Managing Drug Shortages: A Buyer's Perspective

June 2013 - Vol.10 No. 6 - Page #6

Drug shortages have increased in number over recent years resulting in exacerbated medication safety concerns that impact the entirety of hospital operations. Hospital pharmacies are particularly hard hit, as they face daily challenges in finding creative solutions in order to maximize inventory and usage of medications on shortage. For the pharmacy buyer, the pursuit of medications in short supply has come to dominate the workday, as shortages impose additional responsibilities and pressures on the position. Since medication shortages often are discovered at the time of procurement, it is necessary for the pharmacy buyer to be proactive in managing inventory, resourceful in finding alternatives, adherent to cost containment, clinically knowledgeable to prioritize shortages, and cognizant of the most up-to-date developments within the pharmaceutical supply chain. Being perceptive and well versed in clinical practices will allow for better inventory management during shortages and ultimately provide the best level of pharmacotherapy and care for patients.

St. Joseph’s Hospital is an 883-bed community hospital offering extensive specialized services. In 2012, St. Joseph’s experienced 134 different medication shortages, the majority of which involved sterile injectable medications. Unfortunately, many of these specific medication types were sole source products. When looking at the 625 injectable line items on formulary, 30% of these medications went on shortage during the course of the year. Managing these shortages and all the intricacies that fall within their realm has been extremely challenging, and because such shortages are not anticipated to dissipate anytime soon, it is vital to have a process in place along with a supportive workgroup to dissect, discuss, and disseminate operational information appropriately and effectively.

Open Wholesaler Communication
Drug shortages emerge for various and often unexpected reasons. Manufacturers may exit the market due to lack of profitability in production of a certain medication, or issues may arise involving quality and manufacturing problems that require corrective action. Unanticipated increases in demand and unavailability of raw materials also account for product shortages. Regardless of the reason, the impact of these availability issues can be profound if not handled appropriately. 

Developing an understanding of how medications filter through the supply chain is essential in enabling the pharmacy buyer to determine the severity of, and subsequently manage, product shortages. When a medication is unavailable to the buyer for several days, it raises concern at the wholesaler level. To address this, wholesaler representatives are contacted to gain information as to whether there is simply a delay in an order coming in (a temporary outage) or the product is moving toward a manufacturer shortage. In either case, the wholesale representative should be able to advise on whether alternative products are available. Keep in mind, wholesaler entities may impose strict allocations on medications moving into short supply to appropriately ration these products and prevent facilities from hoarding inventory. To better understand the potential impact of each shortage, we have incorporated daily communication with our wholesaler into purchasing workflow. 

In an effort to anticipate the wholesaler’s available inventory, the pharmacy buyer clearly details his or her facility’s usage to the wholesaler when ordering alternative medications. By providing this information, wholesale buyers can proactively order alternatives in anticipation of a shortage to meet the needs of their customers and simultaneously enable more products to filter through the wholesaler channel during shortages. For wholesalers, managing medication inventory of that magnitude can be challenging in and of itself. Therefore, alerting wholesaler representatives of critical, high-use products will put them in a better position to provide for specific facility needs.

Direct Purchases
In today’s pharmaceutical purchasing market, the majority of medications are acquired through a wholesale entity, but due to the outsized number of shortages in recent years, there has been a significant increase in purchases made directly from the manufacturer. In 2011, St. Joseph’s Hospital pharmacy averaged 77 direct-from-manufacturer medication purchases per month. In 2012, these purchases increased by more than 80% to 141 per month—almost 1,700 additional direct orders per year. The remarkable rise in drug shortages and the proportional rise in direct ordering from the manufacturer have created a purchasing environment reminiscent of the days prior to the existence of wholesale prime vendor programs.

Given this environment, once a product-purchasing delay is confirmed as an actual shortage, the natural next step is to begin negotiations in the attempt to acquire any possible stock from sources beyond the wholesaler. Because these medication purchases are facilitated directly through the manufacturer, it is wise to maintain a healthy rapport and open communication with drug manufacturer representatives, similar in manner to the building of a relationship with your wholesale representative. These contacts can provide insight into the reason behind shortages, as well as become a reliable source to turn to in the event direct manufacturer negotiations become necessary.

Ramifications of Direct Purchasing
When making purchases directly from the manufacturer due to shortage, certain budget factors and workflow implications can fall by the wayside, as these decisions often are made at a moment’s notice in the attempt to acquire any available product. As such, it may be advantageous to quantify these added implications to help aggregate the total impact of drug shortages on a facility. These implications include: 

  • Inability to acquire additional wholesaler cost-minus discounts
  • Increased medication delivery turnaround times (3 to 5 business days) including additional delivery/freight charges for expedited shipments
  • Increased workload for purchasing team to place direct orders, track and receive additional deliveries, and reconcile invoices and purchase orders
  • Increased workload for the finance department to process additional payments for invoices from multiple vendors
  • Creation of a more complex medication acquisition and tracking process due to interaction with multiple vendors

In light of these factors, direct-from-manufacturer purchases are considered less optimal, but during a shortage, it is perhaps the most dependable route given the ultimate control that manufacturers have over the allocation of their medications.

Overstock Inventory Management
Many health care providers have been adopting Lean methodologies and other medication cost-saving practices for several years now, and this includes pharmacy’s attempts to streamline the inventory process so that medication use is optimized while waste is minimized. Unfortunately, another detrimental effect of drug shortages is that they create an anomalous need to acquire and keep additional inventory (overstock) on hand in order to sustain proper medication therapy until the shortage is resolved. Consequently, managing overstock inventory in a Lean environment can be quite challenging considering the information on projected or anticipated release dates for shorted products is unreliable at best. Making exceptions to adopted policies on inventory management and finding storage space for these medications in the pharmacy tends to be operationally and logistically unsound. Accordingly, conditions under which policies governing inventory management may be overruled must be established and followed in each shortage instance.

Working through Shortages
The main goal when working through shortages is ensuring the continuum of patient care and safety. To enable this, it is advantageous to establish an internal shortages support group to discuss individual shortages and how they affect pharmacotherapy, workflow, order entry, bar coded medication administration (BCMA), and dispensing processes both within the pharmacy and beyond. At St. Joseph’s Hospital pharmacy, a workgroup known as the Formulary Management Team was created comprising pharmacy managers, coordinators, an automated dispensing technician, and the purchasing team. Each representative contributes their expertise in managing not only shortages, but any changes to formulary as well. The areas of focus are as follows:

Purchasing Team—Pharmacy Buyer, Inventory Control Technician

  • Assesses inventory and alerts the Formulary Management Team of low stock due to drug shortage 
  • Provides current hospital-wide inventory counts, purchase history of medication(s) on shortage, and anticipated medication release dates
  • Researches and if possible acquires any available alternative products and/or concentrations

Automated Medication Systems Team—Coordinator, Technician

  • Provides automated dispensing usage reports of medication on shortage
  • Adjusts inventory in automated dispensing cabinets (ADCs) accordingly during shortage
  • Manages formulary presence in computer systems, BCMA, and automated dispensing systems

Pharmacy System and Clinical Coordinators

  • Researches and suggests therapeutic alternatives for medications on shortage
  • Evaluates how shortage will affect order entry, smart pumps, and dispensing processes for other departments
  • Assesses impact on overall operations and workflow for technicians and pharmacists; makes revisions accordingly
  • Provides drug shortage and process change communications to pharmacy team and other relevant parties

Pharmacy Management

  • Evaluates safety risks associated with product changes
  • Communicates changes in dispensing processes to nurse managers and physicians, as needed 
  • Assesses overall budget impact and communicates findings to senior leadership

Each medication on shortage is evaluated individually based on critical nature and specialty use areas. Data brought forth by the Formulary Management Team is analyzed based on how long the shortage is anticipated to last, estimated medication supply on hand, and availability of therapeutic alternatives. Action plans are then executed. While this process seems fairly elementary in description, on the contrary, it is a very thorough and extensive progression that often leads to general process improvement. Having detailed discussions on the utilization of specific drugs tends to uncover previously unknown, yet beneficial outcomes. These include better management of inventory in central pharmacy stock and ADCs, formulary consolidation, minimization of waste and maximization of product use, as well as positive revisions of pharmacy workflow inefficiencies. 

Positivity in Changing Times
As the medication supply gatekeeper, drug shortages impact the pharmacy buyer first and foremost. Severe drug shortages necessitate major priority shifts, and as the point person for acquiring medications, the buyer’s management of the situation can instill an overall sense of urgency resulting in time management improvements. Similarly, improved networking within the pharmaceutical industry allows for a better understanding of the reasons behind drug shortages, which assists in developing proactive forecasting and problem solving skills. Attaining additional clinical knowledge also has assisted in prioritizing multiple shortages that may occur at the same time. Choosing which shortage management scenarios should take precedence over others is an organizational skill that can be nurtured and positively affected by knowledge of therapeutic and immediate-use factors. 

Regardless of the number of drug shortages encountered on a daily basis, it is of the utmost importance not to lose sight of cost savings initiatives and medication safety measures. Some initiatives, such as tracking and purchasing new generics, can enable significant savings, even in the midst of a shortage. In 2012, St. Joseph’s pharmacy managed a cost savings of over $470,000 due to the transition to generic products over brand. Likewise, evaluating low-use, high-cost medications for consignment in order to decrease carrying costs and maximize cost savings opportunities through GPO programs and volume contracts are value-added components.

Medication Safety Is Always the First Priority
In advocating for medication safety, the pharmacy solicits for and reviews any submissions from clinicians of products that are visually similar or have manufacturer labeling that raises safety concerns, such as the same drugs with similar labels for different volumes, and similar labels for different drugs (see Figure 1). The number of look-alike/sound-alike medications found in the average hospital’s pharmacy inventory also has increased in recent years because shortages often require hospitals to carry several different manufacturers’ products. 

Click here to view a larger version of this Table

Solidly consistent drug purchasing has simply become unrealistic in today’s poly-shortage environment. Therefore, constant internal monitoring as well as reporting of any safety concerns to the Institute for Safe Medication Practices (ISMP) and applicable drug manufacturers is necessary to foster awareness. Medication shortages only serve to further prove the evident benefits of automated approaches, such as BCMA, in providing a double check to ensure the five rights of medication administration are adhered to.

Education and Communication of Drug Shortages
Each hospital pharmacy employs various methods to communicate with and educate staff, both internally and externally, on the impact of drug shortages. At St. Joseph’s Hospital pharmacy, a purchasing training module was developed which focuses on the gamut of purchasing processes, as well as providing details on handling drug shortages. This training module provides education to the entire pharmacy team on how drug purchasing is facilitated, thereby enabling them to effectively contribute to the shortage solution and provide more appropriate communication to other departments. 

In addition to this training module, a periodic drug-shortages status list is provided to the pharmacy team to keep them abreast of the current state of medication availability. This list includes references to management of processes and other therapeutic initiatives directed to specific medications in various stages of shortage. Fluctuating medication availability can affect the supply chain almost instantly, especially if a product goes into recall, so timely communication is vital when a change in process or clinical practice is required. To limit alert fatigue, prescribers are notified only when medication alternatives need to be considered and may be consulted for input into appropriate options. Involvement of expedited P&T committee action likewise may be necessary for a long-term shortage, whereas one-on-one communication between pharmacists and prescribers at the time of ordering may be more appropriate for a short-term shortage.

Medication shortages show no discrimination to therapeutic class or health care setting, and working through a defined process is paramount to ensure appropriate patient therapy and safety. Even though the continuous presence of drug shortages has steered the pharmacy buyer’s responsibilities in unexpected directions, it also has contributed to a heightened sense of drug utilization awareness. In addition to proffering lessons in time management, enhancing networking skills, and sharpened problem solving, the pharmacy buyer position has become a more valuable component in the medication use process and continues to contribute to the high level of service that patients deserve and have come to expect.

Melissa Collins, CPhT, RPhT, is the pharmacy buyer at St. Joseph’s Hospital in Tampa, Florida. She was awarded the Outstanding Pharmacy Buyer of the Year for 2012 from the National Pharmacy Purchasing Association.


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