Are All Generic Drugs Created Equal? An Empirical Analysis of Generic Drug Manufacturing Location and Serious Drug Adverse Events

Generic drugs provide lifesaving, affordable treatment to millions of people each day. Generic drug manufacturing has been steadily moving from advanced economies, such as the U.S., to emerging economies, such as India. Due to the opacity of drug supply chains, the quality risk implications of manufacturing in emerging economies have not been carefully empirically tested. This study addresses this gap. To do so, we identify a novel source of drug manufacturing location data that allows us to compare the occurrence of serious adverse events of generic drugs made in different locations. Using exact matching analyses based on the equivalency criteria established by the U.S. Food and Drug Administration, we find that generic drugs manufactured in India, where a majority of emerging economy generic drugs are made, are associated with significantly higher instances of serious adverse events than equivalent generic drugs made in the U.S., where a majority of advanced economy generic drugs are made. We further show that this key result is explained by mature generic drugs, which are particularly susceptible to operations and supply chain cost reduction efforts—efforts that unfortunately may compromise drug quality. Our study finding leads to implications for the FDA in their regulation of generic drugs.

The global pharmaceutical industry has witnessed a dramatic shift in generic drug manufacturing from advanced economies to emerging markets over the past decades, driven primarily by cost considerations. While this transition has made medications more affordable and accessible worldwide, critical questions about quality implications have remained largely unexplored due to the opacity of pharmaceutical supply chains. This vital gap in knowledge has become increasingly urgent as healthcare systems worldwide rely heavily on generic medications, yet lack empirical evidence about whether generic drugs manufactured in different countries exhibit varying levels of safety risks.

The complexity and opacity of global pharmaceutical supply chains have prevented systematic examination of manufacturing location’s impact on drug quality. Previous limitations in tracking where specific drugs are manufactured have hindered researchers and regulators from conducting rigorous quality assessments across different manufacturing locations. Without transparent data linking manufacturing sites to quality outcomes and adverse events, it has been impossible to determine whether the pursuit of operational efficiency and cost reduction in emerging economy manufacturing contexts might compromise patient safety, leaving both policymakers and healthcare providers without crucial information for decision-making.

Professor Hyunwoo Park of Seoul National University’s Graduate School of Data Science, along with collaborators In Joon Noh (Korea University Business School), John Gray (Fisher College of Business, The Ohio State University), George Ball (Kelley School of Business, Indiana University), and Zachary Wright (Marriott School of Business, Brigham Young University), addressed this challenge through groundbreaking research published in *Production and Operations Management*—one of the UTD24 and FT50 journals widely recognized as premier outlets in business and management research. By leveraging a novel source of drug manufacturing location data and linking it to adverse event reports, the study overcomes previous limitations in supply chain transparency that have hindered systematic quality assessments. The research found that generic drugs manufactured in India are associated with significantly higher instances of serious adverse events compared to equivalent drugs manufactured in the United States, with this disparity being particularly pronounced for mature generic drugs. The impact of this research was underscored when it was discussed in the U.S. House Committee on Energy & Commerce, where Subcommittee Chairman Carter specifically raised the study’s key findings, highlighting the urgent need for transparent drug supply chains that can effectively reward high-quality manufacturers regardless of their geographic location. As healthcare systems worldwide increasingly rely on generic medications to provide affordable treatment options, this research provides essential guidance for developing enhanced quality monitoring systems and potentially differentiated regulatory approaches based on manufacturing location and drug maturity, ultimately safeguarding patient health while maintaining access to affordable medications.

Full article: https://journals.sagepub.com/doi/abs/10.1177/10591478251319691

Congressional hearing (discussion at 1:12:36): https://www.youtube.com/watch?v=eXkAOKwvj3Y&t=4356