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503Bs and Their Role in Responding to Drug Shortages

A doctor working on a computer.

Courtesy of Pharmacy Practice News

With drug shortages at an all-time high, hospital and health-system pharmacies are increasingly turning to 503B compounding pharmacies to help them meet the demand for a variety of essential medications. But hospital pharmacy leaders and 503B executives alike say these compounding facilities could be doing a lot more to mitigate shortages, if they were given more flexibility to do so.

“Responding to drug shortages should be a major role of 503Bs, but it isn’t,” said Craig Else, PharmD, who speaks from both perspectives: He’s the longtime hospital pharmacy director for M Health Fairview, in Minnesota, as well as chief operating officer of M Health’s IntegraDose Compounding Services, a licensed 503B facility that produces drugs for both the M Health system and external customers. “The primary reason for that is that the CGMP [Current Good Manufacturing Practices] regulations that 503Bs are required to follow are extremely cumbersome, so it is usually a monthslong process for us to ramp up production on a new product.”

Under the oversight of the FDA, 503B compounders are permitted to manufacture large batches with or without prescriptions to be sold to healthcare facilities, but they are prohibited from making compounds that are “essential copies” of drugs that are commercially available from pharmaceutical manufacturers except in the event of a drug shortage that has been officially declared by the FDA.

“To comply with CGMP, 503Bs must do stability testing just like a pharmaceutical manufacturer does. So, for example, if we want to release a product with beyond-use dating [BUD] of 90 days, we have to develop the product, make it, submit it to a lab, have them hold it for 90 days to test stability and sterility to that BUD, and then do the documentation,” Dr. Else said. “It usually takes closer to six months to stand up a new compounded product. As soon as the FDA declares the shortage over, we are not allowed to make it anymore.”

 Although some drug shortages are prolonged, “most only last about six months, so by the time we ramp up production, the shortage is resolved and we’re done,” he added. As a result, “we have to calculate whether we expect a product to be on shortage for much more than six months in order to be worth investing all that time and money in making it.”

Chris Fortier, PharmD, who joined Nephron Pharmaceuticals as the president of 503B outsourcing in June 2023 after 10 years as chief pharmacy officer for Massachusetts General Hospital, in Boston, echoed the economic risks involved. “We want to not only meet but exceed CGMP standards, but covering the costs of stability and sterility testing and meeting other CGMP requirements, along with trying to invest in capital automation to improve manufacturing, does not come cheap, and 503Bs are not multinational Fortune 500 drug manufacturers.”

Small-Batch FDA Exception May Not Help

There is one exception to the stability testing rule: The FDA allows 503Bs to make a product for up to 1,000 doses without conducting the full testing regimen, assigning either a 28- or 42-day BUD, as long as the literature supports that it would be stable for that long. But that’s not much help, Dr. Else said. “For most of my products, 1,000 doses accounts for about a week of use. I haven’t yet run across any product in shortage for which we wouldn’t have hit 1,000 doses in a week to two weeks.” Dr. Else has proposed to the FDA that the dose limit should be increased to 25,000, which would likely meet customer demand for many shortage drugs for six months, which is also about the amount of time it would take to conduct the stability testing.

Florida’s BayCare Health System, which has its own 503B compounding pharmacy to serve internal system needs, used a creative solution to get around the 1,000-dose limitation during a summer 2022 shortage of contrast media. “We could get limited supplies, but nowhere near what we usually bought,” said Kenneth Jozefczyk, RPh, the organization’s director of central pharmacy services. 

“Our folks in radiology informed us that often in OR procedures, they would use a very small volume—maybe only 5 to 10 mL out of a 100-mL single-dose container. We realized that we could take that 100-mL container and draw it up into 10-mL syringes, saving nine vials. But the only way we could get around the thousand-dose limit was to vary the sizes we produce: 6 mL one month, 7 mL the next month. We ran that by the FDA, and they confirmed that it did follow the letter of the guidance, although it seems like a silly thing to have to do.”

503B compounders have proposed another solution: that the FDA extend the time after a shortage has been resolved when 503Bs are allowed to distribute the product they’ve made, which currently is only 60 days, according to an FDA guidance document. “If that period were extended to six months, 503Bs would be better able to recoup their investment and have greater flexibility to help during drug shortages,” said Kevin Hansen, PharmD, the pharmacy director for the 503B program at Premier Inc., a healthcare improvement company that maintains contracted relationships with at least 11 503B vendors that operate a total of 20 facilities.

503B compounders also have asked manufacturers to share their product stability data with 503Bs during a shortage. Unfortunately, “several years ago, during the heparin shortage, no 503Bs were willing to step in,” Dr. Hansen said. “I asked why and they said, ‘Do you know how expensive it is to do stability studies on heparin? We’ll invest hundreds of thousands of dollars, and then the shortage will be over and we’ve lost our entire investment.’”

If manufacturers shared stability data under these circumstances, “503Bs could start making the products on day 1 of a shortage,” he said. “Economically it makes sense, but sharing this type of data remains elusive.”

Investing in Speedier Automation

503Bs could do their part by investing in more high-speed automation, Dr. Hansen suggested. “At my previous organization, we used millions of sodium chloride flush syringes everywhere in our hospital,” he said. “When those went on shortage, I reached out to some of the largest 503B players and was told that their operations were highly manual without the capacity to reach the volume needed. High-speed production automation could help them [address] the high-demand, high-volume shortages that are happening more frequently.”

As one of the larger 503Bs, Nephron has some ability to produce and manufacture higher volumes, Dr. Fortier said. “But the majority of 503Bs are still [primarily using manual processes], and some products you can’t do on automation and must produce manually in any case.”

Hoarding and panic buying is yet another barrier to mitigating drug shortages, particularly given the lack of transparency from manufacturers. “A true shortage hits the market well before the FDA recognizes and posts it,” Dr. Hansen said. “These shortages sometimes appear to happen so fast, but we know that can’t be the case.”

The heparin infusion shortage, for example, “appeared to happen overnight,” he said. “I was a hospital director of pharmacy at the time, and my buyer came up to me and said, ‘I normally place this order every week, and we just found out that we can’t order them, won’t be able to get them for a year and we’re going to run out next week.’”

Such occurrences underscore that “pharmacies and 503Bs alike would benefit from advanced intelligence as to when a drug is going to go on shortage,” Dr. Hansen stressed.

Premier has been developing an artificial intelligence–fueled shortage prediction tool called CognitiveRx. “It pulls in all the data we have as a GPO [group purchasing organization], collates it and analyzes it for signals of potential supply chain disruption,” Dr. Hansen said. “We’ve found that it can predict these disruptions as much as six months in advance, and 503Bs have told us that having that information ahead of time could change their decision making about whether or not to make a shortage drug.”

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Tamia Sumpter

Tamia is a driven senior undergraduate Bioengineering student currently enrolled at Clemson University. With a strong foundation in her field, she has honed her skills through hands-on experience in research and development at Eli Lilly & Company. During her time in the ADME department, Tamia contributed significantly by working on siRNAs and their applications in finding In Vitro-In Vivo Correlation (IVIVC). Looking ahead, Tamia has set her sights on a promising career in law. She aspires to specialize in Intellectual Property Law, with a particular focus on serving as in-house counsel for leading medical device or pharmaceutical companies. Her enthusiasm for this role is palpable as she prepares to embark on her legal journey! She is also a proud member of the Omicron Phi chapter of Delta Sigma Theta Sorority, Inc., PEER Mentor for Clemson PEER/WiSE, and currently serves as the President of Clemson Bioengineering Organization (CBO). With her unique blend of scientific knowledge and legal interests, Tamia is poised to make a meaningful impact in the healthcare and life sciences industries.