Part 1:Where Have All The Drugs Gone?

Jan 28, 2011Posted By: igorUnder: Pharmacy Industry News

This is Part 1 in a series that we have elected to focus on the pharmaceutical industry with a focus on describing some of the current key issues in particular our current supply of drugs and the development of some intelligent measures focused on providing Canadians a healthcare system that is one of the best in the world.    Care has been taken to make certain the information shared is accurate, the opinions are those of the author and do not reflect the opinions, or the philosophies of staff or management.    The series is provided to inform and stimulate discussion among concerned Canadians. Access to healthcare for all Canadians is a philosophy that people in other parts of the globe have identified as characteristically Canadian not so different than those other Canadian attributes such as our game is hockey;  the maple leaf and our reputation for being “pleasant, polite people living in the frozen north”.

Drug Shortage in Canada: Ottawa, We Have A Problem

Living in Canada, the shortage of anything let alone prescription drugs, is the furthest from most people’s minds.   Unfortunately, as a result of many significant and sustained drug shortages that continue into their third year, that peace of mind has been shattered.   Yes Canada, we have a problem - a big problem. One of unprecedented significance and severity.   In fact, as a pharmacist in community practice for over thirty years, this pharmacist has never seen a drug shortage of this size, duration and significance in Canada before.

First, let’s describe the situation as it stands today and readers of this post are encouraged to do their own research by simply searching on “drug shortage” or “drug supply” via the search engine of your choice.  There is no shortage of attention paid to the drug supply in Canada over the past one to two years.    Everyone from the Edmonton Journal, National Post, Globe and Mail, Canadian Pharmacists Association to most every local and regional news media have highlighted this story now.

Unfortunately, despite these stories the shortage continues and our governments, both federal and provincial continue to ignore this problem or even worse, when asked about it claim that “their sources advise that the shortages are being corrected”.    Phooey!  So, why is it that as of today, January 19, 2011 we are unable to find any brand of the drug mirtazepine, just to name one.   And by the way, according to a very recent news article that cited a reference from the largest Canadian generic manufacturer Apotex, they have no drug shortages.   I’m sure when the spokesman last received a production status report but I can assure you that there is a shortage and many of the product is Apotex brand.    We have the proof that we cannot find, purchase, procure, buy, or transfer any brand of mirtazepine, including Apo-Mirtazepine.    At some point the comment may become, well we no longer manufacturer this drug product, that goes to describe the ugly side of this story and that is that many manufacturers rather than trying to deal with the supply problems have simply stopped the manufacture and marketing of certain molecules for the Canadian marketplace.   It’s not yet known if that is the case with the drug Apo-Mirtazepine but this is used simply as an example of what has happened recently.   The next week or two will tell us all how the industry will deal with this one particular drug shortage.  By the way, our current purchase order placed with a major pharmaceutical wholesaler, which was five pages in length, included better than two pages of products that will not be shipped because they are not currently available.

By the way, the shortage today isn’t limited to just mirtazepine.     Most Canadian pharmacies also cannot find penicillin V, cephalexin (at least the 250mg tablet strength), valcyclovir,  certain strengths of allopurinol and diltiazem and if I’m not mistaken some manufacturers are having trouble with warfarin, a very commonly used blood thinner.    Not to suggest this is the full extent of the molecule shortage, NO -  far from it.  In fact, as we place our daily orders to our wholesalers, close to 50% of the products ordered are not available at the time of that order’s processing and shipping.   Remember now, orders are placed daily (except on weekends), so that this repeats itself across Canada, in every pharmacy, at least five or six times each week, 52 weeks of the year for the past two plus years.    That also means the pharmacy technician or the pharmacist depending on who gets the pleasant task of managing drug inventory, will spent at least an hour each day and sometimes longer, just simply trying to procure a particular molecule so that the needs of patients will be met.

Regulatory Agencies: Canada and U.S.

This sordid little story originally went something like this.   One of the many generic manufacturers of drugs for the Canadian market and who happened to own about 30% of the Canadian market, started to experience shortages due to new, more stringent regulations  introduced by the American Food and Drug Administration (FDA) and to a lesser degree, the Canadian equivalent, Health Protection Board of Canada (HPB), a division of Health Canada.   Although most companies (not all)  manufacture their product in either the U.S. or Canada for marketing in Canada,  any problems experienced by a drug company in their U.S. manufacturing plants due to FDA regulations, soon spills over into Canada because the drug inventory is so integrated between the two markets.

The fact that there are stringent regulations for the manufacture of drugs is a good thing, generally.  This is what protects you and me from poor quality products and “fly by night” manufacturers.    It’s a good thing until the FDA or HPB inspect a facility and reject a specific lot of drug tablets or capsules for example, then literally over night we have a million tablets less for distribution to the marketplace.   Of course, we are fortunate to have more than one company manufacturing most of the marketed drug products, so one would think that if Company A cannot supply the drug, then Company B or Company C’s product would be purchased by pharmacies and no one would be the wiser.    And that can work and has worked that way for many years, until Company A happens to have 30% of the market share for that particular drug product and the inventories of Company B, Company C, Company D and/or Company E are depleted in less than a week.    Now we see the beginnings of the drug shortage because when pharmacies go to re-order this particular drug in week two of this model,  the inventories have been depleted!   You see, it may take the original company a month, two months or longer to re-establish their production line for that particular product.   It depends on what the problem was originally and if the problem can be corrected quickly.    The regulations are very specific and very stringent, so it often takes a manufacturer one, two, maybe multiple attempts to get that production line up to standards and then back online.

By the way, the supply of drug inventory becomes even more complicated.   Think of it as some multi-variable formula (who said you wouldn’t need that “new math”) that includes supply, demand, margins, total profitability, time to manufacture, number of other products that must be made in that production line, production time available in any one month (or year) and previous demand history for that product.     All of these variables must be considered by each manufacturer and decides how much product is kept in inventory and when more product can be produced on any given production facility.   Of course, that also assumes that other companies DO NOT have production problems, raw material supply problems or fail their HPB or FDA inspections.

Pretty complicated stuff, isn’t it?  There is one other variable that wasn’t really highlighted or maybe it is more a function of several variables.   The question that many manufacturers share is, “what is the relative profitability of that drug product?”   These companies are not in the pharmaceutical industry because of any altruistic motivation.   They are large manufacturing concerns, often multi-national corporations with head office in the U.S., Germany, Israel, France.   Even the privately owned companies, which are not many, are very large companies with gross sales that probably compare the GNP of many small countries, employ hundreds of people in at least Canada and the U.S.    They are driven by profit and many of them you can find their stock symbols on the Toronto Stock Exchange, the New York Stock Exchange and/or many others.

Why this focus on their profitablity?   Not because profit does not belong in pharmaceuticals, please do not give that thought a moment.  No, it’s not that profit does not belong, it’s that profitablity is a concern and in a country of only 42 million (okay maybe it’s now 45 million) it takes only a few percentage points to make a product’s market shrink to the point where it’s just not worth doing.   Yup!  That’s right in today’s global economies, we are a very small market and when you compare the potential of our market to say the U.S., where profit is larger and there are 450 million people, we cannot make the mistake of assuming that we are of equal importance.   In fact, ask anyone who has recently looked for any number of over the counter (Schedule 3, non-prescription medications) products and you will discover that most companies will only trial a product in Canada for so long.   If the sales are not what they need, they simple discontinue that product and place their focus in the U.S., Europe, Australia or Asia.

So, don’t think for a minute that we are the pot of gold at the end of any rainbow for any company.    We are one small market in a global economy that seems to drag us into global problems each year.   No different than when there is a change in oil supply due to some conflict which affects production or OPEC decides to reduce the supply – prices go up and fuel becomes temporarily and artificially a short supply commodity.    I’m not suggesting for minute that there is an OPEC of drug companies – no that’s not where I’m going with this – but it is just another commodity dictated by basic economic supply and demand.    Add to this economic reality, that we are not a large market in a global economy.   Remember some 42 million people or potential consumers, is not a large market today.

(Note:  the shortages mentioned above were as of the original writing of this posting.  Since these shortages change day by day and week by week, some of the molecules mentioned may be back in stock, but there will be others that have taken their place)

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