Healthcare providers are grappling with a shortage of chemotherapy drugs, leading to dose rationing and delayed care.

Supply chain managers have seen similar supply issues with cisplatin and other chemotherapy treatments in year’s past, and the supply-demand imbalance for many medications is likely to continue.

It's not just chemo medications. Health system administrators and clinicians constantly manage a rotating list of dozens of pharmaceuticals in short supply. Providers are often forced to conserve drugs that are used daily in hospitals and find alternative suppliers or substitute medication, a practice that could jeopardize patient safety, limit access to care and squeeze hospital margins.

The pharmaceutical supply chain is obfuscated by a web of suppliers, subcontractors and middlemen. Many large manufacturers use subcontractors, and there is minimal insight into their production capacity. Manufacturers are not required to publicly provide specific reasons for shortages, leaving most health systems in the dark.

Despite pushes from advocacy groups and pleas to Congress, there isn’t any transparency on which suppliers are more reliable and proficient, Fox said. Still, increasing transparency doesn’t address the core problem: a lack of supply of critical, widely used drugs. 

Manufacturers distribute drugs to wholesalers and group purchasing organizations, and sometimes directly to pharmacies or hospitals. Some GPOs have created private drug labels in which they contract directly with a manufacturer to make a generic drug under their own brand name.

On behalf of health plans and employers, pharmacy benefit managers negotiate rebates and other discounts with manufacturers. PBMs and payers design the formulary, which is a list of drugs that are covered under the health plan. Patients pay less when a drug is placed on a higher formulary tier.

When demand spikes and supply wanes, prices go up. Hospitals typically don't have the flexibility to renegotiate reimbursement with insurers in real time, and Medicare and Medicaid payed fixed rates, so they often have to assume the higher costs. In some cases, Medicare offers temporary reimbursement boosts for hospital-owned outpatient departments known as "pass-through payments," which are designed to offset the cost of innovative, high-priced therapies. 

Delaying care also dents revenue. If hospitals don't have saline to stabilize patients during surgery, they may have to postpone elective procedures, which are high revenue generators. Providers may also have to prioritize doses for the most critical patients, leaving some patients in the lurch. When chemotherapy drugs were short in 2011, healthcare organizations paused clinical trials, potentially postponing breakthrough treatments.