Panning the lists
Given the sheer enormity of the pharma market, it’s easy to imagine how quickly spending on domestic manufacturing will escalate if left unchecked.
“There are around 2,800 generic API molecules on the U.S. market. There’s tens of thousands of drugs on file with the FDA. So where do you start?” asks Kevin Webb, chief operating officer at the API Innovation Center (APIIC), a St. Louis-based nonprofit formed in 2021 to help lead U.S. efforts to reshore APIs. “Initially it was just ‘throw a lot of money at it, fix the problem.’ But now the position that the administration and Congress is taking is that we need to be more tailored in our approach.”
Among the supply chain issues currently in need of resolution, no problem has garnered more widespread attention than drug shortages — which has made shortage lists an attractive starting point for reshoring efforts. Currently, the FDA is tracking over 120 drug shortages (reported at the molecular entity level). According to the American Society of Health-System Pharmacists (ASHP), ongoing and active shortages have reached a record high in the U.S. Per ASHP’s list, which reports shortages at the drug preparation level, there were 323 active shortages during the first three months of 2024 — largely involving the same molecules that FDA is tracking.
Because the lists include vital drugs such as chemotherapies, antibiotics and emergency medicines used on hospital crash carts, finding a fix has resulted in a flood of Congressional hearings, reports and proposed policy solutions. But the idea of reshoring has been a consistent part of these discussions, and in some ways, constantly pushing domestic manufacturing as the remedy for all that ails the pharma supply chain has diluted the movement’s mission.
“When I testified with Senate Finance Committee, we were talking about shortages of generic sterile injectables, which are largely made in the U.S. and in Europe. But senators make their statements and it seemed like their solution often was ‘we should onshore’ as if that alone would solve the problem,” says Wosińska.
Wosińska, who served as economic advisor to the U.S. Senate Finance Committee and has spent over a decade doing policy work on drug shortages and supply chain resilience through positions at the FDA and HHS, is among those trying to help the government prioritize its supply chain spending. And for Wosińska, using reshoring as the primary means to trim the drug shortages list doesn’t add up. According to Wosińska, current persistent shortages are caused by a race-to-the-bottom in pricing, not geopolitical risk, which makes reshoring a mismatched solution.
The countless drug shortage reports that have been released by various organizations and sectors of the government have reached similar conclusions: Factors that cause drug shortages are multifaceted and thus, solutions need to reflect the nature of each of those factors.
Because it stands at the intersection of so many supply chain issues, reshoring continuously runs the risk of losing focus, which makes the need to create a refined, targeted list crucial to the movement’s momentum.
“We need to be strategic about which supply chains to prioritize for government support. Let’s assess which products, if lacking, would have the largest consequences for our health care system,” says Wosińska.
Efforts to do that have been underway. Currently there are a multitude of lists attempting to define ‘essential’ medicines. FDA’s list, posted in October 2020, includes 227 drug and biological products deemed essential medicines, medical countermeasures and critical inputs. ASPR, in response to an executive order from President Biden, solicited input from various stakeholders to down select FDA’s list to create a prioritized list of medicines that the government could target for domestic manufacturing. The list, published in a resilience assessment report in May 2022, included 86 medicines. At the time the report was created, half of those medicines were on a drug shortage list, highlighting the persistent and alarming overlap between shortages and essential medicines.
Those closest to the problem are calling for further refinement of reshoring targets, which would establish a ‘vulnerable’ medicines list. This list would look at the already established essential medicines lists overlaid with all possible supply chain vulnerabilities, creating a continually updated ‘super list’ of the most essential medicines facing the highest risk of shortage.
“You have to talk about vulnerable generics such as those that have been on the ASHP or FDA drug shortage list or a combination thereof and then further classify those drugs for which there is no American manufacturer and there is no clinical alternative,” says Eric Edwards, co-founder and CEO at Phlow Corp.
Shortly after its inception in 2020, Phlow, a certified B Corp pharma manufacturer, made national headlines when it was awarded a $354 million contract from BARDA to procure medication for the Strategic National Stockpile (SNS) as well as build domestic infrastructure for advanced manufacturing of essential medicines.
“We need a global supply chain for resiliency, but we have lost our pharmaceutical sovereignty for these medicines, and we need to make them here again as a matter of national public health security,” says Edwards.
Upstream and down
With efforts underway to narrow the reshoring list, experts stress the need to simultaneously broaden its scope.
“If you onshore APIs, but your starting ingredients still come from China, then what problem did you solve?” probes Wosińska. “When you are thinking about domestic manufacturing, it’s a more complex system.”
Currently, much of federal policy focus has been on repatriating generic drugs and APIs, but stakeholders have realized that in order to achieve true sovereignty, reshoring efforts must reach further into the supply chain — both upstream and down.
Phlow’s government-backed program initially focused on surge response to the pandemic. The company procured 2 million doses of medications from various manufacturers in shortage for patients hospitalized with COVID-19 and delivered them to the SNS. But in doing so, Phlow recognized that the SNS was not set up to facilitate the rapid production of essential medicines because it was lacking starting materials and ingredients.
Working alongside BARDA and ASPR, Phlow built a Strategic API Reserve (SAPIR) to store and supply critical starting materials and active ingredients that can be rapidly converted to finished essential medicine if needed. Phlow also built two new facilities, a kilo-scale facility and a metric-ton scale facility, that are both capable of manufacturing necessary components to make drugs: key starting materials (KSMs), intermediates and APIs.
Biden’s use of the Defense Production Act last November specifically acknowledged the importance of these KSMs, a crucial component of APIs, in supply chain security by including a $35 million investment in their domestic production.
Also vital to the drug supply chain are excipients, which are included alongside the APIs in formulations and are necessary to enhance stability and bioavailability of the finished drug products.
A deep dive into pharma supply chains for the purpose of repatriating its various constituents requires visibility into said supply chains — historically a stumbling point in the U.S. According to Edwards, while the country has made progress towards comprehending the API supply chain, that’s where visibility ends. “We have a long way to go to truly understanding where the key starting materials and some of these constituent components are being manufactured.”
Phlow has been working for years on mapping the extended supply chain for essential medicines, leveraging a variety of publicly available databases as well as private information from market research firms, manufacturers, distributors and others.
While the Federal Food, Drug and Cosmetic Act requires all API manufacturing facilities serving the U.S. market to register their locations with the FDA, the agency has lacked data on the actual volume of APIs that facilities are producing and how much is entering the U.S. market. When the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law in March 2020, the $2.2 trillion economic stimulus bill included a provision that requires all manufacturers of drugs and APIs to report drug volume details to the FDA via a dedicated portal.
Taking that idea a step further, last year, legislators introduced a bipartisan bill — Mapping America’s Pharmaceutical Supply (MAPS) Act — that would require HHS to update its essential medicines list, creating a federal database to map the origin of each drug, the location of the facilities involved in the production of the KSMs and excipients needed to produce the APIs and finished dosage forms, as well associated inspections and recall alerts.
“We’ve done a lot of work, but we still need to do more, especially as you start trying to go upstream and downstream across this opaque essential medicine supply chain,” says Edwards. “It’s a critical task because to find an effective cure, you have to have an accurate diagnosis.”
Continue reading Part 2: Sustaining efforts once infrastructure investments dry up
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