Rock bottom prices on drugs causing shortage

The shortage of generic drugs used in hospitals is primarily driven by rock-bottom prices. In the U.S., prices for generic sterile injectables, essential in hospitals, are often so low that it becomes unprofitable for companies to continue manufacturing certain drugs. This leads to fewer suppliers and a lack of incentive to invest in quality control, which can result in recalls and plant shutdowns.

The abrupt closure of Akorn pharmaceutical plant in Decatur, Illinois, a significant producer of generic drugs, exemplifies this issue. The plant closure contributed to new drug shortages and exacerbated existing ones. Rising Pharmaceuticals has since acquired the former Akorn factory with plans to resume production of some generic drugs by the second half of 2024. However, the fundamental economic issues causing these shortages persist, as highlighted by experts like Rena Conti from Boston University Questrom School of Business and Valerie Jensen from the FDA.