< How rock-bottom prices drive shortages of generic drugs used in hospitals

JUANA SUMMERS, HOST:

Prescription drug shortages have been plaguing the country. Low-cost generics, painkillers, anesthetics and chemotherapies have been especially hard hit. But what is driving those shortages? NPR pharmaceutical correspondent Sydney Lupkin sought some answers at one shuttered factory that new owners are trying to reopen.

SYDNEY LUPKIN, BYLINE: Steven Coventry spent 20 years at the Akorn pharmaceutical factory in Decatur, Ill., where he worked his way up to operations manager. It closed last winter when the company shut down its four manufacturing facilities, recalling dozens of generic drug products. In Decatur, it laid off 400 employees. Coventry went back to the factory last summer because new owners hired him to bring it back to life. It was a surreal scene.

STEVEN COVENTRY: Coffee mugs were left on tabletops, personal items. You know, it was kind of like a ghost town and a little sad to go through and see, you know, people's lives just basically upended.

LUPKIN: He says they used to make a hundred products there, and he's glad to be back.

COVENTRY: It's kind of like home. It's where I grew up and learned. And I was really driven to see the site come back up, to bring it back up to its glory days of what it was in the past.

LUPKIN: But the shutdown caused some new drug shortages and worsened others. When Americans think of drug prices, they usually think of the fact that their medicines are too expensive. But when it comes to generics, the opposite problem is true. They're too cheap. Here's Rena Conti, a professor at the Boston University Questrom School of Business.

RENA CONTI: For off-patent generic drugs, especially those used in the hospital setting, Americans actually pay lower prices than Europe does.

LUPKIN: Generic drugmakers compete with each other to offer hospital purchasers the lowest price. Over time, prices get so low that it doesn't always make good business sense for the companies to keep making some drugs, so they stop. Sometimes, they go out of business. The last few years have been rough for the generics industry. Akorn shut down. Mallinckrodt filed for bankruptcy. Generics giant Teva is planning to cut many generics from its portfolio. Here's Valerie Jensen, associate director for drug shortages at the Food and Drug Administration.

VALERIE JENSEN: It's the same issues that we've been dealing with for many years, especially with these older generic drugs that are having fewer and fewer manufacturers making them. There isn't a lot of buffer when something goes wrong on a manufacturing line.

LUPKIN: With dwindling redundancy in the drug supply chain, a weather event, like the tornado that ripped through a Pfizer factory earlier this year, can wreak havoc on an already-fragile system. On top of that, the bargain basement prices don't encourage manufacturers to invest in new equipment and other things that would keep quality high and avert recalls and shutdowns. So the country winds up with drug shortages. Here's Rena Conti from Boston University again.

CONTI: Economics is causing this problem, and this problem is longstanding. We've been dealing with periodic and more concerningly persistent shortages in drugs for the better part of a decade.

LUPKIN: She says the economics have to change to get a more resilient drug supply. Right now, these shortages are disruptive and leave hospitals scrambling. Erin Fox is a hospital pharmacist who oversees purchasing drugs, medication safety and more for the University of Utah Health System. Like her peers across the country, she was caught off guard by Akorn's demise last winter.

ERIN FOX: We actually got an email from our representative, and he just said, hey, we just walked in today. We learned that we're closing. Everyone has to leave today. So it was very abrupt.

LUPKIN: The company went bankrupt in February 2023, after operating at a loss and failing to get acquired by a company that would cover its liabilities. About two months later, it recalled all the products it made. There was nothing wrong with the drugs, and they weren't expired. But no one was left at Akorn to answer the phone or initiate a recall if there was a problem. Staffers at the University of Utah Health had to log an extra 250 hours right away to deal with the fallout, taking Akorn products off shelves and finding replacements.

Products included things like Sufentanil, an opioid that's often used in epidurals during labor and delivery. Akorn was also the only supplier of Dimercaprol, an injectable antidote for lead poisoning. There are oral alternatives, but some patients are too sick to take them. A few months after Akorn shut down, Rising Pharmaceuticals acquired the former Akorn factory in Illinois. It plans to manufacture several of the generic products Akorn used to make there. Here's Ira Baeringer, Rising Pharmaceuticals' chief operating officer.

IRA BAERINGER: Our intention is to really focus on those products of greatest need in the U.S. pharma marketplace and bring those back on priority.

LUPKIN: These include an injectable antibiotic, an anesthetic and an anti-nausea medication. It also includes several former Akorn eyedrop products in short supply. But getting the factory back up and running is tricky because the water, air and mechanical systems had been shut down for so long. Normally, those systems run continuously.

BAERINGER: That takes a lot of time, it takes a lot of effort, and once a facility is shut down, it means all those systems have to be revalidated. And so that's the process that we're going through right now to bring this facility back up into commercial production.

LUPKIN: He said Rising hopes the factory will be making products by the second half of 2024. But what will keep Rising from going the same way Akorn did? Baeringer says Rising is being cost-conscious and taking its time so that once the factory begins making generics, it can go the distance. Here's Erin Fox again.

FOX: It's really hard to know if they'll be able to make it a success or not. I hope they do. I hope they get support from people that want to keep manufacturing in the U.S., but we'll just have to see how it works out.

LUPKIN: The Biden administration says it's taking steps to mitigate drug shortages, including expanding its use of the Defense Production Act to bolster domestic manufacturing of medicines deemed critical for a national defense. It's investing $35 million in domestic manufacturing of key starting materials for sterile injectable drugs. But the economic problems of the industry run deep, and they likely won't be solved overnight.

Sydney Lupkin, NPR News.

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