COVID-19 restrictions send generic drug shipping costs through the roof: survey

FedEx, UPS, DHL planes
Generic drug makers could come out in the black during COVID-19 despite a big bump in shipping costs. (Wikimedia Commons)

Global restrictions spawned by the coronavirus pandemic have sent transport costs skyrocketing for generics and biosimilar makers, a trade association finds. But despite the dire report, COVID-19 might not be all bad news for the industry.

Average shipping costs have jumped by 224% as the pandemic added new kinks to the global drug supply chain, a survey from the Association for Accessible Medicines (AAM) found.

In a notable case, one drugmaker's cost to ship its medicines skyrocketed by 413% as an economic slowdown and restrictions on international travel raised the price of global transport, AAM said.

"The global pharmaceutical ecosystem is built on a highly complex supply chain,” AAM interim CEO Jeff Francer said in a release. “This ongoing crisis illustrates the importance of developing new strategies and policies that enhance the pharmaceutical supply chain in the U.S. and increase our nation’s self-sufficiency.”

AAM highlighted government-mandated work-from-home orders and "unpredictable" trade restrictions as cost drivers during the pandemic. 

RELATED: After 'initial shock,' generics supply chain likely to weather COVID-19 blows: analyst

A lasting bump in shipping costs would eat away margins at a time when generic drug makers are already dealing with pricing pressure abroad and stateside. But COVID-19 could also prove a boon for the industry, which supplies 90% of U.S. prescriptions each year, AAM said.

After some "initial shocks" from the pandemic, the global generic drug supply chain is likely to rebound and deliver strong growth numbers despite some potential "spot shortages," Bernstein analyst Ronny Gal said in a March note to investors. 

A potent mixture of patient and channel stockpiling and manufacturer "allocation" measures will drive generics pricing upward in the short term, Gal argued, and could have a "lasting positive impact" on the industry in future quarters.

RELATED: Eyeing COVID-19 shortages, FDA unleashes compounded drugs to treat hospital patients

However, those spot shortages have already become a concern for federal regulators and hospitals working on the front lines of treating COVID-19 patients. 

Earlier this month, the FDA said it would temporarily allow hospitals to source hard-to-find drugs from compounding pharmacies to treat certain patients hospitalized with severe COVID-19, particularly the critically ill needing mechanical ventilation. 

The regulation, meant to last as long as hospitals continue to encounter shortages of key drugs, applies to compounding pharmacies that aren't already sanctioned by the FDA as "outsourcing facilities." To qualify, the copycat drugs must be listed on the FDA's shortages list, and hospitals must have exhausted all other options to access a commercial version of the drug. 

The FDA emphasized that its extraordinary step was designed to be temporary as the pharmaceutical supply chain faces "unprecedented disruptions" amid the novel coronavirus pandemic to provide drugs used for patients placed on respirators.

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