Earlier this year, one company’s closing is adding to national pharmaceutical shortages and capacity in its bankruptcy. The closing can be construed as more than just allowing a laissez-faire economic policy. There are greater healthcare implications for the US.
The nation can rescue banks, companies such as AIG, and those gambling with CDS, countering naked CDS, tranched CDOs threatening the national economy. It fails to see the threat of the Akorn closing and the removal of the pharmaceuticals it supplied. There does not appear to be a method of last resort which was allowed with Wall Street gamblers.
The first part of this post is taken from Fierce Pharma. The links are in the paragraphs. I blended them into the post itself. Fierce Pharma has been tracking the fall of Akorn since 2016.
Bankrupt Akorn Pharma calls it quits and closes all US sites, fiercepharma.com, Zoey Becker
Akorn Pharmaceuticals shut its doors February 2023.
The impact of its closing was felt across the pharma industry. It is said, the company shut down due to regulatory woes and financial troubles, I have not explored either. If I get some time, I may dive into it too. I am wondering why the US did not act with a strategic suppler of meds. It is not like another company can immediately replace this company’s products.
Located in Lake Forest, Illinois, the drugmaker was responsible for producing 75 generic drugs, all of which were pulled from the market when the company closed down. In some cases, the company was the sole supplier of particular products.
In 2022, Akorn attempted to sell itself. The attempts of trying to sell itself since last year did not receive an “appropriate bid” according to President Douglas S. Boothe in a letter to employees. The company was also “running at a loss for some time,” and was unable to secure financing to continue operations.
This announcement occurred after an FDA reinspection of the plant last year had cleared it over the 11 observations, many tied to filling lines, that turned up in a June 2016 visit. A $4.3 billion bid by Fresenius was made to buy Akorn in 2017. Knowing full well of the 11 FDA observations which had been reconciled by Akorn, Fresenius had made the offer. However, the FDA found new issues with Akorn’s sterile manufacturing during another inspection of the Decatur plant in April.
This occurred just months after Akorn announced the FDA reinspection of the plant last year had cleared it over the 11 observations, tied to the filling lines found to have issues in a June 2016 FDA visit. Fresenius backed out of the purchase agreement in April 2018. From that point it was all down hill.
Akorn paid a fine of $7.9 million in 2020 for violating the False Claims Act. Akorn also set aside $74 million for investors to further back any problems occurring. In February 2023, Akorn shut its doors and after filing Chapter 7 bankruptcy.
The nature of the Lake Forest, Illinois-based drugmaker bankruptcy meant there was no one else in line and responsible for producing 75 generic drugs. Several of the drugs were solely produced by Akorn. To make matters worse, all available product was pulled from the market when the company closed. A dilemma is created when one US company commands the market for a particular product(s) and has the only capacity in the US to manufacture. There make be other companies globally which produce similar. What about capacity, supply lines, and pricing.
After all of the above, I come to this conclusion.
The closure occurs and contributes to an already ongoing drug shortage crisis in the U.S. Akorn’s bankruptcy and subsequent shuttering are part of a bigger disaster caused by management and fewer manufacturers in the U.S. The companies which manufacture less costly generic drugs. Less profits for the remaining companies and an already overly complicated global supply chain leave patients scrambling for lifesaving medications for months or possibly years to come.
NBC News was also reporting on this issue July 16, 2023
How U.S. drugmaker Akorn’s closure contributed to the escalating drug shortage crisis, nbcnews.com, Berkeley Lovelace Jr. July 2023
New drug manufacturing shortages increased by nearly 30% from 2021 to 2022. This resulting shortage affecting 295 products at the end of last year. A March report from the Senate Committee on Homeland Security and Governmental Affairs gave detail to the serious nature of it. Such shortages are affecting cancer patients who are in desperate need of chemotherapy drugs. It impacts people in intensive care units or emergency rooms needing certain generic intravenous medications, which are in tight supply, are also endangered.
The shortages are worsening:
As of June, there were more than 300 active drug shortages, the most in nearly a decade, according to the American Society of Health-System Pharmacists, a professional organization that tracks drug shortages.
Drug shortages are not new. There have been supply crunches for heart medications, cancer treatments and ADHD medications in the U.S. and globally in recent years. The generic drug supply is especially vulnerable. Companies similar to Akorn face intense overseas competition and declining profits. To compensate they lay off workers, cut costs to stay in business, or maybe fail to update processes.
With the closure of Akorn, the U.S. lost a “chunk” of its manufacturing capacity. Occurring all the while other generic drugmakers struggle to stay in business, said Valerie Jensen, the associate director of the Food and Drug Administration’s drug shortage program.
Strategically, I believe the US could have stepped in and helped with the resurrection of Akorn. Instead, the US has lost capacity it could not afford to lose or allowed. There is only so much laissez-faire a nation can tolerate before it is held captive by external interests.
More to come on the topic. There is more to the NBC article which is also worthy of a read. I had worked in the planning of pharmaceuticals for a major company. It is of interest to me.
The U.S. Needs to Reimagine Its Pharma Supply Chain, Angry Bear, Bill Haskell
How U.S. drugmaker Akorn’s closure contributed to the escalating drug shortage crisis, nbcnews.com,
After Fresenius deal collapse, Akorn inks $74M settlement with investors over data integrity woes, Fierce Pharma
Akorn sterile plant in Illinois smacked again by the FDA, Fierce Pharma
International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparisons with Previous Studies, RAND, Authors
2023-06-06-HSGAC-Majority-Draft-Drug-Shortages-Report.-FINAL-CORRECTED.pdf, senate.gov, Senator Gary Peters, as supplied by Ken Houghton.