Balancing Supply with Quality

According to FDA, 75% of the products in shortage are generic sterile injectables; low-margin products that must be manufactured in specialized facilities and that must meet stringent quality metrics. Recent lapses in quality from manufacturers including Ben Venue and Hospira have led to plant shutdowns and drug shortages. FDA has found itself squeezed between the necessity of ensuring that drugs on the market are safe, and ensuring that there is a sufficient supply of drugs on the market to meet crucial medical needs. For example, a report released in June 2012 by the House Committee on Oversight and Government Reform accused FDA of contributing to shortages by over-zealous enforcement. Yet House members also accused FDA of contributing to the recent meningitis outbreak by under-zealous enforcement.

To shed some light on the topic, FDA commissioner Janet Woodcock and Marta Wosinska, director of the analysis staff in the Office of Planning and Informatics at CDER, coauthored a paper in the February, 2013 issue of Clinical Pharmacology and Therapeutics. The paper discusses how the pressures faced by manufacturers of sterile generics to keep the cost of production low can affect quality, and thereby supply. The authors recommend that quality be a factor when considering the price of a sterile generic injectable, and suggest that the additional monetary incentive for producing a quality product will lead to more consistent manufacturing practices.

The paper’s premise can be summed up by the following: “The drivers behind the quality problems we describe above are multifaceted, but we postulate that at their core is the failure of the market to sufficiently reward quality.” Generic manufacturers compete on price, and the lowest price wins. Low profit margins, the authors say, mean that manufacturers are reluctant to invest in the kinds of plant maintenance and improvement that would ensure dependable operations and consistent quality. If manufacturers were able to differentiate their products based on quality, and could charge more for a quality product, they would be more likely to make those investments, they argue.

While their argument makes sense, it is difficult to see how a quality reward system could be implemented. Consumers will pay more for higher quality cars, washing machines, and produce because they derive some benefit or satisfaction from the higher-quality product that they purchase. But for sterile injectables, the purchaser of the product (e.g., a physician or a hospital pharmacy) is not the end user (i.e., the patient). In a system where the product’s buyer and the product’s end-user are not the same entity, where would the impetus to reward quality come from?