Preparing for the US generics boom
pharmafile | December 15, 2008 | News story | Sales and Marketing | US, generics
One of Barack Obama's key goals as president is to reduce healthcare costs, particularly those related to prescription medications, by increasing the importation of generic drugs. However, the majority of these, or their ingredients, are manufactured in China, and to build confidence in such products, which are often considered unsafe, the FDA will require updated IT systems and solutions.
The 2008 US presidential election has come to an end and the public is now waiting to see which of his promises President-elect Barack Obama will deliver on first. At the top of the list is the plan to address the soaring costs of healthcare and prescription drugs. In order to reduce costs associated with prescription medication, Obama aims to increase the importation of safe, generic drugs from developed countries. However, a significant portion of generic drugs and active pharmaceutical ingredients (APIs) are manufactured in China, which does not have the best reputation for safety and quality. To make matters worse, as costs increase in developed nations, more and more plants are shutting down. Therefore, it is not immediately clear how Obama will increase importation of generic drugs from developed countries when so few 'safe' manufacturing plants remain.
Over the past decade, China has become the leading supplier of APIs due to the ability of Chinese companies to offer much lower prices than their competitors in developed nations. Chinese suppliers and manufacturers have become extremely attractive to generic drug makers, which are under intense pressure to offer low-cost drugs in order to remain competitive in the quickly growing generics market. However, the extreme difficulty in regulating Chinese manufacturing facilities is a major hurdle, as it can lead to contaminated products, made in uninspected and unapproved plants, reaching the market. Furthermore, if a safety issue is brought to light, the source of the contamination is often untraceable due to poor supply chain management (SCM).
The Food and Drug Administration (FDA) regulates all drugs that will be marketed in the US, which involves conducting inspections of all plants involved with the drug supply chain and manufacturing process. Now that a majority of these facilities have moved to the emerging markets, years lapse between inspections. The inspection process in China is particularly difficult because of language barriers, translation mishaps, multiple organisations with similar names and overall discrepancies between official records. The FDA's lack of resources to deal with the global pharmaceutical market, along with poor recordkeeping on old, disparate computer systems, adds to the frustration.
The legacy IT systems that currently exist within the FDA are so antiquated that personnel are often unable to determine which documents and manufacturing sites are legitimate. For example, to figure out which plants in China need inspection, the agency must compare two incompatible databases, both of which have different records. Agency investigators also cannot tell when plants were last inspected, if ever, where they are located, or what products they make. Needless to say, the FDA needs to revamp its IT systems completely if it is to be an effective agency.
To fully realise Obama's goal of increasing the availability of safe, generic drugs, the government and the FDA must make a conscious effort to invest heavily in both personnel and monetary resources to improve the agency's crumbling IT systems. Technology vendors specialising in resource and content management solutions can provide the FDA with guidance on the necessary tools to improve their computer systems. Some key IT solutions that the FDA must consider are enterprise resource planning (ERP) tools and an enterprise content management (ECM) system. ERP solutions will help the FDA to better manage its personnel and plan the inspection schedule, while an ECM platform will provide for enhanced tracking and storing of inspection-related documents, thus improving opportunities for Chinese plants to be placed on the 'safe' list, and increasing the available sources of generic drugs.
Obama's plan to increase the supply and use of generics represents a great opportunity for generic drug manufacturers, especially those in the emerging markets, such as China and India, that have been trying to enter the highly coveted US market. However, while US citizens would greatly benefit from the low-cost drugs from these countries, fears of contamination, safety and quality outweigh price. To help alleviate these fears, generic manufacturers must build a trusting relationship with the FDA and the US public by providing the agency with accurate, detailed and traceable SCM documents upon request. Technology vendors can play a key role in providing IT solutions to drug makers in the emerging markets, in order to spur the development and manufacture of high-quality drugs.
Datamonitor believes that China and India represent a significant opportunity for IT vendors specialising in SCM solutions, as the generic market rapidly grows in these countries, and organisations attempt to capitalise on Obama's views and policies. SCM solutions will assist generic manufacturers in their efforts to provide the FDA with more visibility into the foreign drug supply chain and manufacturing process, and will help China and India to become 'developed' nations in the eyes of the US government. This is a win-win situation for China, India and the US, as it would increase China's and India's market share of the generic drug market, while the US would have additional suppliers of low-cost, safe and high-quality generic drugs.
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