Is the generics market well-structured or poorly structured?

Via Marginal Revolution, libertarian economics professor and FDA commentator Alex Tabarrok on the generics market.

The United States has some of the lowest prices in the world for most drugs. The U.S. generic drug market is competitive and robust—but its success is not accidental. It is the result of a series of deliberate, well-designed policy interventions.

The 1984 Hatch-Waxman Act allowed generic drug manufacturers to bypass costly safety and efficacy trials for previously approved drugs by demonstrating bioequivalence through Abbreviated New Drug Applications (ANDAs). To spur competition, the Act also granted 180 days of market exclusivity to the first generic filer who challenges a brand-name patent—a mini-monopoly as a reward for initiative. Balancing static efficiency (P=MC) with dynamic efficiency (incentives for innovation) is hard, but Hatch-Waxman mostly got it right.

The Generic Drug User Fee Amendments (GDUFA), modeled after the very successful Prescription Drug User Fee Act (PDUFA), require generic manufacturers to pay user fees to the FDA. These funds allow the Office of Generic Drugs to hire more staff and meet stricter approval timelines. GDUFA dramatically reduced ANDA backlogs and accelerated market entry, especially under GDUFA II.

He also mentioned the FDA’s Division of Policy Development in the Office of Generic Drug Policy, which was apparently helpful in accelerating generics to market. 

Here's another viewpoint on a specific arm of the generics market, via an article in JAMA by Eli Cahan: 

One family of drugs that has remained stubbornly susceptible to shortage is what experts call generic sterile injectables (GSIs). This class—which includes non–brand-name IV medications like fluids as well as many antibiotics and chemotherapies—accounts for a disproportionate share of the problem: between 2017 and 2023, 67% of all drugs in shortage were GSIs, according to data from IQVIA.

Part of the supply chain vulnerability derives from GSIs being less than enticing from the manufactures’ perspective, explained Erin Fox, PharmD, MHA, associate chief pharmacy officer at University of Utah.

An April 2025 report from the US Government Accountability Office (GAO) characterized “low price and low-profit margins” as key drivers of the GSI shortages. Late last year, a US Department of Health and Human Services (HHS) report likewise found that 70% of GSIs do not achieve profitability by 3 years. This limited upside has led to manufacturers exiting the market, according to the GAO report.

I think this is the core issue that isn't mentioned by Prof. Tabarrok - in some places, the generics market is genuinely neither competitive nor robust. Instead, there are not enough players in the market, the margins seem to be razor-thin, quality is lacking and the only profits to be made are in the times of shortage when prices spike. I am not saying that Prof. Tabarrok is wrong, but I think I am saying his praise is incomplete.

(In truth, I think Prof. Tabarrok is praising the policy responses from both Congress and the FDA for creating the correct conditions for the strengths of the American generics market and not the weaknesses...)

FiercePharma: "FDA misses another approval decision target date, this time for GSK's Nucala in COPD"

Via FiercePharma, this news: 

In the wake of mass restructuring efforts across the Department of Health and Human Services (HHS), the FDA has missed yet another approval decision target date.

GSK had expected to secure an FDA nod for its IL-5 antibody Nucala in chronic obstructive pulmonary disease (COPD) on Wednesday, but the May 7 deadline has come and gone without a decision from the U.S. regulator.

“Based on our latest discussions with the FDA, we continue to expect approval,” a GSK spokesperson said in an email.

“The FDA is actively reviewing our submission for Nucala in COPD and we are working closely with them to help bring this important treatment option to patients as quickly as possible,” the spokesperson said, caveating that the company does “not comment on ongoing discussions with regulatory authorities.”

Between the president's new executive order and this news, it very much feels like the Executive Branch is threatening pharma revenue streams directly. I can't imagine this will do anything good for hiring, especially in terms of entry-level R&D positions.  

NYT: Cassava executives resigned

Via the New York Times, this news:  

Two top officials at Cassava Sciences — a small pharmaceutical company in Austin, Texas, embroiled in years of controversy over a proposed Alzheimer’s drug — have resigned.

Remi Barbier, the chairman and chief executive, stepped down on Wednesday but will remain at Cassava “without duties or responsibilities” until September, according to a company statement.

Lindsay Burns, Cassava’s chief scientist, who is married to Mr. Barbier, will also leave the company.

In June, a neuroscientist at the City College of New York, Hoau-Yan Wang, was charged with fraud by a federal grand jury for allegedly falsifying data to obtain research grants from the National Institutes of Health.

In collaboration with Dr. Burns, Dr. Wang published research studies in support of Cassava’s drug candidate for Alzheimer’s, called simufilam. It is currently in advanced trials, although more than five of Dr. Wang’s studies have been retracted or questioned by scientific journals.

It is amazing that these scientists to get as far as clinical trials. That's a lot of patients affected. 

WuXi in the NYT

There's an article in the New York Times about the BIOSECURE Act, and its impact with WuXi on the general pharmaceutical market. This is the only relevant portion (I feel): 

Last month, after a classified briefing with intelligence staff, the Senate homeland security committee advanced a bill by a vote of 11 to 1: It would bar companies from receiving government contracts for work with Wuxi, but would allow the companies to still obtain contracts for unrelated projects. Government contracts with drugmakers are generally limited, though they were worth billions of dollars in revenue to companies that responded to the Covid-19 pandemic.

The real question is 1) will a bill pass, and 2) what will the bill look like? If the Senate version looks like this (i.e. banning the government from working directly with WuXi, but not stopping pharma companies from working with WuXi), I suspect this is going to not be particularly impactful.

Moderna pauses its Kenyan manufacturing site

Via FiercePharma: 

Moderna made headlines in 2021 with a commitment to bringing more mRNA manufacturing capabilities to Africa, eventually landing on Kenya as the site of a $500 million plant project. Now, amid waning global vaccine demand, the company has hit pause on the endeavor.

The Spikevax maker is taking a step back to evaluate future demand for mRNA vaccines in Africa as it has not received any vaccine orders from the continent since 2022, Moderna said in a statement.

Cancelations of previous orders have stacked up to “more than $1 billion” in losses and write-downs, according to the mRNA specialist. The company said demand "has declined since the pandemic and is insufficient to support the viability of the factory planned in Kenya." 

Too bad - I was looking forward to the start of biopharma manufacturing in Africa. Here's hoping for brighter days. 

An alarming story about WuXi, and its (potential) impact on chemical employment in the United States

Via Derek, this seriously bonkers Reuters story regarding WuXi AppTec: 

March 28 (Reuters) - U.S. intelligence officials in late February told senators working on a biotech security bill that Chinese pharmaceutical firm WuXi AppTec (603259.SS), opens new tab had transferred U.S. intellectual property to Beijing without consent, according to two sources.

The U.S. government is concerned that certain Chinese biotech companies are contributing technology or research and development for use by China's military, and the proposed legislation would restrict U.S. government funds going to those Chinese companies.

The classified briefing to about a dozen senators was led by the FBI, the State Department and the Office of the Director of National Intelligence. Those officials said that WuXi AppTec and other Chinese entities had engaged in activity in the U.S. contrary to U.S. national security interests, the sources said on condition of anonymity.

Among the agencies' concerns was information reflected in recent intelligence reporting that WuXi AppTec transferred a U.S. client's intellectual property to Chinese authorities without consent, the two sources said.

First, I am a little skeptical of this story. I'm probably more of a dot mil type than Derek, to calibrate. I am, in general, pretty skeptical of specific stories about foreign governments without additional corroboration. So, the rest of this post will needs to start with "IF this is true" and I think it's a big "IF." 

IF this is true, then I suspect this is sufficient evidence for Congress to move on whatever legislation they are planning. The fact that the intelligence community is providing these briefings to Congress intimates a potential level of agreement and potential assent from the White House, which presumably will attempt to adjust any future bills via the Senate. 

So. IF this is all true, then you could imagine A Great Decoupling away from China IF indeed there is large-scale evidence that WuXi is either voluntarily or involuntarily coughing up American IP to the Chinese government.* I remember a story (I don't know if I entirely believe it) from a friend, or a friend of a friend who was taken to a rooftop on the WuXi campus in the late aughts and told "that's the Merck building over there, and the Pfizer building over there, and the [insert large pharma] building over there." Again, I'm skeptical of these stories, but suffice it to say in 2024 that there are many thousands more FTEs in China working on pharma (med chem, process, etc) than there were in 1990 or 2000. 

IF there is a Great Decoupling, then yes, some (or many?) of these jobs will eventually end back up in the United States. Likelier, though, they will start somewhere else. India, perhaps, or maybe Central/Eastern Europe. I don't see the numbers of chemists increasing in the US dramatically any time soon, but my crystal ball is murky. That said, IF a WuXi bill is signed, and IF there are serious consequences (i.e. if large pharmas are barred from working with WuXi on pain of, say, being removed from the CMS formulary), then all bets are off. IF. 

*The Chinese government is weird in all sorts of ways - but why would they have a meal on seed corn like this?

Another reminder of the possibilities of working in pharma

Via The Atlantic Monthly, this wonderful article on Vertex's CF drug Trikafta: 

...Imagine, though, that you had never been able to simply breathe. Imagine that mucus—thick, copious, dark—had been accumulating since the moment you were born, thwarting air and trapping microbes to fester inside your lungs. That you spent an hour each day physically pounding the mucus out of your airways, but even then, your lung function would spiral only downward, in what amounted to a long, slow asphyxiation. This was what it once meant to be born with cystic fibrosis.

Then, in the fall of 2019, a new triple combination of drugs began making its way into the hands of people with the genetic disease. Trikafta corrects the misshapen protein that causes cystic fibrosis; this molecular tweak thins mucus in the lungs so it can be coughed up easily. In a matter of hours, patients who took it began to cough—and cough and cough and cough in what they later started calling the Purge. They hacked up at work, at home, in their car, in bed at night. It’s not that they were sick; if anything, it was the opposite: They were becoming well. In the days that followed, their lungs were cleansed of a tarlike mucus, and the small tasks of daily life that had been so difficult became unthinkingly easy. They ran up the stairs. They ran after their kids. They ran 10Ks. They ran marathons.

Read the whole thing. 

FiercePharma: potential drug cross-contamination in Brexafemme API manufacture

Via FiercePharma, this news: 

Monday, Scynexis said in a filing (PDF) that a recent review of the drug's manufacturing process by GSK has triggered a recall of the product and a pause of all clinical trials testing the medicine.  

As part of GSK's review, Scynexis learned of potential cross-contamination risks during the manufacturing process of ibrexafungerp, which is marketed as Brexafemme.

The company is not aware that any of its medicine has been contaminated. Scynexis said it has not received adverse event reports tied to contamination.

Here's the filing: 

Following a recent review by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, SCYNEXIS became aware that a non-antibacterial beta-lactam drug substance is manufactured using equipment common to the manufacturing process for ibrexafungerp. 

Current FDA guidance recommends segregating the manufacture of beta-lactam compounds from other compounds since beta-lactam compounds have the potential to act as sensitizing agents that may trigger hypersensitivity or an allergic reaction in some people. In the absence of the recommended segregation, there is a risk of cross contamination. 

It is not known whether any ibrexafungerp has been contaminated with a beta-lactam compound and SCYNEXIS has not received reports of adverse events established to be due to the possible beta-lactam cross contamination. Nonetheless, in light of this risk and out of an abundance of caution (and aligned with GSK’s recommendation), SCYNEXIS is recalling BREXAFEMME® (ibrexafungerp tablets) from the market and placing a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study, until a mitigation strategy and a resupply plan are determined. 

I genuinely do not understand how someone screwed this one up, but I am going to guess that some QA folks and some manufacturing folks had a very, very bad day. Good luck to the drug substance manufacturer; that's gonna leave a mark.

NYT: Pfizer facility in NC hit by tornado, likely impact to US medical supplies

Also in the New York Times: 

A tornado caused extensive damage to a Pfizer drug manufacturing site in Rocky Mount, N.C., on Wednesday, threatening critical supplies for hospitals across the country.

The company estimated that one-fourth of the injectable medications it supplies to U.S. hospitals were made at the Rocky Mount property, including drugs used during surgeries and other procedures to help block pain, keep patients sedated and fight infections.

Though the company has yet to disclose the extent of the storm’s impact, video footage of the site and interviews with the Nash County sheriff and with people briefed on the damage indicated that the tornado caused the worst damage at the company’s warehouse.

On Thursday, Pfizer declined to comment on the drugs affected or the proportion of its supply destroyed in the tornado, which could be considerable given that a lot of these medications required careful production and handling to ensure sterility.

It sure seems serious, but I sense that it is too soon to tell what exactly the impact will be. You can be sure that the next warehouses Pfizer builds will be significantly more secure than this... 

FiercePharma: Akorn Pharmaceuticals declares bankruptcy

Via FiercePharma: 

After years of navigating regulatory woes and financial troubles, Akorn Pharmaceuticals is calling it quits.

The company has filed for chapter 7 bankruptcy and is shutting down U.S. operations, according to a letter posted by the Herald & Review in Illinois.

In Decatur, Ill., the company is shutting a plant and laying off 400 workers, angering local and national representatives. But the problems stretch beyond that plant, according to the letter from Akorn CEO Douglas Boothe.

Akorn has been trying to sell itself since last year, but it did not receive an "appropriate bid," Boothe wrote to employees. Since Akorn has been "running at a loss for some time," the company was unable to secure financing to continue operations.

As of Thursday, all Akorn U.S. sites will close and all employees will be terminated, Boothe wrote to employees.

“I truly regret that these actions have become necessary,” Booth said in the letter. “This is a shock. It will take some time to absorb the news and what it means to you and your colleagues.”

Best wishes to them, and best wishes to all of us. 

Endpoints: Pfizer lays off 196 employees at its La Jolla facility

Via Endpoints News: 

The WARN notice also gave more details on Pfizer layoffs to the south. Pfizer has laid off 196 employees at a facility in the San Diego area, which will go into effect in April. Pfizer confirmed layoffs in California in late January, telling Endpoints in January that it is “increasing earlier external innovation efforts.”

Pfizer’s presence in the area is in the La Jolla area and includes a 25-acre campus that has around 500,000 square feet of labs that are focused on vaccines and oncology work. 

Best wishes to the laid off folks, and to all of us. 

C&EN: Nektar lays of 70% of employees

From this week's C&EN (by Jessica Marshall): 

Nektar Therapeutics says it will lay off 70% of its 700-plus employees. The news follows the April 14 announcement that Nektar and partner Bristol Myers Squibb were halting development of the interleukin-2 (IL-2) therapy bempegaldesleukin. The drug was intended to stimulate growth of T cells, which can attack cancer, but it failed in late-stage trials. Nektar, which focuses on immune modulation, says it will keep working on other drugs in its pipeline. 

 Best wishes to those affected. 

Moderna building a biomanufacturing facility in Montreal

Via FiercePharma: 

Moderna is expected to announce Friday that it has chosen the Montreal area for a new biomanufacturing production facility that will include a research center.

The Massachusetts-based company, which has seen explosive growth in the wake of its mRNA COVID-19 vaccine, announced last year that it would build a Canadian facility along with other production expansion projects that include plans to build a $500 million plant in Africa.

The exact site of the Canadian mRNA vaccine facility, which is forecast to produce about 30 million doses a year and employ between 200 and 300 people when completed in 2024, hasn’t been determined, but Radio-Canada reported it will be in the greater Montreal region...

Good news for Canadian chemists, as Montreal seems to be a more and more popular destination for biopharma...

Kodak going into the pharma services business with $765 million of Uncle Sam's money

Via the Rochester Democrat and Chronicle (articles by Victoria E. Freile and Brian Sharp), the best summary of this story that I've seen: 

Eastman Kodak Co. will receive a $765 million government loan to help expedite the domestic production of generic drugs to treat a variety of medical conditions and loosen the country's reliance on foreign sources, officials said Tuesday.  Specifically, the Rochester-based company will make the ingredients so often produced overseas so the country can produce its own medications.

The move is expected to create at least 350 new jobs, launching a new business unit for the Rochester-based company that — when at peak production in four to five years — could produce 25% of the active ingredients for  "non-biologic, non-antibacterial, generic pharmaceuticals."  

...Continenza told The Journal that the loan has terms similar to a commercial loan and must be repaid over 25 years. Kodak will produce “starter materials” and “active pharmaceutical ingredients” used to produce generic medicines, he said. “We have a long, long history in chemical and advanced materials — well over 100 years,” Continenza said. He added that Kodak’s existing infrastructure allows the company “to get up and running quickly.” 

...The operation will build on Kodak's existing Specialty Chemicals Group, a segment that is dispersed across a three-building complex at Eastman Business Park, with multiple cells or bays that operate as its own chemical factory so that multiple processes can be run concurrently. That operation already is working with various markets, including pharmaceuticals. In company brochures, Kodak touts the 88 reactors, more than 25 centrifuges, filter and membrane presses.

I think this is a pretty logical move on the part of the Trump Administration, i.e. they clearly want to reshore the pharmaceutical supply chain, and Kodak is (I strongly suspect) the largest group of not-currently-spoken-for large scale reactors in the country. They're making noises about making APIs there, and I'm pretty skeptical of that, but the better part of a billion dollars will get you at least partway there. This bears watching. 

Tough times at antibiotics companies

Via Twitter, this New York Times article on antibiotics firms: 

...“Unlike expensive new cancer drugs that extend survival by three-to-six months, antibiotics like ours truly save a patient’s life,” said Larry Edwards, chief executive of the company that makes Xerava, Tetraphase Pharmaceuticals. “It’s frustrating.” 

Tetraphase, based in Watertown, Mass., has struggled to get hospitals to embrace Xerava, which took more than a decade to discover and bring to market, even though the drug can vanquish resistant germs like MRSA and CRE, a group of resistant bacteria that kills 13,000 people a year. 

Tetraphase’s stock price has been hovering around $2, down from nearly $40 a year ago. To trim costs, Mr. Edwards recently shuttered the company’s labs, laid off some 40 scientists and scuttled plans to move forward on three other promising antibiotics....

I'm ready to declare market failure on antibiotics, and move both R&D, manufacture and stockpiling to the government, sigh...