Last January, a group of hospitals expressed frustration with threatened supplies of certain expensive but vital drugs, and said they were going to come together and start manufacturing and offering them at cheaper prices.
Supporters seemed to breathe a sigh of relief that someone/anyone was willing to manufacture increasingly expensive off-patent drugs or those on FDA’s shortage list, while skeptics questioned how this would be more cost effective than what generic drugmakers already do.
One of the biggest problems (aside from a general dearth of return on investment in the generics space), is that certain drugs require companies to operate in the red, end up on FDA’s shortage list (and usually stay there for a long time), and few if any drugmakers, manufacturers or non-profits want to, or even can, help. But another problem is that drugmakers can be slow to update aging infrastructure, creating shortages because of certain lapses.
The situation for a potential nonprofit or public-private manufacturer of generic drugs, hospital consortia included, is more complicated and expensive than just setting up a plant and starting the manufacturing.
Gil Roth, founder and president of the Pharma & Biopharma Outsourcing Association, explained to Focus
: “If they're trying to become an ANDA [abbreviated new drug application]-holder (so that they'd be the license-holder for generics in shortage), they'd either have to pay to acquire such ANDAs or file them themselves.
“Filing their own would incur GDUFA [Generic Drug User Fee Act
] filing costs for each one, and then they'd have the ANDA Holder Fee, starting the fiscal year after approval. They'd also have to build the infrastructure or hire consultants to ID and contract with API [active pharmaceutical ingredient] suppliers, source excipients, and either build their own Finished Dosage Form site or contract with a CDMO [contract development and manufacturing organization],” he noted.
And for some of the more complicated drugs to manufacture, like sterile injectables, it can be difficult to cut corners and manufacture more cheaply.
Roth noted: “If they build their own, it'll depend on the type of dosage they want to get involved in. A new sterile injectable facility could cost hundreds of millions, and it won't generate revenue until the ANDA is approved and on the market. The new site would have to be ready and inspectable prior to the ANDA filing, so that would take years, from building, filing, getting approval, to reaching the market. (ANDAs rarely get approved in the first review cycle.)”
Working with a CDMO may make such a nonprofit venture feasible, but Roth noted that such a scenario would still require having the infrastructure in place to select the drug candidates and negotiate contracts.
“The key question here is ‘buy ANDAs from holders or file their own’? Then the questions become ‘how much would the ANDA holder charge?’ or ‘how much work are they ready to do to get their own ANDA(s) through the FDA pipeline?’” Roth noted.
Poor Quality Manufacturing
Back in June, FDA made clear that it would encourage the manufacture of such drugs in shortage by publishing a list of off-patent, off-exclusivity branded drugs without approved generics
, and also implementing for the first time, a new policy to expedite the review of generic drug applications
where competition is limited.
But how such moves have impacted industry remain unknown and some critics have noted that the drugs on the list are well known by industry and mostly all economically unfeasible to manufacture with any sort of return on investment. Another problem occurs when companies’ infrastructure fails and shortages persist.
Erin Fox, senior director of drug information and support services at the University of Utah Health, explained to Focus
about how costly manufacturing plants are to build and discussed issues with manufacturing infrastructure that cause shortages, noting: “It seems like pharma should be fixing their own infrastructure – especially with their price increases.
“I am still fascinated that everyone is so quick to blame FDA/government for drug shortages yet it’s the drug companies who made business decisions to not take care of their infrastructure and facilities,” she said. “Why Congress doesn’t have these companies lined up in the hot seat to explain themselves is a mystery (or a demonstration of how much money pharma gives to Congress).
“Drug shortages are the pharmaceutical manufacturers fault because they are almost always a result of poor quality,” she added.
And as far as the hospital collaborative, she noted that it seems to be focused “more on using contract manufacturers which won’t necessarily increase capacity (which is also a big issue – we don’t have enough capacity and high-quality manufacturing which is why we have shortages.)”
Intermountain Healthcare CEO Marc Harrison told Focus
in a statement that the initiative is in its "organizing phase so we are declining interviews at this point. We plan to provide updates in September.".
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