Study: Unfavorable FDA inspection outcomes associated with fewer future drug shortages

More rigorous statistical analysis refutes the 2016 GAO report on the subject.

A common belief held that regulatory citations against drug manufacturing facilities led to drug shortages. A new study by Gies Business researchers Iris Wang and Gopesh Anand contradicts this belief. Their findings were announced in their paper, "Obligatory Responses to FDA Inspection Outcomes and Future Drug Shortages," and published in Manufacturing & Service Management.

Since its inception, the Food & Drug Administration has regulated drug quality. In 2012, the FDA added another key aspect of the supply chain, drug shortages, to its purview after Congress passed the Food and Drug Administration Safety and Innovation Act (FDASIA).

“As drug shortages became a problem, the FDA got the additional charge of discovering what causes shortages and finding ways to reduce them,” Anand said.

Drug manufacturing facilities are typically inspected every year or two, and those reviews result in one of three outcomes: official action indicated (OAI), meaning improvements are required; voluntary action indicated (VAI), meaning action is suggested, but not required; and no action indicated (NAI).

As drug shortages became a concern, there was fear that plant managers' shift in attention toward quality concerns would cause supply to dip further, leading to even greater future shortages. In fact, a 2019 FDA Drug Shortages Task Force Report concluded that 62 percent of drug shortages from 2013-17 were attributed to drug quality issues. In 2016, the Government Accountability Office (GAO) found a positive link between unfavorable FDA inspection outcomes, which may require numerous corrective actions, and drug shortages.

Wang, Anand, and their fellow researchers, George Ball from Indiana’s Kelley School of Business and Hyunwoo Park from Seoul National University, wanted to further investigate that hypothesis with a more rigorous methodology. Anand researches process improvements while Wang’s research has focused on the pharmaceutical industry, making them an ideal pairing for this project. Both Anand and Wang are scholars with Gies' Health Care Research Initiative, which works to advance understanding of major health care issues affecting Illinois and the broader United States.

“The suggestion that shortcomings in compliance with required manufacturing practices discovered through FDA inspections are associated with shortages seems to make sense. Because plants are having to do extra to overcome shortcomings, they could be falling short of their targeted volume,” Anand said. “We saw there were some deficiencies in the existing analyses that found support for this suggestion and decided to employ some more sophisticated analysis methods to check.”

For the project, the team got shortage data from the American Society of Health-System Pharmacists (ASHP) at the University of Utah Drug Information Service (UUDIS) and used a FOIA request to obtain FDA inspection data from the past 20 years. They used two different model specifications and instrumental variable (IV) analysis to estimate the impact.

What they found refuted the GAO report. Inspection outcomes were actually associated with fewer future shortages. According to their research, those manufacturing facilities with VAI outcomes were 77.2 percent less likely to have shortages, while those that received an OAI were 96.4 percent less likely to have shortages in the subsequent 12-month window.

“The main issue is that the underlying quality of the facility is a common cause for both deficiencies in product quality and production,” Wang explained. “If the facilities' quality level is low, they are more likely to have an OAI outcome because of deficiencies in the production line. Once the facility gets inspected and reveals the quality issues, they typically also address their processes and consistency, meaning a lower likelihood of future shortages.”

For obvious reasons, the FDA has shown an interest in the results of this study. Ball, who works closely with the FDA, has had some preliminary talks with the organization. While this research doesn’t specifically recommend an action, Wang is working with a doctoral student on potential scenarios, including the implications of more frequent or less frequent inspections.

Anand notes that if OAI or VAI outcomes contributed to shortages, as suggested by the GAO report, inspectors might be reluctant to give these ratings.

“Based on our research, however, when the FDA does an inspection, they shouldn’t be afraid to say what they see just because they think this might cause a shortage,” Anand said. “If a facility deserves an OAI, the FDA can help it improve the quality while also preventing a shortage from happening.”