The FDA announced yesterday that it had taken steps to mitigate shortages of two cancer drugs, Doxil and preservative-free methotrexate. Doxil, a drug used to treat ovarian and other cancers, has been in short supply for months, after manufacturing problems shut down the drugs' sole U.S. plant. The FDA will temporarily allow importation of Doxil from an Indian manufacturer, a move that is expected to effectively end the shortage.

For preservative-free methotrexate, a critical cancer drug for pediatric acute lymphoblastic leukemia (ALL) and bone cancer, the FDA has asked other pharmaceutical companies to step in to fill demand after a major supplier, Ben Venue, shut down a plant making the drug for "maintenance and requalification of equipment."

The FDA reports that it has prevented nearly 200 shortages in 2011 thanks to advance notice from manufacturers, but 280 drugs remain in short supply. Short term fixes are welcome. Long term fixes are harder to come by.

The U.S. market strongly encourages substitution of branded drugs by generics immediately after a drug loses patent protection. For very profitable drugs (like statins) generic companies will rush in to fill the vacuum, slashing prices and saving consumers and insurers billions in annual drug costs. For high demand, high profit generics (and branded drugs), shortages will be few and far between.

But for other medicines, like sterile injectable drugs, which have high manufacturing costs and narrow profit margins, fierce price competition may eventually drive all but one or two manufacturers from the market. And when there are only one or two suppliers, it creates the opportunity for drug shortages when unexpected manufacturing problems at a single plant can place thousands of lives in jeopardy.

One solution, offered by the FDA's Sandra Kweder in an interview yesterday, is for "a shift in the industry to assuring good manufacturing practices to prevent finding themselves in a critical juncture where they have no choice but to shut down."

This, however, puts all the blame in the wrong place. By all means, companies should comply with the current Good Manufacturing Practices required by the FDA, and find ways to share information to help prevent or alleviate the effect of drug shortages.

But perverse Medicare price controls, just-in-time inventory supply practices at hospitals, reverse auctions by Group Purchasing Organizations for filling generic drug contracts, tougher FDA manufacturing and inspection standards for domestic companies (which can raise costs), and increased global competition from low-cost suppliers in India and China has created something of a "race to the bottom" in the generic drug market.

In this environment, quality (but higher cost) manufacturers may (rationally) exit the market to focus on higher margin products. And the few low cost suppliers that remain for complex drugs like sterile injectables may not be able to ensure the integrity of their manufacturing and supply chain over time at a rock-bottom price.

In other words, if private and public purchasers insist on driving prices below a sustainable level, drug shortages may become an endemic feature of the U.S. generic drug marketplace - as they have over the last several years.

You can find good articles on the problem (and potential solutions) here, here, and here (by yours truly).

Funding constraints, hopefully addressed by the new generic drug user fee agreement, have limited the FDA's ability to conduct timely inspection of foreign plants, posing a potential safety risk for patients. It also creates an imbalanced playing field for U.S.-based companies that are inspected more frequently and adhere to higher, more expensive safety and quality standards. In this environment, quality American manufactuers can't compete on price.

Until China and other developing countries raise their manufacturing standards to match those of the U.S., a market-based solution that would supplement the FDA's efforts would be for industry to work with regulators to create a voluntary third-party certification system for manufacturing standards and supply chain integrity for contractors based in developing countries where regulatory standards don't meet those of the FDA or EMA. This approach would mimic independent non-profit organizations like the Joint Commission, which certifies hospital quality, for the global pharmaceutical manufacturing and supply chain. Something like this may already be in the works at Rx360.

Under a certification system, companies that submitted to regular third party inspections and other quality measures would receive a "seal of integrity" that they met or exceeded established regulatory standards.

Generic drug purchasers could still opt to buy from the lowest bidder, but they would do so at their own (and their patients') risk. Third party certification of supply chain integrity would help counteract the "race to the bottom" in generic drug pricing without intrusive government regulation by sending better market signals about manufacturers' commitment providing a dependable supply of the highest quality medicines - not just the cheapest.

At National Review Online's Critical Condition blog, I have a long post explaining why imposing price controls on Medicare Part D in the name of deficit reduction will lead to less innovation and fewer American jobs:

Cost cutting would come in the form of laying off workers (or reducing pay and benefits), sending more jobs and manufacturing facilities to low-cost countries abroad, or reducing investment in discovering new medicines. None of these responses should count as a winner for the U.S. economy. One recent study found that the president's proposal could reduce direct and indirect employment in the pharmaceutical industry by up to 238,000 jobs by 2021.

Reducing research-and-development spending might seem like a clear "winner" for the supercommittee, since fewer expensive new drugs would come on the market. The government's drug tab would decline rapidly (aided by the expiration of existing drug patents), but as the U.S. population aged and more people became afflicted by cancer, Alzheimer's, and other expensive chronic illnesses, we'd just spend more money on hospital care and physician care -- actually increasing overall health-care spending. (Economist Frank Lichtenberg estimates that for every $1 that Medicare spends on newer medicines, it saves about $6 in other health-care costs, mainly from reduced hospital costs.)

As they say, check out the whole thing.

Yesterday, the Senate voted 45-55 to defeat an appropriations amendment that would have permitted U.S. patients to purchase individual-use quantities of FDA-approved prescription drugs from Canadian pharmacies. According to The Hill, Sen. Barbara Milkuski (D-Md.), floor manager for the underlying appropriations legislation, based her argument against reimportation on safety concerns.

"You don't know that what you are taking has been made in Canada or approved from Canada or that that it comes from a real website or from a legitimate pharmacy," she argued. "We could be importing death."

Germany has embraced a new comparative effectiveness pricing scheme that allows companies to set drug prices at launch, but then requires them to submit additional evidence to support that price to the German Federal Joint Committee (G-BA). 

Within six months, the G-BA and the office for health technology assessment (IQWig) conduct a cost-benefit assessment to a comparative therapy that the office chooses.  If the new product doesn't outperform the "comparator" it will be "reference priced", means it will have the same priace as all comparable drugs in the therapeutic class. 

This is a bad idea, and it will hamstring patient access to new medicines in Germany - the birthplace of the global pharmaceutical industry.

The new pricing scheme forces companies to go through two separate processes, one for drug approval (to the EMA), and a second for market access, to the G-BA and IQWiG. And because it can take years for companies to develop comparative effectiveness data, it will delay patient access to new therapies.

It also raises a myriad of other questions: What's the right comparator drug? What happens if a new drug comes on the market just before a new product launches, but is then held to be the new "standard of care" that new products must compare themselves to?

Already two companies, Eli Lilly and Novartis, have pulled drugs from the German market rather than risk reference pricing to generic levels that would have been used as a benchmark for other national price control schemes.

Less innovation, and less patient access to new therapies. Hardly a recipe for improved health in Germany or any other country.

The Medical Progress Today blog provides a forum for economists, scientists, and policy experts to explore the scientific, regulatory, and market frameworks that will best support 21st century medical innovation.  We will focus especially on the U.S. Food and Drug Administration, the agency responsible for overseeing the nearly half-trillion dollar drug and medical device markets in the United States.

The blog will range widely in terms of topics and POV.  But, at its heart, MPT is about harnassing the power of science, market incentives, and (prudent) regulation to create the kind of health care system that we all want - more effective, efficient, and affordable.

We live in a time of breathtaking advances in the capacity to treat--and cure--illness. The translation of the human genome and an explosion of information from new sciences like metabolomics and proteomics have given researchers powerful new tools for understanding, treating and (eventually) curing deadly diseases like cancer and Alzheimer's. The old medical paradigm treated illnesses symptomatically with one-size-fits all medicines; the new paradigm will analyze disease at its molecular roots and to develop personalized therapies that match a patient's own unique biochemistry.

The question is not whether personalized medicine will become a reality, but when. Innovation is currently struggling in the face of regulatory, reimbursement, and insurance frameworks built around public health assumptions that fit the middle of the last century, rather than the first decades of the 21st century.

Turning personalized medicine from an aspiration into a reality will require regulators, companies, and researchers to breakdown binary regulatory frameworks; develop collaborative approaches to rapidly validate new technological standards; and embrace clinical tools that allow patients and physicians to become full partners in the innovation process.

Through both this blog site and the original essays it will commission, MPT will provide a forum to explore the most current ideas--and emerging challenges--in the field of personalized medicine.

We hope that you will find MPT a vital and provocative resource for building a health care system ready to embrace the full potential of personalized medicine and sustain U.S. leadership in biomedical innovation.