Generic Drug Shortages May Be Ahead

Sarasota, FL (WorkersCompensation.com) – The Drug Competition Action Plan was implemented in 2017 in a bid to remove barriers to generic drug development and marketing. The Office of Generic Drugs, a department within the Food and Drug Administration (FDA), is responsible for ensuring affordable, quality generic drugs are available.

According to current statistics from the FDA, 9 out of 10 prescriptions filled are for generic drugs. However, according to a recent report from KFF Health News on a manufacturing shut down overseas, those statistics could change drastically in the coming year due to shaky ground for manufacturers. While the reason for using generic drugs is cost, that specific competitive advantage is wreaking financial havoc on generic drug manufacturers.

Average manufacturer price (AMP) is the average price that wholesalers and other large volume buyers pay the manufacturers for prescription drugs. According to an April report from Anthony Sardella, Senior Research Advisor at Washington University, the AMP over the last 6 years has seen a 53 percent decrease, going from an average of $3.15 to $1.47 for generic drugs that are considered high volume.

The fallout from those reductions have been seen in the form of manufacturers moving production to overseas, where costs is lower and there is less regulatory oversight. According to Sardella, more than 80 percent of active pharmaceutical ingredients(API) for drugs that the FDA defines as essential medicines are only manufactured overseas. At least 90 percent of the top antibiotics and antivirals also have no manufacturing sources in the U.S. The largest number of API facilities supplying the U.S. are located in India and China, and over 10 percent of these facilities have received an FDA warning letter.

According to Sardella’s analysis, 26 percent of the prescriptions in the U.S. are supplied by companies that have received an FDA warning letter as of 2020. Going back to 2015, the percentage increases to 50 percent.

What is troublesome is that some of the manufacturers that have remained in the U.S. have filed for bankruptcy. Earlier this year, Akorn Pharma filed for Chapter 7 bankruptcy and shut down all of their operations in the U.S. According to a report from Fierce Pharma, the company had been operating at a loss for years prior to going up for sale. The company was a large manufacturer of over 75 generic drugs.

According to a report from Reuters last month, Vyera Pharmaceuticals, formerly known as Turing Pharmaceuticals filed Chapter 11 bankruptcy to sell its assets. The company had settled lawsuits related to price fixing, and is facing multiple additional lawsuits.

Generic drug maker Lannett Company also filed Chapter 11 bankruptcy, but according to recent reports the company has every intention to move forward under private ownership with a new focus.

Currently, there are 14 cancer drugs listed on the FDA Drug Shortage list, along with blood thinners, and antibiotics. While the CARES ACT does give the FDA power to require companies to have a contingency plan in place to be able to respond to shortages that can occur, guidance to enforce provisions has not yet been implemented.

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