Preventing Drug Shortages

We know that patients around the world rely on our medicines, and we are committed to doing our part to ensure continuity of supply, including through policy solutions that tackle root causes of supply disruption.

Preventing Drug Shortages

At Viatris, we are committed to improving access to high-quality medicines while working to ensure a reliable supply so patients can get the treatments they need, when and where they need them. We know that patients around the world rely on our medicines, and we are committed to doing our part to ensure continuity of supply.

Preventing drug shortages is not something that we can do alone, however. Addressing the root causes of drug shortages requires partnership across all healthcare stakeholders, and in many cases requires careful analysis of the systemic drivers and market dynamics that make drug supply chains more susceptible to shortage.

Market does not recognize and reward manufacturers for mature quality management systems

Quality problems with economic roots: Manufacturers are more likely to keep costs down by minimizing investments in manufacturing quality, which eventually triggers supply disruptions and shortages

Lack of market reinforcement of effective quality management maturity: The market does not compensate drug manufacturers with price premiums for mature quality management

No mechanism for transparency of quality between buyers and sellers: Even if market actors were willing to pay more for higher quality, there is no efficient way to assess a price-quality trade-off

Logistical and regulatory challenges make it difficult for the market to recover after a disruption

Pharmaceutical firms often cannot increase production substantially without incurring additional costs: New equipment and regulatory costs may not be recouped in the marketplace

Global supply chain serves many markets subject to different regulations, increasing costs and delays: 88% of API manufacturing sites and 63% of FDF manufacturing sites serving US are overseas

Supply-demand disconnect means new entry is unlikely: Abnormal supply-demand relationship means price increase may be too small to induce entry, $1 – 5 M cost to prepare application for approval.

The U.S. Food and Drug Administration conducted in 2019 an in-depth study of drug shortages, and found that economic forces, resulting from a mix of market dynamics and regulatory challenges, are the root cause of drug shortages.

FDA Report

Price competition driven by unsustainable contracting practices has resulted in generic price deflation of 61% from 2016 to 2019. Coupled with unpredictable revenue streams and high investment requirements in regulatory and quality systems, this has imperiled the viability of maintaining these low-priced generic drugs on the market.

As generics exit the market, formerly robust multi-source availability becomes reliant on a smaller number of manufacturers, increasing the risk of a shortage should any supplier encounter a production issue or logistics constraint.

While there is no single solution to prevent drug shortages, there are important steps to address the root causes.

Ensure market predictability and sustainability:

Improve regulatory efficiency and global regulatory harmonization

Identify essential medicines and vulnerable products

Association for Accessible Medicines 2023 U.S. Generic and Biosimilar Savings Report

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Preventing Drug Shortages