The Generic Industry Fallacy; How global low drug price policies are threatening the sustainability of a low price industry




In 2011 the Netherlands witnessed a seemingly novel phenomenon of shortages of cancer drugs. The shortage mostly affects generic injectable drugs. For cancer patients the situation is a night mare. In general,  in cancer, there are hardly any substitutions that can easily be made.  An increasing number of physicians have been forced to take their patients off therapies mid-treatment, delay treatment, choose alternative therapies that are less effective, and ration their remaining supplies of these therapies. The Dutch news media helped to dramatize the accounts  of those affected by the shortages. The why question figured prominently in most stories. According to the Dutch press, the shortfall was partly due to manufacturing problems and quality control issues of the international generic drug industry and partly due to supply problems of the raw materials, made almost exclusively in India and China. Reporters would also refer to the fact that injectable drugs are more time-consuming and expensive to make. In addition, these older drugs are said to be made in aging facilities that are more likely to have mechanical problems and quality issues. 

What is most interesting in the media stories is that the shortages appeared to be less of an isolated Dutch phenomenon but were related to international supply problems. Apparently the world’s biggest and most profitable drug market in the United Stated has suffered most from generic drug shortages lately.  In 2004 the US had a shortage of 58 generic drugs and this figure has risen to more than two hundred in 2011. On September 26th the Food and Drug Administration (FDA) held a hearing with the hope of answering urgent questions: why the world’s biggest pharmaceutical market is failing its customers, and what might be done about it. The priority issue appears to be coordinated action by the various stakeholders in order to prevent grey-market vendors to sell drugs in short supply for many times their usual cost.  According to analysts the proliferating 'gray market' of secondary prescription drug dealers charging hospitals huge markups for scarce supplies is creating a dire public health situation.

In my talk I will show that the causes of the current generic drug may remain tangled, but that for a better understanding of the issue a thorough historical analysis of the political economy of the global generic drug supply chain is needed.
Contact information:
Marten Boon