The pharmaceutical industry is in a financial emergency.
According to the Pharmaceutical Manufacturers of America (PMA), a trade group that represents drugmakers, the U.S. generic drug market is expected to shrink by 20% by 2021.
And while the market is already shrinking, the price of a generic drug could increase by 20%, and that’s assuming generic manufacturers will be able to get enough supply.
And the industry has a lot of other issues to worry about.
“We’re going to need a whole lot of resources and an abundance of manufacturing capacity, which is what the government needs to finance those programs,” said Jeff Johnson, president and CEO of PMA.
The American Medical Association (AMA) estimates that it will cost Medicare $1.6 trillion over the next decade to pay for prescription drug programs.
And it’s not just Medicare.
“It is also going to have to pay a tremendous amount of the bill for all these other programs and programs that will be funded through the health care law,” Johnson told ABC News.
The problem is, the health law’s drug benefit cuts don’t apply to drugmakers.
So even if they get a subsidy, they will have to pass on the costs to Medicare.
That’s because the health plan will be responsible for paying for the drug cost in the first place.
So there’s no guarantee that the federal government will pass on those savings to Medicare, Johnson said.
“That’s going to be a huge burden on our economy, and it’s going, frankly, to be an enormous burden on the taxpayers,” he said.
One solution to that problem would be to use a combination of public-private partnerships to help companies compete.
The National Institutes of Health (NIH) recently announced a program to partner with companies that have significant patents and manufacturing capacity.
The goal is to increase supply of generic drugs by up to 25% by 2022, according to a press release.
And Johnson is hopeful the government will take advantage of this partnership.
“The idea that you can put money in the pockets of drugmakers and get them to produce more generics is a very, very good idea,” Johnson said, “because that is the most effective way to keep our economy going.”
The pharmaceutical manufacturing industry is not alone.
A recent report by the consulting firm Avalere Health says that as the supply of drugs drops, prices will rise.
In fact, Avalere estimates that the cost of drug imports will increase by 25% between 2018 and 2020, according the report.
“If you look at the entire cost of prescription drugs, the cost increases every year,” Johnson noted.
“What we’re doing is not just going to increase prices, but also the price increase will be higher for consumers.”
And Johnson isn’t alone.
The U.K. has seen a surge in drug shortages.
Last year, there were 6.5 million prescription drugs in use in the country, according a report from the British Association of Drug Prescribers.
That number dropped to 3.4 million in 2017, a decline of nearly 10% according to the association.
And this year, it’s expected to drop another 8% to 5.5.
“People are very concerned,” Johnson pointed out.
“They’re looking for ways to find solutions, but in the meantime, we’re seeing shortages.”
Johnson is hoping the U