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The Cancer Letter Inc.
P.O. Box 9905
Washington, D.C. 20016
Tel: 202-362-1809
Fax: 202-595-1310
publication date: Jan 3, 2014
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It takes a few clicks to look up the name of a company that holds the “Abbreviated New Drug Application,” or ANDA, to make a generic drug. Alas, this information is of little value.

If you want to prepare for a drug shortage or pick a high-quality manufacturer to supply drugs, you need to know about the role of a contract manufacturer, the company that makes the drug. Currently, there is simply no way for the doctors or the public to get this information.


Even FDA can’t easily determine whether a drug is made by the ANDA sponsor or a contract manufacturer.


The demise of Ben Venue Laboratories, a company that produced a big share of the generic drugs used by America’s oncologists, exposes the tangled structure of the generics industry, and brings into focus the little-understood business practice of contract manufacturing.


Ben Venue, scheduled to close at the end of 2013, produced drugs and sold them under its trademark and that of a related company, Bedford Laboratories. The two firms had the same corporate parent: Boehringer Ingelheim of Germany. However, Ben Venue’s principal function was to manufacture drugs under contract for a multitude of other companies that hold ANDAs.


“The lack of transparency around which company is actually manufacturing medications is incredibly frustrating,” Erin Fox, director of the University of Utah’s Drug Information Service, said to The Cancer Letter. “When a shortage occurs, the first action item is to determine if there are alternative sources. Currently available data makes it extremely difficult to identify if alternatives exist, or in the case of a factory or line closure, exactly which products might be affected.”


It is possible to go to the FDA compendium called the Orange Book and find out which company holds the license—the ANDA—to make a drug. Yet, in practical terms, this information is useless. In addition to gaps in information about contract manufacturers like Ben Venue, there is no way to know whether ANDA sponsors have discontinued drugs without notice to FDA.


Without this information, there is no easy way for FDA officials or other stakeholders to assess the implications of changes in the supply of drugs or to easily identify available domestic capacity to make drugs needed for patient care.


Clifford Hudis, president of the American Society of Clinical Oncology, said the society supports FDA’s efforts to address the problem. Nonetheless, “it appears that greater transparency at the manufacturing level is necessary to provide earlier warning about upcoming shortages,” Hudis said after being briefed about the scarcity of information on contract manufacturing. “While earlier notice might not solve the shortage problem entirely, at least it would give regulators, hospitals, manufacturers, physicians, and patients additional time to plan and prepare.”


Contract Manufacturing on the Rise

Contract manufacturing is an increasingly common practice throughout the branded and generic pharmaceutical industry.


Ben Venue, a Bedford, Ohio, company which closed at the end of 2013, manufactured many generic cancer drugs currently in short supply. Also, the company made the branded drug Doxil (doxorubicin hydrochloride) under contract from Johnson & Johnson.


In a report published last year, FDA noted the trend of growing reliance on contract manufacturing throughout the pharmaceutical industry (Figure 1).


Indeed, a number of prominent manufacturers of oral tablets and capsules and physician-administered drugs, including cancer drugs currently in short supply, hold ANDAs for their own drugs and also act as contract manufacturers for others. These include including Hospira, Luitpold, and Fresenius/APP.


Thus, Ben Venue was one of a number of such contract manufacturers. Its main specialty was producing sterile injectable drugs for Bedford, its parent Boehringer Ingelheim, and other companies.


From an economic perspective, the outsourcing of production of injectibles to established contract manufacturers offers cost efficiencies to companies that hold ANDAs. Contract manufacturers can likely offer their services at a cost lower than that incurred by self-manufacturing.




Notably, they can take advantage of scale economies, producing the same drug for different ANDA sponsors using automated equipment. Furthermore, because of scope economies, contract manufacturers likely face financial incentives to expand the portfolio of products they produce.

Contract manufacturers can pick up the slack when production by ANDA sponsors is temporarily or permanently suspended.


In the case of many drugs, the sourcing of base ingredients for drug production and the final fill and finish of the drug for sale in the U.S. may be both outsourced to different manufacturers. Here, too, supply interruptions can produce shortages.


For example, quality production problems and ongoing supply concerns in the sourcing of base ingredients outside the U.S. continue to threaten the domestic supply of heparin.


More than anything, Ben Venue is a case study in what happens when a contract manufacturer fails to adhere to manufacturing standards (The Cancer Letter, Oct. 11, 2013).


Last year, the company signed a consent decree accepting the obligation to improve quality.


Industry sources estimate that the company’s owners had pumped an estimated $350 million into modernizing the plant, and that the company would need to absorb another $700 million in operating losses over the next five years to bring the plant in compliance. Negotiations between FDA and the company went on since it signed a consent agreement last January, and during that period the generic drug maker was teetering on the brink of closing the factory gates.


What FDA Knows

FDA maintains records that identify which manufacturers are producing generic drugs for the U.S. market. However, these data aren’t maintained in a format that makes it possible for the agency to quickly distinguish between ANDA holders and contract manufacturers of fill and finish products or base ingredients. These records aren’t available for public scrutiny.


When a company submits an ANDA to the agency, it must satisfy several requirements:

• Provide evidence substantiating bioequivalence to the already approved branded compound;

• Provide a sample of the proposed generic drug;

• Identify which FDA-approved facility will manufacture the drug (by the sponsor or outsourced to another company);

• Identify which FDA-approved facility will supply the base ingredients for the drug (by the sponsor itself, or outsourced to another company).


The agency collects and collates information that identifies the actual fill-and-finish manufacturer of a generic drug. Though these data are in the electronic format, sources said that this information doesn’t contain flags that would indicate that the drug in question is manufactured by contract rather than by the ANDA sponsor.


The sponsors of ANDA are obligated to notify FDA of plans to discontinue drug manufacturing as well as any changes in manufacturing responsibilities, including the outsourcing of drug production after initial ANDA approval. FDA sources say that it’s common for a firm to have to qualify a new facility to manufacture their drug due to either the loss of the old facility or due to changing market demand, which may prompt the firm to acquire additional capacity.


In these cases, ANDA holders often turn to contract manufacturers. 


Even this limited information is not publicly accessible through the public web portal, Drugs@FDA, and is exempt from being released under the Freedom of Information Act. The agency generally treats non-public business relationships as confidential commercial or financial information, exempting it from public disclosure.


“U.S. courts have recognized that public disclosure of this type of information may cause substantial competitive harm to the owner of that information,” FDA officials said in a statement.


“If a business relationship has been made public in a lawful manner, such as when a drug product’s labeling identifies a contract manufacturer, FDA will publicly disclose in other agency records for that drug application the existence and identity of that contract manufacturer.”


A proprietary data source, Thompson Reuters’ RedBook, maintains more updated information on which ANDA sponsors are actively offering a drug in the U.S. market, but even this source doesn’t flag contract manufacturing arrangements.


The identity and nature of base ingredient manufacturing for many drugs, also collected by FDA from ANDA sponsors, are similarly shielded from public scrutiny.


Thus, public announcements of shortages, contract manufacturing relationships and/or legal disputes among ANDA holders, fill-and-finish contract manufacturers, base ingredient sources and/or other industry stakeholders are the only way to learn about the presence and specific details of such arrangements.


Alas, even these sources are of limited value.


Even when legal disputes flare up, as they did in the case of Ben Venue’s production of Doxil for J&J, all the relevant details are kept under seal.


Learning from Ben Venue

In the case of Ben Venue, The Cancer Letter has more information about these arrangements than would ordinarily be publicly available.


This is the case because so many of Ben Venue’s products have been in short supply.


Still, a search through company reports and news outlets produces no estimate of the number of drugs currently produced by Ben Venue for other ANDA sponsors, nor is it possible to identify those drugs using these sources or the FDA website.


However, Ben Venue’s corporate sibling Bedford enumerates drugs for which it holds ANDAs and drugs known to be available through contract manufacturing by Ben Venue in its online catalog (Table 1).


Bedford’s catalog lists 66 unique generic injectable drugs manufactured by Bedford or Ben Venue.


A search through the FDA’s Orange Book suggests an average of 5.4 sponsors hold ANDAs to manufacture these drugs (standard deviation 3.6).


Interestingly, there are a handful of drugs where only one ANDA holder is listed. They are: Doxil, Thiotepa and azathioprine sodium for injection. Based on this and public reports, we can surmise that Bedford/Ben Venue is likely the only manufacturer of Doxil and Thiotepa for the U.S. market.


Altogether, 53 percent of drugs listed have four or fewer ANDA sponsors.


Cross-listing Bedford’s catalog with the University of Utah Drug Information Service shortages list reveals Bedford offered 25 drugs that are now in short supply and three drugs that had been in short supply in the past.


Thus, 42 percent of the drugs offered by Bedford are either currently in short supply or have been on that list. Interestingly, the average number of ANDA sponsors listed by FDA producing these drugs reported in short supply is 5.1, similar to that observed for all Bedford offered drugs.


The degree of overlap between Bedford listing and Ben Venue production isn’t publicly known, but likely to be significant. Again, comparing Table 1 with Table 2 is revealing.


Among all drugs in Table 1 listed as being currently in short supply and manufactured by Bedford in their catalog, the closure of Ben Venue facilities is always listed as one public rationale for shortages reported to the University of Utah Drug Information Service. The University of Utah researchers offer the following rationale for the shortage:


Ben Venue has stopped production in its plant in Bedford, Ohio, and will close…Ben Venue supplies multiple sterile injectable products for Bedford Laboratories. Supplies of product that has already been manufactured will continue to be released until inventory is depleted. Bedford Laboratories has a small number of products manufactured elsewhere that are not affected by this closure.”





Assessing America’s Drug Supply

The knot of undocumented, overlapping outsourcing arrangements has two important implications for patients, physicians, hospitals, insurers and other manufacturers.


First, these arrangements make it hard for these stakeholders to predict exactly what the supply of drugs will be after mergers, acquisitions and/or closures of contract manufacturing facilities supplying drugs to the U.S. market.


For example, among the drugs listed in Table 1, it is unclear which manufacturers have the existing capacity to continue to make the drugs after the closing of Ben Venue. It is plausible that every one of the drugs listed in Table 1 had been outsourced to one or more contract manufacturers.


“Currently, if you hear of a closure at a specific facility, you have to wait and see what products might be impacted,” Fox said.


Perhaps of more immediate concern, the public lacks information regarding the number and probable capacity of current suppliers of drugs in short supply. Indeed, one implication of Table 1 and Table 2 is that the number of companies with adequate capacity to manufacture generic injectable drugs for the U.S. market, including those affected by shortages, is likely much smaller than previously documented.


University of Utah's Fox predicts that the exit of Ben Venue will make drug shortages stretch another four years or longer. This comes at a time when the rate at which shortages emerge has been dropping, but the absolute number of shortages is on the rise.


Second, under these arrangements, public stakeholders are unable to quickly assign blame when supply or quality lapses occur.


Thus, drug purchasers cannot effectively choose manufacturers with a demonstrated commitment to quality production or reassure patients of supply meeting quality standards.


“FDA’s new strategic plan around drug shortages recommends that purchasers use available data regarding the quality of manufacturers when making purchasing decisions,” Fox said.


“This is currently difficult to do as the only available quality data from FDA are MedWatch alerts, warning letters, and ‘483’ inspection forms. In some cases, these data may document concerns regarding quality, yet a list of products manufactured on site is not publicly available.”


The author is an assistant professor of health policy and economics at the University of Chicago. Paul Goldberg and Will Craft contributed to this story.


Copyright (c) 2014 The Cancer Letter Inc.
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