Biden to use Defense Production Act on Shortages
President Biden has announced that his administration will invoke the Defense Production Act to manufacture essential medicines in the U.S. to mitigate drug shortages. A Presidential Determination is planned to be issued to give HHS broader authority to “enable investment in domestic manufacturing of essential medicines, medical countermeasures, and critical inputs that have been deemed by the president as essential to the national defense,” A White House announcement says.
It says HHS has set aside $35 million for investments in domestic production of key starting materials for sterile injectable medicines. “HHS will also designate a new Supply Chain Resilience and Shortage Coordinator for efforts to strengthen the resilience of medical product and critical food supply chains, and to address related shortages,” it says. Additionally, the Department of Defense is expected soon to release a new report on pharmaceutical supply chain resilience “aimed at reducing reliance on high-risk foreign suppliers,” it says, noting that this is part of the administration’s “broader work to increase access to essential medicines and medical products.”
FDA commissioner Robert Califf and the agency have spent considerable attention in addressing drug shortages over the past several years, and it is a popular topic that comes up during the agency head’s public speaking engagements. In September, Califf appeared on a Healthcare Unfiltered podcast (see story) and noted the difficulties FDA faced with shortages, saying drug manufacturers have actually fought agency efforts to encourage companies to ramp up production when a shortage occurs in another company. “People don’t like to be regulated,” he said, “but we need it for the public health.”
Califf identified three reasons for drug shortages: (1) when there is a great demand for a drug, such as the current weight loss drugs; (2) when there are federal restrictions on the amount that can be produced, such as stimulants that are scheduled; and (3) when manufacturers of inexpensive generic drugs have manufacturing issues and inspection violations. He said the vast majority of drug shortages are generics and pointed out that FDA cannot order companies to produce additional low-price generic drugs.
“We can’t prevent shortages,” he said, “but we’re getting better information and improving our inspection regimes.” Califf also said the agency is encouraging companies to invest in improving their manufacturing systems.
In August, Califf addressed the Alliance for a Stronger FDA and said the agency was spending way too much time on addressing continuing drug shortages, to the tune of about 200 shortages, or what he calls “plugging holes,” each year. Plugging over 200 holes a year is not good for society, Califf continued, adding that it’s a huge national security risk and better information from industry is needed to get a more complete picture of what's in the supply chain so the agency can help respond.
Califf noted that the one fundamental problem boils down to drug pricing — innovator drugs are priced too high, and generics are priced too low. He acknowledged that pricing is not in “FDA’s lane,” but he said that some generics are priced below their cost and this is creating a big problem.
“What I mean by that is that the price has been driven down below the cost of manufacturing and distributing the drug,” he told the Alliance. The generic drug industry is continuing to leave the U.S. because it's not viable to run their business, he said. “And even in India, companies are saying they can’t invest in the manufacturing because there's not enough of a margin, if any, to attract investors to go into it. And that's been driven by the success of the generic laws, which I'm a big fan of.” Currently over 90% of prescriptions are generics, he noted.