NATIONALIZE IT UNDER WORKERS CONTROL
Biden wants to bolster the pharma supply chain. A major generic plant closing may make that harderBy Ed Silverman
July 27, 2021
If you think bolstering the pharmaceutical supply chain in the U.S. is a national priority, you could be wrong.
Just take a look at the sorry situation in Morgantown, W. Va.
A decades-old generic-drug manufacturing plant run by Viatris — which was created last fall through a merger of Mylan and Pfizer’s Upjohn unit — will close this week, eliminating more than 1,200 jobs. Another 200 or so will go next year. The production work is being sent overseas, mostly to India, where Mylan already operates several facilities.
This is causing a political firestorm in a state that desperately needs jobs. The layoffs will remove $403 million in wages from the local economy in the next year and cut $62.8 million in state and local tax receipts, according to an analysis commissioned by The Democracy Collaborative, a nonprofit think tank that opposes the plant closing.
But it’s not just West Virginia that is losing out. So is the U.S., where 89% of all prescriptions written are for lower-cost generics.
A Viatris spokesperson says the plant made about three billion doses last year, although she declined to say how many were earmarked for the U.S. market. The drug maker has previously said that 20 billion doses were made in 2016, which was before a companywide restructuring began, production was gradually shifted elsewhere, and serious quality control problems had to be fixed.
Still, three billion doses is a lot. Yet the Biden administration has said nothing publicly about the closing or shown any sign of intervening. And the seeming lack of action is puzzling, to say the least.
Just last month, the White House issued a report warning about reliance on foreign pharmaceutical production, calling it a “key vulnerability” for the U.S. supply chain. One number jumped out: 63% of all plants that make finished generic doses are located outside the U.S. (see page 216). The takeaway, the report said, is that the U.S. needs “increased domestic production capacity for key drugs.”
The backdrop to this alarm is the Covid-19 pandemic, which underscored a need to bolster domestic production, for both for active pharmaceutical ingredients that are mostly made in China and finished medicines, including generics. At times, there also has been tumult in the generic market over shrinking competition and quality control lapses, which have contributed to both short and long-term shortages.
If you think bolstering the pharmaceutical supply chain in the U.S. is a national priority, you could be wrong.
Just take a look at the sorry situation in Morgantown, W. Va.
A decades-old generic-drug manufacturing plant run by Viatris — which was created last fall through a merger of Mylan and Pfizer’s Upjohn unit — will close this week, eliminating more than 1,200 jobs. Another 200 or so will go next year. The production work is being sent overseas, mostly to India, where Mylan already operates several facilities.
This is causing a political firestorm in a state that desperately needs jobs. The layoffs will remove $403 million in wages from the local economy in the next year and cut $62.8 million in state and local tax receipts, according to an analysis commissioned by The Democracy Collaborative, a nonprofit think tank that opposes the plant closing.
But it’s not just West Virginia that is losing out. So is the U.S., where 89% of all prescriptions written are for lower-cost generics.
A Viatris spokesperson says the plant made about three billion doses last year, although she declined to say how many were earmarked for the U.S. market. The drug maker has previously said that 20 billion doses were made in 2016, which was before a companywide restructuring began, production was gradually shifted elsewhere, and serious quality control problems had to be fixed.
Still, three billion doses is a lot. Yet the Biden administration has said nothing publicly about the closing or shown any sign of intervening. And the seeming lack of action is puzzling, to say the least.
Just last month, the White House issued a report warning about reliance on foreign pharmaceutical production, calling it a “key vulnerability” for the U.S. supply chain. One number jumped out: 63% of all plants that make finished generic doses are located outside the U.S. (see page 216). The takeaway, the report said, is that the U.S. needs “increased domestic production capacity for key drugs.”
The backdrop to this alarm is the Covid-19 pandemic, which underscored a need to bolster domestic production, for both for active pharmaceutical ingredients that are mostly made in China and finished medicines, including generics. At times, there also has been tumult in the generic market over shrinking competition and quality control lapses, which have contributed to both short and long-term shortages.
Related:
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But building infrastructure — even with a solid vision — takes time. So why let the plant close?
Last April, West Virginia legislators offered a reasonable idea. They passed a resolution calling for Gov. Jim Justice to create a task force to urge the Biden administration to use the Defense Production Act to keep the plant open. “He has yet to do that,” State Sen. Mike Caputo told me. I asked the governor’s office for an explanation and will pass along any reply.
Last week, numerous patient advocacy groups and other organizations made the same plea in a letter to Biden. “We view this plant as a critical resource to ensure generic access for our patients,” Reshma Ramachandran, co-chair of the drug affordability action team at Doctors For America, wrote me.
I asked a White House spokesperson why the administration hasn’t taken this step and was referred to the Department of Health and Human Services, which hadn’t responded at the time this article published. I also asked the Cybersecurity & Infrastructure Security Agency whether it will designate the plant as critical infrastructure, a step taken after an antibiotics maker planned to close a Tennessee plant. No word yet.
“This seems like an easy issue to be loud about,” says Ira Loss of Washington Analysis, who tracks how lawmakers and regulators view the pharmaceutical industry for investors. “And it’s a very important issue because most drugs used in this country are generic. I’m surprised the administration is asleep on this one.”
Related:
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Meanwhile, union officials, who represent Viatris workers, have their own theory: They believe Biden may be avoiding the issue because he needs to keep Sen. Joe Manchin on his side.
The West Virginia Democrat has become something of a power broker in a closely divided and highly partisan U.S. Senate, where his centrist views have made his vote critical to White House initiatives.
This may explain why his wife, Gayle Conelly Manchin, was recently appointed co-chair of the Appalachian Regional Commission, a partnership between the federal and state governments to promote economic development. The job pays $163,000.
Then there’s Manchin’s daughter, Heather Bresch, who was Mylan’s chief executive officer until the merger closed. She was a controversial figure who alienated union members, inaccurately claimed to have completed an MBA, and angered millions of consumers over the price for EpiPen.
But here’s another important detail: Bresch was rewarded with nearly $31 million after the merger was completed last fall. Some of her former Mylan colleagues, who now run Viatris and decided to close the plant, also made out well.
Of course, if she has already collected her money, why risk angering Manchin by pushing him to jawbone Viatris management or directors? After all, it’s only one manufacturing plant and production has already dropped.
“The bottom line is they need Joe Manchin for his swing vote,” says Joe Gouzd, president of United Steelworkers Union Local 8-957, which represents 855 Viatris employees. “How much do you think they want to get involved in this when they need his assistance for their agenda on the Senate floor? His daughter gets $30 million and his wife gets a job. How can people not connect these dots?”
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For some, this line of thinking may be a stretch. But Manchin has done little to quell the speculation.
When I asked about his efforts to save the plant, I received a statement saying he has spent months talking to the drug maker and local and state officials “to find a solution that protects every single job.” But there was no response when asked why he didn’t push the White House to use the Defense Production Act.
The Viatris spokesperson maintained the company “worked diligently” to find viable alternatives for the plant and “communicated with all potential prospects” in hopes of obtaining a proposal to maintain the site. “This work continues and the process is ongoing,” she wrote me.
The plant, however, closes in a few days.
Maybe the Biden administration will somehow find a way to revive the facility at a later date. But that hardly speaks to the sense of urgency in its own report.
As my father taught me: actions speak louder than words.
About the Author
Ed Silverman
Pharmalot Columnist, Senior Writer
Ed covers the pharmaceutical industry.
ed.silverman@statnews.com
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