Drug shortages and ‘butter mountains’: Time to get our act together

As Hemingway famously remarked, one should never mistake motion for action. He was talking about African wildlife, but the observation holds equally true for business and politics.

That’s why I’m always cautious when new programs are launched with the proclaimed goal of ‘solving healthcare’ – or any other major issue of the day. My first question is always: will the words be followed by timely and appropriate actions?

Having said that, I do welcome the launch by the European Union of the Critical Medicines Alliance (CMA), a new initiative that brings together patient representatives, European and local agencies and industry to find ways of improving medical supply chains and avoiding shortages. The CMA is due to hold its official launch and inaugural meeting in Brussels next week on April 24 .

It’s a clear sign that policymakers in Europe are beginning to realize something really has to change if we want to offer our populations reliable, high-quality medical care in years to come. And the inclusive approach is spot on: we need to work together across sectors and national borders to identify the most critical medicines, anticipate supply risks, and implement joint solutions that benefit all concerned.

But I do have two underlying concerns. First, we need to identify the real problem. Then we need to implement appropriate solutions, rapidly and consistently. I’m not yet convinced that either of those is happening the way it should – though I hope the CMA will help get us to where we need to be.

What problem are we trying to solve?

On the first front, there is a common belief that the root of the problem is inadequate supply chains, which break down at the first sign of trouble. The Covid-19-induced ‘supply shock’ is often cited as evidence. However, as The Economist pointed out in an excellent article [Attempts to make supply chains “resilient” are likely to fail (economist.com)] last year, this view is largely mistaken.

As the authors argue, we should distinguish true supply chain failures from delays caused by an unprecedented demand surge. They use the example of hand sanitizers, where UK imports rose from 16,000 tonnes in 2019, at an average price of USD 2.90, to 86,000 tonnes in 2020, at an average price of USS 3.50. In other words, companies actually responded quite efficiently to an extreme, one-off increase.

We saw a similar pattern with critical medicines during the pandemic, where temporary pressure on global supply routes was combined with a huge surge in demand. But many companies responded rapidly, ramping up supply of critical products such as antibiotics and medicines used in intensive care, with strong support from policymakers.

Fast-forward several years, with further ‘supply shocks’ including a major land war in Europe and inflation at levels not seen since the 1970s. And yes, we are currently experiencing some shortages of key medicines in a number of European countries, but the reason is not wonky supply chains – it is wonky economics.

If we want to ensure stable supply of critical (largely generic) medicines, the solution is simple: introduce an economic framework that rewards healthy competition by allowing companies to respond flexibly to temporary shifts in demand. What won’t help is to perpetuate the current system of one-way (downward-only) pressure on prices, regardless of economic and political reality.

It’s Economics 101: you can’t have both the lowest possible price and the highest possible level of medicine stocks at the same time. If you want to maximize stock levels, you need a trade-off on price to incentivize increased production. Or you find a reasonable balance somewhere in the middle. The only other variable in the “magic triangle” is quality, and of course there can be no room for trade-offs there.

First: do no harm

As every physician knows, the first rule of caring is not to make things worse. Governments and policymakers can play a huge role in ensuring sustainable supply by being supportive, not directive.

In addition to sustainable market conditions, they can design robust regulatory frameworks, aligned with other countries, adapted to latest technological developments, and with standardized reporting requirements.

They can act now to support existing domestic manufacturing capacity, rather than prioritizing ‘bring-it-all-back-home’ policies that would take decades to produce tangible results. And they can promote favorable trade policies, which eliminate tariffs, export restrictions and other politically-inspired barriers to trade.

Last but not least, national governments need to work together to avoid undermining each other by a raft of individual, and potentially mutually counterproductive, measures. A classic example is moves by some EU countries to impose requirements on manufacturers for increased inventory and stockpiles.

No more ‘butter mountains’, please!

Obligatory stockpiles simply divert products from the overall market, add to operating costs and threaten supply to other markets, creating a situation where wealthier countries have disproportionately more access to limited resources. I’m old enough to remember the EU ‘butter mountains’ and ‘milk lakes’ of the 1980s, so let’s not go down that road again.

Another example is the trend towards national-level financial sanctions or penalties for delayed reporting and/or missing stockpiling requirements. If disconnected from product sales, these can have unexpected consequences including delisting, product ‘pruning’ and corporate reassessments of commercial viability.

As a recent study showed, nearly 70% of generics marketed in Europe now have fewer than two suppliers and more than a quarter of the medicines available in Europe 10 years earlier have simply disappeared from the market [critical-medicines-health-check-2024_website.pdf (tevapharm.com)] .

I look forward to continuing positive engagement with national governments and EU policymakers, via forums such as the Critical Medicines Agency. And I am hopeful that there will be growing recognition of the need both to solve the right problem and to do so in a coordinated way. Let’s get our act(ion) together!