A Minnesota health care technology company is tackling a costly problem that isn’t gaining as much attention as skyrocketing consumer prescription prices — the problem of periodic drug shortages at hospitals.
Hospitals bemoan that their inpatient drug spending is inflated by 1 to 5 percent because of episodic shortages that drive up prices for medications and solutions. Even a small percentage can mean millions of dollars in waste.
Minneapolis-based LogicStream Health responded with the Drug Shortage App, which analyzes drug inventories of hospitals nationwide to predict when shortages are likely, and advises hospitals when to shore up their supplies.
Shortages in recent years have ranged from medications to control heart rate to liquids that reconstitute drugs from powder to intravenous forms, said Patrick Yoder, co-founder and chief executive of LogicStream. “If you don’t have them, it’s a real big problem.”
The U.S. Food and Drug Administration maintains a list of drugs in short supply, but the goal of the app, unveiled in November, is to provide faster and earlier guidance. Yoder said a critical function of the app is to assess drugs that hospitals actually use, so they don’t just buy in a panic.
“We don’t want them to just go buy it because of a shortage when they use almost none of it,” Yoder said.
Shortages often occur when quality problems are identified by FDA inspectors that force manufacturing plants to shut down. Natural disasters play a role as well; the hurricane in Puerto Rico last year forced the closure of plants that make sterile liquids for U.S. hospitals.
Yoder used to be a clinical pharmacist for the Hennepin Health system. He recalled drug shortages that compelled him to take supplies from surgery or other departments to divert to patients in intensive care or other units.
“It made the OR upset, but what was I going to do?” he said.
The FDA currently lists 110 drugs on its shortage list, with many of them being generic and lower cost versions of sterile, injectable medications. An FDA researcher reported earlier this year that the number and duration of shortages are increasing.
Shortages increase costs in a number of ways, especially when the absence of generic drugs forces hospitals to pay top dollar for brand name versions. Hospitals also have to employ extra pharmacy staff to identify shortages and then hunt for remaining supplies of drugs on the market.
While hospitals tend to manage by overpaying, the nightmare scenario occasionally occurs when a pharmacist can’t find a drug that a patient needs, Yoder said. “That really keeps you up at night.”