How a US drugmaker contributed to the escalating drug shortage crisis

When Akorn Pharmaceuticals closed its doors in February, hospitals across the country felt it.

The Lake Forest, Ill.-based drugmaker was responsible for producing 75 generic drugs, all of which were pulled from the market when the company closed. In some cases, the company was the sole supplier of particular products.

The shutdown comes amid and contributed to an ongoing drug shortage crisis in the U.S. The Akorns bankruptcy and subsequent shutdown is part of a larger disaster caused by fewer manufacturers in the U.S. making more generics low profits, meager profits for the remaining companies, and an overly complicated global supply chain that could leave patients scrambling for life-saving drugs for months or perhaps years to come.

The new drug shortage increased nearly 30 percent between 2021 and 2022, affecting 295 products at the end of last year, according to a March report by the Senate Homeland Security and Governmental Affairs Committee. The drug shortage is affecting cancer patients who are in desperate need of chemotherapy drugs and people in intensive care units or emergency rooms who need some intravenous generic drugs, which are in short supply.

Shortages are getting worse: As of June, there were more than 300 active drug shortages, the most in nearly a decade, according to the American Society of Health-System Pharmacists, a professional organization that tracks drug shortages.

Why is this happening now?

Drug shortages are nothing new. There have been supply shortages in the United States and around the world in recent years for heart medicines, cancer treatments, and ADHD medications. The supply of generics is particularly vulnerable. Companies like Akorn face intense competition and dwindling profits and have been forced to lay off workers and cut costs to stay in business.

With Akorn’s closure, the U.S. has lost some of its manufacturing capacity, all while other generic drug makers struggle to stay in business, said Valerie Jensen, associate director of the Food and Drug Administration’s drug shortage program .

When we see a company like Akorn shut down, it’s extremely concerning for us because then we lose that capability, Jensen said. And then we have to work closely with other companies to increase coverage of that shortage. So it’s definitely concerning and we continue to monitor very closely.

Douglas Boothe, the former CEO of Akorn, did not respond to a request for comment. Emails to Akorn’s media relations contacts went unanswered.

Americans rely heavily on generic drugs: They account for about 90 percent of all prescriptions filled, according to the Association for Accessible Medicines, a trade group representing generic drug makers.

At the same time, generic drugs sold at very low prices represent only about 20% of pharmaceutical spending in the United States. Even with high demand for the products, the low cost of drugs means generic drug makers don’t make much money, according to David. Gaugh, interim president and chief executive officer of the AAM.

Over the past decade, the number of generic drugs manufactured in the United States has declined. A working paper from the National Bureau of Economic Research, a nonprofit, nonpartisan research group based in Cambridge, Massachusetts, found that between 2013 and 2019, the number of U.S. facilities registered to produce active pharmaceutical ingredients was decreased by about 10%, to 118. The only year in which the number did not decrease was 2014, according to the report.

When Akorn closed its doors after filing for bankruptcy, it was one of two U.S. suppliers of liquid albuterol, an essential drug used by hospitals to treat asthma and RSV in children.

It was one of the hottest products for the company, said Mohammed Kabir, who served as Akorns’ director of formulation development before the company closed.

It was a big surprise, Kabir said of Akorns closure.

The company, founded in 1971 as a manufacturer of eye care products, has expanded to produce a range of pharmaceuticals such as antibiotics, pain and anti-allergy medicines, and veterinary drugs. Its generics included adenosine, which is a drug for irregular heartbeats, and lorazepam, which is used for anxiety, nausea and vomiting in some cancer patients. It was the sole supplier of physostigmine, an antidote for certain drug overdoses, according to a report by the End Drug Shortages Alliance, a group dedicated to preventing drug shortages.

In the wake of Akorns’ closure, according to the American Society of Health-System Pharmacists, all of its drugs are either in shortages or running into supply problems as other generic manufacturers struggle to fill the gap.

Even worse, when Akorn closed, it could no longer monitor the quality and safety of many of the drugs it had already distributed nationwide to retailers, medical facilities and online consumers. In early May, the FDA announced that Akorn was recalling drugs that had been distributed.

At the Mayo Clinic, pharmacists scrambled to switch suppliers or find a way to obtain drugs that only Akorn made. The clinic also had to get rid of any remaining Akorn products and notify doctors and patients of the recall.

It’s definitely a difficult situation, said Eric Tichy, president of the pharmaceutical supply solutions division for the Mayo Clinic in Rochester, Minnesota, and chairman of the board of the End Drug Shortages Alliance. The experience has led to additional work for our team and anxiety for patients.

Shortages of generics could get worse

Once the pharmaceutical patent has expired, generic drugs are allowed on the market, often at a lower price than the brand name drug.

The fundamental problem is the economics of the system, FDA Commissioner Robert Califf said at the Aspen Ideas Festival in late June. Unlike brand-name drug companies, he said, generic drug makers aren’t protected by patents that allow them to exclusively sell drugs for a specific period of time. For generic drug manufacturing to grow in the United States, companies must be paid enough to make the drugs and stay in business.

The problems facing the sector now are likely to worsen as more US companies go bankrupt.

Lannett Co., a maker of generics in Pennsylvania, announced in May that it was filing for Chapter 11 bankruptcy, though it plans to continue operating as it restructures its business.

Teva Pharmaceuticals, a major generics maker based in Israel, said in a statement the same month that it was cutting its production of generics. Earlier last year, India-based Aurobindo Pharma announced the closure of its US generic manufacturing facility in New Jersey.

It’s become a race to the bottom, Gaugh said.

The generic pharmaceutical industry business model has become unsustainable for many manufacturers, said Michael Ganio, senior director of pharmaceutical practice and quality at the American Society of Health-System Pharmacists.

If you talk to anyone in the generics industry, they’ll tell you that about a third make money, a third break even, and a third lose money, he said.

You risk relying on foreign drug manufacturers

The United States is already heavily dependent on foreign drug makers. In 2021, according to the FDA, 78% of active pharmaceutical ingredient suppliers were in China, India and the European Union. With the closure of Akorns, the US will become even more dependent on overseas manufacturing.

Foreign suppliers don’t always meet the FDA’s stringent standards for generic drugs. Additionally, FDA visits to overseas facilities are often notified in advance, and investigators may rely on the facility to provide translation services, raising questions as to whether the agency is obtaining all the information needed to accurately evaluate product quality.

Overseas production in China and India has surpassed nearly all manufacturing facilities in North America, said David Gortler, a former science policy adviser at the FDA and an FDA oversight expert. Unfortunately, lower prices usually come with poor quality.

In December, Intas Pharmaceuticals, an India-based generic drug maker, temporarily halted production after a 2022 FDA inspection cited multiple quality issues. The suspension caused a widespread shortage of cisplatin, a chemotherapy drug used for a range of cancers, including testicular, lung, bladder, cervical and ovarian.

Global Pharma, also based in India, recalled its EzriCare Artificial Tears eye drops earlier this year after the products were linked to highly drug-resistant bacterial infections that resulted in four deaths. An FDA inspection found that the company did not follow the proper protocol to prevent contamination of its products.

Intas Pharmaceuticals and Global Pharma did not respond to a request for comment.

The move towards more drug production overseas is a major national security issue, especially given the current state of international conflict, Califf said.

What can be done?

There are no quick fixes. Pharmaceutical companies are not required to disclose exactly which suppliers are producing which product and location, said Erin Fox, a pharmacist and professor at the University of Utah College of Pharmacy. This means that it is very difficult for the FDA to know which products are manufactured overseas.

The problem is we don’t know what comes from where and how much, Ganio said. It’s not easy to access.

In a relationship Published in June, the policy team at the Association for Accessible Medicines outlined several steps the US government could take to help keep domestic generic drug makers afloat.

They included creating incentives for hospitals to purchase supplies of generic drugs at fixed prices over multiple years, providing generic drug manufacturers with a continuous source of revenue. The government could also provide grants to generic manufacturers that would allow them to upgrade their manufacturing facilities and build new plants that could provide additional capacity.

The steps also included that Medicare drug plans cover and encourage the use of new generic drugs.

Because generic drug manufacturing is a very complex and highly regulated industry, it’s not easy for new manufacturers to jump right in, Tichy said.

This means that patients who need the drugs will go without them.

The market is already short on supplies, Tichy said. How will we communicate this to patients?

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