Examining the Effects of Generic Drug Shortages Within the Pharmaceutical Industry

Examining the Effects of Generic Drug Shortages Within the Pharmaceutical Industry

In the past five years, the U.S. Food and Drug Administration (FDA) has received 731 reports of supply chain issues from manufacturers, with 113 drugs experiencing "meaningful" shortages. These shortages have been particularly prevalent in the categories of sterile injectables, antibiotics, oncology treatments, and ADHD medications.

The generics industry, which accounts for nearly 90% of prescriptions, has been significantly impacted by these shortages. Some shortages have lasted for several months or even years, causing disruptions in routine treatments and creating difficulties in filling prescriptions across the U.S.

The causes of these disruptions are complex and multifaceted. Manufacturing issues, supply chain fragility, regulatory factors, and cost-driven quality concerns in global production all play a role. The reliance on foreign manufacturing, particularly in India and China, also contributes to the problem. These manufacturers face intense cost pressures, leading to quality control lapses and regulatory warnings that further exacerbate shortages.

The DEA (Drug Enforcement Administration) controls the production levels of certain controlled APIs, which can contribute to shortages in the market. Initial investigation by the American Society of Health-System Pharmacists (ASHP) has shown that in 60% of cases, manufacturers do not know or do not provide reasons why their drugs fall into short supply.

To mitigate these risks, generic pharmaceutical companies can take immediate steps. Implementing a solid material planning and reconciliation process, along with an Integrated Business Planning (IBP)/Sales & Operations Planning (S&OP) process, can help manage shortages more effectively. Additionally, conducting research and submitting applications to expand the expiry date for products can also be beneficial.

Other solutions include considering partnerships with 503B outsourcing facilities for high-risk or frequently shorted sterile injectables. Improving data sharing to increase transparency on causes of shortages can also help in creating a more resilient supply chain.

Ensuring the company meets regulatory requirements, including a quality management system, performance, and patient focus, is crucial. Generic manufacturers often face unpredictable revenues due to contract terms with Contract Manufacturing Organizations (CMOs), making it challenging to invest in improved equipment and quality controls.

The process followed is that manufacturers must provide the DEA with actual sales so the DEA can develop demand requirements to prevent excess supply that could find its way to the black market. Disruptions have become more frequent and harder to manage and mitigate, with a substantial majority of these shortages occurring for drugs where generics are available.

In summary, the key generic drug classes prone to shortages are sterile injectables, antibiotics, oncology treatments, and ADHD medications, primarily due to manufacturing issues, supply chain fragility, regulatory factors, and cost-driven quality concerns in global production. Companies can work through the assessment and/or implementation of these recommendations with the help of Life Sciences Supply Chain Consulting services, such as those offered by Clarkston.

1. The life sciences industry has been grappling with supply chain issues for several years.
2. These disorders have been particularly prominent in the categories of sterile injectables, antibiotics, oncology treatments, and ADHD medications.
3. The generics industry, constituting nearly 90% of prescriptions, has been adversely affected by these shortages.
4. Some instances of shortages have persisted for several months or even years, disrupting regular treatments and prescription filing across the nation.
5. Manufacturing problems, fragility in the supply chain, regulatory factors, cost-based quality concerns in global production, and relying on foreign manufacturers, especially in India and China, are contributing factors to these disruptions.
6. The intense pressure on cost-efficiency in these foreign manufacturers leads to quality control lapses and regulatory warnings, further aggravating the shortage problem.
7. The DEA has control over the production levels of certain controlled APIs, which can contribute to market shortages.
8. ASHP's preliminary investigation reveals that in 60% of cases, manufacturers do not reveal or are unaware of the reasons for shortages in their drugs.
9. Implementing a robust material planning and reconciliation process, as well as an Integrated Business Planning (IBP)/Sales & Operations Planning (S&OP) process, can help manage shortages more efficiently.
10. Extending product expiry dates through research and application can also be advantageous in addressing shortages.
11. Collaborating with 503B outsourcing facilities for high-risk or frequently shorted sterile injectables can be another approach to resolving these issues.
12. Enhancing data sharing to boost transparency on the root causes of shortages can aid in creating a more resilient supply chain.
13. Meeting regulatory standards, including quality management, performance, and patient focus, is essential for generic manufacturers.
14. Facing unpredictable revenues due to contract terms with Contract Manufacturing Organizations (CMOs) often makes it difficult for generic manufacturers to invest in better equipment and quality controls.
15. Manufacturers must supply the DEA with actual sales data to allow the DEA to establish demand requirements to avoid excess supply that could end up on the black market.
16. The escalating frequency and complexity of disruptions have made it more challenging to address and mitigate them.
17. Substantial majority of these shortages occur for drugs where generics are available.
18. The primary generic drug classes susceptible to shortages are sterile injectables, antibiotics, oncology treatments, and ADHD medications, primarily due to manufacturing issues, supply chain fragility, regulatory factors, and cost-driven quality concerns in global production.
19. Life Sciences Supply Chain Consulting services, such as those offered by Clarkston, can assist companies in assessing and implementing these recommendations.
20. The pharmaceuticals industry is integrated with other sectors, such as technology, retail, supply chain, and operations, necessitating comprehensive strategies.
21. SAP, a leading ERP solution provider, plays a pivotal role in helping industries automate their processes and manage resources efficiently.
22. Quality management is crucial in the consumer products sector to ensure standards are maintained across the product lifecycle.
23. Workplace-wellness programs have become crucial in industries like pharmaceuticals, fostering employee health and boosting productivity.
24. Chronic diseases like diabetes, cardiovascular diseases, and cancer require management strategies that focus on lifestyle changes, nutrition, and therapies and treatments.
25. Respiratory conditions and digestive health are concerns in multiple industries, including consumer products and healthcare, requiring careful attention and research.
26. Eye health, hearing, health and wellness, fitness, and exercise are all interconnected, with poor health in one category potentially exacerbating issues in other areas.
27. Autoimmune disorders like lupus, rheumatoid arthritis, and Crohn's disease require tailored therapies and treatments, in addition to management of underlying medical conditions.
28. Mental health is a critical concern in various industries, necessitating supportive policies, programs, and resources for employees.
29. Skin care products have become increasingly popular, due to concerns about appearances and chronic skin conditions like acne and psoriasis.
30. Technology plays an essential role in the development, production, and distribution of pharmaceuticals, consumer products, and therapies and treatments.
31. Consulting services are crucial in the life sciences, pharma, and retail sectors, offering expert guidance, strategic planning, and process optimization.
32. In the face of rising prices and inconsistent availability, customers are seeking alternatives like CBD products to manage medical conditions.
33. The treatment and management of neurological disorders, such as Alzheimer's, Parkinson's, and multiple sclerosis, requires significant investment and collaboration across the industry.
34. Additional concerns in the industry include finance, energy, and diversity, including promoting sustainability, developing renewable energy sources, and fostering inclusivity.
35. Entrepreneurship and startups play a vital role in innovation and growth in sectors like retail, transportation, and commercial real estate, and investment comes from various sources, such as venture capital, banks, and fintech firms.

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