As COVID-19 leads to new supply chain difficulties, the FDA wants more information on shortages

Amid potential shortages of drug products resulting from the COVID-19 outbreak, the FDA issued new guidance updating policy on how and when manufacturers should notify the agency of manufacturing disruptions.

To contact the author of this analysis, please email Laura DiAngelo.
To contact the editor of this analysis, please email Alec Gaffney.

Executive IQ Brief

  • How Things Work Now: Under Section 506C of the Federal Food, Drug, and Cosmetic (FD&C) Act, manufacturers of certain products are required to notify the FDA of disruptions in their manufacturing capabilities or supplies that could lead to a potential shortage. Under the regulations promulgated by the FDA, manufacturers are directed to look only at their own capacity and supplies, not at the general supply of the product on the market or their understanding of market demand, when considering whether to submit a notification.
  • What’s New: Under new guidance from the FDA, manufacturers are explicitly directed to take potential sharp increases in demand for their product into account when determining whether to submit a notification of manufacturing interruption to the agency. Additionally, the FDA is requesting new information from manufacturers in their notifications, including potential remediation techniques and broad explanations of the root cause or underlying reason that lead to a notification.
  • What’s Next: Unlike the other policies the FDA has recently issued in response to the COVID-19 public health emergency, this guidance will not be automatically revoked after the emergency declaration is terminated. Rather, the agency is expected to issue new guidance incorporating at least some of the policies in this guidance document within 60 days. Additionally, the agency will have to issue new guidance on the changes to Section 506C outlined in the COVID-19 stimulus bill—indicating that more changes could be coming to the 506C reporting process.


Regulatory Background

Under Section 506C of the Federal Food, Drug and Cosmetic (FD&C) Act, manufacturers of certain drugs and biologics are required to report to the FDA on disruptions in manufacturing that could impact a drug’s supply.

Under the law, these requirements apply to manufacturers of drugs that are:

  1. Life-supporting;
  2. Life-sustaining; or
  3. 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.

Certain products, such as radiopharmaceuticals, are exempt from the reporting requirements. While the reporting requirement does apply to manufacturers of biologic products as well as pharmaceuticals, the standards do vary slightly for blood products as the supply of these products are generally dependent on donation levels and donor eligibility.

Manufactures of non-blood products are required to notify the FDA of a “significant disruption” in their production that could lead to a reduction in the supply of the drug or biologic, while blood products’ manufacturers are required to report on “significant disruptions” that “substantially affect” the ability of the manufacturer to fill orders and would impact a significant percentage of the US blood supply.

Under Section 506C, types of entities that are required to submit these notifications are firms with an approved drug (either through an approved New Drug Application, Abbreviated New Drug Application, or Biologics License Application), as well as manufacturers of a covered drug that is marketed without an approved New Drug or Abbreviated New Drug Application. Some drugs, for example, were marketed before the creation of the FDA’s regulatory approval pathways and are “grandfathered” into use.

The FDA must also be notified of any “permanent discontinuances” in the manufacture of the drug that would lead to a “meaningful” disruption (or a “significant” disruption, in the case of blood products). For example, a company choosing to discontinue production of a product would need to notify the FDA.

Advanced notice and compliance
In general, manufacturers are required to submit these notifications to the FDA six months before permanently discontinuing their product, or six months in advance of a potential interruption.

For example, if a firm’s supplier of certain ingredients or components halts its production of those products, a firm may have enough supply in stock to continue manufacturing for a period of time while seeking a new supplier. That manufacturer would be required, if their drug was intended to support/sustain life or used in surgical or emergency care, to notify the FDA of the potential disruption when their available stock dipped below six months of expected production.

In the event that a manufacturer cannot foresee a disruption in manufacturing capacity, such as a natural disaster, a fire at a manufacturing facility, or a contamination in a warehouse, the firm has five days to submit such a notification to the FDA.

The law clarifies that manufacturers should only take into account their own manufacturing capacity, as well as their own supply, when considering whether to submit a notification to the FDA. Manufacturers are expected to neither consider a competitor’s manufacturing capacity nor the potential demand for their product when determining if a notification is required.

Manufacturers that do not comply with these requirements are at risk of receiving a letter of noncompliance letter. After the noncompliance letter is received, the manufacturer has 30 days to respond. If the agency determines that there is a “reasonable basis” for not notifying the agency, no action is taken. However, if the FDA determines that the manufacturer has not responded appropriately and is in violation of the reporting requirement, the agency will post both the noncompliance letter and the manufacturer’s response to its website within 45 days of issuance.

This policy is intended to help inform action that can prevent or mitigate a shortage. For example, the FDA can expedite or prioritize the review of an alternative product, and manufactures are required to publicly notify providers of potential shortages and disruptions in manufacturing.

Regulatory Context

As the outbreak of COVID-19 continues to spread, there are concerns from lawmakers and public health officials about potential shortages of medical products.

These shortages could be caused by both increases in demand and decreases in supply. Patients with COVID-19 will use a substantial number of medical products, including ventilators, masks, and hydroxychloroquine. Other products made outside of the US may be available in reduced supply due to shutdowns of manufacturing facilities or reduced shipping capacity.

Already, there have been reports that certain drugs are, or could be, in shortage. Hydroxychloroquine, an anti-malarial that is also used to treat common autoimmune disorders like rheumatoid arthritis or Lupus, is currently under investigation as a potential treatment for COVID-19. In response, demand for the product skyrocketed beyond regular manufacturing capacity and prompting concerns among patients already taking the drug about whether they would continue to be able to access it. The FDA reported the drug was in shortage as of March 31, 2020.

Additionally, on March 31 STAT news reported, using data from Vizient, that the widespread need for mechanical ventilation of patients with COVID-19 has increased demand for the types of sedatives and anesthetics needed when placing a patient in severe respiratory distress on a ventilator by 51 percent.

Critically, because these shortages aren’t due to manufacturing disruptions, but instead because of a sharp increase in demand, these changes aren’t necessarily captured under the reporting requirements detailed at 506C.

What’s New

In guidance issued March 27, 2020, the FDA clarified its policy on reporting of potential disruptions in manufacturing.

In a key update to the policy, the FDA is now requesting that manufacturers notify the agency “when they are unable to meet demand for products” for reasons unrelated to manufacturing disruptions, such as a sudden and unexpected spike in demand.

Under Section 506C, manufacturers are not technically required to report on this type of disruption to the FDA. However, the agency maintains that reporting of these types of disruptions, while only tangentially manufacturing-related, “provid[e] an important signal to the Agency about a potential shortage and allows FDA to take appropriate steps to address a potential shortage.”

Typically, manufacturers are not supposed to consider “what it understands about market demand for the product” in determining if there has been a meaningful disruption, nor should it consider another manufacturer’s capacity to product the product. Given the public health emergency, however, the FDA is urging companies to err on the side of over-notification.

“[If] a manufacturer is unsure of whether to notify FDA of an interruption in manufacturing because the firm does not know whether a meaningful disruption in its supply is likely to occur, FDA urges the manufacturer to submit a notification,” the agency wrote in its guidance document.

The FDA added that if it is notified of a potential disruption, it will take steps to monitor the overall market for potential disruptions.

It acknowledges that a six-month-in-advance policy is infeasible, given the quick spreading nature of the outbreak, but maintains that manufacturers should report disruptions in manufacturing, or a situation which would reasonably lead to a disruption, no more than five days after the difficulty becomes apparent.

The guidance includes a set of recommended questions that manufacturers should consider when determining if they should notify the FDA, and include such information in their notifications:

  • Is the supply disruption potentially preventable?
  • What is the root cause of the disruption?
  • Is there an estimated date of onset or estimated duration for the disruption?
  • If the manufacturer is notifying the FDA of a permanent discontinuance, what is the anticipated time before all supply is exhausted?
  • What is the estimated market share of the impacted product?
  • Where is the product manufactured? Are there multiple facilities?
  • How much inventory is currently available?
  • When would the last batch of the product be distributed, and how long would it reasonably last in the market?
  • Is there an emergency or reserve supply of the product?
  • Have you, or will you, provide public information about actual or potential shortages for providers?
  • Is there a proposal for the FDA to expedite availability of the product? What can the FDA do to help prevent or mitigate supply disruption?

Manufacturers should submit separate notifications for each disruption or potential disruption, although a single notification can list all affected products from a potential disruption. The format for submitting 506C notifications remains the same.

What’s Next

Unlike other guidance documents issued recently by the agency to respond to the COVID-19 outbreak, this guidance document will not automatically be rescinded following the expiration or withdrawal of the public health emergency declaration by the Secretary of the US Department of Health and Human Services (HHS). Instead, the FDA will “revise and replace” this guidance within 60 days after the termination of the emergency.

This indicates that the FDA intends to shift towards a broader interpretation of the requirements under 506C in the future. Under the recently enacted COVID-19 stimulus bill, the CARES Act, Congress made two updates to Section 506C. First, the FDA was officially given authority to both “prioritize” and expedite alternative product reviews in the case of a shortage (although, as AgencyIQ has previously noted, this was already standard practice in the agency).

Second, and more impactfully, Congress amended Section 506C to expand reporting requirements under the law to include not just drug themselves, but the active pharmaceutical ingredients (API) needed to manufacture the drug. With this more granular reporting, the FDA would potentially be able to more quickly identify and respond to shortages of multiple products that use the same API in a market-wide capacity.

The update to the law, as well as the language in the guidance, indicate that changes are coming to 506C reporting requirements.

Key Documents and Dates

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