* Drug shortages increasingly frequent worldwide
* Consolidation has cut number of generic suppliers
* Too low prices can drive manufacturers out of market
* GRAPHIC - Drug shortages in Europe http://tmsnrt.rs/22KmuI5
By Ben Hirschler
LONDON, April 1 (Reuters) - Philip Aubrey buys medicines for
British government-funded hospitals across London, capital of
the world's fifth-largest economy, but last year he struggled to
secure supplies of a basic AIDS drug.
He is not alone. Shortages of essential drugs, mostly
generic medicines whose patents have long expired, are becoming
increasing frequent globally, prompting the World Health
Organization (WHO) to suggest minimum prices may be needed to
keep some products on the market.
Drug shortages are due to a variety of factors from
manufacturing, quality and raw material problems to unexpected
spikes in demand, but such upsets are aggravated when there are
few suppliers.
"It can be really problematic," said Aubrey.
The rise in shortages has gone hand in hand with a wave of
consolidation among the companies making generic drugs - which
range from global pharmaceutical giants to smaller firms in
countries such as India - reducing the number of manufacturers
making individual product lines.
Downward pressure on generic drug prices is good news for
healthcare systems in the short term, but it may fuel disruption
if a supplier hits production problems. While the lack of a
patent means other suppliers could also make the same drug, they
would still need regulatory approval and that can take years.
The result, according to experts, is a worryingly fragile
supply chain, particularly for injectable medicines such as
chemotherapy treatments and certain antibiotics.
Benzathine penicillin, for example, a vital drug for
preventing transmission of syphilis from mother to child, has
been in short supply for years because of manufacturing
problems, inconsistent demand and a relatively low price.
"Medicines can be too cheap," said Hans Hogerzeil, professor
of global health at Groningen University in the Netherlands and
a former director for essential medicines at the WHO. "For a
viable market model you need at least three and preferably five
different manufacturers."
The idea of minimum prices for certain essential medicines
contrasts sharply to traditional pricing debates about how to
reduce the sky-high cost of new patented drugs for diseases such
as cancer and hepatitis C.
Drug shortages will be discussed as a specific topic for the
first time at this year's WHO World Health Assembly in May, and
U.S. and European regulators told Reuters more needed to be done
to address the problem.
Shortages in the United States hit a peak in 2011 due to
manufacturing outages, yet the American Society of Health-System
Pharmacists still lists 155 products as being in short supply.
The European Association of Hospital Pharmacists says more
than four out of five of its members face regular shortages,
while doctors in Canada have been grappling this year with tight
supply of a widely-used epilepsy drug.
COUNTERFEIT RISK
Shortages in developing countries can go unreported for
months or even years, increasing the risk of counterfeits
entering the supply chain, according to Lisa Hedman, a
procurement and supply chains expert at the WHO.
Hedman was an author on a WHO report released earlier this
year setting out possible ways to tackle the problem.
These include a global notification system for supply
problems, increased collaboration between regulators and
potential advanced purchase commitments for priority drugs, as
well as action on pricing.
Low-cost generic manufacturing has produced huge benefits in
increasing drug affordability but the report warned: "Too low
prices, however, may drive manufacturers out of the market."
Valerie Jensen, associate director of the U.S. Food and Drug
Administration's drug shortage programme, believes global action
could complement national measures, such as a new FDA policy to
speed reviews of generics competing with only one other product.
"We know that internationally this is a problem and we need
to think of ways to address it," she said.
Drug regulators themselves have limited scope for action,
since while they can keep a drug off the market, they cannot
require a company to make a product.
"We need to sweet talk manufacturers to get them to think
about best practices," said Brendan Cuddy, head of manufacturing
and quality compliance at the European Medicines Agency.
Brendan Shaw, assistant director general at the
International Federation of Pharmaceutical Manufacturers and
Associations in Geneva, argues that recognising the need to keep
generic drugmakers financially viable is essential.
"Companies don't like stock-outs either, so it is in
everyone's interest to find a way forward," he said.
In London, medicines buyer Aubrey has now resolved the
supply difficulties he faced over the HIV/AIDS treatment
nevirapine, after one generic supplier eventually fixed its
production problems, but he is still struggling to get supplies
of other important drugs.
These include the bladder cancer therapy BCG and even
diamorphine, or heroin, the powerful painkiller sometimes given
to end-stage cancer patients.
As the man holding the purse strings, Aubrey needs to get a
good deal on price but he worries that a couple of hundred
medicines in Britain now have only one supplier.
"We need a balance," he said. "It's not good news if there
is a shortage and patient care is compromised."
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GRAPHIC: Drug shortages in Europe http://tmsnrt.rs/22KmuI5
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(editing by David Stamp)