Akorn Pharmaceuticals Bankruptcy and Closure Supply Chain Impacts
February 23, 2023
Situation Overview
On February 22, 2023, Illinois-based Akorn Pharmaceuticals filed for bankruptcy and announced it will cease all US operations and terminate all employees effective immediately. The company holds notable US market share for generic pharmaceutical manufacturing (1.1% of total industry revenue as of 2022). This is our initial assessment on potential impacts to available pharmaceutical supply from this event.
Company Background
Akorn Pharmaceuticals manufactures generic and branded prescription pharmaceuticals, specializing in difficult-to-manufacture sterile and non-sterile dosage forms, including topicals, ophthalmic solutions, otic solutions, nasal sprays, oral liquids, inhalants, and injectables. They have notable market share in generic pharmaceutical manufacturing in the US, accounting for roughly 1.1% of total industry revenue.
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Assessment of Pharmaceutical Supplies
Albuterol Sulfate Inhalation Solution
Akorn Pharmaceuticals manufactures albuterol sulfate inhalation solution (a 0.5%, 20 mL glass bottle with an accompanying calibrated dropper). This product is used as a quick-relief medication to reverse or prevent bronchospasm, a narrowing of the airways (bronchial tubes) in the lungs that causes breathing problems usually seen in viral and bacterial infections such as bronchitis, RSV, influenza, COVID-19, asthma, COPD, emphysema, and other diseases of the lungs.
As of February 16, both the FDA and American Society of Health-System Pharmaceuticals (ASHP) have listed albuterol sulfate inhalation solutions on their drug shortage lists. Akorn Pharmaceuticals and other companies reporting production disruptions and delays include Nephron, Mylan (Viatris), and Sun Pharma. Manufacturers have not provided a specific cause explaining these shortages, however, they appear to be related to increased overall demand for jet nebulizer solutions related to a rise in respiratory illnesses across the nation, and undisclosed supply chain issues. (See our analysis on the crises caused by the surge in pediatric respiratory illnesses). Akorn’s closure of US facilities may worsen the current shortage.
It is unknown if Akorn will be contractually obligated to supply current backorders of albuterol sulfate after declaring bankruptcy.
Ophthalmic Solutions
Akorn also manufactures ophthalmic solutions, including ciprofloxacin, cyclopentolate hydrochloride, ofloxacin, and hypromellose ophthalmic solutions. As of late December 2022, and January 2023, ASHP listed several ophthalmic solutions on their drug shortage lists, include Akorn Pharmaceuticals’ products:
It’s possible that other companies producing the same generics (e.g., Sandoz, Bausch and Lomb Health) may fill demand instead and we're monitoring the only other thing is that with albuterol solution on shortage, this may strain the single-dose vial supply (since Akorn made a 20 mL formulation).
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Potential Supply Chain Impacts
Pharmaceutical Supply Chain Constraints
Akorn’s closure of US operations may further constrain existing stressors on the US pharmaceutical supply chain. The wide-spread rise and confluence of respiratory illnesses within the pediatric population the past six months have led to an albuterol shortage, first reported in late October when Akorn’s albuterol sulfate appeared on both FDA and ASHP shortage lists.
When a company with a significant market share within the generic pharmaceutical industry abruptly discontinues production, stakeholders must find a way to fill that gap. Other pharmaceutical products within the same class of medications—typically not the first choice of use by providers—could experience impacts on product availability (example: ipratropium bromide and albuterol sulfate combination solution, which is administered when using a single inhalation solution does not yield results, is already being reported as in shortage). Furthermore, diversion of the supply chain, raw materials, and/or a specific API towards one product has the potential for unknown cascading impacts.
Additional Pharmaceutical Supplies at Risk
Akorn’s closure poses potential risk to the availability of the following critical pharmaceutical supplies that are commonly used in patient care (especially critical for public health emergencies):
- Albuterol sulfate (bronchodilator)
- Levalbuterol HCl (beta antagonist)
- Levofloxacin (quinolone antibiotic; anthrax MCM)
- Ephedrine sulfate (alpha/beta adrenergic agonist; pressor)
- Gabapentin (anticonvulsant)
- Hydrocodone and Acetaminophen (Lortab; benzodiazepine)
- Lorazepam (benzodiazepine)
- Naloxone (opioid antagonist)
- Sodium chloride (crystalloid fluid)
These drugs are important to support public health during emergencies and mitigating adult and pediatric chronic condition (per CMS’s list of 21 chronic conditions).
Impacts to Bolster Domestic Production of Pharmaceuticals
Akorn’s closure may also impact the federal government’s mission to bolster domestic production of pharmaceuticals. The COVID-19 pandemic raised concerns over lack of the domestic production of critical API in case there was future disruptions in global supply chain operations. The bipartisan realization by US lawmakers on the current overreliance on imported pharmaceuticals (and related loss of domestic production capacity) moved lawmakers to bolster domestic manufacturing and onshoring production of critical drugs and other materials necessary for medical devices and pharmaceutical manufacturing.
In their one-year report on the Public Health Supply Chain and Industrial Base, the Department of Health and Human Services' (HHS) calls for a strengthening of the pharmaceutical supply chain. To achieve this goal, they set out a number of tasks including developing an essential medicines list, coordinating vaccine supply chain with industry partners, and expanding and advancing manufacturing capabilities. This includes plans to invest in infrastructure to expand the capacity of domestic raw materials. It also is an opportunity to use end-to-end continuous manufacturing for both API and drug product manufacturing which offers the potential to reduce drug shortages. With Akorn being a major generic pharmaceutical company that produced drugs domestically, it’s closing of US operations thwarts the US Government from reaching its goals.
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Mitigation Activities
The Children’s Hospital Association (CHA), in conjunction with STAQ Pharma, is working to alleviate the current strain on the albuterol situation. Together, the two stakeholders are looking to start continuous production of active pharmaceutical ingredient, albuterol sulfate, domestically to ensure replenishment and maintenance of supply. This initiative is one example of a potential solution, but wider discussion and support is necessary between the federal government and private sector stakeholders to establish necessary supply chain redundancies to safeguard public health.
There is meaningful opportunity for federal government to leverage private-public partnerships (with pharmaceutical manufacturers, associations, and other stakeholders) to facilitate necessary discussions around potential supply chain impacts and mitigating solutions. Additionally, ASPR’s Office of Industrial Base Expansion (IBx) could use this opportunity to consult with the private sector on where to expand domestic production around these critical supplies to bolster resiliency.
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