Managing Product Supply Risks

How to use geographic diversification and legacy technology transfers to avoid product shortages.
Apr 02, 2012

In 2011, there were 267 drug shortages in the US alone, up from 178 in 2010; if unchecked, even more shortages could occur in the coming years (1, 2). In response to this situation, President Obama issued an Executive Order in October 2011 that directs FDA and the pharmaceutical industry to take appropriate steps to prevent and reduce drug shortages (3). Patients who rely on these products, especially drugs that prevent life-threatening conditions, are seriously affected by the shortages. In addition, disruption in product supply can negatively impact a company's revenue stream, share price, and reputation. Bio/pharmaceutical companies must seriously consider how they would react to unforeseen problems that could disrupt product supply. The ultimate goal is to have a robust product supply chain and to ensure that product reaches the patients safely every time.

Factors that cause product shortages

Several factors can cause product shortages, including:

  • regulatory nonapprovals
  • contamination (e.g., viral, mycoplasma)
  • natural disasters
  • raw material issues.

Regulatory nonapprovals due to major failings in quality systems (e.g., consent decree) can result in a manufacturer being unable to meet product demand, as occurred in 2010 and 2011 with Johnson & Johnson McNeil Tylenol (4). More recently, shortages occurred with two critical cancer therapies, methotrexate and Doxil, due to substantial product quality and safety issues at Ben Venue Laboratories (2).

Multiple instances of contamination have been reported in recent years, such as the vesivirus contamination at Genzyme's Allston facility in 2009 and Merck's porcine circovirus (PCV1) contamination in 2010 (5, 6). The former resulted in shortage of supply of Fabrazyme and Cerezyme to patients, which undoubtedly impacted Genzyme's reputation, and also resulted in a loss in market share to a competitor's product (Shire's Replagal), (7).

Natural disasters such as tsunamis, earthquakes, and fires can have catastrophic effects as well. For example, the earthquake and tsunami that hit Japan in March 2011 and the subsequent crisis at the Fukushima nuclear power station resulted in concerns about irradiation of critical raw materials that are used in drug substance manufactruing.

There have been increasing reports of serious issues with raw materials, including cases of product adulteration, counterfeiting, and a general lack of control in the raw material supply chain (e.g., heparin contaminated with an oversulfated form of chondroitin sulfate), (8, 9).