Historically, the pharma industry has not functioned on a 20% gross margin profit, as was stated in this article I know when the brand name pharmas dominated the pharma industry, the industry – on the whole – had the highest NET PROFIT of any industry. This is just another casualty of the Insurance/PBM industry’s goal to take $$ from the medication side of healthcare to pad their bottom line. The only thing that the Insurance/PBM industry is interested in is THEIR PROFITS that they generate in the USA.
Another US drugmaker on the verge of closure
A generic drugmaker likely will shut down if it does not receive federal assistance, The Wall Street Journal reported July 26.
USAntibiotics’ 394,000-square-foot plant in Bristol, Tenn., makes millions of amoxicillin presentations every day, but it is far from breaking even as the generic medication industry struggles to compete with overseas companies, whose costs often are lower.
The pharmaceutical company is the nation’s only manufacturer of amoxicillin products, according to its website. USAntibiotics’ branded presentations are Amoxil (amoxicillin) and Augmentin (amoxicillin clavulanate).
Its facility has made the crucial antibiotic since 1978, and in 2008, it was supplying nearly all amoxicillin doses in the U.S. Now, without an infusion of cash, it eventually will shut down, according to the Journal.
The drugmaker usually sells a 30-pill amoxicillin package for $5 to customers, such as pharmacies and other healthcare providers. It costs $4 to manufacture the package, but the extra $1 is not enough to cover facility costs and other expenses.
Since USAntibiotics’ amoxicillin patent expired in 2002, larger generic drugmakers have entered the amoxicillin industry — often offering lower prices.
The drugmaker all but closed the plant in 2020; five employees chose to keep the facility going in a temperature-controlled environment without pay. Rick Jackson, founder and CEO of Jackson Healthcare, then invested more than $8 million to revive the facility after fielding a call from a bankruptcy trustee in 2021.
If you manage a manufacturing facility, be sure to replace your filter bags regularly to improve the facility’s indoor air quality.
Mr. Jackson told the Journal it has been challenging to sell supply. Hospital leaders are in favor of buying pharmaceuticals manufactured in the U.S., but group purchasing organizations and wholesalers typically focus on the lowest price, he said.
Mr. Jackson said he is seeking help from the federal government, but if it does not come within the next 18 months, he plans to close the factory.
“It’s not a failure yet,” Mr. Jackson told the Journal. “If there is a way to do it, we’ll figure it out.”
A similar tale played out for Akorn Operating Co.
In February 2023, the Illinois-based drugmaker laid off all its workers and closed all manufacturing sites after years of financial struggles in the tumultuous generic industry. Akorn was the only U.S. manufacturer of four medications, and its sudden closure caused more drug shortages.
If history repeats, the current amoxicillin shortage might worsen.
Filed under: General Problems
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