Premier Annual Report on Progress in Eliminating Drugs Shortage

Collaboration with Health System Leaders Yields Rapid Results

A Pervasive Problem for Patients and Providers

Since the year 2000, drug shortages have been a major challenge for hospitals, compromising their ability to provide lifesaving and urgent care to critically ill patients.


As a result of pervasive shortages, patients may experience delays in receiving necessary care, receive alternative treatments that are not as effective or may have to forgo treatment altogether. According to a 2019 survey conducted by the American Hospital Association (AHA), the Federation of American Hospitals (FAH) and the American Society of Health-System Pharmacists (ASHP), 56 percent of hospitals reported that they changed patient care or delayed therapies because of drug shortages, and another 36.6 percent said they were forced to reschedule non-urgent or emergent procedures1. Another survey conducted by the American College of Emergency Physicians found that 90 percent of emergency room doctors routinely lack access to critical medicines2.


Drug shortages and the compromised care that results from them have been linked directly to adverse outcomes and deaths. For children diagnosed with acute myeloid leukemia, one shortage of the oncology drug cytarabine caused almost half of all newly- diagnosed cases to delay their treatment by two or more weeks3. Another shortage of norepinephrine, a front-line drug used to provide emergency treatment of septic shock, increased in-hospital deaths by 3.7 percent4 as a result of the use of a less effective medication. Equally important, drug shortages also increase the likelihood of drug errors and adverse events as a result of dosing changes and medication substitutions5 that alter well-established care protocols and standing orders.


Drug shortages also pose a threat to hospital operations, as pharmacists, physicians, nurses and others who provide urgent care for patients must instead devote time locating scarce supplies, researching alternative options, tracking inventories and reconfiguring procedures. All this added effort comes at a price to patients, payers and providers, with studies estimating that drug shortages cost hospitals $359 million each year in added labor6.


Costs are also incurred in obtaining therapeutic alternatives, such as buying a more expensive branded drug in lieu of a low-cost generic in shortage. According to the AHA, FAH and ASHP report, almost 80 percent of hospitals said drug shortages resulted in increased spending to a moderate or large extent7.


Drug shortages are triggered by a variety of events, including natural disasters or manufacturing quality problems that take producers offline for weeks or months at a time8. Some shortages occur when manufacturers have difficulty finding sources of raw materials, others when there is a sudden surge in demand due to a disease outbreak or seasonal spike in cases, such as flu season9. However, the October 2019 FDA report on the root causes of drug shortages points overwhelmingly to economic factors as the predominant cause triggering shortages and their lengthy duration10.

An Unhealthy Market

Most drugs in shortage are older, low-cost generic products11. Because they are low cost, mature products, these drugs do not generate the blockbuster profits that are necessary for manufacturers to fund the ongoing investments required to maintain a market position, enter a new therapeutic category or invest in manufacturing quality and redundant capacity necessary for continuous supply – even in categories where demand is strong12.

As a result, even products used daily for essential care may only be supplied by one or two manufacturers13, creating a fragile supply chain that isn’t strong enough to handle variable market demand. The bottom line is an unhealthy market that quickly crumbles when there’s a disruption, producing dire consequences.

As an example, consider the ongoing shortage of Bacillus Calmette-Guerin (BCG), a drug used to spur the body’s immune system to fight off certain types of bladder cancer.
BCG is a complicated drug to produce; it’s a bacteria that takes three months or more to cultivate in a rare, special breed of potato14. It’s highly effective, but generates low margins, with a list price of $157 for a six-week dose15. In 2012, there were two makers of the drug. That same year, the FDA inspected one of the drug makers and found sanitation issues at the manufacturing plant, including mold and birds nesting in air-intake systems16. Shutting down the plant left a single supplier for the entire market, and at BCG’s low price, no additional competitors have stepped forward to fill the gap. Even with the remaining manufacturer increasing production, shortages persist today17 – eight years later.
In 2017 the Pew Charitable Trusts conducted interviews with pharmaceutical manufacturers to determine the economic factors that influence a company’s decision to invest in reducing the risk of shortages. In addition to the quality issues cited in the case of BCG, Pew uncovered additional factors that directly lead to increased shortage risks, including:
  • Market withdrawals due to the introduction of new, low-cost competitors;
  • Financial decisions to focus on higher-margin products for greater profitability and shareholder return;
  • Little to no investment in backup manufacturing or dual-source suppliers, except in cases where a clear return on investment could be demonstrated;
  • Lack of guaranteed volume and long-term contracts that would justify market entry or investment in redundancies;
  • Limited insights into future product demand that would enable a company to accurately forecast financials and justify investments; and
  • Regulatory burdens associated with entering a new market, expanding manufacturing capacity or upgrading equipment18. In fact, the FDA continues to have a multi-year drug approval backlog that dis-incents market entry and investment, particularly for older, lower-cost products19.

Recognizing the dangers of hospital drug shortages and the risks inherent in concentrating sources of supply to just a few companies, the FDA has made great strides to encourage additional manufacturers to enter the market. For instance, the agency has fast-tracked approvals in shortage categories, increasing the number of drugs on the market by nearly 17 percent, while cutting average reviews of new drug applications by six months25. At the same time, the FDA began publishing a list of drugs that are off patent but lacking generic competition, giving manufacturers a clear set of opportune targets21.

Though helpful, these efforts have not produced a permanent fix to nation’s drug shortage problem or the flawed economic model that often triggers them.

The Premier Difference

Recognizing the multi-faceted issues that lead to drug shortages, Premier has a successful record of remediating the flaws in the economic model, most recently with the creation of its ProvideGx® program in 2019. Built on the backbone of Premier’s 15-year experience creating solutions to shared drug sourcing challenges, ProvideGx’s sole mission is to help ensure health systems have continuous and affordable access to shortage medications, as well as those in categories that lack competition.

ProvideGx offers a vehicle for Premier to invest in innovative new business models and partnerships to address drug shortages, including partnering with quality generic drug manufacturers that can supply shortage products. The program seeks to combat shortages by fundamentally altering the economic dynamics that plague the generics market and put supplies at risk.

Drug Shortage Solutions at Scale

The Way ProvideGx Works is Simple

Health systems partner with Premier to aggregate their spending with that of hundreds of other hospitals. Those hospitals work collaboratively to identify priority shortage products based on transparent and well-defined criteria, including drugs that are:
  • in active shortage today, particularly those that are on the FDA or the ASHP shortage lists, and preferably both;
  • off patent, but lack generic competition, thus making them susceptible to shortages and pricing volatility; and,
  • off patent, but have fewer than three generic competitors, thus making them susceptible to shortages and pricing volatility in the future.

Once products are selected, Premier negotiates directly with manufacturers to enter or re-enter the market and/ or increase production. As an incentive, ProvideGx guarantees that its members will purchase 65 percent or more of their drug volume from the chosen manufacturer, with long-term, three- to five-year commitments. This helps attract high-quality suppliers to participate in categories where they otherwise would not, providing a long-term return on the investments necessary to build out additional/redundant production capacity and safety stock. In exchange, health systems get a guaranteed supply at a fair price. And, most importantly, patients get access to the medications they need in a timely manner.


In addition, ProvideGx is also prepared to invest capital to co-fund manufacturers’ development of affordable products that address specific market needs and directly secure contracts for active pharmaceutical ingredients to ensure a continuous supply.


All decisions for drug selection and manufacturer partnerships are made by the members of the program, which include 20 of the nation’s leading health systems and buying collaboratives.

Broad-based Innovations

In addition to reliably suppling vital medications at a fair price, the ProvideGx model has also solved for other, downstream supply chain problems that can exacerbate or cause shortages, even when additional sources of supply have been added to the market.

Impacting Lives

The success of Premier’s drug shortage solutions go beyond mere numbers. While the business model and the scale of the program are important, what really matters are the patients whose lives have been demonstrably improved as a result of the care teams’ access to these therapies.

Safer Care for

Newborn Babies

Seriously ill, premature or babies born with congenital health issues often have difficulty feeding and absorbing nutrients through their gastrointestinal tract. In these cases, total parenteral nutrition (TPN) is required. One of the critical components of that nutritional cocktail is cysteine hydrochloride, an amino acid that encourages growth and reduces the chances of babies developing liver disease and brittle bones.

However, cysteine hydrochloride went into widespread shortage in 2015 after the market consolidated to leave just one manufacturer producing the drug. Even if providers were able to obtain cysteine, the formulation was less than ideal because it contained high levels of aluminum. Since the product was introduced, science has advanced and produced a large body of evidence finding that high aluminum levels put newborns at greater risk for impaired neurologic development. Unfortunately, the only product available did not keep pace with the science, containing aluminum levels 30 times higher than the level recommended by the FDA for newborns.

Through ProvideGx, Premier learned that Exela Pharma Sciences, LLC, was in the process of seeking approval from the FDA to produce a new formulation of cysteine hydrochloride – one that reduced the aluminum levels well below the FDA’s recommendations. Not only did Premier help fast-track this approval through the FDA, but it also put this drug in the ProvideGx portfolio as soon as it could be commercially marketed.

As a result of the ProvideGx partnership, a new competitor was able to supply the market with a safer alternative to the incumbent. But the results don’t stop there.

Ensuring Survival

After Heart Surgery

In 2017, Richard Wilson was diagnosed with aortic valve stenosis, a condition in which the flaps of the heart valves thicken, stiffen or fuse together. With stenosis, heart valves cannot fully open, which makes the heart work harder to pump blood through the body and reduces the overall supply of oxygen. In 2019, doctors determined that Richard would need a valve replacement to treat his condition. However, during pre-surgical care, it was confirmed that he also had blockages, and would require open heart surgery.
After his surgery at Atrium Health’s Sanger Heart & Vascular Institute (Charlotte, N.C.), Richard started experiencing atrial fibrillation (or an irregular heartbeat), the most common complication for cardiac patients affecting about half of all surgical cases. Left untreated, AFib can lead to blood clots, stroke, heart failure and other potentially deadly complications. The best medicine to treat AFib in this case was metoprolol, a drug that Atrium Health had on hand as a result of its participation in the Premier ProvideGX program.
Had Richard been diagnosed a year earlier, that drug may not have been available for his doctors to administer. In 2018, the drug was in a nationwide shortage after Baxter Healthcare opted to withdraw from the market in order to focus its manufacturing on other drugs with higher demand. But after Premier approached the company with a guaranteed volume commitment and a long-term contract to supply metoprolol to thousands of member hospitals, the economics of that decision changed. Based on the strength of the ProvideGx economic model, Baxter decided to re-enter the market, making metoprolol available to health systems like Atrium Health, where it can be used to save lives – including Richard’s.

Speeding Emergency

Response Time

When dealing with a serious medical event, physicians and nurses need every possible supply at their fingertips, ready for immediate use. But imagine an emergency room responding to a 28-year-old mother suffering from a severe allergic reaction. The physician reaches down into the crash cart of supplies for an emergency syringe of epinephrine, the drug that’s needed to save her life, only to come up empty handed.
Sadly, that’s the reality in emergency rooms across the country.
Drug shortages can affect all types of generic medications, but they are particularly dire in the case of emergency, pre-filled syringes. Pre-filled syringes became the “go-to” standard for emergency care because they are pre-measured in the exact adult dose and ready to use, speeding response times and minimizing the potential for dosing errors22. But, across the country, emergency syringes used to treat allergic reactions, manage trauma and reverse the effects of poisonings are nowhere to be had. Without them, first responders are forced to backpedal and jerry-rig alternatives, either administering the drug using vials or turning to a substitute product. Either response takes critical minutes that patients in a medical emergency don’t have.
To remediate this problem, ProvideGx partnered with Amphastar Pharmaceuticals to produce pre-filled, emergency syringes of calcium chloride, epinephrine, phytonadione, sodium bicarbonate, atropine sulfate, dextrose and lidocaine – seven front-line drugs clinicians routinely reach for in emergency department crash carts. With creative financing and group purchasing options, ProvideGx has created a real remedy to the emergency syringe shortage problem – something that emergency first responders – and their patients – can be grateful for.

Ensuring Availability Before, During and After Pandemic Events

In the spring of 2009, H1N1 (also known as the swine flu) affected millions of patients in more than 214 countries23. To provide care, providers need to surge buy supplies necessary to treat the virus, including personal protective products such as N95 respirators, vaccines and antiviral drugs.
Some of these products were produced in single location: Mexico. Mexico was particularly hard hit by the virus, forcing a government-mandated shut down of all businesses for nearly a week at the height of the crisis. That shutdown triggered widespread shortages, resulting in manufacture lead times of months to provide products that were needed immediately.
The experience with H1N1 taught supply chain leaders an important lesson about the dangers associated with overreliance on a single country or a single region for medical supplies. Yet despite that, about 13 percent of all facilities that make ingredients for U.S. drugs are located in China, and 85 percent of medicines in the U.S. strategic national stockpile use some component that comes from China24. These statistics are particularly troubling given the recent outbreak of COVID-19 in China, with experts warning that closures of seaports or restrictions on exports could compromise supply and lead to widespread shortages for a range of products. However, the magnitude of that risk is almost impossible to assess, as no one, including the FDA, has complete data on what portion of what critical medicines originate in China25.
To address this problem, Premier’s drug shortage programs require that manufacturer partners disclose both the finished dose centers of manufacture, as well as the sources for all active pharmaceutical ingredients. Manufacturers are then risk scored, and those with an undue concentration of manufacturing in a single region passed over in favor of those that source from multiple countries at a minimum, with preference given to those sourcing from multiple continents. Today, none of the drugs sourced through the ProvideGx program contain ingredients sourced from China, and all have diverse supply chains for sourcing ingredients and manufacturing finished goods.

Giving Kids With Cancer a Fighting Chance

Giving Kids With Cancer a Fighting Chance

When 4-year-old Milo Sligh of Charleston, South Carolina, was diagnosed with childhood acute lymphoblastic leukemia (ALL) the diagnosis terrified his family26.
ALL is one of the most common childhood cancers, affecting about 3,000 children a year, most between the ages of 2 to 5 years old. With ALL, the body’s bone marrow makes too many immature white blood cells, leading to fevers, fatigue, bruising, bone pain, swollen lymph nodes and frequent infections.
While battling cancer can be a traumatic experience for children and their families, ALL is largely treatable. With the right chemotherapy, 98 percent of children with ALL go into remission within weeks after treatment begins, and about 90 percent of those children are cured27. These results are all thanks to a chemotherapy drug called vincristine, the longstanding “gold standard” for treating many pediatric cancers, including ALL.
Vincristine has been around since the 1960s, and in many cases it is the only therapeutic option for care. But it’s also relatively inexpensive, with an average sales price of about $5 per treatment. As such, very few drug companies have incentives to invest in vincristine, even though it’s needed to treat about half of all pediatric cancer cases.
Vincristine went into nationwide shortages in October of 2019 after one of just two drug companies producing it exited the market for undisclosed reasons. Upon learning of the shortage, Premier went into action, contacting the remaining manufacturer, Pfizer Inc., to increase supply production through the ProvideGx program. Just six weeks later, the product was placed on a ProvideGx contract, and was made readily available to program participants.


Today, kids like Milo don’t have to worry about missing a treatment or slowing down their recovery. Through ProvideGx, Premier is helping to ensure that every child fighting cancer has a full chance of survival.

Continuing Our Fight

While drug shortages continue to be a pervasive problem for patients and their providers, Premier and its member hospitals are taking a leadership role, stepping up to systematically address the root causes and provide the right economic models that incent manufacturers to increase supplies, invest in redundancies, enter or re-enter markets and explore new therapeutic categories for innovation. Although much work lies ahead, participants in Premier’s drug shortage programs can have confidence that they have access to a broader range of shortage products than anyone else in the market. Going forward, Premier will continue to fight this problem until every drug on the shortage list has been resolved nationwide.

Speak with one of our experts.

Before you face the uncertainty of generic drug access, let’s talk. We’ll show you the hard work that’s already being done for you. Contact us today.
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3. Hedlund NG, Isgor Z, Zwanziger J. et. al. Drug Shortage Impacts Patient Receipt of Induction Treatment. Health Services Research 53:6. (Dec) 2018.

4. Vail, E., Gershengorn, HB., Hua M. et. al. “Association Between US Norepinephrine Shortage and Mortality Among Patients with Septic Shock.” JAMA. 2017:317(14):1433-1442.





9. ibid


11. ibid

12. ibid



15. ibid

16. ibid

17. ibid



20. ibid








“Premier has been a strategic partner in our effort to deliver high-value care while achieving our long-term financial goals. We have built a healthcare system that puts the patient front-and-center with regard to every decision we make and every strategic initiative we deploy.”

- Thomas F. Zenty III, CEO of University Hospitals

Leaders who act now can be winners.

The key is to have a comprehensive margin improvement strategy that is focused on reducing variation and costs, while also uncovering new revenue lines to offset diminishing reimbursement. Premier’s five keys to maximizing value are essential to achieve systemic and strategic transformations; alleviate margin pressures; improve efficiency and productivity; and maintain high-quality care.

“Premier has been a strategic partner in our effort to deliver high-value care while achieving our long-term financial goals. We have built a healthcare system that puts the patient front-and-center with regard to every decision we make and every strategic initiative we deploy.”

- Thomas F. Zenty III, CEO of University Hospitals

Leaders who act now can be winners.

The key is to have a comprehensive margin improvement strategy that is focused on reducing variation and costs, while also uncovering new revenue lines to offset diminishing reimbursement. Premier’s five keys to maximizing value are essential to achieve systemic and strategic transformations; alleviate margin pressures; improve efficiency and productivity; and maintain high-quality care.