Shortages of life-saving drugs, including cancer drugs, have been in the news in recent months. The United States House of Representatives held a hearing about the root causes of the drug shortages, including the “race to the bottom” in drug pricing that tends to negatively impact investment in manufacturing and can lead to fewer companies actively producing individual drugs.
According to the American Society for Health-System Pharmacists, there are more than 230 drugs currently experiencing a shortage. Cancer treatments, heart medications, albuterol inhalers, amoxicillin, and penicillin are among the drugs that are currently in a shortage or were recently experiencing a shortage.
During the House hearing, it was discussed that at the root of the issue, drug shortages are caused by economic factors. Generic drugs tend to have low to no profit margins because of the low prices that intermediaries who buy or negotiate drug prices can get from the manufacturers. Whether those price savings are passed on to patients is a contested area.
Drug manufacturers, including Teva Pharmaceuticals and Akorn Pharmaceuticals, have either scaled back or completely closed the generic component of business, in part due to low profitability. Teva was previously one of the largest generic drug manufacturers in the world, but notes that with debt increasing and prices decreasing, it was no longer viable for them to produce generics at such a high volume. Akorn filed for Chapter 7 bankruptcy, which led to a recall of its products and shortages in medications such as albuterol. As of April 2023, four drugs manufactured by Akorn were discontinued, while another 14 were experiencing severe shortages.
Scott Gottlieb, former Food and Drug Administration (FDA) Commissioner and a board member at Pfizer noted that the “generic business, particularly for these complex drugs, these complex formulations, is not a health business right now.” He went on to say that while there are some ‘things the government can do…most of them are going to cost money” and that it’s likely that there needs to be “ways to provide more reimbursement for these hard-to-manufacture drugs.” Gottlieb also referred to the Inflation Reduction Act, noting that it may be contributing to the lack of investment in the generic supply chain.
What is the Solution?
While Gottlieb noted that the government can step in and help alleviate some of the shortages, it remains to be seen if and how that will be done. The White House has a team assembled of professionals who are focused on the shortages and quality issues in the supply chain, and the House of Representatives has held a hearing on the issue.
During the hearing Representative Cathy McMorris-Rodgers raised ideas such as increasing the reimbursement rates for generics and reviewing the business practices of pharmacy benefit managers. She also referred to the “harmful consequences of consolidation, federal programs, and malincentives that distort the market and make it more difficult for patients to get lower cost medication” and called for “American innovation, [an] increase [in] domestic manufacturing capabilities, and …the adoption of quality generic drugs.” Representative Frank Pallone suggested that we need greater transparency surrounding drug ingredients made overseas and expanded reporting on unexpected spikes in drug demands.
However, no solutions have yet been put forth in an official manner.
It’s Not Just Generics
While the generic shortages may be a result of pricing pressures, brand-name drugs are also experiencing shortages, including Children’s Tylenol during the winter months. This was likely due to the uptick in a combination of flu, RSV, and COVID cases.