The Shortage of Essential Chemotherapy Drugs in the United States
Mandy L. Gatesman, Pharm.D., and Thomas J. Smith, M.D.
N Engl J Med 2011; 365:1653-1655November 3, 2011
Comments open through November 9, 2011
- Citing Articles (1)
- Comments (14)
For the first time in the United States, some essential chemotherapy drugs are in short supply. Most are generic drugs that have been used for years in childhood leukemia and curable cancers — vincristine, methotrexate, leucovorin, cytarabine, doxorubicin, bleomycin, and paclitaxel.1 The shortages have caused serious concerns about safety, cost, and availability of lifesaving treatments. In a survey from the Institute for Safe Medication Practices, 25% of clinicians indicated that an error had occurred at their site because of drug shortages. Many of these errors were attributed to inexperience with alternative products — for instance, incorrect administration of levoleucovorin (Fusilev) when used as a substitute for leucovorin or use of a 1000-mg vial of cytarabine instead of the usual 500-mg one, resulting in an overdose. Most cancer centers quadruple-check drugs for accuracy, and we're unaware of any documented death of a patient with cancer such as the nine deaths in Alabama attributable to the use of locally compounded liquid nutrition because the sterile product was not available. However, it is only a matter of time.
These shortages have increased the already escalating costs of cancer care. Brand-name substitutes for generic drugs can add substantial cost. For instance, Abraxane, a protein-bound version of paclitaxel, costs 19 times as much as equally effective generic paclitaxel (see table
Average Wholesale Prices (AWPs) of Selected Oncology Drugs in Short Supply and Their Potential Alternatives.). Since 2010, health care labor costs in the United States have increased by about $216 million because of the increased time and work required to manage drug shortages.2 A gray market for essential drugs — an unofficial alternative market of drugs obtained by vendors outside the usual distribution networks — has grown rapidly, with unregulated vendors charging markups of up to 3000% for cancer drugs.
The main cause of drug shortages is economic. If manufacturers don't make enough profit, they won't make generic drugs. There have been some manufacturing problems, but manufacturers are not required to report any reasons or timetable for discontinuing a product. Contamination and shortages of raw materials probably account for less than 10% of the shortages. In addition, if a brand-name drug with a higher profit margin is available, a manufacturer may stop producing its generic. For instance, leucovorin has been available from several manufacturers since 1952. In 2008, levoleucovorin, the active l-isomer of leucovorin, was approved by the Food and Drug Administration. It was reportedly no more effective than leucovorin and 58 times as expensive, but its use grew rapidly. Eight months later, a widespread shortage of leucovorin was reported.
The second economic cause of shortages is that oncologists have less incentive to administer generics than brand-name drugs. Unlike other drugs, chemotherapeutics are bought and sold in the doctor's office — a practice that originated 40 years ago, when only oncologists would handle such toxic substances and the drugs were relatively cheap. A business model evolved in which oncologists bought low and sold high to support their practice and maximize financial margins. Oncologists buy drugs from wholesalers, mark them up, and sell them to patients (or insurers) in the office. Since medical oncology is a cognitive specialty lacking associated procedures, without drug sales, oncologists' salaries would be lower than geriatricians'. In recent decades, oncology-drug prices have skyrocketed, and today more than half the revenue of an oncology office may come from chemotherapy sales, which boost oncologists' salaries and support expanding hospital cancer centers.
Before 2003, Medicare reimbursed 95% of the average wholesale price — an unregulated price set by manufacturers — whereas oncologists paid 66 to 88% of that price and thus received $1.6 billion annually in overpayments.3 To blunt unsustainable cost increases, the Medicare Modernization Act mandated that the Centers for Medicare and Medicaid Services (CMS) set reimbursement at the average sales price plus a 6% markup to cover practice costs. This policy has reduced not only drug payments but also demand for generics. In some cases, the reimbursement is less than the cost of administration. For instance, the price of a vial of carboplatin has fallen from $125 to $3.50, making the 6% payment trivial. So some oncologists switched to higher-margin brand-name drugs.4 Why use paclitaxel (and receive 6% of $312) when you can use Abraxane (for 6% of $5,824)?
Now practices are struggling to treat their patients because of the unavailability of drugs. Short-term solutions include gray-market purchases, which more than half of surveyed hospitals say they've made, but that option introduces safety and quality-control issues. Pharmacists are intensively managing inventories and alerting prescribers to developing shortages and potential alternatives. Some centers now have a red–yellow–green system for quickly recognizing developing shortages and determining which patients get priority (usually those with curable cancers) when supply is limited.
Long-term, non–market-based solutions have been elusive. Proposed legislation would require manufacturers to give 3 to 6 months' notice before discontinuing a drug in order to allow others to pick up production. However, it is likely that gray-market vendors would buy the remaining inventory of such drugs and charge huge markups. Creating a national stockpile is impractical: Do we stockpile the drugs and then waste whatever is not used or stockpile the ingredients and make new batches as needed? A national health care plan with a single formulary and a central pharmacy stockpile is possible for Medicare or Veterans Affairs but unrealistic given oncologists' dependence on drug income and difficulties with timely, safe distribution.
Market solutions take one of two approaches: let the market work and accept short-term uncertainties or regulate the market more tightly. For instance, the CMS could reimburse at the average sales price plus 30%, but that wouldn't help if the drug price has fallen from $125 to $3.50 per vial. The government could set a floor for average sales prices to encourage the production of generic drugs, but that would increase the total cost of cancer drugs unless brand-name prices were reduced. Europe has fewer shortages for that reason: prices are set higher for generics so that companies will make them, but prices of brand-name drugs are often much lower than U.S. prices.
More far-reaching reforms of oncology practices and reimbursement are necessary if there is no national intervention or federal market regulation. One solution is adopting clinical pathways for which practices are paid disease-management fees that are not based on chemotherapy sales. For instance, one large oncology group has developed care pathways specifying preferred drug combinations and sequences — for example, allowing only a few first-line, mostly generic regimens for patients with non–small-cell lung cancer, as compared with the 16 possible drugs and many more combinations included in National Comprehensive Cancer Network pathways. This approach has been shown to result in equal or better survival, less use of chemotherapy near the end of life, and 35% lower costs than usual care.5 Another solution is to pay physicians salaries, as Kaiser Permanente, Veterans Affairs, and most academic centers do, but that would reduce oncologists' earnings at a time when a 40% workforce shortage is predicted, so the effect must be monitored.
To ensure a predictable supply of generic cancer drugs, manufacturers need reasonable markets and profits, and oncologists need incentives to use generics. Standardized clinical pathways with drug choices based only on effectiveness will enable the prediction of drug needs, practices for effective management of inventory, and planning by manufacturers for adequate production. Such pathways, disease-management fees, and physician salaries would dramatically change oncologic practice, but since drug costs will increase by 4 to 6% this year alone, they are necessary. The current system not only is unsustainable but also puts oncologists in potential ethical conflict with patients, since it hides revenue information that might influence drug choices and thus affects costs and patients' copayments.
The only good news is that the drug shortages may catalyze a shift from a mostly market-based system to one that rewards the provision of high-quality cancer care at an affordable cost.
Disclosure forms provided by the authors are available with the full text of this article at NEJM.org.
This article (10.1056/NEJMp1109772) was published on October 31, 2011, and updated on November 2, 2011, at NEJM.org.
From the Virginia Commonwealth University Health System, Richmond (M.L.G.); and the Sidney Kimmel Comprehensive Cancer Center, Johns Hopkins Medicine, Baltimore (T.J.S.).
Food and Drug Administration. Current drug shortages (http://www.fda.gov/drugs/drugsafety/drugshortages/ucm050792.htm).
Jacobson M, Earle CC, Price M, Newhouse JP. How Medicare's payment cuts for cancer chemotherapy drugs changed patterns of treatment. Health Aff (Millwood) 2010;29:1391-1399
CrossRef | Web of Science | Medline
Neubauer MA, Hoverman JR, Kolodziej M, et al. Cost effectiveness of evidence-based treatment guidelines for the treatment of non-small-cell lung cancer in the community setting. J Oncol Pract 2010;6:12-18
Marc Cohen, Walter P. Jeske, Jose C. Nicolau, Gilles Montalescot, Jawed Fareed. (2012) US Food and Drug Administration approval of generic versions of complex biologics: implications for the practicing physician using low molecular weight heparins. Journal of Thrombosis and Thrombolysis
14 Reader's CommentsDEAN TSARWHAS, MD | Physician | Disclosure: NoneLIBERTYVILLE ILNovember 08, 2011
Integrity among Medical Oncologists
I am writing to defend the thousands of medical oncologists in community and academic practices who do not prescribe particular chemotherapy regimens based on maximizing financial profits but based on approved treatment guidelines, pathways, and what is best for the patient. The article is truly a "slap in the face" for the hard working oncologists who provide countless hours of unreimbused time caring for some of the sickest patients in medicine. The article fails to mention that the "drug margin" primarily goes to cover the numerous under-reimbursed expenses involved with providing cancer care in the community setting. Since the advent of the MMA, the ASP+6% reimbursement is often under our acquisition cost, making it impossible to treat the patient in the cost-effective office setting, and as a result, the patients are treated at the hospital where it is costlier and often more inconvenient. Finally, many medical students and medical residents choose a career not only based upon their passion, but also upon financial considerations. To suggest that oncologists should be salaried as at the VA would exacerbate a workforce shortage that already exists.DANIEL LANGER, MD | Physician | Disclosure: NoneWINDSOR CONovember 03, 2011
Economics 101. Price fixing = drug shortages.Han Zhong | Other | Disclosure: NoneMadison WINovember 03, 2011
ASP not AWP
Why does the table list the AWPs of comparable drugs when physicians are reimbursed at ASP+6%? Actual Medicare Part B drug reimbursement at ASP+6% is often significantly lower than AWP.
Just look at the CMS Medicare Part B drug pricing file https://www.cms.gov/mcrpartbdrugavgsalesprice/
Just looking at Paclitaxel vs. Abraxane, Abraxane is more expensive at ASP+6%, but it is also significantly more effective. Is it worth the difference in price? Ask a cancer patient if they want a less efficacious drug to treat their life-threatening condition.THOMAS WAGNER | Other | Disclosure: NoneSNELLVILLE GANovember 03, 2011
The faliure of economic homeopathy
Why is the answer to a market failure caused by inane regulatory action always more inane regulatory action, instead of removing the regulatory thumb from the market's windpipe? This is reminiscent of homeopathic theory, where the cure for a disease is a drug that reproduces the symptoms of the disease, without homeopathy's saving grace of dilution to extinction.ROGER WILGUS | Other | Disclosure: None
November 02, 2011
What an Astounding Situation
I worked in the health care field for more than three decades and was unaware of the absurd situation described, wherein oncologists sell drugs to their patients at cost plus a percentage. This situation simply begs for abuse, which is clearly occurring. Only our governmet bureaucracy could countenance such a situation, after having permitted it to begin.
Whether oncologists need this windfall to obtain fair compensation for their services is beside the point. There are other ways to provide them such remuneratiion -- ways in which patients and the taxpayers aren't negatively affected. This deplorable situation should be halted at once.GEORGE CALDWELL, MD | Physician | Disclosure: NoneSINGAPORE SingaporeNovember 02, 2011
For the treatment of Acute Gout the combination of Colchicine with Benzbromarone ("Narcaricin") is excellent.
No longer is Benzbromarone available unless someone knows of a new manufacturer.
Don't try and teach me.
Allopurinol is for defectives who will not observe careful diet.
Do they yet know that an excess of Fructose will cause a delay in the kidney's ability to excrete Uric Acid? That is, Bananas and Mangos, Dates and figs and nectarines can produce Gout just as Prawns and Squid will.
Anyone got any "Narcaricin" (Benzbromarone)?THOMAS MONAGHAN, MBBS | Resident - Neurology | Disclosure: NoneMEATH IrelandNovember 02, 2011
A physician should not profit from a prescription
In our country we have strong laws that prevent any association between a prescriber and the dispenser for obvious and sensible reasons. Therefore I was somewhat horrified when I came to understand this article and that the oncologist profits from the dispensing of the drug.
Of course bringing this to its logical extension one might question the prescriber of angioplasty also being the person who may materially "profits" from it. This has of course been addressed worldwide with concerns about pay-for-procedure. Perhaps it is not that different from the concerns expressed here.
Perhaps it is therefore a cultural thing, or that I am a product of a semi-socialised system (full of it's own ills), but I remain deeply concerned about the act of profiting from prescribing a medication. We are beyond the spectrum of a few pens from a drug representative or a trip to a conference here. Maybe those geriatricians should be marking up and selling the donepezil...ROBERT HAMILTON | Other | Disclosure: NoneCOLCHESTER VTNovember 01, 2011
Instead of reimbursing oncologists at cost plus a percentage, reimburse at cost plus a fixed fee. This removes the incentive to use more expensive drugs to maximize the percentage reimbursements.JEFF SOURBEER, MD | Physician | Disclosure: None
November 01, 2011
The inevitable result of the attempt to fix prices.
This is an excellent analysis, except for the statement implying the need to move from a market-based solution. Such shortages and perverse incentives are the natural result of the attempt to control prices by fiat (government regulation). The failure is not that of a market system so much as it is a failure of a mis-regulated market system, with prices fixed by Medicare for both the drugs and the services. The Medicare system fails to appropriately reward oncologists for their cognitive efforts and the real costs of administration of chemotherapy, leaving them reliant upon "ancillary income" from drug sales. This is a fine illustration of the Rule of Unintended Consequences that attends bureaucratic management of a complex system. Medicare compounds the shortages of the drugs by its pricing mechanism, as is so well highlighted in the article. It creates perverse incentives for providers, such as those cited.JAMES COWELL, PHD | Other | Disclosure: NoneHOLLY SPRINGS NCNovember 01, 2011
Abraxane vs paclitaxel use
The authors strongly imply that many oncologists use Abraxane over paclitaxel for their patients simply for a higher profit for their practice. I suggest that this is not a good example to draw such a conclusion, since it my understanding that there are important advantages for use of Abraxane from the standpoint of reduced adverse reactions compared to the use of paclitaxel.PROF RAGHUNADHARAO DIGUMARTI, MD | Physician | Disclosure: NoneHYDERABAD IndiaNovember 01, 2011
Cancer Drug Shortages
Cancer Drug Shortages in the US can be easily overcome by importing drugs from high quality, US FDA Certified manufacturers outside the US, especially from countries in the developing world, like India and ChinaROMI SZAWLOWSKI | Other | Disclosure: NoneCanadaOctober 31, 2011
I sense the need to reexamine customer demands and forecasting methods.SIMON QUILTY, MD | Resident | Disclosure: NoneCASUARINA NT AustraliaOctober 31, 2011
Pharmaceutical security an international issue
This issue is of international importance, with Australia having many shortages in the last few years, most recently intravenous benzylpenicillin.
Pharmaceutical supply chain in the global economy requires governments to mandate notification of manufacturing failure, quaIity, or supply compromise and share this information globally. Individual nations need to identify "essential" medicines and specifically legislate for secure manufacture and supply of these exceptional drugs. International efforts need to focus on strategies to diversify manufacturing of such essential medicines.JOHN WILLIAMS, MD | Physician | Disclosure: NoneWESTPORT CTOctober 31, 2011
Drug "shortages" and government intervention
Only the government could be responsible for such price dislocations.
The president's executive order will only make things worse.
The government should not get involved in "medicine"' and other places they don't understand! Only the government could be responsible for such price dislocations.
Tuesday, February 07, 2012
The Shortage of Essential Chemotherapy Drugs in the United States — NEJM