FDA Tackles Drug Shortages
October 30, 2011
Posted by chcablogadmin in : Cost Reduction, Group Purchasing, Industry Trends, Quality
by John VanEeckhout, Pharm.D., Vice President, Clinical Services, CHCA
On Sept. 26, I participated as part of a panel discussion for the Drug Shortage Workshop presented by the FDA Center for Drug Evaluation and Research. The objectives of the workshop were to update the status of drug shortages in the U.S. including trends over time and a discussion of the impact on patients and the health care system; describe the FDA’s role in and regulatory authority related to drug shortages; hear perspectives from the health care sector, patient representatives and the industry, and seek perspectives on solutions to alleviate or prevent drug shortages.
As part of the professional group panel offering recommendations, I shared the particular vulnerability of our children’s hospital patients — pediatric dose substitutions and different strengths; severity of medication errors on vulnerable patient population, and higher use of injectables to name a few. In addition, I outlined our specific drug shortages — hematology and oncology, electrolytes and trace elements used in TPNs for neonates and nutritionally at risk patients; specialized agents for diagnostic procedures such as intravenous Arginine, and controlled substances such as Morphine and Fentanyl in small dose forms to avoid overdoses. I shared our efforts to date to diminish the effects of the shortages such as close contact among pharmacy personnel, vendors, buyer groups and directors. We’ve also worked with Premier on education about the risks and costs associated with gray marketers.
Among our CHCA recommendations:
- Improve communications to end users and distributors of pending and existing drug shortages;
- Allocate remaining supplies by drug wholesalers or directly by the manufacturer;
- Create CDC-like, federally controlled repositories of critically needed drugs similar to pandemic and disaster supplies now in place;
- Review the effects of Regulatory Action by FDA with drug manufacturers; and
- Provide an incentive/stimulus to drug manufacturers by federal, state or local entities to maintain and improve or build new factories for manufacturing critical drugs in the U.S.
The FDA stated they would take more accountability and vowed to be much more effective in the future. They cited 100 drug shortages prevented by FDA intervention. For several of the drugs in limited supply, five vendors are expanding their plants in the next three to four years. Three tactics outlined are as follows:
- Better communication among vendors, distributors, hospitals and the FDA about shortages;
- Asking vendors to know who they are selling to, to avoid gray marketers or problems with drug pedigree; and
- Protecting the supply chain particularly for the most vulnerable patients, e.g. oncology, small unit production, low volume and high expense drugs.
Children’s hospitals were also represented as part of a ASHP Drug Shortages Summit Regulatory-Legislative Work Group by Michael P. Link, M.D., President-elect of the American Society of Clinical Oncology and a pediatric oncologist at Lucile Packard Children’s Hospital at Stanford.
The CHCA Pharmacy Team is working on multiple fronts to counter drug shortage issues including legislative efforts, advance warnings and connecting available supplies to Owner Hospitals with an acute shortage of a drug product or unusually high demand. Specifically, we are working with partners on the following efforts:
- Premier Pharmacy Drug Shortage group for latest updates on their activities on supply availability and failure to supply refunds;
- Contracted Pharma vendors who can supply small quantities of short supply drugs for critical needs of patients e.g. chemotherapy treatments or other treatment regimens;
- CHCA Pharmacy Buyers and CHCA Pharmacy Directors who through networking and utilization of various legitimate drug wholesalers, expedite supplies of drug to their colleagues location in need of the drug in short supply; and
- Advocacy efforts through Healthcare Supply Chain Association (HSCA), HSCA Pharmacy Committee and Premier, and by talking directly to key decision makers on Capitol Hill.
Recently, I discussed drug shortages and their impact on children’s hospitals with Sen. Herb Kohl’s (D-WI) legislative aides and the Chief Investigator of the Special Committee on Aging. They are very interested in the gray market issues that have become a source of concern in our industry. I am supplying them information on gray market sources and examples of solicitation of our Owner Hospitals.
We are also in discussions with our current vendors to determine if we have any looming shortage issues we may not be aware of at this time. This is especially vital concerning drugs for special needs that are truly small market products.
Please contact me with any questions. (john.vaneeckhout@chca.com).
add a commentGray Marketers Taking Advantage of Drug Shortages
August 28, 2011
Posted by chcablogadmin in : Group Purchasing, Industry Trends
by John VanEeckhout, Pharm.D., Vice President, Clinical Services, CHCA
Editor’s Note: See the previous blog entry on drug shortages.
The current drug shortage situation — the highest in a decade — is a case study of supply and demand principles. Costs are rising exponentially as the drugs become harder to attain. There is also a growing trend of price gouging by “gray market” vendors. Also known as parallel market, “gray market” refers to the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.
A few weeks ago, Premier publicly released recommendations as a part of analysis which shows the average markup on many drugs in short supply is 650 percent. Even higher markups were seen in certain critical care areas including cardiology and oncology; so the sickest patients are most at risk.
In addition to the astronomical costs, the quality of the drugs cannot be assured since you don’t know how the “gray market” vendor gained access to the product. The drugs could be counterfeit and since pedigrees aren’t officially documented and tracked, you assume a huge liability risk when dealing with these distributors.
CHCA and Premier both recommend using recognized distributors who have a documented chain of custody, and we’ve been in close contact with your pharmacy directors.
We are working on multiple fronts to counter drug shortage issues including legislative efforts, advance warnings and connecting available supplies to organizations in high demand. I’ve been asked to participate as a panel member at an upcoming Drug Shortage Workshop presented by the FDA Center for Drug Evaluation and Research on Sept. 26. The workshop will focus on the causes and impact of drug shortages and strategies for addressing shortage issues. I will report back to you the outcomes of the workshop.
We are working in close partnership with your pharmacy directors to address drug shortages in all Owner Hospitals. In addition to your pharmacy team, you may contact me (johnvaneeckhout@chca.com) or Ben Lizak (ben.lizak@chca.com) with an urgent drug shortage issue, and we will do our very best to help you attain the necessary drugs without disruption of care.
WEBCAST UPDATE: J.P. Morgan Economic Outlook – Debt Crisis 2011
August 14, 2011
Posted by chcablogadmin in : Financial Viability, Healthcare Reform, Industry Trends, Leadership
We thought we’d give you a brief synopsis and another chance to hear a timely webcast from last Thursday–several of you were on the call. Bob Muller of J.P. Morgan outlines the current ecomonic situation and recent events in D.C. including the downgrading of our U.S. credit rating with S&P. No doubt, you are all following these events closely as they dramatically unfold. Bob offers great takeways and action items for children’s hospitals at the end of the recap. – JR
INTRO:
Given the current goings-on in Washington and concern over the impact on CHCA Owner Hospitals’ VRDBs, we thought it would be very timely to hear from Bob Muller, Managing Director – J.P. Morgan Chase & Company. During the webcast, Bob shared his take on the U.S. debt crisis and the potential impact on the bond market and children’s hospitals. (You may access the webcast and PowerPoint or PowerPoint only below.)
NOTES:
The last few weeks in the financial industry and in Washington have been stunning to say the least. There is a new normal over the last few days with bouts of intense volatility in the market. What does it mean for you going forward?
There is a possibility of real reform but also the possibility of increased gridlock on the political front.
Although the S&P could have waited to make the decision to downgrade our credit rating, there are justifications and S&P has explained their position very clearly. They would not accept the U.S. continuing to take on more debt to reach Italy’s level of net debt to GDP in the next 10 years. The Budget Control Act didn’t bend the cost curve significantly enough through cuts and budget adjustments.
This is a meaningful event that will have a ripple impact for decades to come. It is the most important credit action I’ve seen in my 30 years as an economist. Eventually, every credit area including your own rating will be impacted.
The debt ceiling agreement opens the possibility of real reform, or could be the continuation of unsustainable policies.
If the President and Congress reach an agreement on spending cuts and revenue increases that avoids sequestration and deals with entitlements, Moody’s may keep our rating at “AAA” and S&P could stabilize at “AA+.” An S&P increase to “AAA” won’t happen anytime soon. We need to not only stop the debt load increase but show true reversal of the trend. If this scenario plays out, health care payments to providers will be curtailed but benefits won’t be eliminated.
If the “super committee” fails to approve a deal or a compromise is rejected by Congress or the President, automatic sequestration kicks-in. This will result in losing our Moody’s “AAA” rating and the S&P will further downgrade us. Sequestration results in mal-distributed cuts which would have to come from discretionary budget funds. This is what the government does for us: workers, Social Security check processing, federal research grants, the EPA, energy subsidies, etc. Mandatory spending would be walled off—food stamps, Medicare, Social Security, etc.—but Medicaid would be cut by two percent.
The deal improves the debt-to-GDP trajectory, but with few immediate cuts, much of the implementation is left for future congresses.
The actual FY budget cuts kick in with $900 billion to deal with including NIH funding which picks up momentum in ’13 and ’14.
By walling off entitlements, discretionary spending will be hard hit (especially if the automatic sequester kicks in).
If the “super committee” can’t reach consensus which it may not with its makeup of “super liberals” and “super conservatives,” sequestration will further affect discretionary cuts. Health and Human Services would be greatly reduced which in turn would have some impact on every American. If the Defense budget is threatened push back on sequestration might lead the committee to look at revenue increasing measures including limiting tax deductions.
Defense spending is the other prime area targeted for savings. However, health care spending will be the major driver of spending growth. Health care costs are the single biggest issue dwarfing the costs of Social Security. Calculations show the majority of increases in Medicare and Medicaid—mainly in rising nursing home cost projections.
Revenue increases are also needed, but solely taxing the rich is insufficient.
To bend the curve back and reinstate the triple rating, a Pew analysis shows a multi-pronged approach is needed to reduce debt. The required permanent spending cut and tax hike would be about 12 percent beginning in 2016.
The S&P downgrade drew headlines, but broad underlying economic weakness caused the significant fall in rates and equities.
We’ve only seen the market gain and lose these percentages in the same day seven times over history. However, we’ve received recent good news on unemployment rates and decreased energy prices. Consumer confidence is shaken and if stock prices continue to drop and stay declined, higher income consumers won’t spend.
Tax-exempt rates follow UST yields lower over the week; volatility is expected to continue on the back of S&P downgrade of the U.S.
Municipal bond funds experienced heavy outflows of $232 million last week.
Tax-exempt rates are below historical averages.
They are at the lowest rate in 20 years. It is a good time for a high-rate borrower to fund projects.
Although forecasting is difficult, interest rates are generally expected to increase in 2011.
Q&A
Q: Forecasts might indicate a recession. Are we in one?
A: No, I don’t think so. Our jobless claim numbers have improved which belies a recession. At J.P. Morgan, we estimated odds of another recession as three-to-one. However, there is concern about Europe—they could be sliding toward a recession.
Q: If Defense spending is cut, won’t that have a significant impact on unemployment?
A: Yes, it could keep us from a further reducing unemployment or even raise the numbers. Sequestration would have a huge impact. States affected would have to make other cuts. Maryland, Missouri, Connecticut and other states with large procurements along with the Sunbelt states with most of the military bases would be hardest hit.
Q: What are your thoughts about the makeup of the “super committee?”
A: On a simple macro level, the members reflect the current divisive ideology in D.C. However, there might be members willing to compromise. Republican members Rob Portman of Ohio and Pat Toomey of Pennsylvania seem to be reasonable.
Even the best outcome by the “super committee” won’t end with the best solution. The best case scenario has to address an increase in revenue and reduction of tax deductions, maybe even those for non-profits. This would have a direct impact on your endowments and fund-raising ability.
Q: Is there a call-to-action or do you have advice for our children’s hospitals?
A: 1.) It is a free-for-all in D.C. right now and will be for the rest of the year, not just with the “super committee” but with specific areas of reduction. NIH will be hit hard. As you protect your interests, they may push back. So, you need to have a strong lobbying strategy and a presence like never before. Children’s hospitals will need to fight the Defense and the non-discretionary items to keep Medicaid payments and other funding.
2.) S&P changed the economic landscape with our downgraded rating. Rating agencies have not mentioned health care yet but they will start figuring out the context of a reduction in entitlement program payments and impact on your financial picture. You need strategies for protecting your credit ratings. As the sovereign rating is downgraded, your rating will ultimately be affected. Children’s hospitals’ dependence on government revenue means you will be required to be more transparent in your interactions with the government and rating agencies will ask for much more information.
3). Be aware that your investments are threatened. If the volatility of the market continues and prices and values drop and won’t rally on a sustained basis, then your portfolios will be affected.
4.) Interest rates are very low—historically low. If you need to finance or refinance it is an attractive time for fixed rates.
Observation Patient Trends and Management Strategies
August 14, 2011
Posted by chcablogadmin in : Financial Viability, Industry Trends, Manpower & Workforce
Operational and financial challenges exist when children’s hospitals use the “observation status” patient category. To understand observation patient trends for children entering hospitals through Emergency Departments, a group of physicians, operational leaders and CHCA staff members analyzed PHIS data from 16 CHCA hospitals. To prevent costly delays in throughput for patients entering the ED, the group offered several successful strategies. They include monitoring entry points to identify appropriate patient status early in the stay, educating staff on observation guidance (medical necessity) based on Medicaid, Milliman© and/or InterQual® criteria, developing order sets and/or pathways to avoid delays in treatment, and forming relationships with payer groups to facilitate prevention and timely resolution of denials. Learn more about the groups’ findings and additional strategies. If you have questions, please contact Carla Hronek (carla.hronek@chca.com or 913-981-4165).
