Some of the most common prescription drugs face extinction; 'repatriating' our drug supply' offers one solution

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Imbalanced profits between brand-name and generic drugs is one cause of Americans' prescription drug woes, reports Geoffrey Joyce for The Conversation, a journalistic platform for academics. "Patients and their providers increasingly face limited or nonexistent supplies of drugs, many of which treat essential conditions such as cancer, heart disease and bacterial infections. The American Society of Health System Pharmacists now lists over 300 active shortages, primarily of decades-old generic drugs no longer protected by patents. . . . I believe the drug shortage problem illustrates a major shortcoming of capitalism. While costly brand-name drugs often yield high profits to manufacturers, there's relatively little money to be made in supplying the market with low-cost generics, no matter how vital they may be to patients' health."

The hole in the generic-drug supply chain can have a dramatic impact on rural pharmacies that often make survival profits off their reimbursement. “Filling a generic prescription, from a financial standpoint, is like pulling the slots at a casino,” Ben Jolley, an independent pharmacist in Salt Lake City, told Markian Hawryluk of KFF Health News. “Sometimes you lose a quarter, sometimes you lose a buck, and sometimes you make $500. But you have to have those prescriptions that you make $500 on to make up for the losses on the rest of your meds.”

To shore up generic drug production, their profits would need to dramatically increase. Joyce explains, "Prices of brand drugs in the U.S. are among the highest in the developed world, while generic drug prices are among the lowest. [Brand-name] patents allow the drugmakers to cover the costs. . . and earn a profit without the threat of competition from a rival making an identical product. . . . Once the drug becomes generic any company can manufacture it. . . . Profits are determined by their ability to manufacture the drug at the lowest marginal cost. This often results in low-profit margins. . . . One of the consequences of generics' meager margins is that drug companies outsource production to lower-cost countries. As of mid-2019, 72% of the manufacturing facilities making active ingredients for drugs sold in the U.S. were located overseas, with India and China alone making up nearly half of that."

A generic drug's paltry profits also mean its quality can suffer, which can be dangerous. "A company that sells a new, expensive, branded drug has a strong profit motive to keep quality and production high. That's often not the case for generic drug manufacturers, and this can result in shortages," Joyce reports. "In 2013, the Department of Justice fined the U.S. subsidiary of Ranbaxy Laboratories, India's largest generic drug manufacturer, $500 million after it pleaded guilty to civil and criminal charges related to drug safety and falsifying safety data. In response, the Food and Drug Administration banned products made at four of the company's manufacturing facilities in India from entering the U.S., including generic versions of gabapentin, which treats epilepsy and nerve pain, and the antibiotic ciprofloxacin."

What are the options? "One option is to simply find ways to produce more generic drugs in the U.S.," Joyce adds. "California passed a law in 2020 to do just that by allowing the state to contract with domestic manufacturers to produce its own generic prescription drugs. In March 2023, California selected a Utah company to begin producing low-cost insulin for California patients. . . . Whether this approach is feasible on a broader scale is uncertain, but, in my view, it's a good first attempt to repatriate America's drug supply."