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Drug shortages drain hospital dollars

It costs U.S. hospitals $230 million annually just to purchase more expensive generic drugs for shortage drugs

Chris Nerney, Contributor

Hospitals and health systems try their best to anticipate and meet the demand for specific drugs. But drug shortages – whether due to outbreaks of specific illnesses or unanticipated supply bottlenecks – are a fact of life in the medical world.

An American Journal of Health-System Pharmacy (AJHP) survey released earlier this year showed that 98 percent of pharmacy directors “reported at least one drug shortage during the previous month.”

This year alone, U.S. hospitals have had to cope with a shortage of intravenous saline solutions, while hospitals in the Midwest this month have reported shortages of albuterol, a drug used in concentrated form to treat children with respiratory problems.

Drug shortages jeopardize the ability of hospitals and health systems to deliver medications to patients in a timely manner, if at all. Forty-three percent of AJHP survey respondents reported treatment delays related to drug shortages, while 21 percent said patients have been referred to and from other facilities. 

“The potential for delayed patient treatments related to drug shortages are well documented in the literature,” said Ross Day, director of pharmacy for Novation, a healthcare supply chain services company with more than 100,000 members. “In addition, the incremental labor expenses associated with the day-to-day management of drug shortages within the hospital pharmacy environment are also well documented.”

Indeed, AJHP survey respondents cited numerous extra costs generated from activities required to manage oncology drug shortages, including “increasing inventory, increasing staff time devoted to managing shortages, implementing strategies to minimize product waste, and identifying substitution protocols.”

“The ongoing shortage of I.V. solutions in the U.S. could be the most costly as hospitals are spending a significant amount time managing inventory due to limited supply,” Day said.

An analysis released earlier this year by healthcare performance improvement alliance Premier Inc. estimates that it costs U.S. hospitals $230 million annually just to purchase more expensive generic drugs for shortage drugs. This doesn’t include additional labor costs related to drug shortages, which add about $216 million a year. For hospitals and health systems struggling to cope with cuts mandated by the Affordable Care Act, that adds up to a lot of money.

The good news is that annual new drug shortages in the U.S. peaked at 267 in 2011, dropping to 204 the year after and 140 in 2013, according to the University of Utah Drug Information Service. However, active shortages reached a four-year high (to 306) in the second quarter of this year.

“While it’s encouraging that the number of newly reported drug shortages is trending down, the fact that the number of active shortages remains very high continues to contribute to negative clinical and economic implications for hospital pharmacists and buyers,” Day said.

Respondents to another Premier survey said they rely on a number of strategies to cope with ongoing drug shortages, including adding back-up inventory, better communicating information about shortages to internal stakeholders, and rationing or implementing restrictions.