There could be a troubling human cost to the race to offer cheaper generic drugs

  • A recent study found that generic drug companies with more competition had a higher number of recalls due to manufacturing problems.
  • Higher competition was also found to be associated with lower FDA plant inspection scores.
  • The study recommends that the FDA more closely regulate how generic drugs are made and the manufacturing quality of the plants that produce them.

There’s a caveat to the availability of cheaper drugs: There’s no guarantee on consistent quality.

These days, generic drugmakers can’t seem to win. Consolidation of generic drug companies result in shortages, which negatively impacts patients. But competition has its own consequences as well.

Generic drug price competition in the market is associated with higher number of product recalls due to manufacturing-related issues, according to a new study. These findings were published last week in the Journal of Operations Management by researchers from Indiana University’s Kelley School of Business, University of Minnesota’s Carlson School of Management, and University of Notre Dame’s Mendoza College of Business

“When we push companies to be more cost competitive, that money has to come out of somewhere,” George Ball, one of the study’s authors, told Business Insider. And it’s very likely that the firms are cutting costs on manufacturing, which could have implications on drug quality.

The researchers cross-referenced two datasets: product recall data across a 12-year period and data from the Food and Drug Administration’s Orange Book, which contains approved drug products with therapeutic equivalence evaluations to measure product competition in the pharmaceutical industry.

Generic drugs continue to populate the marketplace, and that’s thanks to the Drug Price Competition and Patent Term Restoration Act, also known as the Hatch-Waxman Act, which passed in 1984. The act sought to increase competition and lower prices by speeding up the generic drug approval process.

However, upon closer examination of 939 recalls over a 12-year period, the researchers noticed that greater competition was linked with more reports of severe manufacturing recalls that could potentially cause death or medical harm to the customer.

High competition was also found to predict poorer FDA plant inspection scores, which in turn predicts the recalls, Ball said. These inspections are geared toward measuring how well the plant is managing their product quality.

The researchers suggest that these problems could be solved by more aggressive inspection of the manufacturing and production of high volume generic drugs. “Consider not just what’s in the drug, but how the drug is being made,” said Ball.

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