Report alerted
government to potential drug shortages four years ago
By Pauline Tam, The
Ottawa Citizen March 26, 2012 6:53 PM
OTTAWA
— The federal government ignored a warning by one of its own agencies about the
potential for a nationwide medication shortage nearly four years before the
current crisis caused by Sandoz Canada.
The
warning, contained in a 2008 report by the federal Competition Bureau, flagged
then-Industry Minister Tony Clement to the dangers of dwindling competition
among some generic-drug makers.
According
to the report, the lack of competition “could lead to shortages when winning
bidders are unable to meet demand.”
The
agency expressed particular concern about the three drug buyers for the
nation’s hospitals, whose heavy reliance on a single supplier, Sandoz, resulted
in fewer firms bidding to make the older “workhorse” drugs at the centre of the
current ongoing shortage.
The
dependence on a lone supplier “could lead to an erosion of the Canadian generic
manufacturing base and a high level of concentration and a lack of competition
among Canadian generic manufacturers,” the agency said.
A
leading drug-policy expert pointed to the report as evidence of federal failure
to protect Canadians from the current drug shortage.
“The
Competition Bureau warned about this problem,” said Amir Attaran, a professor
of health law at the University of Ottawa. “The minister didn’t do anything about
it at the time. The danger is now here so the federal government needs to
investigate.”
Attaran
urged Industry Minister Christian Paradis, who oversees the Competition Bureau,
to launch a public inquiry into the generic-drugs industry.
Sandoz
is the sole supplier of more than 140 generic injectable painkillers, sedatives
and antibiotics, or about half of all such medications used by Canadian
hospitals.
In
recent months, the company’s troubled plant in Boucherville, Que., has been
plagued by quality-control lapses, a recent fire and reports of mislabelled
drugs.
“How
is it that Sandoz acquired such a big market share? Nobody knows because nobody
has investigated,” said Attaran, who studies how trade laws affect a country’s
access to drugs.
Paradis’s
office declined comment, referring calls from the Citizen to Health Minister
Leona Aglukkaq. However, Attaran insists Paradis has the power, under federal
competition laws, to act.
The
Competition Bureau conducted its 2008 study to determine why prices for generic
drugs seemed to be higher in Canada than many other countries.
The
report concluded that pharmacies weren’t passing enough savings onto consumers,
even though, in most cases, there was ample competition among the country’s
generic drug makers.
However,
the report singled out the practices of the nation’s three bulk drug buyers —
HealthPro Canada, Medbuy and Sigma Santé — as a cause for concern.
In
an effort to get the best deal for taxpayers, the bulk buyers have in recent
years pooled together the purchasing power of hospitals across the country and
sought bids from suppliers willing to provide large quantities of generic drugs
at the lowest prices possible.
However,
two major consequences of such competitive tendering have been a limited number
of large contracts for which generic drug makers could bid and tighter profit
margins for the winning bidders.
As
a result, many companies have simply abandoned the business, leaving just one
or two players in the market, the 2008 study concluded.
Attaran,
who holds the Canada Research Chair in Law, Population Health and Global
Development Policy, said the federal government, not the bulk buyers, should
have acted to prevent the current shortage. “It’s the federal government that
can see what the market looks like and whether there is a de facto monopoly
emerging that would create the risk of these shortages.”
Attaran’s
view is disputed by Sheridan Scott, the former competition commissioner who
oversaw the generic-drugs study.
Under
the federal competition act, the industry minister or any six Canadians could
file a complaint with the Competition Bureau, but only if there is clear
evidence that a company engaged in anti-competitive practices that would be
considered illegal, Scott said.
“You
have to be complaining about price fixing or a merger that significantly
lessens competition,” said Scott, a competition lawyer whose past clients have
included Teva Canada, a generic-drug maker. “I’m not sure if the (current drug)
shortages flow from the competitive dynamic.”
The
Competition Bureau declined to say whether the agency has received any public
complaints related to the drug shortage, or if an investigation has been
launched. “By law, the bureau is obliged to conduct its work confidentially,”
said spokesman Greg Scott.
Health Canada acts to stem drug shortage
OTTAWA—
Health Canada has given market approval to two new generic drugs and one
brand-name product that, it says, could help ease a nationwide medications
shortage.
One
of the generic drugs is ondansetron, an injectable anti-nausea medication that
could be used to treat cancer patients suffering the side effects of
chemotherapy. The drug is made by Accord Healthcare Inc., an Indian
pharmaceuticals company with Canadian operations.
The
other drug is rocuronium bromide, an injectable muscle relaxant used in
anesthesia. Omega Laboratories Ltd. is the Canadian manufacturer of the drug.
Also
approved is a brand-name drug called Aloxi, an anti-nausea medication made by
Eisai Ltd., a Japanese drug maker with a branch in Canada.
Health
Canada said it fast-tracked the approval of all three drugs to help health-care
providers access replacement drugs they would normally get from Sandoz’s plant
in Boucherville, Que.
All
three companies applied to the federal drug regulator for permission to sell
their medications before the start of the shortage caused by production
slowdowns at Sandoz’s Boucherville facility.
Case
Questions:
1.
What is the link to Crisis Management?
The
story talks about a drug shortage in Canada that is caused by the lack of
competition in the Canadian market. This is affecting the generic drug industry
and patients that cannot afford non-generic or name brand drugs. The
pharmaceutical company mentioned in the story is Sandoz Canada which is based
in Boucherville, Quebec. This company has the largest market share for
manufacturing generic drugs and is the only supplier of over 140 injectable
painkillers, sedatives and antibiotics. The company has had quality control issues,
reports of it mislabeling drugs, and a recent fire.
The
possible impending drug shortage in Canada is a risk for patients and hospitals
that purchase generic drugs. Sandoz Canada having a major market share of the generic
drug industry is an issue for the generic drug industry as there is a lack of
competition.
Sandoz
Canada is in a state of crisis as its business continuity is being affected by
the fire it had and other quality control issues. Lastly, this is an issue for competition bureau who was warned of the issue in 2008 but did not do anything to deal with the issue which has now become a risk for the patients and hospitals that are supplied by Sandoz Canada.
3. How well
does the system appear to be handling the situation?
Health
Canada has approved three new drugs in a speedy manner to combat the drug
shortage. The competition bureau has refused to make a statement on whether
they have received complaints about a drug shortage and if they will carry out
an investigation on this matter. It seems that the competition bureau is
avoiding the crisis that could occur and ignored the warning signs when they
got the report in 2008.
The
other three generic drug companies that have applied for approval of their
drugs are taking advantage of this possible shortage that may occur. They have
applied for approval when Health Canada is worried about a drug shortage which
has sped up their approval process.
4. What level of crisis preparedness
does the system appear to have?
The
system which is the generic drug industry in this case seems like they were not
prepared for this risk even though there was a report in 2008 about this
happening. Health Canada and the competition bureau should have approved other generic
drugs earlier and ensured a competitive market so that the major market share
was not owned by one company that could suffer a crisis and cause a drug
shortage. Hospitals were not mentioned in this story, but they need to be
prepared for Sandoz Canada not being able to provide them with drugs and
develop a contingency plans so that they can provide care to their patients.
5. What
personal reactions/feelings does the description trigger in you?
This story makes me question whether the competition bureau
was doing their job. The risk of a drug shortage could have been avoided if
they had ensured that Sandoz Canada did not become so depended on by the hospitals
and healthcare industry. Health Canada fast tracking the approval of 3 new
drugs is also worrisome as it makes me question whether they did their due
diligence in testing the safety of these drugs or if they just approved them
because they feared a drug shortage.
6. What
advice would you offer to those involved?
I would caution Health Canada to consider the risks that
they are taking on by fast tracking other drugs because of a fear of a drug
shortage crisis. The Competition Bureau should do an environmental scan of
other industries with these issues and have a crisis management team in place
that can promote proper competition in these industries, especially in
healthcare so that it doesn’t impact the health of Canadians. To Sandoz Canada,
I would say that they are in a state of crisis and need to have a crisis
management team in place that can develop crisis communications and have a
spokesperson make a statement to their shareholders and patients that will be
affected if their business is disrupted or goes bankrupt. I would encourage other
drug companies to develop generic drugs and enter the market to ensure that
there is good competition in an industry where there is a lot of potential for
them to increase their market share.
Hospitals should develop a crisis management team in case
there is a drug shortage and their major supplier Sandoz Canada is not able to
provide them with generic drugs. They need to explore other avenues and other
companies that they can use to purchase generic drugs for their patients. To
patients, I would say they need to contact Health Canada and the competition
bureau with their concerns if they are finding a shortage of generic drugs so
that these two organizations can work for them in handling this risk before it
becomes a crisis.
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