1. Introduction
A drug shortage is defined as a supply issue due to an internal or external situation (or both) that affects how the pharmacy prepares or dispenses a drug product or influences patient care when prescribers must use an alternative agent. (“Drug Shortages FAQs – ASHP”, 2020)
1.1 Background:
Shortages of drugs have been reported from countries over the years. Medicines shortages pose risks for patient health as a result of non-treatment, under-treatment and possible medication errors from attempts to substitute missing medicines. While medicines shortages are not a new phenomenon, they have been increasing in recent years prompting international concern about long-term supply of key medicines.(WHO., 2016)
1.2 Reason for the shortage:
A drug shortage is a situation where the demand for a medicine is not met by adequate supply.(WHO., 2016) Drug shortages maybe caused by various factors, such as:
• difficulties in acquiring raw materials,
• manufacturing problems,
• regulatory issues,
• business decisions,
• other disturbances within the supply chain. (Ventola, 2020)
1.3 Consequent effects of the problem on the community:
Shortages of drugs pose a serious and growing threat to public health. The various problems that occur from the shortage are-
• Patients face medication error such as,
a) Omission
b) Wrong dose dispensed/administered
c) Wrong drug dispensed/administered
• Patients are given alternative medication;
• There is a delay in therapy; (McLaughlin et al., 2013)
• Increased patient monitoring becomes necessary which takes a toll on doctors, nurses and other people working for the patients;
• High institutional costs,
• Price hike in medicines which causes people to spend more money on medicine than usual. As this is a short-run situation, the supply remains the same while the demand for the product increases which causes an unnatural rise in the price level. Unless the supply increases (i.e. the supply curve shifts to the right), the price level is bound to rise. Fig 1 shows the short run equilibrium of an industry (here the drug industry). Demand curve 1 shifts to the right to demand curve 2 due to the increase in demand of the drugs. Since the supply of the drugs doesn’t increase in short run, the price level rises as the demand rises. Thus we get a new price level 2.
Figure 1: short run equilibrium of an industry (here the drug industry)
Price Level
Quantity Demanded
• It affects the country’s economy adversely;
• There are malpractices conducted like,
a) Hoarding
b) Black marketing
• Creating artificial shortages in the country.
• Informal exchange of stock through the grey market, posing risks for drug quality.
2. Current Global Trends Revolving Around Drug Shortages
Although India is one of the top formulation drug exporters in the world, it’s domestic drug industry relies heavily on the import of bulk drugs (APIs and intermediates that give medicines their therapeutic value). In FY19, India imported around Rs 24,900 crore worth of drugs accounting for approximately 40 per cent of the overall domestic consumption. India’s API imports are mainly from China. These APIs require large capacities of fermentation boilers, a USP of Chinese manufacturers, giving an upper hand to Chinese manufacturers. Delivery and tracking of consignments are still uncertain within China whether inward or outward. For many critical antibiotics and antipyretics, dependency on imports from China is close to 100 per cent.
Countries such as USA, UK and Japan who import drugs largely from India are at risk of supply disruptions and unexpected price movements.(Economic Times, 2020)
2.1 Demand side factors:
Unexpected demand changes or fluctuations may lead to medicines shortages, and the risk increases with the use of just-in-time inventory control where facilities sometimes hold no or insufficient buffer stock. (WHO., 2016)With a pandemic like Coronavirus prevailing, the need for medicines has increased exponentially. Due to a lockdown in the country, people started hoarding and stock-piling which is another reason why the drug market will experience a drug shortage very soon.
2.2 Supply side factors:
Medicines shortages have been increasingly related to quality and raw material problems at the manufacturing level for years now.(WHO., 2016) With the pandemic in hand now, the world is yet again facing another drug shortage. With the number of coronavirus cases rising exponentially in India, the reason that India might face a drug shortage very soon, lies in the fact that China accounted for 67.56 per cent of India’s total imports of bulk drugs and drug intermediates at $2,405.42 million in 2018-19. A committee formed by the government had assured that India need not worry about drug shortages for some time to come. The committee, in its report, had said that the present stock-in-hand of the Active Pharmaceutical Ingredients (APIs) may be sufficient for 2 to 3 months to manufacture formulations but the problem with this report is that it was published on 4th March, 2020. Now that two months have passed, India might be facing a drug shortage soon if it doesn’t find a viable solution to combat the problem of drug shortage. (Economic Times, 2020)
India is the world’s biggest supplier of generic drugs and it had restricted export of 26 ingredients and the medicines made from them as on 4th March 2020. The restricted drugs included Paracetamol, one of the world’s most widely-used pain relievers. In 2018 Indian imports accounted for almost a quarter of US medicines and more than 30% of medicine ingredients, according to the US Food and Drug Administration (FDA). India restricting the export will take a heavy toll on supply of drugs and cause a severe drug shortage in the USA. (BBC, 2020)