WHY WE NEED GENERIC DRUGMAKERS

They’re Being Driven Out

How many times have you opted for a generic version of a drug to save money?  Most of us have.  The latest drugs on the market can cost thousands per month, money most of us either don’t have or don’t really want to spend that way.  Vacation or great new drug?  You only pick the latter when there is no other choice.

Sadly, we may be in trouble here. 

US Antibiotics

In Bristol, TN, US Antibiotics, the only remaining producer of amoxicillin, is likely to go out of business.  The plant produces a million doses of the antibiotic daily, remedying a drug shortage most of us don’t realize is occurring.  The company almost failed two years ago, when Rick Jackson invested $38MM into buying and fixing it up, but things aren’t going well.  It is likely that US Antibiotics will be bankrupt soon.

Overseas competitors can undercut US Antibiotics easily.  In the US, we have much higher production costs and regulatory requirements makes it even costlier to compete. Keep in mind that high minimum wage regulations make things even worse for these companies.  And, it is possible that many overseas companies aren’t as careful in making these drugs, which could lead to serious consequences for patients.  China has a very bad track record of sending over a variety of substandard, even dangerous products.  I remember dog food that killed many dogs. And a friend used what was supposed to be a very safe, low-chemical paint on her house.  It had milk in it, which spoiled.  She had to strip all her walls down to the boards to get rid of it.  Do you want your drugs to be that unsafe?

Adding to the challenge is that as health care companies and pharmacies consolidate, they have tried to force manufacturers to give them even lower prices, making it even harder to survive.  It is likely that this last bastion of antibiotic production will cease to exist soon.

Cheap Labor, No Regulations

With the increase in demand for generics, many starting opening up overseas pharmaceutical manufacturing plants.  It’s so much easier making something that someone else has spent billions on and years of research to create.  All you do is plug in the formula.  As an example, Asian companies usually have a 40-60% lower cost structure.  India is now the main supplier of solid-form, generic drugs to US patients.

While it sounds good to get the cheapest price, globalism has a cost.  In times of a global crisis and/or supply chain interruptions, can we get the drugs we need?  We saw that we couldn’t during Covid; remember trying to find masks?

In this vital industry, the US needs to have its own supply chain.  A big factor is the regulatory environment which has impacted innovation (it takes many years to get through the FDA approval process, giving the company very few years to recap its costs).  The costs of getting through all the government bureaucracy makes it difficult for companies to survive, which is why those who invent new drugs charge so much for them.  We don’t want to get rid of all regulation, but the processes and rules should be vetted to see what makes no sense and what just gives government the excuse to hire more workers.

US Health and Security

We have to find a way to ensure that Americans can rely on a drug supply chain.  There are too many hurdles in the way of getting drugs made.  As more 3-D printing makes automation more practical, companies may be able to reduce costs by eliminating employees, but regulations often also cover this. 

We need to support these companies in some way, perhaps by offering trade policies that slightly favor us (or getting rid of the minimum wage, which would help).  Public-private partnerships have gained traction in innovation.  R&D matters as does funding – perhaps instead of sending money to China via EcoHealth Alliance, we spend it here.  There is no reason to support research in other countries where they benefit from the gain (or hurt us with their incompetence). 

This may sound like a small issue, simply something affecting others.  But we all find times where we need drugs and wish to pay as little as we can for them.  In some cases, it may mean life or death, and affordability is key.  This should be great ground for the next term of Donald Trump, as he wants to reduce regulatory burdens on companies.  Let’s start there.