in the U.S. The refinement would be in the form of thegovernment providing incentives for sustaining manufacturers who already produce in the U.S., not bringingnew or more capacity online.

For the past several years Fresenius Kabi has been highlighting this concept and our investment in the U.S.through an awareness campaign called “More in America.” Fresenius Kabi has invested nearly $1 billion dollarsto expand U.S. capacity and modernize our U.S. manufacturing technology and logistics capabilities. We’vedone this, long before U.S. investment in drug manufacturing became a subject of Congressional hearings,because we believe a strong U.S. supply chain for essential medicines is critical to public health. Newmanufacturing lines are coming online at our U.S. pharmaceutical manufacturing centers now thanks toinvestments we made years ago. Our new national logistics network operates 24 hours a day/7-days a week andcan deliver lifesaving medicines to any hospital in the continental U.S. within 48 hours.

While others have moved manufacturing offshore, we have been hiring and expanding manufacturing operationsacross the country, including in urban centers near Chicago, to fulfill our purpose of caring for life. We take ourresponsibility seriously, working tirelessly to help assure essential medicines are available.

What’s being done – advocacy and alliances
To stop current shortages—and prevent new ones— we must adopt a multi-stakeholder approach and FreseniusKabi does just that. We are in constant dialogue with the FDA, customers and professional societies. We arealso pleased to be part of the efforts conducted by two organizations in which we are members – the End DrugShortages Alliance and the Association for Accessible Medicines (AAM). The End Drug Shortages Alliance consists of health system, supply chain, industry and patient advocates and it is focused on reaching consensusacross the supply chain to address essential medicine shortages. AAM is the trade association for generic andbiosimilar companies and is actively engaged in policy and legislative discussions at the state and federal level.

What’s being done – policy and legislation
Lawmakers are increasingly calling for action to stem the tide of unprecedented shortages. Policymakers,however, should resist the urge to enact short term solutions that amount to symptom control. Rather, Congressand stakeholders should seize the moment, approach the issue comprehensively, and take direct aim at the rooteconomic causes.

While the value proposition of generic injectables has always been a centerpiece of this market, the increasingfixation on price reductions has become a destabilizing force in the generics sector. There is a high cost to pricesthat fall too low, and we are seeing this disrupt quality, reliability, and more broadly, sustainability of thegenerics industry at large. These dynamics also put domestic manufacturing at a disadvantage, as we competeagainst companies outside the U.S. with much lower labor costs.

Fresenius Kabi appreciates that Congress and multiple federal agencies are endeavoring to take on this criticalissue. We serve as a key resource to decisionmakers on Capitol Hill who are looking to establish a moresustainable supply of essential medicines for all providers and patients in the U.S. As our nation considers keyreforms in the coming months, we continue to advocate for a comprehensive approach that rewards productionof essential medicines and its workforce through tax incentives rather than funding to build new facilities; tapsinto existing domestic capacity instead of grants to onshore; and provides regulatory flexibilities to speedshortage-mitigation activities.

Most important, we are urging lawmakers to focus on the market dynamics responsible for the problem. Solvingdrug shortages will require cooperation and shared commitment from key stakeholders in the supply chain.Reforms should assert that the value proposition of generic injectables be measured not simply by the cost of thephysical product but also by reliability of suppliers.

Greater supplier reliability starts with increased predictability. In exchange for more certainty, manufacturers candevelop contingency capabilities, like finished dose and API surge stock to guard against shortages in the case of market disruption. Comparing suppliers competing for an award based on the price of the physical product, their reliability, and the contingency capabilities necessary for preventing or mitigating shortages, would assure an infinitely more sustainable and resilient supply of essential medicines.

More still needs to be done
Drug shortages – specifically shortages of essential sterile injectable medicines – have been an issue in the U.S. for too long. Ending drug shortages will not be easy because the reasons for the shortages are complex and involve many stakeholders. My hope is that through collaboration with our fellow stakeholders and policymaker engagement, we can soon tell the story of how we all worked together to bring drug shortages to an end. I can assure you that we at Fresenius Kabi intend to continue to fight to make this hope a reality.

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