Premier Inc. Data Shows Drugs Essential to Providing Care for COVID-19 Patients Quickly Slipping into Shortage

Premier Inc. (NASDAQ: PINC), a leading healthcare improvement company, today released data finding that 15 drugs essential to providing care for COVID-19 patients are currently in or very near shortage.

Using its comprehensive data on purchasing patterns and current fill rates, Premier found that these products experienced the greatest spikes in demand during the month of March but were also unable to be supplied in the requested quantities – two early warning signals for shortages. Drugs include antimalarials and antivirals that may be an effective COVID-19 treatment, as well as antibiotics used to cure infections. Other products at risk of shortages include bronchodilators for keeping airways open, as well as sedatives and neuromuscular blockers used to intubate patients. Demand for these products was even higher in COVID-19 hotspots like New York, suggesting that products could move from regional shortages into national shortages as the disease spreads to additional communities.

“Increased demand for these products will clearly put pressure on manufacturers’ safety stocks, creating shortages that could worsen with time unless we take fast action now,” says Premier President Michael J. Alkire. “For commodity products, we can tap adjacent industries to begin production. But drug manufacturing is highly regulated, and it typically takes years and substantial investment to build additional capacity and gain U.S. Food and Drug Administration (FDA) approval. Even if the FDA expedited approvals, inspections and other actions, drug manufacturing cannot be stood up overnight. Moreover, there are also secondary concerns about where replacement ingredients will be sourced, as many of these drugs rely on active pharmaceutical ingredients (API) from overseas.”

Premier surveyed its members and found that active shortages are far more pervasive in the acute care setting, where 70 percent of acute care respondents report at least one shortage for COVID-19 drugs. In the non-acute setting, that number drops to 48 percent. Antimalarial drugs were the most commonly reported shortage (70 percent of hospital respondents), followed by bronchodilators (65 percent), antibiotics (40 percent), antivirals (38 percent) and sedatives (35 percent). Reported shortages were higher in hotspots like New York, where 77 percent of hospitals with COVID-19 cases report shortages of antimalarials, as well as antivirals (54 percent) and sedatives (39 percent).

“Given that hospitals are on the front lines of COVID-19 treatment, they are experiencing the shortages first and more acutely than other providers,” continues Alkire. “As distributors and government agencies think about how supplies need to be allocated for the future, it’s important that a dynamic allocation process is developed that matches available supply to areas with greatest need. In addition, any dynamic allocation process needs a two-fold approach: balancing the COVID-19 surge demand in hospitals with the consistent demand from non-acute and retail pharmacies whose patients utilize the drugs for chronic conditions.”

Recommendations

Premier created the following set of recommendations that, if acted upon quickly, will either prevent or ease shortages for COVID-19 drugs. Given there is no single cause of drug shortages, there can be no single solution. To stabilize the drug supply chain, the government and FDA must leverage a multifactorial approach that uses several of these recommendations in tandem.

• Allocation: Allocations cap orders to prior historic purchasing. Working alongside private sector partners, the nation needs a dynamic allocation process that accounts for surge demand and prioritizes the needs of acute care providers.
• Accessing the Strategic National Stockpile (SNS): The current process for accessing the SNS is cumbersome and state-specific. Working alongside private sector partners, the Administration should create a streamlined and efficient process for accessing drugs from the SNS.
• Drug Enforcement Administration (DEA) Quotas: Ramping up production for controlled substances is contingent upon DEA allocating additional quota. The DEA should temporarily increase the threshold for allocating quota to provide added flexibility and avoid bottlenecks.
• Transportation: Active pharmaceutical ingredients and finished dose drugs that are produced overseas may be delayed in arriving to the U.S. due to port closures or other shipping delays. The government should leverage air transport to expedite transportation of necessary products.
• Transfers: Health systems should be allowed to temporarily transfer drugs freely between hospitals or other pharmacies without having to obtain licensure to distribute products. This will allow supplies to flow freely between entities in greatest need.
• Safety Stock: The current inventory levels and available safety stocks for critical medications is unknown. Working with private sector partners, the FDA needs to create a centralized data repository quantifying inventory levels for critical medications.
• Domestic Capacity: To ramp up domestic manufacturing, FDA should leverage line and tech transfers to expeditiously increase domestic manufacturing of critical drugs at U.S.-based pharmaceutical manufacturers. The President can utilize the Defense Production Act to speed the process.
• Manufacturer Incentives: Manufacturers may be hesitant to enter the marketplace for shortage drugs due to uncertainty that their products will be purchased. FDA should collaborate with private sector partners, such as Premier’s ProvideGx^™ program, to create incentives for manufacturers to enter the marketplace through committed volume and/or co-investment.
• API Continuity: The FDA should leverage the new authority granted under Section 3112 of the CARES Act (HR 748) to require API manufacturers to begin reporting supply disruptions immediately. The FDA should also leverage this new authority to require manufacturers to disclose their exact API sources and locations of finished dosage drugs. This information will help prioritize drugs for domestic manufacturing.
• Capital Constraints: Manufacturers and distributors may be hesitant to increase inventory levels due to financial constraints. The Administration should consider providing 0 percent interest loans to these entities to accommodate surge demand.
  
  

Survey Methodology

Premier’s survey was conducted from March 20-25, 2020, and sent to a representative portion of the Premier membership. Approximately 377 unique hospitals and health systems in 42 states responded. Approximately 100 long-term care, home infusion and retail pharmacies in 38 states also responded. Not every respondent answered every question. In addition to the survey responses, Premier also collected purchasing and fill rate data to conduct the analysis on imminent shortages. Premier has not independently verified the data submitted in response to the survey.

About Premier Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,000 U.S. hospitals and health systems and approximately 175,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.

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