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Towards a Patient-Based Supply Chain for Generic Drugs

Updated: Jul 2

There is one thing both regulatory bodies and pharmaceutical industry leaders agree on: the supply chain of generic drugs is not 100% efficient and it is more fragile than it seems. The recent pandemic has brought this issue to light, and for the J. Molner Company the solution lies in taking a human-centric approach while bringing generic drugs to the market.

“More than waiting for the right time, the right politician in office, or the right budget, it’s time for generic companies to change their generic drug portfolio priorities for the right reason. Having a good reason, especially if it is a humanitarian one, can help to create resilience and create a team spirit among key players.” stated Indrek Kaing, Business Development Manager at J. Molner Company.

To have a human-centric approach in drug development means that it is necessary to focus on which essential medicines should be made, taking into consideration the fragility of markets. Not prioritizing the right drugs can have consequences in the inventory, as Katherine Ellen Foley, Lauren Gardner and David Lim write in Politico magazine:

“Twenty-nine of 40 critical drugs for treating Covid-19 patients were in shortage at various points in 2020, including common painkillers, the asthma drug albuterol and medicines used to sedate patients on ventilators.” the authors point out.

Overhauling the generic drug supply chain and centering it on the patient will require spending on research and manufacturing. The hefty price tag may scare some lawmakers after all the recent spending on pandemic relief bills, but in the long run it will generate a more resilient and stable pharmaceutical market.

In regards to pricing, Deborah Abrams Kaplan from Managed Healthcare Executive, the current supply model offers little to no transparency regarding the factors that can affect the price of a generic drug.

“Prices may be driven up because of higher ingredient pricing or a shortage of ingredients, or prices are raised because the product would not be financially viable to produce otherwise,” she writes.

How can a patient-based supply chain fix this issue?

By considering the qualities and needs of the demand, pharmaceutical companies can manage better their generic drug portfolios and pricing models. Although it might seem that brand-name drug list prices should drop with more generic competition, often they remain the same and frequently they may increase.

Offering patients a larger list of alternative generic drugs on top of brand-name ones also benefits both developers and manufacturers. This is due to the spread of risk allocation among a larger number of pharmaceutical products, since usually one-third of them will lose money, one-third will break even and one-third will make money.

Helping patients to access a larger variety of generic drugs will also require optimizing development and manufacturing. This will involve finding new partners at a national and global scale, thus providing more stable prices and maintaining the supply even when one of the partners falters.

There are several obstacles to overcome in the revamping of the current generic drug supply management. Low demand for orphan drugs, formulation changes of brand-name drugs, monopolies, and sole patent owners are some of these challenges. That being said, the current political landscape in North America favors international collaboration and the entrance of more generic drugs to the market.

The Biden Administration recently released an Executive Order to promote competition among pharmaceutical companies, some of the provisions include:

  • Making a more transparent and efficient approval framework for generic drugs and biosimilars;

  • Developing educational materials for the public that helps them to understand generic and biosimilar drugs; and,

  • Supporting aggressive reforms that allow Medicare to negotiate drug prices with intermediators and manufacturers.

With a favorable political climate and a market bouncing back from the pandemic, it is an ideal time to build a supply chain that is centered on the people at the end of the chain and to work towards a more diverse portfolio of generic drugs that also has more accessible prices and does not depends on a single location or partner to fulfill the demand. In simpler terms, the generic industry needs to learn how to put their eggs in more than one basket for the better good and health of people everywhere.

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