CHEAPER DRUGS AT WHAT COST?

NEW RESEARCH FINDS THAT GENERIC MEDICATIONS ARE MORE FREQUENTLY RECALLED THAN THEIR BRAND-NAME COUNTERPARTS

The average American spends around $1,100 each year on prescription and over-the-counter drugs, far higher than any other country in the world and approximately triple what patients in the United Kingdom spend.

The primary culprit is high drug prices, an issue that rocketed to public attention in 2015, when Turing Pharmaceuticals, founded by "pharma bro" Martin Shkreli, purchased the anti-infection drug Daraprim and immediately raised its price per pill from $13.50 to $750.

To bring down costs, the U.S. government has long encouraged pharmaceutical companies to produce cheaper, generic versions of brand-name drugs whose patents have expired. In 1984, Congress passed the Hatch-Waxman Act, which expedited the approval process for generic drugs.

But new research from Kaitlin D. Wowak, assistant professor of IT, Analytics, and Operations at Mendoza, suggests that the bipartisan push for cheap generic drugs may come with its own risks. In a study forthcoming in the Journal of Operations Management, Wowak — along with co-
authors George Ball of Indiana University and Rachna Shah of the University of Minnesota — find that greater product competition among generic drug manufacturers leads to a higher number of manufacturing-related recalls, suggesting that manufacturers may be cutting corners to lower drug prices.

Wowak and her co-authors examined 939 pharmaceutical recalls across 64 firms from 2002 to 2014. Using data from the FDA's annual Orange Book, which tracks all approved medications in the United States, the researchers found that generic drugs with multiple manufacturers were recalled more frequently than brand-name drugs that were manufactured under a monopoly.

Thanks to the Hatch-Waxman Act, generic drug manufacturers face significantly less government scrutiny than the inventors of the original drug. Rather than passing rigorous clinical trials, generic drugmakers only have to show that their product is bioequivalent to the original drug and then adhere to official Current Good Manufacturing Practices. But those manufacturing guidelines leave companies a wide degree of discretion — stipulating that they must train their employees, for instance, but not which specific training techniques they must use. The FDA must conduct regular audits of manufacturing facilities, but the rigor and scope of those audits isn't spelled out.

The result, the researchers found, is a higher number of manufacturing defects resulting in product recalls. In 2008, Actavis Corporation initiated a recall of the heart drug Digitek after discovering that its pills contained twice the medication indicated on the label. Johnson & Johnson recalled its schizophrenia drug Risperdal in 2013 after discovering mold on the product originating from a poorly maintained manufacturing facility.

"The intense attention to reducing drug prices by increasing product competition may have bred a culture of reduced attention to quality standards in manufacturing, which has resulted in lower-quality pharmaceutical products," Wowak explains. "Federal regulators seem to be unaware of product quality risks."

To improve patient safety, Wowak and her co-authors recommend that the FDA require more detailed documentation from pharmaceutical companies about how their generic drugs are manufactured, conduct more frequent and rigorous plant inspections, and pay closer attention to the agency's customer-reported complaints database.

By Michael Hardy

Illustration by Richard Mia