All it took to turn a simmering problem into a raging fire was…a fire.
There has been a lot of wringing of hands and gnashing of teeth lately over the issue of drug shortages. And rightly so. Many of the drugs that are in short supply are essential for delivering the health care that people need. But media pundits and politicians are throwing up their hands and wondering how we got to this position. Did drug shortages drop out of the sky unexpectedly? The fire at the Sandoz plant in Quebec is the immediate cause for the situation we find ourselves in, but the shortage in drugs has been building for years now.
If you want to understand why there are drug shortages then the answer, as it usually is, is to follow the money. In this case the money means that the drugs that are in short supply are almost uniformly low margin products and nearly all of them are generics. You can make a good profit out of manufacturing and selling generics, just look at Apotex as one example with Canadian sales in 2010 of $1.35 billion. But because the profit margins on generics are low companies may lose interest in them and move their money into some more profitable product. Moreover, unless the drug happens to be a big seller often only one or two generic companies are interested in making it. (Sandoz is the generic arm of the Swiss multinational Novartis.)
Money is also the reason that the production of the active ingredients, the part of the pill that does the work, has been steadily moving to places like China and India. Production costs there are much lower than they are in Canada and the United States and that translates into a higher profit margin for the drug companies. However, as recent scandals like melamine in milk or contaminated heparin show, there are problems in relying so heavily on countries where quality control is sometimes very iffy and where corruption may mean unreliable inspection procedures.
All it took to turn a simmering problem into a raging fire was…a fire. Health Canada has been blithely ignoring this issue for years. There has not been any planning about how to deal with a full-scale crisis like the one that we now find ourselves facing. Health Minister Leona Aglukkaq claims that Health Canada has acted proactively on the grounds that her department has previously approved applications from other generic manufacturers who are able to make the drugs that are now in short supply. (Although these applications have been approved the companies in question have never marketed their products, emphasizing the point that there is not much money to be made from them.) But she is just trying to deflect attention from the inactivity in her department. Passively approving applications to make drugs but doing nothing to ensure that those drugs are actually available is not planning. Up until now the drug companies, both brand and generic, have done little to deal with supply questions beyond a voluntary pledge to collect information about shortages and pending shortages and post this information on a web site.
What would real planning look like? Here are my recommendations.
- Health Canada should convene an expert committee to identify off-patent drugs that are supplied by only one company and that are considered “critical” to medical care. Examples of critical products might be things such as chemotherapeutic agents, morphine, anesthetic agents and drugs to treat epilepsy.
- Once these critical drugs have been identified Health Canada should then pro-actively identify possible alternative sources of these products and determine whether the companies making these products are prepared to supply Canada in the event of an emergency. Contingency contracts could then be negotiated with interested suppliers.
- Any company marketing one of these critical drugs in Canada should be required to give Health Canada a minimum of 6 months notice before they stop supplying the products. Health Canada should maintain a list of these drugs and post this list publicly.
- In the future, one of the conditions for granting a Notice of Compliance to sell one of these critical drugs in Canada should be a commitment by the company to guarantee the availability of the drug for a minimum of 3 years.
These measures will help to ensure a continuous supply of drugs for Canadians. However, they do not necessarily guarantee that these drugs will be available at a reasonable price in the event of an emergency. Manufacturers may try and take advantage of such a situation by charging a premium for their products. At that point, a desperate government would have little choice. Therefore, I propose that the federal government should establish a publicly owned generic drug company to manufacture some of these drugs that are deemed critical to medical care. Recall that up until the mid 1980s Connaught Labs was a publicly owned vaccine and insulin manufacturer.
Drug shortages are not going to vanish and may become a fact of life. Doing nothing, which seems to be the federal government’s preferred choice, is not an option.
About the Contributor
Joel Lexchin works in an emergency department in Toronto where he tries not to prescribe drugs that are in short supply.