European Generic Medication Shortages Raise Concerns About US Drug Supply

A recent report forecasting that supplies of affordable generic medicine will decrease in the European drug market, in large part because of Europe’s energy crisis, has raised concerns about a potential spillover effect in the United States.¹ “In the past 30 years of my working career, I can’t remember a sector under this level of pressure,” Mark Samuels, CEO of the British Generic Manufacturers Association, told Politico.²

In the United Kingdom, generic drugs account for approximately 80% of all drugs in its National Health Service.² “As the [rebate] rate goes up, we’ll see fewer launches of new biosimilars and branded generics in the UK, because companies won’t be able to supply those products and avoid making a loss,” Samuels said.²

Some drug manufacturers in Spain share these concerns. The production costs of essential drugs such as generics have risen 10% because of electricity and gas. The costs of these utilities have increased 112% and 150%, respectively, according to a recent Teva report.³

Elisabeth Stampa, CEO of Medichem SA, a generic drug manufacturer in Barcelona, Spain, said she anticipates lower generic drug production.⁴

“We may discontinue 3, maybe 5 products [because of] the direct and indirect impact of increasing energy costs,” she told Reuters.⁴

Some observers have warned that Europe’s energy crisis will also affect drug costs. “Higher energy costs just eat all the margins of many makers of essential medicines in the fixed-price system that we operate under in Europe,” Adrian van den Hoven, director general of Medicines for Europe, told Reuters.⁴

Experts have indicated that the energy crisis could affect access to European generic drugs and prices of US generic drugs. Peter Bolstorff, executive vice president of innovation and business intelligence at the Association for Supply Chain Management in Chicago, Illinois, told the University of Minnesota’s Center for Infectious Disease Research & Policy (CIDRAP) that the “cumulative impact” of disruptions to the US health care supply chain will “escalate and increase stress,” leading to disruptions in the generic drug market.⁵

The United States also has lower energy costs than Europe, so European generic drug makers may consider manufacturing drugs in the United States.⁵ “Every one of them are considering the United States,”Bolstorff said, adding that many European companies “are viewing the energy crisis as the last straw.”⁵

The energy crisis began in 2021. What began as a rapid postpandemic economic rebound transformed into a global crisis after Russia declared war on Ukraine in February 2022, according to an International Energy Agency report.⁶

The costs of electricity and natural gas have reached record highs worldwide, and ramifications were steep in Europe, which relies heavily on Russia for fossil fuels.⁶Transportation costs have risen approximately 500% since the pandemic; these costs and natural gas deficits could affect the flow of essential medicines to US markets for up to 10 years.⁵

Essential medicine is already deemed low profit. The energy crisis may heighten competition and push some generic manufacturers out of business.⁵ David Margraf, PharmD, PhD, MS, a pharmaceutical research scientist at the University of Minnesota’s CIDRAP, said, “It’s reasonable to assume that the cost of production will continue to rise with lower revenue generation, especially from generic drugs.”⁵

References

1. Report: 2022 U.S. generic and biosimilar medicines savings report. Associa-tion for Accessible Medicines. 2022. Accessed November 16, 2022. https://accessiblemeds.org/resources/reports/2022-savings-report

2. Collis H. Inflation hits medicines manufacturers, threatens UK supplies. Politico. October 5, 2022. Accessed December 9, 2022. https://www.politico.eu/article/inflation-hits-medicine-manufacturing-threatens-uk-supplies/

3. Addressing Europe’s essential medicines exodus. Teva. October 31, 2022. Accessed December 9, 2022. https://www.tevapharm.com/globalassets/tevapharm-vision-files/manufacturing-report-final_31_10.pdf

4. Burger L. Europe’s generic drugmakers say they may cut output due to energy bills. Reuters. September 28, 2022. Accessed December 9, 2022. https://www.reuters.com/markets/europe/europes-generic-drugmakers-may-cut-output-due-surging-energy-bills-2022-09-27/

5. Van Beusekom M. European energy crisis may portend US drug shortages. Center for Infectious Disease Research and Policy. November 10, 2022. Accessed December 9, 2022. https://www.cidrap.umn.edu/news-perspective/2022/11/european-energy-crisis-may-portend-us-drug-shortages

6. Global energy crisis. International Energy Agency. Accessed December 9, 2022. https://www.iea.org/topics/global-energy-crisis