Critics have long blasted the pharmaceutical industry for focusing too much on "profits", and called for empowering the FDA to force companies to continue making generic drugs, even when they are unprofitable. This move would of course be a disaster, and it would potentially reduce the incentives for companies to make complex generic drugs on the assumption that exiting the market would be costly. It would also give payers even more power to slash prices, knowing that companies could never refuse to produce the drug, even if they had to sell it at a loss.
 

A better approach is for regulators, manufacturers, and health systems to work harder to identify potential shortages as early as possible, allowing hospitals and pharmacists to develop plans to better manage or reallocate existing drug supplies before the shortages occur. Hospitals and health systems might also want to consider long-term purchase agreements or paying a few pennies extra per pill to reward suppliers with a track record of making complex, high-quality generic products. Rewarding quality and long-term reliability with a slightly higher price (or longer term contracts) should give producers better incentives to stay with generic product lines and invest in continuously improving their manufacturing processes.
 

More can certainly be done as well on the FDA side, including better monitoring to ensure that companies are in compliance with current Good Manufacturing Processes, along with upgrading the FDA's ability to provide meaningful oversight inspections. This would include increased funding for more frequent FDA inspections of high-risk manufacturing facilities, and adequate staffing to conduct inspections outside the U.S.
 

Should the FDA do more? "More is always better," said former FDA Associate Commissioner Peter J. Pitts. "But the agency must spend its money where it can get the biggest bang for the regulatory buck. More focus should be put on those who present the highest risk -- particularly overseas. A handful of FDA inspectors in China and India just doesn't cut it."
 

The problem of drug shortages comes at a time when the drug market is changing significantly. In the next several years, the market between generic and branded drugs will blur as innovative companies expand into the generics and biosimilars markets.
 

Read the full piece here.