Transcript of Q&A by Rep. Chris Murphy on the drug shortage crisis

House Oversight and Government Reform Committee 

“Drug Shortage Crisis: Lives are in the Balance” hearing held on Nov. 30, 2011 by the Subcommittee on Health Care, District of Columbia, Census, and the National Archives

Transcript of Q&A by Rep. Chris Murphy (D-Conn.):

Rep. Chris Murphy (D-Conn.). IMAGE SOURCE:

Rep. Chris Murphy (D-Conn.):

“Thank you, Mr. Chair. Thank you very much for this incredibly important hearing.

“According to probably the most comprehensive FDA study that we have, the leading cause of these drug shortages are quality problems during manufacturing. I think the study showed about 54% of the shortages studied were due to manufacturing problems.

“I guess I’ll pose the question to you, Dr. Thompson, you mentioned that there’s a multitude of causes here. But while we spend most of the time here talking about pricing, the data, at least coming out of the FDA, suggest that the biggest problem is manufacturing. The information you’ve collected thus far that back up the idea that the biggest cause here is manufacturing problems?”


Dr. Kasey Thompson, Vice President of Policy, Planning, and Communications for the American Society of Health-System Pharmacists: 

“Yes sir, that 54% – that number is the one that’s has been backed up by the research we’ve done over the years on the issue.”


Rep. Chris Murphy (D-Conn.):

“That study goes on to further say that outside of that 54% that’s due to product quality of manufacturing issues, 21% is due to delays in capacity issues, 11% is due to discontinuations, 5% is due to raw material issues, 4% are increased demand because of another shortage, etcetera and etcetera. None of the reasons that the FDA cites are due to pricing issues and certainly none of them are related to 340B.

“And so maybe, Mr. Okon, I’ll ask you the question and I’m glad to hear comments from others. Is this study wrong? And if it’s not, how do you square the focus that we’ve heard in this panel on pricing when the FDA suggests that it’s much more due to underlying manufacturing issues?”


Ted Okon, Executive Director of Community Oncology Alliance:

“No, I think that’s absolutely right. But I think what you have to understand, Mr. Murphy, is that what we’ve done is we’ve consolidated the manufacturing market. So we’ve looked at – and actually I have a couple of charts looking at ANDAs. That’s an abbreviated new drug application that the manufacturer of a generic has to file; it’s an abbreviated process. If you look at those numbers of new ANDAs – I think put up – of clorpactin before, I can show you 17 that have been filed for most form strengths. There are only three or four manufacturers that have put the drug in the markets now. So you can look at double-digit numbers of ANDAs have been filed, but if you look at the number of the available manufacturers now for any type of product, it’s usually one, two or three. What happens is as a result of that, any manufacturing glitch, any quality glitch, anything that the FDA says, which is absolutely right, it’s happening on a much smaller base. What happens is typically you take the whole production line – other products – off cycle. That’s our problem. The problem is that it’s economic, and it’s not using reimbursement as an excuse. It was driven by that. That’s the root cause. But because we’ve consolidated the manufacturing market down now, any kind of a glitch – regulatory, quality, supply glitch – is going to be magnified.”


Dr. Scott Gottlieb, Resident Fellow at the American Enterprise Institute: 

“The other issue is that it’s true that the agency’s gotten more vigilant in recent years around the manufacturing of the parenterally injected products, particularly looking at foreign sites after years of criticisms that it wasn’t doing enough to look at the overseas manufacturing facilities. It’s gotten more aggressive. So it’s stepped in; it’s brought regulatory actions against a lot of manufacturers in this space. That’s prompted many of them to have to take remediation that’s increased the manufacturing cost increase – cost of the goods.

“I think the pricing issue comes into play when they can’t take price increases to reflect their higher costs of goods. So rather than continuing the product at a loss, more manufacturers are choosing to get out of certain lines of business.”


Rep. Chris Murphy (D-Conn.):

“So let’s take the pricing issue because there’s been incredible benefit of generic drugs coming out on the market and the very justifiable incredible decrease in costs that comes along with it. So if you believe that pricing is the cause here, how do you adjust upwards for shortage areas without adjusting upwards for drugs that aren’t shortage drugs? And then, secondarily, how do you do that in a way that doesn’t create an incentive for shortages? How do you create an incentive to make the stuff you really need without creating a reason for people to declare shortages in order to get a little extra benefit? Maybe I’ll ask that to Mr. Kalmans.”


Walter Kalmans, President of Lontra Ventures:

“A couple of comments. One is the FDA paper, I think, is accurate but the FDA regulates manufacturing and so the FDA is commenting on its mandate, not commenting on pricing because it’s outside of their mandate. I’d like that noted.

“Second, if you look at the data, the drugs that are in shortage tend to be the lower-priced generic drugs, not the higher-priced generic drugs. There aren’t manufacturing shortages cited for many high-priced generic drugs, just the low-priced ones. So I think that’s evidence that points to the direction that pricing is a factor.

“Thirdly, I’d mentioned earlier and I’ll mention briefly again, I think that after a drug has gone generic, it has taken a price decline over a period of time there needs to be a rebalancing so that drugs, rather than having the bottom fall out, are able to move back up. So therefore I think after the drug has been benching for 12 to 24 months, then there needs to be something put in legislatively to allow that price to float more freely.”


Rep. Chris Murphy (D-Conn.):

“Thank you very much.”



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