Drug Shortages Caused by the FDA

Shortages of drugs, especially generic injectables, continue to cause significant harm to patients. A new Congressional report offers the best account to date of the shortages and provides details confirming my earlier post. The story in essence is this:

The FDA began to ramp up GMP rules and regulations under the new commissioner in 2010 and 2011 (see figure at left (N.B. this includes all warning letters not just GMP so it is just illustrative, AT added). In fact, the report indicates that FDA threats shut down some 30% of the manufacturing capacity at the big producers of generic injectables. The safety of these lines was not a large problem and could have been handled with a targeted approach but instead the FDA launched a sweep against all the major manufacturers at the same time. These problem have been exacerbated by a change in Medicare reimbursement rules and by the rise of GPOs (buying groups) which reduced the prices of generics. Thus, in response to the cut in capacity, firms have shifted production from less profitable generics to more profitable branded drugs, so we get shortages of generics rather than of branded drugs.

Add to these major factors a few unique events such as the FDA now requiring pre-1938 and pre-62 drugs to go through expensive clinical trials, the slowdown of ANDAs and crazy stuff such as DEA control over pharmaceutical manufacturing and you get very extensive shortages.


If these are off-patent generics can't they be imported? The whole world isn't facing an injectables shortage, is it?

The FDA directly regulates overseas production that is imported to the US as well, so these issues affect that production too.

The most important part of GMP is the M. They forgot that.

Even beyond the fact that they are killing far more people than any quality issues that they assume (with zero evidence) are solved by GMP, there is no justification for FDA enforcement of GMP by the way. It's simply authoritarian interventionism. If people want to contract that they follow GMP, then the government can enforce the contract.

When balancing risks consider:


"Results. The two studies cited by the IOM committee substantiate its statement that adverse events occur in 2.9% to 3.7% of hospital admissions...The committee's estimate of the number of preventable deaths due to medical errors...estimate the upper bound of the estimate (98,000 preventable deaths)...lower bound (44,000 deaths)."

I know the bad guys in Ayn Rand novels said that you could do anything to a market and the market will adapt, but that's not reality actually works. If you are doing anything to make medical decisions more difficult you are killing people. If you care about anything more than self-interested image management and CYA (i.e. you are not in politics or bureaucracy) you will think hard about this.

Think about this for a moment.

What Alex says is that the market decision to shift from generics to more profitable branded products and greater competition as a result of hospital Group Purchasing Organizations reduced the supply of generics.

Alex must not like the market.


I can never tell if you are joking. I see that as a problem.

I suppose we have THE WORST SHORTAGE IN 3 FN DECADES because of the repeal of Glass-Steagall.

Andrew, I guess you would.

By the way, this is the majority report of the House Oversight Committee headed by Darryl Issa.

From the text of the report:

"Group purchasing organizations (GPOs) have also contributed to a market structure that makes shortages more likely. GPOs, which emerged as a mechanism for providers to increase their buying power, assemble large networks of hospitals and clinics who agree to purchase drugs through a GPO. GPO contracts, which are structured to take advantage of large economies of scale in drug production, result in only a few large manufacturers producing each generic injectable medication. Because of intense manufacturer competition to win GPO contracts, prices are driven down – the intended goal. As a consequence, however, companies that cannot produce a drug at large enough output levels to take advantage of the economies of scale – often because they lack the guaranteed source of demand that GPOs provide – will stop producing the drug or will neglect to enter the market.
Largely because of GPO contracting and the MMA’s impact on changing Medicare’s reimbursement formula for injectable medications, individual generic injectable drugs are being produced by at most three companies. In 2010, 90% of generic injectable oncology drugs were produced by three or fewer manufacturers. In such a tight oligopoly, the temporary closure of a significant number of the production lines in one or two manufacturers’ facilities makes shortages much more likely."

Funny thing, they identified the problem as a highly concentrated industry--three producers-- and wonder why "in such a tight oligopoly' (to use their own words) there is poor performance.

I wonder why "the market" would move from low margin to high margin efforts.

Who could possibly have impacted the marginal margins of the low margin drugs?

I wonder. Who could that possibly be.

Maybe I'll ask a politician and trust his opinion. That sounds like a great plan.

I wonder why patented drugs are higher margin. It's a Laissez-Faire patent market after all. It's sooooo confusing.


If you want to get hurt, stand between me and the remote when ANY politician is talking on television.

"While FDA actions over the past several years are the primary reason for the severity of the drug shortage crisis, the Committee also found that growing market concentration over the
past decade laid the groundwork for the crisis."

You seem to have forgotten the first sentence Bill.

When presented with something that makes sense, even I can force myself to read the opinion of politicians.

Now what could possible cause a consolidation of industry? I wonder if there might be some fixed cost of regulation, and capture relationships. Nahhhh! Couldn't happen!

Andrew, Regarding regulatory enforcement, that's interesting as well.

Had there been consistent enforcement during the preceding period--there wouldn't have been an increase in enforcement relative to the past. If you read the report, it notes that the FDA had not been doing inspections as they should have in the prior periods because they had no money to do it. So, guess what, when they got the money in 2009, they began doing their job, and, low and behold, enforcement letters and agreements to clean things up.

Sometimes consistent and sustained enforcement leads to a steady state. Not enforcing is not an alternative, although I am sure some here believe it.

Sometimes consistent and sustained enforcement leads to a steady state. Not enforcing is not an alternative, although I am sure some here believe it.

I am pretty sure that it is an alternative. You may think that it's a worse alternative, but you've hardly proven that. Alex can and has pointed to plenty of studies, but I suppose that Bill simply isn't one for science when he can trust his gut.

I suppose that there will be a steady state eventually, but that's still no guarantee that on net lives will be saved. How can you assume otherwise?

Bill, you sound like one of those people who excuses war and invasions because we can't just "do nothing," and notes that while there's a bunch of loss of life in the short term, in the long term afterwards we'll reach a steady state.

No, according to Alex's post, they started sending letters they shouldn't be sending, and should never have been given the authority or the money to enforce.

Creating a law that you don't fund is stupid. Funding a stupid law is stupid.

Not enforcing is actually an alternative. We were doing it until the FDA decided it was better to kill people.

What's your point?

How much does it cost to send letters anyway? Isn't that the usual canard that government failure is always due to a lack of funding? I realize lawyers can make anything stupid, but personally I'd prefer to not kill people by not sending overly expensive letters that shouldn't be sent at all.

How many people were dying due to un-enforcement versus the deaths from shortages caused by the current discretionary enforcement? Okay studies and facts are everything man, show me that study. And save the politician reports. If that study doesn't exist, then you and the FDA are wrong. I haven't heard about a huge number of manufacturing quality deaths forcing the FDA to enforce manufacturing quality standards, although standards isn't even the right word, FDA wishes is more like it. This against the known deaths caused by shortages.


John, The regulations existed in both periods. The enforcement did not. You are not attacking the regulations, but simply arguing non enforcement results in fewer closures.

I just finished reading the committee report and it's really not very good or thoughtful. I spent 90% of my working career in the pharmaceutical industry and this current shortage issue is largely one that is self-inflicted. There are a number of good solid companies out there that have very rarely had a GMP violation and if they do, they remedy it quickly. The key issue here is that almost all the shortages are with injectables and for drugs that are off patent. In most cases the brand name company that developed the drug has gotten out the business and the number of companies that maintain sterile processing manufacturing lines has shrunk dramatically (in the not too distant past, brand companies used to do 3rd party manufacturing on their sterile lines as a way to augment revenue and it made good economic sense; unfortunately economic pressures to go after blockbuster drugs saw them leave this business and it was further complicated by the merger mania that has taken place within the industry over the past 20 years).

Whether the MMA is to blame here is arguable. To my knowledge we don't have shortages of solid oral dosage generic drugs and there is incredible price pressure on all of these as well (look at the cheap Rx prices at Walmart).

Finally, Alex is just wrong on the "ramping up of the GMP" issue. This has been going on for the past 15 years and you can simply look at the number of consent decrees that have been entered into by companies with the FDA (and similarly decisions to get out of the sterile manufacturing business altogether). One of my former colleagues was the manager of a high level task force that worked long and hard with the FDA to get "quality by design" guidelines developed and implemented.

This is a complicated issue and you should ask yourself as a prospective patient someday - do you want more stringent controls over sterile manufactured products than for normal pills and capsules that don't present the same kind of issues. I know what my answer to this is.

First, you should get the option as a patient. You actually don't even get to ask that question. You need to ask, do you want an agency that is entirely incentivized by CYA to make the decision on your behalf.

You think there isn't a problem. But have you actually analyzed the situation to determine how many problems there are with sterility versus unavailability?

If I were a surgeon and, as the article says, I typically had a syringe ready, I would not want to have to fool around with ampules because I had the syringe ready for a reason. For example, this will cause unaccounted for surgical errors and time critical missteps but the politicians will never catch the blame for them.

"Alex is just wrong on the “ramping up of the GMP” issue"

Did Alex just make up the chart? I welcome your experienced opinion, but the law is what is enforced. So, if something has been ramping up for years then REALLY ramps up that seems pertinent.

Alex apparently did not go to the FDA source document for warning letters. If he had he would note that this is the total warning letters for all the various centers. when looking at the actual break down of data, it shows that 1040 of the warning letters were from the Center for Tobacco Products and that the increase over the last two years can be attributed to FDA's regulation of tobacco and NOT and major increase in GMP oversight. This is selective and junk use of data without looking closely at what is being reported. One should expect a Congressional Committee report to do a better job.



You get the detective award of the month.

Congratulations on your search for facts.

When I go here and by eyeball compare 2008 versus 2010 there seems to be a drastic increase on "Violation of GMP" citations in 2010.


If you have access to a better method of making such an analysis, feel free to provide a link

Orange14 is mistaken. To be precise, I believe Orange14 must be confusing warnings about tobacco marketing that go to retail stores with the warnings to manufacturers that we are talking about here. In particular, the idea that 1040 of these warning letters were from the Center for Tobacco Products is simply wrong. By my count there were, for example, 4 warning letters in 2010, and 23 in 2011 issued by the Center for Tobacco Products. You can go to the FDA page and download Excel sheets here


if you wish to check.

Moreover, as the paper I linked to makes clear, the ramp up in warning letters issue in the graph is illustrative of the general tenor of the times. What is most important for generic injectables is that four of the five of the nation's largest suppliers of generic injectable drugs received warning letters over the past few years and the other one received numerous threats. Four of the five had to take production offline to address the issues raised by the FDA with a drop in the aggregate of about 30% of their manufacturing capacity.

Alex, if you are going to distinguish between warning letters than you also need to distinguish between advertising and promotion warning letters and GMP violations; two different kettle of fish and the Slide you show does NOT do that.

Consider the summary report on drug shortages by the American Society of Health-System Pharmacists (ASHP), the American Society of Anesthesiologists (ASA), the American Society of Clinical Oncology (ASCO), and the Institute for Safe Medication Practices (ISMP) that Alex linked to in his first post.

"Several drug shortages (e.g., concentrated morphine sulfate solution, levothyroxine injection) have been precipitated by actual or anticipated action by the FDA as part of the Unapproved Drugs Initiative, which is designed to increase enforcement against drugs that lack FDA approval to be marketed in the United States. (These drugs are commonly called pre-1938 drugs, referring to their availability prior to passage of the Food, Drug, and Cosmetic Act of that year.) Some participants noted that the cost and complexity of completing a New Drug Application (NDA) for those unapproved drugs is a disincentive for entering or maintaining a market presence. Other regulatory barriers include the time for FDA review of Abbreviated New Drug Applications (ANDA) and supplemental applications, which are required for changes to FDA-approved drug products (e.g., change in source for active pharmaceutical ingredients API, change in manufacturer). Manufacturers described this approval process as lengthy and unpredictable, which limits their ability to develop reliable production schedules."

and on GMP:

"Manufacturing-related causes that contribute to drug shortages are multifactorial. Inability to fully comply with GMP, which results in production stoppages or recalls, was considered a major cause."

I don't know what 'CYA' stands for, but I certainly want a regulatory agency in place that has procedures and policies to guarantee sterility of injectable medicines. What do you mean "option as a patient?" This makes no sense to me. There are a sufficient number of documented problems about making sterile drug products both in the US and in other countries that argue for a strong regulatory presence. Your third point doesn't make any sense. The vast majority of cancer drugs are infused in IV bags and not given by a syringe.

I want procedures and policies that guarantee sterility of injectable medicines (without, of course, killing too many other people by making things too expensive). I care about that outcome, not about whether or not specifically there's a regulatory agency.

There are generally tradeoffs involved, as Alex acknowledges. The FDA is, in general, on the wrong side of those tradeoffs. You and other support policies that kill, the balance of the science demonstrates.

Subract 1100 from 1700 and you still get 200 or so more than the 400 or so average. That's a 50% increase.

So when Margaret Hamburg SAID “Under my leadership, we’ll see a somewhat more aggressive posture with respect to enforcement,” what do you think she meant? Was she fibbing? Exaggerating? Mistaken?

She either failed to fulfill that, or she did it.

Not to mention, how dumb is it to put tobacco in the mix in the first place?

We are worried about "adulterated" tobacco?

Okay, the graph is misleading, but still correct in direction. But only because the government is flipping asinine.

If you are not going to go back and look at data, stop posting nonsense. You can look up data for the various FDA Centers if you want and when you look at the Biologics center that regulates a lot of injectable products (Blood, Blood Products, Vaccines, Allergenic Extracts, etc) you see exactly 8 warning letters in 2011 and the Drug Center had 108 (and I suspect that most of those were for advertising and promotion violations). Just because a graph is posted out of context on a blog doesn't make it the whole truth and nothing but the truth.

Okay, the graph is misleading, but still correct in direction.

He has a 50% chance to get it in the right direction! Weak defense.

Alex screwed it up this time and Orange14 caught it.

"Alex screwed it up this time and Orange14 caught it."

Still not sure about that.

And the fact that noone seems to know indicates that the government screwed up.

If they include whatever they are trying to do with tobacco in the FDA drug statistics then there are some real problems there.

They want to appear to be getting tough on pharmaceuticals while not taking "credit" for the shortages that they are causing.

What doesn't matter is the chart, what matters is whether their stated goal, and presumably achieved end of "getting tough" on manufacturers is the cause of the shortage.

Regardless of whether the graph is "correct," and again Alex didn't conjure up the graph, the government did, the general trend is absolutely correct, and corresponds with the STATED goal of the head of the FDA.

The question is whether this CAUSED the shortage.

I'm pretty sure the asinine step of putting tobacco under the rubric of the FDA is not what caused the shortage.

"First, you should get the option as a patient."

The option of what - rolling the dice on a potentially dirty needle? That sounds wonderful.

Maybe we should just cut out the middle man and institute a "bring your own hypodermic" hospital policy.

Again, for the nth time, please square for us consumers the two libertarian positions that the invisible hand (middle finger?) will help weed out malpractice and malfeasance while the tort law that would potentially help in that mechanism ought to be cut off at the knees.

Which is worse: Rolling the dice on potentially unsterile medicine or not getting any medicine at all?

Who should make that decision? Is it the same answer in every case?

Alex is implying that the FDA is making the decision, for everyone, in every situation. Is it reasonable to assume that every time that question is asked, the answer is the same?

Again, if your proposed policy is a) to let the market - in this case, a consumer who couldn't possibly be educated enough about the sterilization practices inside a faraway manufacturing plant - decide and b) to limit tort damages such that those uneducated - or even profoundly educated but perhaps the plant had an undisclosed breach - cannot recover damages, then at least be honest enough to come right out and admit that you're a misanthropic corporate shill.

Again, let me explain.

Do you have more control over your doctor or over the FDA?

The issue isn't control over your doctor. Your doctor does not factor into the equation. Your doctor will know as much about whether a syringe was adequately sterilized during manufacture as you do.

This is an information asymmetry problem.

If you propose to remove the one intermediary acting on behalf of the consumer - the one body with the wherewithal to eliminate, or at the very least drastically reduce the information asymmetry problem - then you'd better be prepared to deal with (i.e. fund via your taxes the judicial resources to deal with) a potential mountain of tort lawsuits.

Just so you know, surgeons do not draw up drugs. Also, it is correct that there have been almost no shortages with pills, and I have not seen any with drugs still on patent.


While I can't speak to your claims RE GMP, the adderall issue is a big one for me. I've been on it for years, but since last year, well after generic was released, there have been shortages of the generic. I switched back to the name-brand, however it's significantly more expensive ($200 /month vs $50 /month -- I pay out of pocket).

His point that the DEA is coming to the party with their hamfisted handling of drug policy is accurate.

The DEA: "We can't stop illegal drugs at all, so let's make quota by going after legal pain clinics and ADD patients."

All these agencies have vastly damaged their usefulness in their primary mission through mission creep and ancillary projects.

It's kind of awesome that every time Tabarrok posts one of these anti-FDA articles one or two commenters with actual knowlege of the pharamceutical industry (as opposed to preconceptions based on right-wing economic theory) tear it to shreds. Every single time.

Unfortunately it's just too easy. As one who sat across the table from the FDA for 30 years, there is a lot of stuff that needs to be reformed but trying to erect straw men to accomplish that is quite frankly a waste of everybody's time since it's just so transparent. Too bad since there is a lot of constructive criticism that could be thrown back to the Agency.

Except that no counter evidence was published. Orange14 may be right, but without any links, it's just a claim of expertise without substance. And Alex did post actual links:

From the linked Congressional report:

"Despite FDA’s awareness of growing industry concentration, FDA began a sweeping policy in mid-2009 that would force America’s largest producers of generic injectable medications to upgrade facilities. It appears that FDA’s political appointees unleashed its field force to issue a flood of broad warning letters to manufacturers. It is not a coincidence that nearly every major American manufacturer producing generic injectable medications has undertaken large scale facility remediation during the past two years. Rather, under the threat of FDA enforcement activity, manufacturers have decided to make large scale facility upgrades simultaneously with a resulting loss of 30% of industry manufacturing capacity."

That appears to support Alex's assertion pretty directly.

GMP inspections are handled by the Office of Regulatory Affairs at FDA and generic drug manufacturing facilities are treated no differently from brand name manufacturing facilities. You can go back to the FDA website and download the CDER annual reports and you will see this manufacturing initiative goes back a number of years. I'm not the one who should be doing other people's homework here.

And again you make a claim without any evidence to back it up.

Orange14 is incorrect. (see my above comment for details.) You can find the correct data here indicating 4 tobacco warning letters in 2010 and just 23 in 2011.


Thanks for the link.

So Orange, who is right, you or Bill?

Have they been doing this all along, or did they only just start enforcing it?

And what did THE HEAD of the FDA mean when she SAID she was going to be tougher on enforcement? That she wasn't going to?

Something really needs to be said, however, about the source of the Congressional Report. The policy team at Darryl Issa's committee is a collection of 20-something political science majors who came to their their current positions by being "true believers" (yes, that designation is used internally by the staff). The committee actually likes to hire Mercatus and Koch Fellows because its a useful proxy for the kind of "policy experts" they like working there; trained to do quantitative analysis, but predisposed to holding the approved political bias. They are there to deliver talking points and ammunition to their partisan masters, not to do detailed analysis. The prompt for this report was quite literally "create a report that blames the government for high pharmaceutical costs." Internally, industry lobbyist's reports and talking points are circulated; evidence to the contrary of the pre-determined narrative is not even considered. It's a circus. The "Staff Reports" coming from this committee should be taken with a grain of salt the size of Darryl Issa's ego.

Read the report Alex linked to earlier from the American Society of Health-System Pharmacists (ASHP), the American Society of Anesthesiologists (ASA), the American Society of Clinical Oncology (ASCO), and the Institute for Safe Medication Practices (ISMP).


"Manufacturing-related causes that contribute to drug shortages are multifactorial.
Inability to fully comply with GMP, which results in production stoppages or recalls, was considered a
major cause. It was noted that FDA has increased inspections of injectable drug manufacturing
processes based on the higher likelihood of harm should these processes be inconsistent with GMP.

Alex said that I am in correct. The chart that he shows at the top of this post comes from an FDA slide deck that is up on their website at: http://www.fda.gov/downloads/ICECI/EnforcementActions/UCM285781.pdf This particular slide is #7 in the deck. Please take a look at slide #6 and tell me how I am wrong. Is FDA wrong? Please let me know. You cannot cherry pick a chart and then pretend it doesn't exist which is what you are doing here by presenting the slide from the Committee Report. Let's talk about apples and apples and not apples and oranges.

Your claim is that the FDA's chart is irrelevant.

What about their chart on page 10? Still irrelevant?

They look quite similar and chart 11 says there were zero recalls for tobacco products.

Is it pure coincidence that they got tougher exactly when the new head said she was going to get tougher?

Or did industry suddenly get worse at quality and productivity?

You are falling into the same trap as Alex, trying to divine information from charts that don't have the type of information that you are interested in. If you want to talk about recalls, look at data regarding recalls (and medical devices lead the pack which is not the subject of discussion here). You also have a lot of recalls of biologics but how many are blood products and how many are vaccines; you cannot tell from the table in this slide deck. If you just want to talk about "warning letters per Center" the chart is just what I said it was and Alex can try to spin things however he wants; he can probably even bar me from this blog but that's not terribly relevant. Alex did us a disservice by pulling out a chart that really does not make the case he wants to make. As I said in an earlier post, there is a fair amount of stuff that needs to change at the FDA but simply and blindly using data that in no way makes the case is just junk science of the worst degree. Let's call it like it is - this is just comparing apples and oranges and is not addressing the root cause issues. There's a lot of data on the FDA website that one can look at; that's your job if you accept it but don't blindly follow something that doesn't make any sense or try to argue from incomplete data.

My final point for the day is that I expect better from those who are critics and this is not "better."

So what were these actual warnings about, anyone know? Point being how serious were these violations or were these frivolous enforcements?

No, the entire point is whether the FDA is increasing enforcement and whether enforcement is a free lunch.

We know the answer to the second question. Apparently the FDA has made it super hard to actually determine the answer of the first question but we basically know what their intention is and as I showed way above there appears to be an increase in GMP warnings.

Both charts indicate the answer to the first question is yes. The head of the FDA says the answer is yes. Multiple organizations say the answer is yes and that the answer to the free lunch question is no.

It seems to me that you are doing us the disservice.

This is curious. If you look at the graph it shows 1720 warning letters in 2011 but if you go to the link Alex provided to the FDA Electronic Reading Room, the FDA issued 727 warning letters. So I went back in the Reading Room to get the Data from 2006 to 2011. I can never seem to compose tables well in comments, so here is a list:

Warning Letters

2006 468 (538 in Graph)
2007 376 (471)
2008 433 (445)
2009 566 (474)
2010 619 (673)
2011 727 (1720)

Subject including GMP

2006 96 (21%)
2007 122 (32%)
2008 181 (42%)
2009 177 (31%)
2010 212 (34%)
2011 344 (47%)

Oh, and in 2009 there were 16 Tobacco warnings, vs 5 in 2010 and 23 in 2011 and 10 thus far in 2010.

What this tells me is that FDA may have hired someone from BLS.

Let's review folks:

Alex's TOTAL reference to the chart is "the story in essence is this:"

And that's what the story in essence is. If the FDA published a misleading chart, does that change the essence of the story? Unfortunately no. It probably means that if the FDA didn't want to publicize a chart leading you to believe they ere "getting tough" on big pharma, then they wouldn't have done so.

See page 10 at Orange14's link above. Same story essence. Or, don't take my word for it, take the word of the head of the FDA.

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