Causes

Possible Causes of the Drug Shortage

The causes are unknown to most people –patients, pharmacists, and physicians–who are dealing with this problem.

Those who do know the causes are reluctant to publicize them.

Health Canada insists that, since 2017, it requires pharma companies to indicate the cause. However, companies are constrained to select a response from a flip-down menu that has vague choices: “disruption in manufacturing,” “shortage [unexplained] of active ingredient,” “increased demand,” “delay in shipping,” “requirements related to compliance with standards,” and “other.” The vast majority select “disruption in manufacturing.” For discontinuations, companies often select “business decisions.” Readers will likely agree that these “causes” are opaque if not obfuscating.

Several causes of shortages usually operate at once, in various combinations depending on time and place. The American FDA has a list of possible causes. For example, in its 2022 report on the baby formula shortage it cited more than a dozen factors. Another example shows that the 2023 shortage of penicillin for syphilis was provoked by a rise in syphilis cases (demand) and shortage of other drugs.

The following is a list of 17 robust possibilities that we have gleaned from the literature on the problem:

1. Big pharmaceutical companies discontinuing or actively combatting generics in order to enhance sales of newer, more expensive, brand-name drugs. Sometimes companies discourage sales of their own cheaper brands or arrange “deals” in marketing. For an example, click here. For another example, in 2013 a lawsuit has ensued between two American pharmaceuticals Hospira and ICU over marketing practices to Canada. Pharmaceutical companies in various countries are also lobbying for longer patent protection before generic drugs can be released; this concern is part of Canada-European Union free trade discussions. For a discussion, see here. Sometimes pharmaceuticals “tweak” their drugs slightly to apply for a renewed patent in a process called “evergreening.” A landmark case in India, rejected evergreening of an important cancer drug. For an April 2013 discussion of pay-for-delay, click here. In September 2014, New York launched a lawsuit against manufacturers for anti-trust manipulation of Alzheimer market, by deliberately stopping production of a cheaper form to favour a newer more expensive form in advance of patent expiration; the company reluctantly agreed to keep making the drug for 60 more days. In June 2016, the US Senate heard about a bill designed to prevent the brand-name industry from blocking the manufacture of generics. But in Canada, the rare companies that do supply generics seem to be harassed rather than supported (see example of Biolyse here). Some blame direct market manipulation to cause prices to increase (see Pakistan and Egypt, both in 2017). Although the longstanding saline shortage was aggravated after 2017 hurricane damage to plants in Puerto Rico, the shortage had been going for years and some suggest that it became ‘acute-on-chronic’ owing to manipulation by product manufacturers. In April 2017, the US launched an antitrust probe into saline solutions, but by February 2019 it was dropped. In late March 2018, the blaming-pharma hypothesis was renewed in both the USA and India and manipulation of markets was alleged to stifle generic products. In October 2018, brand-name pharma’s practice of denying products to generic firms to allow for equivalency tested was criticized by Canada’s competition bureau for being against the Competition Act. In February 2019, Spain’s competition bureau targeted nuclear medicine companies for deliberately creating a shortage. Also in February 2019, the US Senate Finance Committee has called pharma executives to testify over their role in setting high prices (see again below). In November 2019, Teva responded to a public outcry against its business decision to stop making vincristine (an important drug for childhood leukemia), claiming it had only 3% of the market; however, combined with manufacturing problems at Pfizer — the only other maker– a severe shortage arose. In some cases, making a fuss works! Patent tactics and drug prices again came under review in November 2023. The following month the US govt began to examine pharmaceutical patent practices and considered ways to boost national production and enhance transparency (see here, here and here). In June the United States Pharmacopieia, launched a report showing that “business decisions” — i.e. discontinuation of low cost medications — are an important factor in the shortages. The idea that drug companies are to blame for shortages will not go away. But it is insufficient to explain the shortages.

2. Prices of generic drugs. Too few makers. Are prices too low to cover manufacturing costs (e.g., in US Medicare)? The result leads to dropout of manufacturers, and sometimes there is only a single supplier of a product (see here, here here and here) therefore, one factory problem can quickly produce a dense, widespread shortage as in for example, the Epipen shortage of 2018. See also here. Low profit margin also means that makers might cut corners in production increasing the vulnerability to inspection-related stoppages. In June 2012, this “too-low-price” cause was endorsed by a report of the US Committee on Oversight and Government Reform and by pharmaceutical lobby groups in Europe (for example, see here). In August 2013, it was said to be behind a shortage of essential drugs in India. In March 2016, it was cited in Egypt, and later in 2016 and 2017, the question was raised again, especially when markets are deemed “small,” for EuropeIndia (twice), AustraliaPakistan and China. See also this May 2016 article in the New York Times and another from August 2017. In Korea of July 2018 a crisis in supply of contrast-agent, Lipidiol, ended when the government agreed to raise the price. In early 2017, the rise in costs provoked by the shortage have resulted in several politically inspired arguments to increase competition in the generic industry. In late 2018 a retrospective study, analyzing more than a billion prescriptions from 2008-2014, showed that low prices are strongly associated with shortages. See also these reports herehere, here, and here, about how and why companies are abandoning generics from August 2017. One of these reports suggests that companies may collude illegaly in constructing shortages to permit a price hike. Others contend that brand-name pharma is blocking competition by denying generic companies access to their products for comparison testing. See also here for 2018 opinion on the need for more competition, and here for 2018 perspective of a leading veterinarian who agrees generic prices are too low. A June 2019 article blamed low prices for the chronic shortage of bladder cancer drug, BCG. In August 2019 low prices are said to be the problem in Pakistan and France. Hysteria was generated also in summer 2019 around new laws in some US states that would allow import of “cheaper Canadian drugs” (as if Canada has an industry!), thereby aggravating shortages in this country. An FDA report in October 2019 also blamed low generic prices. It is also nicely explained in this late November 2019 report about BCG (see also here). In late October 2019, Ontario proposed to alter regulations to allow for generic drug price increases. In December 2019, 81 people were said to have died of influenza owing to a shortage of Tamiflu, itself a result of stopped production owing to too low price. Also in December 2019,  India’s price control regulator allowed an increase of up to 50% in the price of 21 essential medicines (see also here). In  January 2020, price hikes were announced for US by many manufacturer; we need to watch to see if they have a positive impact on shortages. And in November of that year, a conservative pundit  blamed the Patent Medicine Price Review Board and too low prices for the collapse of the pharma indutry in Canada. In Japan in late 2021, a generic company shutdown resulted in massive shortages since there was no company to take up the slack. In the surge shortages in late 2022, Ireland counted 187 shortages, 40 per cent from single suppliers, and blamed fixed, low prices for companies abandonning their market. Similarly, the 2023 and early 2024 shortage of chemo drugs in the USA was blamed on low prices and companies abandonning generics, aggravated by government price controls; see also here here here here, here and here, in which the role of GPOs is questioned (see below). In JUne 2024, the USP reported that discontinuation of low cost medications was an important contributing factor to the shortages. Raising prices of drugs is politically unpopular as a Pakistani editoral in fall 2022 explained. Or are the generic prices too high? The “too-low-price” cause has little traction in Canada where many provinces claim that we pay inflated prices for generics and brand name drugs when compared with other countries. See Council of Federation report of July 2012 and Supreme Court ruling on Ontario’s ban on in-house generics in November 2013. See also this 2014 article, this 2015 blog, this 2016 subpoena, and this report from early 2019. It should be clear that the “right” price is unknown, and that “higher” might not mean “wrong” or “too much,” especially in the context of shortages. One twist in this argument is the plight of developing nations and the relatively higher costs — see for example Nigeria in 2016, generating shortages by lack of access. Conversely some decry spiralling rise in generic prices triggered by the shortage itself, by hostile takeovers, and by changed regulations (for example herehereherehere, and here). An early 2020 report explained that when FDA grants exclusivity to one maker (already a precarious situation), prices can soar–then it is a question of which came first: high price or shortage? Canadians are protected from those random shortage-provoked hikes because prices are fixed at licensing. Outrageous price hikes that have attracted media attention threaten access as well as supply (see here). Shortages are predicted for the UK following the Brexit vote, owing to rising prices due to a falling pound and fewer imports since 80% of their drugs are imported (see here and here and here). In 2017 Ireland, a shortage of generic drugs was attributed to overspending on other very expensive, new brand-name, high-tech drugs. Similarly, in late 2017, the US Congress began to examine the problem of high drug costs — some of which are said to be a consequence (not cause) of drug shortages–and related it to lack of competition in the industry (single supplier) and lack of coherent negotiations over prices (see this 2018 comment). On US high prices see here. In 2019, CBC reported US pharma meddling in Health Canada strategies to lower prices. In February 2019, a Mexican bill to cap drug prices in the interests of accessibility provoked lawyers from pharma to threaten drug shortages. Also in early 2019, the US Senate Finance Committee called pharma executives to testify on high prices and 44 US states joined a lawsuit claiming drugmakers conspire to keep generic prices high; meanwhile, drug makers oppose any legislative attempt to control prices. Meanwhile in 2019 reports from Pakistan and Zimbabwe blamed spiralling drug prices for provoking shortages and sparked cries for government control. Following regulated prices, generic manufacturers retaliated threatening to stop providing essential drugs; prices were raised. A thoughtful essay from November 2019 describes the need for differential drug pricing where rich countries pay more to provide research and subsidize access for poor. In early 2020 California is considering a plan to make its own generics to lower prices and assure supply. In July 2020, the Patent Medicine Price Review Board presented a webinar with data comparing drug prices in Canada with those elsewhere to conclude that there is “no clear association between shortages and the price of medicines in Canada.” In the baby formula shortage of spring 2022, the country was started to learn that the market was dominated by a handful of suppliers. IN 2022 a dense shortage of drugs in Pakstan was blamed on high prices. Patent tactics and drug prices again came under review in November 2023.

3. Pharmacists choosing not to stock cheaper drugs because profit margin is too narrow. Canadian pharmacists reject this hypothesis, since they make their money from dispensing fees — not from the prices of drugs, although arrangements made for stocking and pricing generic drugs in Ontario in 2012 were said to have altered pharmacy finances (see here and here). Other countries continue to make such accusations.

4. Shortage of substrate or raw materials to make drugs. This cause has been frequently invoked by pharmaceutical companies, but under normal conditions, it is insufficient on its own. The same materials are used in making expensive brand name drugs, which are not in short supply. Therefore, somewhere along the line, someone decides where to place scant resources. See also causes #2 and #6. Raw material shortage and high prices were blamed for a 2016 shortage of Dapsone in Korea and this cause became more obvious in 2020 with the advent of COVID-19. It is important to note that the shortage of raw materials, called Active Pharmaceutical Ingredients (APIs), could also be owing to delays when substitute supplies from different sources and countries are awaiting approvals. See for example this early 2018 story from India about Chinese APIs. See also this report from August 2019 in which Chinese and Indian manufacturers were warned to fix production. In November 2019, Asian flu causing sharp decline in Chinese pig population provoked fears for a shortage of heparin, which is made from pig intestines. Similarly, the COVID-19 virus outbreak blocked exports of Chinese API to many manufacturers worldwide and exposed the interconnectedness of the pharmaceutical industry–something that had already been decried by some for political reasons. By February fears of resultant shortages were leading to policies that would ban exports to protect local supply (e.g., in India), while the French company Sanofi proposed to ramp up production of API at home. A new report in February 2023 explained the global origins of API for US generics — only 14 percent in US while 42 other countries are involved including China, India and Italy. Sometimes a single API manufacturer supplies several different makers of finished product!

5. Growing demand for medicines in developing world–owing to increased wealth and lifestyle changes. This situation makes it hard to keep production up with demand. Normally a bigger market would be an incentive to make more drugs. Shortages from growing demand also occur with refugee crises, and / or unforeseen outbreaks, as with inhalers during flu season in early 2017 or diagnostic kits for dengue in Nepal in October 2017, and in early April 2020 for COVID-19 with the drugs needed for ventilator therapy and the putative therapy with hydroxychloroquine. An early 2017 marketing report suggested increasing demand for TB drugs in Asia was provoking shortages in USA. In November 2017, a shortage of HIV drugs in Uganda was blamed on influx of refugees needing treatment. In early 2018 the severe flu season aggravated hurricane-induced shortages of IV bags and Tamiflu in USA. In October 2018, a report suggested because opioids were stronger that the need for greater amount of antidote to treat each opioid overdose provoked concerns about a shortage. Late in 2018, a shortage of shingles vaccine was blamed on increased demand. Another interesting twist on this cause emerged in later 2018:  the projection of rising demand owing to increased numbers of people with type 2 diabetes — an increase that will will stretch already stressed insulin production worldwide. But the developed world has also been exposed to this explanation: by 2019, the off-label use of IVG (immunoglobulin) for conditions where it may have no effect is said to have stretched the limited supply for patients. Also in 2019, changes in legislation around the world are said to have unmasked legitimate demand for medicinal cannabis and thereby provoked a shortage. Growing demand can produce shortages of the one or two remaining products when another version disappears. We saw this in 2019 with Tamoxifen and with famitidine, a popular replacement, when ranitidine was withdrawn in September owing to the presence of carcinogenic NDMA in some versions. The potential use of anti-retrovirals in the treatment of COVID-19 has led some to predict shortages for HIV-positive people, and panic-buying in Australia produced shortages in March 2020 before the count in that country exceeded 130 cases. Increased demand can occur with new drugs, when there simply is not yet enough to go around — such as sacituzumab [Trodelvy] approved by US FDA for triple negative breast cancer in 2020 and impossible to obtain in France by 2021 (See here). In UK, after a documentary by media personality Davinia McCall on greater use of HRT for menopause aired on Channel 4 on 8 March 2021, demand doubled within the year and shortages arose, complicated by Brexit restrictions and leading to a flood of anger and outrage, some protesting that it was a plot against women (see also here). Social media, such as Tik Tok, has also been implicated in creating demand for a prescription diabetes drug (ozempic) to help with weight loss that lead to widespread shortages from Australia to USA lasting for months in 2022. Growing demand was deemed the cause of a shortage of child acetaminophen and ibuprofen during the late COVID-19 pandemic of 2022. (see my blog post here). The same reason was applied to shortages of Tamiflu and amoxicillin. Also Japan reported shortages during the surge of respiratory infections in November 2023. Similarly a widespread shortage of Adderall for ADHD in 2022 was attributed to the stressors of the pandemic and increased diagnosis and demand. When the US Supreme Court overruled Roe  v Wade, a rush on “morning after’ pills prompted pharmacies to limit sales to avoid shortage. Increased demand can also cause a shortage of patented drugs when the new manufacturer underestimates the demand, e.g. for RSV drug for infants in later 2023. High demand has been blamed for the surge in shortages in 2023, An isolated example was noted in Israel with a run on anti-anxiety drugs during ithe war on Gaza.

6. Manufacturing or quality control breakdowns within production lines owing to lack of investment to improve or maintain standards or unforeseen disasters (see hurricanes mentioned above). Closing two of four plants for base ingredients over pollution concerns is said to be the cause of the early 2017 shortage of penicillin G. For example, see here and here. In June 2017 a malware cyber attack on many unprotected computers, hit Merck and was said to have provoked in shortages. In autumn 2017, Hurricane Maria damaged plants in Puerto Rico and resulted in long shortages of many products including IV solutions. See here and here. In November 2019 a defect in manufacturing caused a shortage of the only drug in US used to treat hypoparathroidism. Reports of increased vigilance over manufacturing of generics in India and China has uncovered violations that can provoke shortages, but perhaps because of the shortages or the high costs in North America, a New York Times op ed in May 2019 suggested that the vigilance is no longer tight enough.  In October 2019, an FDA report suggested that 62% of all shortages were caused by a breakdown in quality. A manufacturing delay in quality testing of flu vaccine was correlated with a rise in cases in December 2019. In Japan contamination in drug manufacture resulted in shutdown of a generic company and shortages of more than 3000 drugs in late 2021. The closure of the Abbott baby formula plant led to shortages in spring 2022. In summer 2023 — a summer of dreadful climate change disasters and many shortages – a tornado ripped apart Rocky Mount Pfizer plant, which makes 25% of its injectables. In the same summer, quality problems at a plant in India resulted in serious shortages of cis-platin chemotherapy in the United States. In December 2023, shortages of injectable bicarb arose after recalls when vials were found to contain glass particles.

7. Blaming government: manufacturing slowdowns or lack of competition owing to policies or to greater vigilance by FDA or Health Canada . This cause was characterized as “meaningless red tape” by a report of the US Committee on Oversight and Government Reform in June 2012. The FDA strongly disputed these charges in a letter of 23 July 2012. In May 2014, the same cause was invoked to explain a shortage of paclitaxel in Canada, attributed to Health Canada’s overzealous interpretation of guidelines (see here). Also here. In early 2016, it was dismissed as a significant factor in the emergency room drug shortage; however in August 2016, the FDA was considered partly to blame for slowing down approval of generic competitors that created the conditions for the outrageous EpiPen price hike. By February 2018, FDA was again blamed for the problem by at least one hospital businessman who believes in better competition and invokes the legacy of Frances Kelsey to support his view. In a new twist on blaming government, by May 2018 policies invoked to control the opioid crisis in the USA are predicted to worsen the shortages for legitimate users; how much of the pushback on these policies comes from industry is, as yet, unknown. An interesting twist on blaming government came from South Africa in 2018, contending obsolete warehouse management was to at fault. The discovery of cancer-causing NDEA in some various China-sourced products of blood pressure drugs valsartan and losartan led to recalls in 2018-2019 deepening a pre-existing shortage (see also here). Similarly in late May 2021 Health Canada withdrew multiple lots of the same drugs by multiple manufacturers. Policies that control prices proposed in 2019 are strongly opposed by right-wing Americans claiming (among many other things) that they cause shortages. In Kenya, in September 2019, drug shortages are predicted because of new rules that require pre-shipment inspections of products in other countries; distributors are demanding exemptions. A blog post in December 2019 also blamed government regulations. The fact that FDA shut down Abbott was cited as one cause (of many) of the baby formula shortage in spring 2022. In 2023, another right-leaning policy analyst was still blaming over regulation for causing drug shortages (see also here and here.) An interesting twist on this theory came in June 2023 renewed in October from a physician who treats ADHD; he charged  that increasing demand simply reveals that more adults were getting a proper diagnosis and that limited manufacture (and shortage) was a government policy to avoid abuse of the amphetamine-related drug in an attempt to avoid another crisis like that of oxycontin. He likened it to limiting the manufacture of cars to prevent car theft (see also here). Government restrictions on the active ingredient in ADHD drugs (akin to “speed”) was blamed by manufacturers for the severe shortage in November 2023.

8. Too few manufacturers. Canada has almost no drug manufacturing industry of its own and is vulnerable to changes elsewhere, while many essential medications have only one or two manufacturers–especially true owing to cause #2 above — low generic prices have led to many closures (see here). Massive layoffs and closures at pharma companies in 2010-12 are said to be owing to the expiration of patents on blockbuster drugs. The 2014 shutdown of Biolyse, which produced 80% of the paclitaxel used in Canada, putting 60 people out of work and resulting in an 80-fold increase in price for the replacement product supplied by an American firm (see here). These changes further distance sites of manufacturing from Canada and favour countries where it costs less to file for generics. See here. Another example from 2008 and again in 2018 comes from quality and quantity of Chinese-sourced heparin. See here.

9. Legislative changes to financing arrangements for generic drugs, for example in Ontario and Alberta, resulting in declining profitability for pharmacists and manufacturers (see here). Some mitigating policies result in difficulties for companies and when companies cannot afford to sell at controlled prices they drop out or demand revision of the policies (e.g. Korea in 2018). These changes can provoke cause #3 above. Pharmacists decide not to stock the drugs, and manufacturing further declines in response to lower demand.

10. Canadian controls did not require the pharmaceutical industry to warn of shortages in advance until May 2017, nor do they need to provide the specific reasons. Notwithstanding the Canadian government’s announcement promising to require advanced mandatory reporting on 10 February 2015. Despite the change in government in 2015, there was still no evidence of its effects until May 2017. Notification was voluntary and arbitrary, and so far, incomplete. Pharma companies complain that the definition of “shortage” has now become too stringent making the situation appear worse that it is. However, daily reporting and updates have improved. Go to Tracking page for sites that maintain current lists.

11. Political causes: sanctions against countries, such as Iran or Qatar (e.g. see herehere, here, and here), or economic,  political and military crises in countries, such as Greece or Iraq or Nepal or Kenya or Venezuela or Zimbabwe or Sri Lanka or Afghanistan (e.g., see here, herehereherehere, herehere and here) Some countries cannot afford effective new drugs and use cheaper alternatives with more side effects, e.g., Uganda in late 2017. In early 2018, children with cancer in Syria were said to be suffering shortages owing to US EU sanctions. In June 2019 and January 2020, Iran blamed US sanctions for shortages of medical devices and drugs (also here and here). An early 2019 report described the multiple access barriers for antibiotics as a global health crisis. In late June 2019, distributors in India halted supplies of drugs to protest a fellow distributor being wrongly blacklisted.  Similarly by late summer 2019, sanctions between India and Pakistan over Kashmir tensions led to shortages of essential medicines in the latter, and the trade ban was lifted. By November 2019, severe shortages of drugs for depression, cancer, and seizures in Russia owing to sanctions provoked widespread hardship and mothers were arrested for trying to obtain drugs for their childrens’ epilepsy. In December 2019, a shortage of drugs in Pakistan was blamed on tensions between it and India from where 40% of raw materials are imported. Meanwhile, Syria also in December 2019 was trying to rebuild its pharmaceutical industry with help from Russia following the US NATO bombing of factories and the ongoing sanctions which have provoked serious shortages. By late 2020 an acute shortage of insulin was blamed on US sanctions in Iran. In late 2021 Afghanistan was experiencing shortages due to sanctions following the Taliban takeover (see here). In 2022, Russia shortly after its invasion of Ukraine and the international blockages began noticing shortages of raw materials and HIV, anti-cancer, and leukemia drugs, Meanwhile Rahkine state in Myanmar reported widespread shortages owing to blockades by its own nation’s  military. In early 2023, Karabakh suffered extreme shortages owing to blockades within its own country of Azerbaijan. Late in 2023, ZImbabwe blamed its drug shortages on sanctions.

12. Moral objections –like sanctions, above–to use of drugs for executions in some US states results in refusal to supply lethal drugs. This has caused some states (e.g. Nevada in 2016) to reconsider the death penalty, just as the embargo was intended to do. But other states have retrenched their positions on the death penalty using other drug combinations or bringing back firing squads (see also here) or the electric chair or suggesting nitrogen inhalation instead or introducing legislation (Nebraska) to protect providers. In early 2017, Texas decided to sue the FDA over withholding execution drug sent by an unapproved foreign supplier. In April 2017, Arkansas decided to execute 8 men over the course of 11 days because the drug that the state planned to use would expire and none other could be found. The executions were stayed at the last minute. Read more here. It is not clear if this strategy is having an effect. In 2019, the Trump government proposed to use drugs banned for manufacture or sale in Europe to clear a backlog of federal executions accumulating since 2003. In late 2019, Ohio deferred executions for lack of drugs and for the additional fear that the pharma makers would withhold other drugs from US hospitals should the state obtain the substances by other channels; the delay continued in early 2020.  The failure to stock abortion drugs in prairie provinces of Canada in 2019 may also be related to moral objections over the practice.

13. Failure to communicate regulatory goals within government agencies. According to the GAO in early 2015, the US Drug Enforcement Administration (DEA) has not effectively coordinated with FDA for administration of quotas on controlled substances needed for making drugs. Similarly tightened regulations designed to prevent drug abuse are said to limit legitimate access. See here and here.

14. Changes in clinical practice guidelines may decrease use of previously profitable medications, causing manufacturers to abandon them. In September 2019, your webmaster published an article on how this iatrogenic cause could ‘work’ using the example of beta-blockers.

15. More lucrative exports to another country; cross-border shopping. The evidence for this cause is more hypothetical than real–at least so far– and stems from concerns raised in mid-2019 over the impact of new laws in the USA that would allow importation from Canada and elsewhere. The question is what in the licensing and purchasing agreements permits Canada to allow the exports. A thoughtful essay from November 2019 describes the need for differential drug pricing where rich countries pay more to provide research and subsidize access for poor.

16. Theft and corruption. Especially in Iran and African countries–Zimbabwe, Kenya, Uganda and Malawi– media reports since 2016 and continuing into 2022 describe various accusations that government hospital supplies are being diverted to serve private interests.

17. Effect of large Hospital Group Purchasing Organizations in USA–creating a “monopsony” (single buyer, many sellers) [also “monopsomy”]. Their unethical and anti-trust business practices, such as vendor kickbacks or “pay for delay” schemes, have placed profit above manufacturing standards and patient supplies. For a shocking example from July 2012, click here. For an April 2013 discussion of pay-for-delay, click here. This cause figured in a report of the US Committee on Oversight and Government Reform, 15 June 2012. In April 2013, the US Supreme Court refused to hear an appeal from a company convicted by jury for using these anti-trust practices. But a US GAO report released in November 2014 tended to absolve the GPOs from wrongdoing by emphasizing how they save money within Medicare. Canada has at least three GPO’s one Medbuy is based in London Ontario. Another HealthPro is in the Toronto area, and a third Sigma Santé is in Montreal. In 2013, clients of the GPO Medbuy in southwestern Ontario experienced an under-dosing error of chemotherapy drugs, which Medbuy blamed on the compounding pharmacy that supplied the drug. In May 2013, it emerged that the Canadian GPO, Health Pro, is a client of the American pharmaceutical Hospira and that 25 of the 136 drugs that Hospira has contracted to supply to HealthPro are on back order. HealthPro broke its contract with Biolyse when the Canadian manufacturer was temporarily shut down owing to a government inspection. No evidence suggests that Canadian GPOs violate anti-trust laws but little is known about how they work. For more on this idea of GPO as a cause of drug shortages, see references below.*

* To understand the large American hospital Group Purchasing Organizations, see any of the following

Marcia K. Horn, Unscathed middlemen fueling drug shortages and challenges for patients, Real Clear Health, 17 July 2024.

Christina Jewett, US agencies [FTC and HHS] start inquiry into generic drug shortages, New York TImes, 14 February, 2024 [checking out GPOs]. See also here, here, here, here,

CHristina Jewett, Behind the shortage keeping cancer patients from chemo, New York Times, 19 December 2023.

Kevin A. Schulman, Understanding the History of GPos, Health Afffairs, 1 December 2023. A book review of Lawton Robert Burns: The Health Care Value Chain, Palgrave Macmillan 2022.

Editorial, Are generics too cheap for their own good?, Bloomberg 17 November 2023.

Sara Sirota, The dirty secret of drug shortages, policy brief American Economic Liberties Project, 19 October 2023. See here, here

Association for Accessible Medicines, White paper. Drug shortages: causes and solutions, June 2023.

Arthur Allen, Cancer patients can’t get meds as drugmakers drop cheap generics, LA Times, 21 June 2023.

Peter Coy, How to fix the national drug shortage, New York Times, 2 June 2023.

Robert Kuttner, Drug shortages as an indictment of capitalism, The American Prospect, 24 April 2023.

Press release, Advocates urge the FTC to investigate GPO’s impacts on drug, medical equipment shortages and rising healthcare costs, American Economic Liberties Project, 22 November 2022.

Sam Hornblower, et al. Medical Middlemen: Broken system making it harder for hospitals and patients to get some life-saving drugs, 60 Minutes. CBS News, 22 May 2022.

The White House, Biden-Harris, Building resilient supply chains, revitalizing American supply chains, and fostering broad-based growth, June 2021. Especially pp. 226-7.

David Dayen, Monopolies are why salt and water in a bag became a scarce item, American Prospect, 22 July 2020.

Dave Lieber, Here’s one reason medical costs are high: we have shortages, and made in America isn’t working [GPOs], Dallas News, 17 April 2020.

David Dayden, Behind the Coronavirus threat, a middleman destroying prescription drug markets [GPOs], The American Prospect, 25 February 2020.

Stephen Barlas, Do GPOs play a role in drug shortages? Long-standing allegations disputed by the GPOs, P&T Community, 4 March 2019.

Niran Al-Agba, We can save lives from overdose – but maybe not at this cost [on safe-harbour kickbacks], Kitsap Times, 10 December 2018.

John G. Brock-Utne, Identifying the Root Causes of Drug Shortages, The Bulletin (official magazine of the Santa Clara County Medical Association & the Monterey County Medical Society), Nov-Dec 2018, p. 25.

Norm Sinclair, Medical Monopoly, dBusiness [Detroit], Nov-Dec 2018.

Phillip Zweig and Physicians Against Drug Shortages (PADS), Has the Hospital Group Purchasing Industry Hijacked Tuesday’s FDA Meeting on Drug Shortages? Sure Looks That Way, press release, PADS, 26 November 2018.

Sydney Albert, Middlemen ratchet up health costs, The Daily Standard, 1 November 2018.

Phillip Zweig, Comments for Information Regarding Anti-Kickback Statutes, 26 October 2018.

J. G. Brock-Utne, Identifying the root cause of drug shortages, Anesthesiology News, 25 October 2018.

Tara Bannow, GPOs pay to play fees drive up health-care costs, Modern Healthcare, 19 October 2018.

Johns Hopkins University interview with Martin Markary, MD MPH, Researchers detail how middlemen suppliers can increase hospital bills and drug prices, Medical Press, 18 October 2018.

William E. Bruhn, Elizabeth A. Fracica, Martin A. Makary, “Group Purchasing Organizations, Health Care Costs, and Drug Shortages,” JAMA, 18 October 2018.

Jim Braibish, Physicians Express Concern About Drug Shortages, Price Increases, Kansas City Medicine, Summer 2018, p. 16.

Marilyn M. Singleton, Group Purchasing Organizations: Gaming the System, Journal of American Physicians and Surgeons 23.2:38-42, Summer 2018.

Physicians for Reform, NoMiddlemen.org. A website gathering information about GPOs.

Katie Thomas, Meet the rebate, the new villain of high drug prices, New York Times, 27 July 2018.

Linda A. Johnson, FDA to more agressively tackle disruptive drug shortages, Associated Press, 12 July 2018.

Editorial, Save Health Care: repeal kickbacks, Burlington County Times, 13 May 2018.

Philip Zweig and Frederick C. Blum, Where does the law against kickbacks not apply? Your Hospital. Wall Street Journal, 7 May 2018.

Editor, Philip Zweig on legalized kickbacks in healthcare, Corporate Crime Reporter, 28 April 2018.

Andrew Mangione, The Multi-Billion Dollar Solution – Repeal Safe Harbor, Townhall, 3 March 2018.

Physicians against Drug Shortages & Philip Zweig (PADS) urges Senate HELP to STOP the artificial shortages and skyrocketing prices of prescription drugs by repealing the misguided 1987 Medicare anti-kickback “safe harbor” provision for healthcare group purchasing organizations (GPOs) and pharmacy benefit managers (PBMs), 13 June 2017.

Todd Ebert, Purchasing supply groups help hospital with cost, supply, The Bulletin Oregon, 26 March 2017. (PR from a GPO CEO who describes how GPOs should work). See also his letter in NYT, 25 May 2017.

Phillip Zweig, Time to free a controlled marketplace for generic drugs, Barron’s, 15 October 2016. (an analysis of how GPOs harm drug supply)

Josh Bloom, Escalating drug prices not all what it seems, American Council on Science and Health, 4 October 2016.

Amy Faith Ho, Iron curtain of drug pricing will topple the healthcare system [GPOs and secrecy], The Hill, 2 September 2016.

Valerie Lapointe, Hospital drug shortages: What is really causing them? [about GPO’s], Medill Reports, 26 May 2016.

Wes Duplantier, Blumenthal seeks answers on whether health purchasing groups [GPOs] are costing consumers [and causing shortages], New Haven Register, 28 March 2016

Adam Rubenfire, Surviving the drug shortage by eliminating the middleman, 9 March 2016.

Phillip L. Zweig and Robert A. Campbell, Blumenthal’s silence deafening on root cause of surging generic drug prices, Register Citizen, 10 January 2016.

Phillip Zweig, Robert Campbell, How to stop generic drug shortages? End hospital group purchasing kickbacks, Fortune, 30 January 2015.

Margaret Dempsey Clapp, Speech on Drug Shortages, GPOs and supply chain, given at 44th Critical Care Conference, Jan 17-21 2015, Society for Critical Care, Phoenix [NB scroll down to Clapp on the scroll bar on the right]

U.S. Government Accountability Office, Group Purchasing Organizations: Funding structure has potential implications for Medicare costs. 24 November 2014

Hagop Kantarjian, Chemotherapy Drug Shortages in the United States Revisited. Journal of Oncology Practice JOP, September 2014: 329-31.

Phillip Zweig and Robert A. Campbell, Letter: Response to McKeever et al below [on GPO cause of the drug shortage] Clinical J of Oncology Nursing, 18.2: 143-145, April 2014.

Christian DeRoo, Pay to Play: The impact of Group Purchasing Organizations on the drug shortage, American University Business Law Review 3.1, 227-248, 18 March 2014.

Mollyann March and Philip Zweig, GPO’s fuel drug shortages, Baltimore Sun, 7 February 2014

Elizabeth Rosenthal, The soaring cost of a simple breath, New York Times, 12 October 2013. [GPO’s are mentioned toward the end of this long article]

Margaret Clapp, Michael A. Rie, Philip L. Zweig, How a cabal keeps generics scare, New York Times, 2 September 2013.

Anon. Some MDS blame GPOs for chronic drug shortages. Pharmacy Practice News, June 2013.

Roxanne Nelson, GPOs to Blame for Drug Shortages, says Physicians Group, Medscape Medical News, 24 January, 2013 [free account; password will be needed].

J. Woodcock and M. Wosinska State of the Art: Economic and Technical Drivers of Generic Sterile Injectable Drug Shortages, Clinical Pharmacology and Therapeutics 93.2 (Feb 2013): 171-76 online 23 January 2013

Physicians Against Drug Shortages, founded 10 December 2012. Sign their petition, launched 25 December, 2013.

Dr. Joel Zivot quoted in article by Kristina Fiore, 18 October 2012.

North Coast Medical, GPO’s Business Practices Questioned, 6 September 2012.

GPO Drug Shortage diagram, designed by P.L. Zweig, 2012.

Diana L. MossHealthcare Intermediaries: Competition and Healthcare Policy at Loggerheads? American Antitrust Institute, White Paper, 7 May 2012.

US Government Accountability Office (GAO), Group Purchasing Organizations: Federal Oversights and Self Regulation, 30 March 2012.

Michael F. Cannon, What is causing drug shortages? Cato@Liberty, 16 March 2012.

Patricia Earl and Philip L. Zweig, Connecting the Dots: How Anticompetitive Contracting Practices, Kickbacks, and Self-Dealing by Hospital Group Purchasing Organizations (GPOs) caused the U.S. Drug Shortage, White Paper, 10 January 2012.

John Wilkerson, HHS rejected ASP Hike after weighing GPO, drug distribution issues, InsideHealthPolicy.com, 9 November 2011

Robert E. Liton,  Hal J. Singer, Anna Birkenbach, ‘An Empirical Analysis of Aftermarket Transaction by Hospitals,’ Journal of Contemporary Health Law and Policy, vol. 28, no. 1, Fall 2011

Prakash S. Sethi, Group Purchasing Organizations: An Undisclosed Scandal in the U.S. Healthcare Industry. Palgrave/Macmillan, 2009

GPOs are the “bad guy” in the film Puncture, based on a true lawsuit, and released January 2012. For a review, read here.
For a list of some GPO’s click here. In this report the purchasing volume of the five largest US GPO’s was $154.7 billion.
In 2013, GPO’s launched a website to discredit as “fringe” the people and claims of Physicians against Drug Shortages.