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Fortune
Fortune
Christiaan Hetzner

The cold hard reality of economics has sparked a nationwide shortage in life-saving cancer drugs

(Credit: L.E. Baskow—Las Vegas Review-Journal/Tribune News Service via Getty Images)

Facing a cancer diagnosis is no longer the death sentence it once was thanks to advances in science. But now a new hurdle that has nothing to do with the boundaries of modern medicine threatens the ability of patients to receive timely treatment with vital chemotherapy.

During 2023, U.S. healthcare providers across the country have lacked sufficient supplies of over 300 different active drugs, the worst shortage in nearly a decade. Supplies of critical generic cancer drugs have plunged by almost 50% because of "economic reasons," according to the White House.

“It’s scary just to even hear that number out loud. It’s not like we have 50% fewer cancer patients,” Alison Hart, director of oncology pharmacy at Jefferson Health’s Sidney Kimmel Cancer Center in Philadelphia, tells Fortune

The impact is felt most acutely in the area of off-patent cancer drugs, where every second clinic or hospital has reported having to ration, delay or even cancel life-saving treatments.

While Philadelphia's Kimmel Cancer Center has managed to avoid turning patients away, shortages are a persistent issue, affecting not only high-end platinum-based chemotherapy drugs but also other vital treatments like Fluorouracil, Doxil, and Decitabine.

“I think about shortages every day I’m working. So much of my time is dedicated to making sure we can treat all of our patients,” says Hart. 

The tragedy of the situation for medical professionals like Hart is that the shortages are preventable because they were not prompted by the kind of unforeseen events—like COVID lockdowns or natural disasters—which led to a similar scramble for semiconductor chips two years ago.

Instead, the grim reality of business is casting a pall over the healthcare sector. Many drugmakers are no longer motivated to ensure sufficient production of off-patent drugs because of their low profits.

The U.S. Food and Drug Administration (FDA) tells Fortune it is working with manufacturers like Fresenius Kabi to mitigate the shortage of chemotherapy drugs, but it lacks the authority to compel companies to produce more or enhance distribution.

With the market unable to match supply with demand, experts are now calling for the government to step in and fix the malfunction. They argue incentives must be provided both to companies to invest in their generic production and purchasers to pay a higher price.

That, however, is far from happening.

Bladder cancer preview

For bladder cancer patients, coping with a shortfall in treatments rings all too familiar.

The situation is reminiscent of the 2017 shortage of the BCG drug, which was worsened when Merck & Co., the sole remaining U.S. supplier, couldn't meet demand. Despite approving a new manufacturing site in 2020, it may be another three years before it's fully operational, risking higher rates of tumor recurrence and disease progression for patients placed on alternative regimens.

This time the bottleneck disrupting the vital flow of drugs comes from Intas Pharmaceuticals.

In December the FDA effectively banned its supply of certain generic chemo treatments to the U.S. market until the Indian company cleaned up its quality assurance. A warning letter sent by the regulator to the CEO in July included the word “failure”, or some derivative thereof, no less than two dozen times. 

Intas told Fortune it has been working together with the FDA to release multiple batches of carboplatin, cisplatin, methotrexate and fluorouracil from its stockpile once further testing and verification could be completed under the close eye of the agency. The company did however share some positive news: its first shipment of newly produced drugs was already en route for delivery last week. 

Manufacturers locked in a race to the bottom

The problem stretches beyond just drugs needed to treat cancer, a lengthy 2020 report by the FDA found. It discovered that 69% of all drugs in short supply were no longer patent-protected, while 63% of them were administered via injection. 

“The common theme is cheap generics,” says Mariana Socal, assistant scientist in the Department of Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health.

And the problem only seems to be getting worse. According to data from the American Society of Health System Pharmacists (ASHP) published in August, the overall number of drug shortages in the country is nearing a 10-year high. 

The lack of chemotherapy treatments injected directly into the bloodstream is simply more acute because they are also costlier to produce; a controlled environment is needed to ensure absolute sterility, unlike drugs taken in solid form. 

While these added complications are less an issue with branded products, every penny counts in the case of those therapies no longer protected by patents, since the only competitive differentiator is the price. 

“It’s a race to the bottom,” Socal tells Fortune.

No slack in the system

Given these problems have been around for years now—such as with Merck’s BCG—one might think there was time enough to begin tackling the issue. However, the comparatively poor economics of producing generics makes it difficult for drugmakers to justify investing to expand in their supply. By extension, this means that there is almost no slack in the system. 

“If one company has a problem or discontinues a product, it is difficult for the remaining firms to increase production quickly,” says PhRMA, the industry lobby group representing drugmakers. “A more holistic approach to address prescription drug shortages is needed to address the root cause of this challenge.”

The net result is it takes years before new production lines can be built, fresh supplies of raw materials like active ingredients are sourced, and the product is certified by authorities. This is why the situation with the bladder cancer drug BCG has not yet been resolved since Sanofi exited the market, nor will it likely be until almost an entire decade has passed. 

“The manufacturers have absolutely no incentive to have extra capacity for a rainy day,” Johns Hopkins's Socal explains. Extra capacity is, after all, just more cost that a company must bear.

Leading killer

These shortages occur despite the fact that cancer is the second deadliest killer in the United States, only narrowly behind heart disease but well ahead of other leading causes such as COVID, fatal accidents and strokes. According to the latest annual figures from the National Center for Health Statistics, cancer cost the lives of over 600,000 Americans in 2021. 

This year nearly 2 million Americans are estimated to be diagnosed with the disease, with breast, prostate, lung and colorectal cancer being the most common. Not all of them need chemotherapy of course.

One scientific study published in 2020 suggested over three-quarters of patients are at least eligible for chemotherapy, though, even if their bodies may not respond to it. Whether or not it can help depends on a number of factors that include the specific type of cancer, the age and overall health of the patient, as well as how far the disease has progressed.

The key to beating the disease is attacking a malignant tumor before it has a chance to spread through the body—if a lymph node is infected, it’s usually a sign the cancer has already metastasized and survival rates can begin to shrink rapidly. 

Unfortunately, a survey published earlier this month by the non-profit National Comprehensive Cancer Network show that 72% of cancer centers across the country were still coping with shortages of the drug carboplatin. It didn’t stop there, though: 66% lacked a sufficient supply of methotrexate and 59% didn’t have enough cisplatin, among others. 

More transparency could be the solution

For the largest economy in the world, these outcomes are a stinging rebuke of a healthcare system that Socal says is stymied in part by the “smoke and mirrors” designed to benefit businesses that often profits off a lack of market transparency.

She believes pharmacists like Hart should be empowered with additional information when purchasing doses that would be akin to Amazon’s customer ratings, highlighting other important aspects such as reliability of supply and quality of product. 

“Every single facility in the United States today faces shortages that have been disruptive enough to have to spend time and resources mitigating them,” she argues. Since they end up wasting hours on end calling pharmacies and distributors, Socal believes they would gladly pay more if it resulted in greater overall productivity. 

“Hospitals would have a strong incentive to choose the more expensive product, because they are already spending this money—not on the drug itself, but on their personnel, time and resources,” the healthcare researcher says.

The ASHP favors exactly this sort of approach. But barring such a helpful metric, it wants the FDA to openly name and shame producers by publishing its inspection reports of manufacturing sites free of any redactions.

It also calls for the federal government to step in and provide low- or even no-cost financing to manufacturers and distributors to encourage maintaining a supply buffer of up to six months. 

That way patients already enduring the frightening ordeal of waging a life-and-death struggle with cancer do not have to fear hospital clinics will run out of the drugs they need to survive.

“At some point there needs to be some type of legislation,” says Hart.

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