Permanent Discontinuance or Interruption in Manufacturing of Certain Drug or Biological Products

This is an important area of regulation concerning life-saving drugs and biological products. The FDA is constrained by earlier legislation in formulating its proposed regulatory rulemaking. Unfortunately, the claimed net benefit for the requirement to report discontinuances in production of these products is predicated on weakly constructed data, reflecting uses of the data that conflict with antitrust policy. It is simply impossible to conclude that the rulemaking is of net benefit. As this is at a proposal stage, we can hope that public discussion between now and January 2014 will encourage the FDA to carry out a more detailed analysis and recognize a need to be more careful in avoiding conflicts with other areas of public policy.

The Food and Drug Administration (FDA) has proposed a new regulatory rulemaking covering shortages of drugs and related treatment components. The proposed rule requires covered makers of drugs and biological products, such as blood components for transfusions, to give notice of any significant interruption in manufacturing likely to disrupt their supply in the United States. Interruption includes total discontinuance. The FDA believes that increasing the information flow over discontinuances helps them to intervene in the supply chain with the aim of maintaining the supply of treatment components. Manufacturers must give notice to the FDA electronically; failure to do so leads to naming and shaming by the FDA. The FDA focuses unduly on information flows while ignoring other policy objectives, such as sustaining competition between manufacturers. The FDA’s analysis suffers from poor quantification that provides little guidance for citizens.

Proposed Rulemaking

The FDA’s proposed new rulemaking is designed to implement provisions of the Federal Food, Drug, and Cosmetic Act (the FD&C Act)1 covering shortages of drugs and biological products. The proposed rulemaking will require all makers of drugs and biological products (other than blood-transfusion components) that are covered by the legislation and subject to an approved application to give notice of any significant interruption in manufacturing likely to disrupt supply of their product within the United States. The rulemaking will also extend the reporting requirement to manufacturers of blood components for transfusions who supply at least 10 percent of the market, and to manufacturers of drugs covered by the legislation but marketed without an approved application. The statute defines a covered product as a drug or biological product that is a prescription item that is “life supporting, life sustaining, or intended for use in the prevention or treatment of a debilitating disease or condition, including any such drug used in emergency medical care or during surgery.” 2 In the case of blood transfusion supplies, significant interruptions are defined as arising when a manufacturer serves 10 percent or more of a market and experiences difficulty in meeting demand.3 

The rulemaking requires covered manufacturers to report anticipated disruption of supplies six months in advance or as soon as is practicably possible. If the requirement is not met, the FDA will issue publicly available letters on noncompliance to the firm concerned.4 The penalty appears to be one of naming and shaming rather than the imposition of fines. The FDA claims that it has increased the number of avoided discontinuations of covered products through its activities over the past two years and that the reporting requirements will assist it further in this regard.

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