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Commonly used generic drugs such as cough medicines are constantly in short supply. This situation is occurring mainly because many generic drug manufacturers are small and midsize companies that are only able to produce small volumes of a wide variety of medicines.
Shouldn’t the industry be restructured to increase production capacity?
Generic drugs are made with the same active ingredients as original drugs whose patent has expired and can be developed at lower costs, making them available at reasonable prices. As a result of the government’s promotion of their widespread use as a way to curb medical expenses, generic drugs now account for 80% of all drugs in use.
However, since 2020, cases of quality-control fraud committed by generic drugmakers have come to light one after another. More than 20 companies have been subjected to administrative penalties such as business suspensions, resulting in supply delays. The increase in demand for medicines due to the spread of COVID-19 among other infectious diseases has also affected the situation, causing sudden drug shortages.
The Health, Labor and Welfare Ministry has repeatedly requested the industry to increase production.
However, many of the about 190 generic drugmakers have only a few production lines to manufacture dozens of different medicines. With generic drugmakers lacking sufficient capacity to cope with a sudden increase in production, 30% of generic drugs are currently in short supply.
It must be said that the current situation in which many makers are producing similar medicines in small batches is inefficient when viewed from the perspective of the entire industry. Quality control systems would also tend to become inadequate.
It is important to proceed with the integration of companies and the grouping of several firms in order to build a rational production system. The government should provide support measures such as tax incentives for companies to integrate and subsidies in capital investment.
Generic drugs are now an important foundation supporting medical care, and manufacturers bear a heavy social responsibility. They should be aware that normalizing the supply of medicines is a mission for the entire industry.
Such proactive efforts will also help restore trust in each drugmaker, which has been shaken by the scandals.
Systemic factors also need to be taken into account. Generic drugs are sold at around half the price of the patent-expired originals. In addition, because many companies produce drugs with the same ingredients, the situation spurs price wars.
The government-set prices of medicines, which are revised annually, have been reduced in line with market transaction prices, and some drugs are even priced at less than ¥10 per tablet. In addition, with medical costs swelling, drug prices tend to be reduced so the government can secure financial resources for the payments that medical institutions receive.
If such a situation is left unaddressed, it will become difficult to continue producing high-quality generic medicines. To enable a stable supply of high-quality medicines, it will be necessary to consider raising the prices of generic medicines to a suitable level.
