Does it matter where your prescription drugs are made? This question was at the heart of John Gray’s presentation about generic drugs at the annual W.L. Gore Lecture Series in Management Science, hosted by the University of Delaware’s Alfred Lerner College of Business and Economics. 

His answer was an emphatic yes. 

Gray, a professor of operations and business analytics at The Ohio State University, presented his emerging research to a gathering at the FinTech Innovation Hub on the UD STAR Campus on Thursday, Oct. 27. The lecture series, sponsored by an endowment from the Gore family, brings in experts on probability, statistics and experimental design, who apply their work to decision-making in academia, business, government, engineering and medicine.

“Academic research, especially the more quantitative kind, can seem obscure or inaccessible to most people,” said Caroline Swift, an assistant professor of operations management at the Lerner College and one of the organizers of the event. “The Gore Lecture Series allows us to expose students to speakers whose work — while sometimes rooted in complex analysis — has observable importance and practical applications.” Gray’s work, she noted, is an example of this kind of research that makes our lives meaningfully better.   

In addition to his academic work, Gray serves as a part-time consultant for the White House on pharmaceutical supply chains, although he made clear that this presentation would entirely focus on his research papers. 

“If you’ve ever taken a prescription drug in your life, you probably never really thought about where it came from,” he said. The idea people have is that the Food and Drug Administration has stringent requirements, and if they approve a drug, it should be fine. In fact, the FDA explicitly assures consumers that generic drugs meet the same high standards as their name-brand counterparts. 

Yet growing evidence, including Gray’s own research, indicates where the drugs come from can make a big difference. 

The 2019 book Bottle of Lies: The Inside Story of the Generic Drug Boom by investigative journalist Katherine Eban made an emphatic case for this. The New York Times called it “an invaluable expose.” 

“Eban quotes inspector after inspector saying that they themselves fill only the most essential prescriptions — and will pay anything to avoid taking a drug made overseas,” wrote reviewer David Dobbs. “They’ve seen how those drugs are produced, and they live in fear of them.” 

In June 2020 the Senate Finance Committee held a hearing on the FDA’s inspection process overseas, and more recent hearings have focused on supply and prices amid concerns over affordable options. 

“There’s been concern expressed by many people, many times,” Gray said. 

He pointed to anecdotal evidence as well, including a heart transplant surgeon he’s in touch with who noticed that recovering patients who had been doing fine sometimes suddenly went downhill and even died. The doctor concluded it seemed to happen when pharmacies switched to medicine from different generic manufacturers.  

And yet, the motivation for customers seeking out generic drugs is clear: the price swings between brand names and generics, which can fluctuate hundreds of dollars for the same dosage. Gray cited competition as being the primary driver of this difference. 

Failures in the manufacturing of these drugs may not only have serious health implications, but result in shortages. 

Gray cited an FDA inspection at the end of 2022 at the company Intas’ manufacturing facility in India, which found serious violations of procedure and improper record-keeping. There were reports of employees destroying records, including an allegation that one dumped acid on documents. 

Because the company had such a large market share, “This actually contributed to [a] cancer drug shortage,” Gray said. 

Gray drew on several related studies he’s involved in, which have not yet been published. He spent the most time on a study that compares drugs made in so-called advanced economies (like the U.S. and Europe) to those made in places like India, labeled as emerging economies. 

India looms particularly large in this discussion, because companies there manufacture almost all the generic drugs made in emerging economies. 

To test drug quality, researchers looked at “serious adverse events” related to generic drugs, like hospitalizations, as reported by health care providers. They were able to tie incidents to particular drugs, even though the FDA tightly guards information about where drugs are made. 

“I’ve probably sent six FOIAs (freedom of information act requests) to the FDA asking them to give me [specific information]. Every time, they come back in a couple days, ‘Sorry, confidential company information,’” Gray said.  

But a graduate student working with the project discovered a way to pin down this information using extra label information required by the state of California. It’s not the kind of feat an average customer is going to be able to pull off, let alone put in context with inspection records and other information. Gray said even with his experience, it takes him hours to accurately track down the information to compare drugs using ID numbers. 

The researchers took the time they needed to dig through all this, and armed with the information, found significantly more serious issues related to drugs made in emerging economies. 

On the regulatory side, they found that FDA inspections faced significantly more barriers in emerging economies. The agency also relies on company translators. 

“The FDA is one of the few regulators in the world that doesn’t bring in translators of their own,” Gray said. 

Gray and his collaborators did further testing on possible solutions, and they have recommendations for how to improve the situation. 

One major emphasis is shifting away from announcing inspections in advance. 

“Our argument is that you can window dress when you know the inspector is coming,” Gray said. He noted that Intas had passed five previous inspections with no trouble, all of them announced in advance, before its 2022 issues. 

In a pilot program using this tactic, the FDA found many more violations, especially in emerging economies. 

Another key recommendation is that drugs should provide more information on the label, including details on location and quality. The research indicates that with more information, consumers in the U.S. would be less concerned with where the medication originated, as long as it was high quality. Gray and his colleagues think this would push manufacturers to do better. 

Right now, we don’t have a lot of hard data on quality. “There really isn’t much testing of drugs that goes on in our supply chain. We count on manufacturers to do the right thing day in and day out,” Gray said. 

“It’s really something that’s of interest to many people, because many of us are taking generic drugs, and without any understanding of where they’re made, or who made them, or what regulation there is, or how well [companies are] complying with that regulation,” said Darwin Davis, associate professor of operations management at Lerner, who organized the event with Swift. 

Gray was a fascinating speaker, said Davis, adding that “it’s thought-provoking to see some data.”  

Adam Fleischhacker, an associate professor of operations management, said he is often skeptical of whether studies like these are really measuring the intended effect, but he found Gray’s presentation convincing. 

“I thought it was tremendous,” he said. “It’s a little scary. But it illuminates … and gives you the magnitude of the problem, with a number, and solutions.”