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By PharmaCompass
2023-06-15
Impressions: 4654
Both the US and Europe have been grappling with acute drug shortages since the start of the pandemic. However, drug shortage is a long standing problem, especially in the US where there has been pressure on the industry to reduce drug prices and competition is making the generic business unsustainable.
The pandemic, followed by the Russia-Ukraine war, laid bare a series of weaknesses in the developed world’s healthcare systems. Inflation, energy crisis in several European countries, raw material shortages, proliferation of diseases and new market trends have only exacerbated the drug shortages.
According to the Homeland Security and Governmental Affairs Committee, there was an approximately 30 percent increase in new drug shortages in the US between 2021 and 2022. As of April 2023, the number of drugs in shortage had surged to 301.
In Europe, a survey conducted by the Pharmaceutical Group of the European Union (EU) between November and December 2022 revealed that all 29 member countries were experiencing shortages, with nearly a quarter of them reporting scarcity of over 600 drugs and another 20 percent reporting shortages ranging between 200 and 300 drugs.
View Our Interactive Dashboard on Drug Shortages in 2023 (Free Excel Available)
Drugmakers work on reducing reliance on China, India; FDA allows supplies despite import alert
Over the years, lower costs of production encouraged the developed world to source drugs and active pharmaceutical ingredients (APIs) from China and India. Approximately 80 percent of the manufacturing facilities responsible for producing APIs are located outside of the US. Moreover, 90 to 95 percent of critical acute care injectable drugs rely on key substances sourced from China and India.
Take the case of ciprofloxacin (an antibiotic used to treat bacterial infections) — there is only one known factory producing its ingredients in the US, compared to 20 in India and six in the European Union.
So acute are the shortages that the US Food and Drug Administration (FDA) has allowed companies on import alert, such as Intas Pharma and Glenmark, to supply certain meds to the US. Intas is supplying over 20 critical products from its facility in Ahmedabad (India) and Glenmark is supplying atovaquone oral suspension from its Baddi (India) facility. Similarly, Sun Pharmaceuticals’ Gujarat plant was placed on an import alert last year, but some drugs were excluded from this alert due to preexisting shortages.
The pandemic underscored the need for countries to reduce their dependence on China and India. Several drugmakers have announced plans to build capacities in the developed world. For instance, Amgen is setting up a biomanufacturing plant in Ohio (US), AstraZeneca is investing in Ireland, Genentech is setting up a new biologics plant in California (US), Agilent Technologies is setting up an API plant in Maryland (US), Bayer is investing in Finland and Pfizer is setting up an injectables plant in Michigan. Most of these facilities are under development, and can’t help address the shortages for now.
View Our Interactive Dashboard on Drug Shortages in 2023 (Free Excel Available)
Cancer drug scarcity reaches all time high; FDA permits import of unapproved chemo drug
In the US, there is a worrisome scarcity of cancer drugs, and oncologists have termed it as a national emergency. Shortages of cisplatin and carboplatin have forced some hospitals to ration the drugs by reducing doses. Today, at least 17 cancer drugs are in short supply across the US.
Richard Pazdur, director of FDA’s Oncology Centre, recently attributed the scarcity of chemo drugs to the industry’s failure to invest in expanding production capacity.
In a recent development, FDA authorized temporary import of an unapproved chemotherapy drug from China to alleviate its shortage. Qilu Pharmaceutical, a Chinese manufacturer, will supply 50 mg cisplatin vials to the US. Additionally, FDA is also seeking new suppliers to alleviate the shortage of another cancer drug, methotrexate.
View Our Interactive Dashboard on Drug Shortages in 2023 (Free Excel Available)
Demand from weight watchers causes shortage of diabetes med; tridemic results in shortage of amoxicillin
Some shortages arose due to a surge in infections and demand for new drugs. For instance, a surge in respiratory infections led to a rise in demand for antibiotics like amoxicillin and amoxicillin/clavulanic acid in countries like the US, Europe, Canada, and Australia. Last year, a ‘tridemic’ of respiratory issues (RSV, flu, and Covid-19) caused a shortage of a commonly used antibiotic — amoxicillin — and some over-the-counter cold medications.
There have been shortages of Novo Nordisk’s weight loss drug Wegovy and diabetes med Ozempic in the US, Europe and Australia due to increased demand from weight watchers. Both drugs have the same API — semaglutide. The demand for Wegovy has been so high that Novo had to temporarily halt all television campaigns.
In fact, the high demand for semaglutide by weight watchers is impacting diabetes patients. The Australian government intervened last year to prohibit the sale of Ozempic to non-diabetics. In fact, demand for Eli Lilly’s diabetes drug Mounjaro had surged last year due to supply constraints of Ozempic and Wegovy.
View Our Interactive Dashboard on Drug Shortages in 2023 (Free Excel Available)
IRA, proposed EU laws irk industry; competition makes generics unsustainable
The high drug prices in the US have been a bone of contention for many years now. In August 2022, President Joe Biden had signed a bill that’s now known as the Inflation Reduction Act (IRA), even as the industry had strongly opposed it.
Last week, Merck filed a lawsuit against the US government, aiming to prevent Medicare from negotiating lower prescription drug prices under the IRA. Three days later, the US Chamber of Commerce also sued the government, claiming that the program infringed upon the rights of drugmakers by allowing the government unrestricted discretion in setting maximum prices.
Industry leaders have termed the IRA ‘draconian’, and said it would hurt patient-focused innovation, value and access. Novartis and Genentech have warned that the IRA’s price controls are harming investment and research into various cancer treatments. Several reports, on the other hand, say high R&D costs do not justify high drug prices.
While there is debate over the impact of price control on R&D, we are seeing several drugmakers move away from generics. Generic giant Teva plans to reduce its portfolio by discontinuing production of certain older generics and decreasing the number of new generics due to intense competition.
Competition, price erosion and some regulatory measures in the US are making the generic drug business unsustainable. According to a report published in Pharma Manufacturing, since 2019, generics manufacturers have experienced a 3 percent average yearly drop in profit margins. The number of FDA-approved or tentatively approved abbreviated new drug applications (ANDAs) dropped from 1,021 in 2018 to 776 in 2021.
In the European Union, efforts are underway to update pharmaceutical laws and improve access to affordable drugs. Much like the US, industry leaders argue that these reforms could hinder Europe’s access to cutting-edge treatments and innovation.
Fixed-price regulations are adding to shortages. In Germany, the price of liquid paracetamol has remained unchanged at €1.36 (US$ 1.47) for the last decade. However, the cost of the API increased significantly in 2022, and the number of manufacturers of liquid paracetamol in Germany dwindled from 11 in 2012 to just one by June 2022, resulting in a drug shortage.
View Our Interactive Dashboard on Drug Shortages in 2023 (Free Excel Available)
Our view
The pharma industry is clearly at a tipping point. While sustainability of the generics industry is becoming a cause of concern, the changing regulatory environment has raised the hackles of the industry. What’s clear is that the pandemic and other recent geopolitical and economic situations have disturbed the equilibrium. The industry is grappling with new regulations and the changing market scenario. Until it finds its feet, drug shortages are unlikely to ease.The PharmaCompass Newsletter – Sign Up, Stay Ahead
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Image Credit : Drug shortages reach all - Time high by PharmaCompass license under CC BY 2.0
“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”
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