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Why are there drug shortages?

Drug Shortage Overview

What is a drug shortage?
Drug shortages are tracked by the FDA and ASHP. Drug shortages exists when the supply of an approved drug is not available to meet the need of the market

Why do drug shortages exists?
To understand why a drug shortage may exist you must first understand the what goes into drug development, drug manufacturing and drug sales.

Drug Development
The number of suppliers may impact the likelyhood a drug will be on shortage. Pharma companies choose which products to develop based on a return on investment. If a product has a small return on investment this may impact the number of suppliers in the market and therefore the likelyhood of a drug shortage.

Drug manufacturing
Drug manufacturing can be very complex. This supply chain can play a key role in drug shortages. The production often starts with raw materials and many pharma companies in the market may be using the same suppliers. If there is an issue with a key starting ingredient this can disrupt the production and entire supply chain. Assuming the raw material are all okay, then production can begin. During production there can be many risks as well. Again many suppliers often use the same manufacturers and if one manufacturer has an issue it can impact the entire market. These production issues can include impurity or sterility issues which can take down production from days to months.

Drug Sales
As the market continues to evolve and if supply is constrained the drug sales team will focus on products with the best return on investment. Often generic products have very low margins and as that receded it may be better to focus on selling more profitable product which then translates into production. At that time the number of suppliers of a product may reduce and lead to potential drug shortages.

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