Why Changes at Teva Could Worsen Rx Opioid Shortages
/By Pat Anson, PNN Editor
A change in the business model of one of the world’s largest manufacturers of generic drugs could lead to further shortages of opioids and other medications in the United States, according to an industry expert.
Last week Israel-based Teva Pharmaceutical Industries said it would reduce its production of generics from 80% of its drug portfolio to 60% over the next few years. Teva’s CEO says the company plans to focus on more profitable branded drugs as part of its “pivot to growth.”
“The drugs we’re pulling out of are drugs which are low-margin,” CEO Richard Francis told Bloomberg.
Teva has not publicly identified which generic drugs it will stop producing, but said it would “very carefully” avoid dropping any medications that are already in short supply.
“We don’t want to let the pharmacists, the wholesalers and the patients down. We want to make sure they always have their drug when they’re looking for it,” Francis said in an interview with Endpoints News.
But Teva has already moved to reduce its production of generic oxycodone, informing the Food and Drug Administration earlier this month that it would discontinue producing 30, 15, and 5 mg tablets of immediate release oxycodone. Teva did not respond to multiple requests from PNN to explain the reasons for the discontinuation.
The FDA does not currently list oxycodone on its drug shortage database, but the American Society of Health-System Pharmacists (ASHP) does.
As PNN reported, ASHP added oxycodone to its nationwide list of drug shortages in March, with generic drug makers Amneal, Camber and Rhodes Pharmaceuticals reporting shortages of 5, 15, 20 and 30 mg oxycodone tablets.
“They are a large producer and other companies may not be able to make up the difference. I think it really will result in shortages.”
“I know that (Teva’s) CEO came out with a statement saying that they wouldn't leave the market for products that are in short supply, but it hasn't exactly been a great market overall. The overall capacity of just the generic market is very difficult. When you look at controlled substances, that gets even more difficult,” says Erin Fox, PharmD, Senior Pharmacy Director at University of Utah Health, which tracks drug shortages for the ASHP.
“They (Teva) are a large producer and other companies may not be able to make up the difference. I think it really will result in shortages.”
As an example of how tight the supply of opioids and other controlled substances is, Fox says the University of Utah Health system reached out to its drug wholesaler to let them know that it was adding 50 new beds to its cancer clinic and would be needing more pain medication and other drugs to treat the extra patients. The answer it received was not reassuring.
“It's mostly opioids that we anticipate needing more of. And the wholesaler said, ‘Well, let's just wait until we start receiving your orders to increase the amounts that you're going to buy,’” Fox told PNN. “I think the wholesalers’ settlement that they've done has really limited the amount of products that pharmacies can access. Even if you have the patients, it can be very difficult to increase the amount that you're ordering.”
Fox is referring to a $21 billion opioid litigation settlement that three large drug distributors reached with 46 states last year, which requires them to impose strict limits on the amount of opioids and other controlled substances they can supply to pharmacies in any given month. An unusually large order for opioids could result in a pharmacy getting red-flagged by a distributor and the order cancelled, regardless of patient needs.
“We're unable to be proactive. We're trying to think ahead. And we don't want to have that situation where we we're getting very close to running out or not having enough. That's basically what our wholesaler says has to happen,” Fox explained.
DEA Production Cuts
Fox says years of cuts in production quotas by the Drug Enforcement Administration have also contributed to shortages. With opioids and some other controlled substances in tight supply, there is little margin for error or unexpected developments in the pharmaceutical industry – like Teva reducing its production of generics.
Keeping track of the drug supply is made more difficult because production quotas for each company are not disclosed by the DEA and there is little transparency in the business.
“What we don't have is the amount that the DEA is giving to each supplier. And then we also don't know the amount that each supplier is then manufacturing. Because we don't have that transparency, it's really hard to know,” Fox said. “Drug manufacturing is a business. And even though patients are at the end of it, these drug companies don't have to tell people why they're discontinuing something. They don't have to have to say what market share they had or if they think there might be a shortage. They can just stop at any time.”
Another issue is that DEA’s annual production quotas are not transferable from one company to another. That’s why Fox believes the changes at Teva are likely to worsen drug shortages.
“DEA assumes that everything is going perfectly with manufacturing, that no companies are having a glitch, and no companies are having a problem. And so one company might be having manufacturing problems, but still holding onto their quota. They can't necessarily give it to another company who's able to ramp up production,” she said.
“There’s just a lack of transparency. It's very hard. I've been monitoring drug shortages for over 20 years. Almost always, when a company quits, we end up with some kind of a shortage. Hopefully it won't be long term.”
Another factor that could be influencing Teva’s decision is the $4.25 billion nationwide settlement the company agreed to pay in opioid litigation last year. Teva’s production of generic and branded opioids dwarfed that of Purdue Pharma and other better known drug companies. Now heavily in debt, Teva may have decided that profits in a low-margin product like opioids are simply not worth the risk.
