Propofol might best be known as the anesthetic Michael Jackson used inappropriately as a sleeping aid. Administered properly, the drug widely is used in hospitals to sedate patients. It also happens to be part of an industrywide drug shortage affecting hospitals throughout the country.
Injectable drugs maker Hospira (NYSE:HSP) is among the dwindling number of propofol manufacturers. The company recently restarted propofol production after a stoppage at its manufacturing plant in Clayton, North Carolina. The stoppage was voluntary and temporary, CEO Michael Ball said during during the company’s conference call to discuss first quarter financial results. Without going into detail, Ball said that Hospira has “completed corrective action” at the plant and propofol production has restarted. But restarting production isn’t a solution to the industrywide propofol shortage. And it’s not Hospira’s fault. Blame economics.
Three years ago, propofol was available from three companies. Besides Hospira, Teva Pharmaceutical and APP Pharmaceticals also made the sterile injectable drug. But certain lots of Teva propofol were subject to a 2009 recall due to possible contamination. Hospira also recalled batches of its drug that year after particles were found in some vials.
Those recalls sparked a propofol shortage. In response, APP stepped up its propofol production. The company ramped up production again last fall as shortages manifest themselves again. But in a small pool of propofol providers, a hiccup at one manufacturer quickly ripples through the market and it’s hard for one manufacturer to make up the lost production from the others. The pain of the propofol shortages is even more acute now. Teva bowed out of propofol production in 2010 following a court case that claimed tainted propofol led to cases of hepatitis C. A jury awarded victims $500 million in damages. Teva is still settling more propofol cases.
So if the drug shortage is a problem of supply not meeting demand, why hasn’t anyone stepped up to boost supply? A 2010 New England Journal of Medicine article assessing the shortage that year raised several economic points. For one, it’s not quite that easy to boost supply. Few companies make injectable drugs like propofol because they’re expensive and complex to make. Propofol is also a generic drug, so it’s not a big moneymaker for the companies that make it. With the high barriers to entry into the market and the difficulty to make much money from selling a generic propofol, it’s unlikely another company would or even could enter the market to address the propofol shortage.
Anesthesiologists prefer propofol because it it works quickly and also allows patients to awaken quickly. Alternatives to propofol exist but they come with side effects. During a U.S. Food and Drug Administration workshop on drug shortages last year, the American Society of Anesthesiologists told the agency that propofol has “become our go-to drug.” Hospira’s restart of its Clayton facility will help ease some of the pain from the most recent propofol shortage. But it’s not a long term solution to shortages. Propofol shortages will continue. It’s the unfortunate economics of a generic, injectable drug.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
