Generics manufacturers are pulling out
The causes of shortages are well established. Everyone wants to pay less, and the middlemen who procure and distribute generics keep driving down wholesale prices. The average net price of generic drugs fell by more than half between 2016 and 2022, according to research by Anthony Sardella, a business professor at Washington University in St. Louis.
As generics manufacturers compete to win sales contracts with the big negotiators of such purchases, such as Vizient and Premier, their profits sink. Some are going out of business. Akorn, which made 75 common generics, went bankrupt and closed in February. Israeli generics giant Teva, which has a portfolio of 3,600 medicines, announced May 18 it was shifting to brand-name drugs and “high-value generics.” Lannett, with about 120 generics, announced a Chapter 11 reorganization amid declining revenue. Other companies are in trouble too, said David Gaugh, interim CEO of the Association for Accessible Medicines, the leading generics trade group.
The generics industry used to lose money on about a third of the drugs it produced, but now it’s more like half, Mr. Gaugh said. So when a company stops making a drug, others do not necessarily step up, he said. Officials at Fresenius Kabi and Pfizer said they have increased their carboplatin production since March, but not enough to end the shortage. On June 2, FDA Commissioner Robert Califf announced the agency had given emergency authorization for Chinese-made cisplatin to enter the U.S. market, but the impact of the move wasn’t immediately clear.
Cisplatin and carboplatin are made in special production lines under sterile conditions, and expanding or changing the lines requires FDA approval. Bargain-basement prices have pushed production overseas, where it’s harder for the FDA to track quality standards. The Intas plant inspection was a relative rarity in India, where the FDA in 2022 reportedly inspected only 3% of sites that make drugs for the U.S. market. Mr. Sardella testified in May that a quarter of all U.S. drug prescriptions are filled by companies that received FDA warning letters in the past 26 months. And pharmaceutical industry product recalls are at their highest level in 18 years, reflecting fragile supply conditions.
The FDA listed 137 drugs in shortage as of June 13, including many essential medicines made by few companies.
Intas voluntarily shut down its Ahmedabad plant after the FDA inspection, and the agency posted its shocking inspection report in January. Accord Healthcare, the U.S. subsidiary of Intas, said in mid-June it had no date for restarting production.
Asked why it waited 2 months after its inspection to announce the cisplatin shortage, given that Intas supplied more than half the U.S. market for the drug, the FDA said via email that it doesn’t list a drug in shortage until it has “confirmed that overall market demand is not being met.”
Prices for carboplatin, cisplatin, and other drugs have skyrocketed on the so-called gray market, where speculators sell medicines they snapped up in anticipation of shortages. A 600-mg bottle of carboplatin, normally available for $30, was going for $185 in early May and $345 a week later, said Richard Scanlon, the pharmacist at dr. Moore’s clinic.
“It’s hard to have these conversations with patients – ‘I have your dose for this cycle, but not sure about next cycle,’” said Mark Einstein, MD, chair of the department of obstetrics, gynecology and reproductive health at New Jersey Medical School, Newark.