Laboratories Scramble to Find Replacement Suppliers for IVD Products

Clinica, December 6, 1999 Issue 887

On November 2, 1999 the US FDA agreed to a consent decree in which Abbott would discontinue manufacturing, distribution, and sales in the US of some 65 different blood and urine tests in a variety of platforms.  The reaction from clinical laboratories has been significant.

Robert Bauer, President of CaseBauer, recently reported that while the products being withdrawn from the market impact less than 6-7% of the typical immunoassay testing volume, 50% of the laboratories surveyed by CaseBauer last week believe that the decree will "significantly" affect their laboratory's service level and budget this year.  CaseBauer, a Dallas-based medical products consulting  firm, surveyed 75 laboratory directors during the second week of November to gauge the outcome of this action.

According to Bauer, "the service level impact will largely be on test turnaround time (TAT), especially in the short-term."  Forty-one percent (41%) of respondents anticipate an increase  in laboratory TAT as a result of either sending tests to another laboratory or moving STAT assays to slower "backup" analyzers  already in the laboratory.  Several of the withdrawn products, such as primidone, lidocaine, CRP and hCG, are provided on a STAT basis in many laboratories.

Additionally, 40% of the directors said that changing products will have an impact on the clinical values and critical ranges reported to physicians and will require re-education of their physician base in some cases.  Thirty percent (30%) anticipate the need for re-programming of their laboratory information systems.

From a cost perspective, laboratory directors told CaseBauer that, on average,  they initially expect to spend more than $17,500 to work through this situation.  The biggest anticipated expense is re-training; particularly the re-training of nursing staff that have been using CLIA-waived TestPack kits, the training of laboratory staff in the use of new analyzers, and the training of physicians on new clinical values and ranges.  Re-training accounts for a third of total estimated costs of conversion."

CaseBauer's initial projection of the cost to US laboratories and physicians offices exceeds $85 million.  This is in addition to Abbott's $100M fine and anticipated $68M in costs.

Diagnostic Product Inventories Rapidly Depleted

"This was over before it started" stated one laboratory director, "everyone's inventories were almost immediately depleted, and now we are forced to send out STAT tests like CRP, to an outside commercial laboratory."

According to Bauer, "IMx and AxSym assays, for the most part, are being shifted to alternate analyzers that are either already in place or being acquired, TDx assays are generally being shipped to other laboratories or shifted to back-up systems already in place, and TestPack is being replaced by alternative products (e.g. hCG), either from Abbott or alternate suppliers."

Abbott is clearly taking action to minimize the damage.  Some laboratory directors have reported that Abbott has offered to offset some or all of their incremental costs in future rebates, and has offered manpower support for comparative studies.  Abbott does have some substitute products and is providing inventory to some sites.

FDA Changes its Stance on Abbott's Consent Decree Timing

On November 23, 1999, Abbott announced that the FDA agreed to amend the Consent Decree to delay the product ban for an additional 30 days, from December 6, 1999 until January 10, 2000, in response to requests from laboratories and the Clinical Laboratory Management Association for a longer transition period.

This action addressed a key criticism of the FDA.  According to Bauer, "One-third (33%) of the laboratorians surveyed attribute the FDA action to a "bureaucratic impasse" or just an indication that "FDA is asserting its authority."  Many of these laboratory directors felt that the FDA penalized them more than Abbott.

Laboratories Reconsider Future IVD Product Purchasing Practices

"Many laboratories confided to us," states Bauer, "that, after being challenged to find, qualify, and put alternative tests on-line in less than 30 days, they will change their purchasing practices to hedge against this kind of vulnerability in the future."  One Mid-west director told CaseBauer "we learned a valuable lesson... we will not put all our eggs in one basket in the future."

At this juncture, more than half (59%) of the laboratories surveyed stated that they were undecided about long term product commitments and were open to alternate suppliers for the banned products long term.

The FDA extension is significant in that it allows a greater opportunity for laboratories to stockpile supplies rather than rush to qualify alternates products over the shortened holiday month of November.

CaseBauer is a business development and research consulting firm specializing in diagnostics products and operating in 14 countries in North America and Europe.  CaseBauer is headquartered in Dallas, Texas (inquiry@casebauer.com).

CaseBauer has 5 practices:
Market Modeling, Strategy / Business Development, Benchmarking, Market Research and Business Services.