The hidden costs of drug shortages
When I was the senior pharmacy leader for the University of Utah system, Linda Tyler and Erin Fox who led our drug policy development and drug information programs brought a great idea forward. They recognized the growing impact of drug shortages and suggested that they could put together an information program for our GPO and in turn for ASHP to help everyone better understand and prepare for these shortages. I agreed but cautioned them that these shortages would probably “only last a couple more years.” Right – that was 15 years ago and drug shortages show no signs of abatement in the foreseeable future. Linda and Erin and the University of Utah team are still going strong and offering this valuable program.
In addition to the obvious clinical and safety challenges that drug shortages create, it is important to recognize that there is also a very significant hidden cost beyond just the added expense of purchasing more costly alternatives for drugs in shortage situations and that is the hidden cost of the labor needed to effectively manage drug shortages. Pharmacy Practice News (PPN) recently highlighted the magnitude of this problem. PPN noted that in a survey of 365 hospital executives between March 6 and April 4, 2019, 100% of hospitals were affected by drug shortages. The labor costs associated with the management of these shortages nationally are projected at just under $360 million annually.
In our work at Visante we were recently asked as part of our larger support project if we would help quantify this cost for one of our clients. Looking at the time spent to research shortages and find alternate therapy, to manage back-orders, to change formulary configurations, to change order sets in the informatics system, to change labels, to change automated dispensing cabinet configurations, and to communicate all shortage information across the health system, it was very significant. The total additional cost for this organization was approximately $3M annually and unfortunately most of these activities were “hidden” and happening behind the scenes and pharmacy was just trying to “make do” and absorb these costs while still hitting their budget targets.
With the continued proliferation of drug shortages we at Visante advocate for the recognition of these hidden costs and the inclusion of specific dollar resources as a formal line item in the budget. This will hopefully flex from year-to-year and eventually not be needed but learning from my prediction 15 years ago, hospitals would be advised to recognize the problem now as an on-going issue and work to manage all aspects of drug shortages including hidden labor costs to maximum effectiveness.