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Pandemic spotlights vulnerability of US reliance on foreign drug manufacturing

The COVID-19 pandemic has highlighted the urgency for the U.S. to have a stronger domestic manufacturing base for drugs, vaccines and other medical supplies after many healthcare providers found themselves unable to obtain certain medicines.

Before COVID-19 struck the U.S., the Food and Drug Administration was already grappling with shortages of about 200 medicines, many of them considered essential for patient care.

"Shortages can worsen patients' health outcomes by causing delays in treatment or changes in treatment regimens, such as substituting less effective therapies when a drug of choice is not available," the FDA said in an October 2019 report.

At a recent industry conference, FDA Commissioner Stephen Hahn said his agency was eager to work with drugmakers to help boost the domestic production of medicines and improve the U.S. supply chain.

While Hahn said the U.S. must "absolutely" consider having a stronger domestic manufacturing base for essential medical products, he emphasized "that doesn't mean to the exclusion of global manufacturing."

For all FDA-regulated drugs, 26% of manufacturing facilities producing active pharmaceutical ingredients, or APIs, are in the U.S., while 19% of those plants are in India and 13% in China. About 46% of manufacturing facilities producing finished dosage forms of medicines sold to Americans are in the U.S., according to FDA.

However, the regulator said it does not have the data available to calculate the volume of APIs from China or India being used for U.S. marketed drugs.

Advanced manufacturing

Hahn said it was time the U.S. put its "foot to the pedal" in building more facilities that use advanced manufacturing technologies.

For years, the FDA's Janet Woodcock — who has stepped away temporarily from her role as director of the Center for Drug Evaluation and Research to work on the White House's Operation Warp Speed project to accelerate COVID-19 therapeutics and vaccines — has promoted the use of advanced manufacturing technologies and has called on Congress to provide more incentives for its adoption.

Drugmakers have been too slow to invest in advanced systems like continuous manufacturing, despite its clear benefits, Woodcock said in a series of May 28 tweets.

Continuous manufacturing is the integration of process elements into a single computer-controlled system that constantly regulates the product flow and recovery as raw materials are input to and flow through the manufacturing process, according to the FDA.

The key obstacle to its adoption is cost, Woodcock tweeted.

The Obama administration had long promoted the adoption of advanced manufacturing technologies and urged companies to onshore their production to the U.S. through its SelectUSA initiative, created in 2011 and later expanded — a program the Trump administration has since embraced.

As part of its push to bring drug manufacturing back to U.S. shores, the Trump administration recently awarded a contract potentially worth $812 million to a cadre of American generic medicine manufacturers, led by newly formed Phlow Corp., citing the COVID-19 pandemic as a key reason for the deal.

SNL Image
A researcher in the Virginia Commonwealth University's Medicines for All Lab works to scale up a chemical reaction process.
Source: VCU College of Engineering

The collaboration will be employing a continuous flow processing technology developed by the Medicines for All Institute at the Virginia Commonwealth University's College of Engineering.

The contract partners, which were awarded $354 million for the first four years of the deal, will be tapping into existing infrastructure and expanding it, while also building new facilities outside of Richmond, Va., Phlow CEO Eric Edwards said.

Opposition

However, the drug industry has pushed back on the administration's drive to onshore manufacturing for U.S.-made medicines.

While the Association for Affordable Medicines, which lobbies on behalf of generic-drug makers, has advocated for certain incentives, like tax deductions and research and development credits, to entice companies to bring their manufacturing back to the U.S., it also calls for a supply chain that involves plants outside the nation's borders, like in Canada, Europe, India, Israel, Japan, Jordan and Mexico.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, said it supports efforts to foster more manufacturing in the U.S., but said "proposals to drive all manufacturing of pharmaceuticals to the United States underestimate the significant time, resources and other feasibility challenges and complexities involved."

"They also ignore the strength of a robust and geographically diverse global supply chain," PhRMA spokeswoman Nicole Longo told S&P Global Market Intelligence. "Geographic diversity in the pharmaceutical supply chain enables manufacturers to make adjustments as needed to avoid shortages, which is especially important during national disasters and global pandemics."

Phlow's Edwards acknowledged some backlash from industry over his company's pursuit to make medicines in the U.S.

SNL ImagePhlow Corp. CEO Eric Edwards
Source: Phlow Corp.

He emphasized Phlow is not against having a global supply chain.

"Everyone should be protecting that supply chain for resiliency," Edwards told S&P Global Market Intelligence. "What we're for is focusing on the medicines that everyone else has neglected."

Edwards said it was "very shortsighted" for anyone to make broad sweeping statements about the supply chain without focusing on the fact that certain medicines are vulnerable.

For essential medicines that have robust global supply chains that are resilient and can withstand disasters, like a pandemic, there may not be a need for domestic manufacturing capability, he said.

"But I must tell you, the medicines we're talking about, that is not the situation," Edwards said. "They are extremely concentrated, very vulnerable medicines where unfortunately only one or two places in the world make them."

Legislative efforts

At a June 2 Senate hearing, a number of lawmakers said the COVID-19 pandemic makes clear that Capitol Hill needs to act on legislation aimed at driving more drug production in the U.S.

At the hearing, Martin VanTrieste, president and CEO of CivicaRx, whose company is partnering with Phlow on the government contract, said he backed a bill from Sen. Elizabeth Warren, D-Mass., and Rep. Jan Schakowsky, D-Ill., that would establish and authorize a federal office of drug manufacturing within the U.S. Department of Health and Human Services that could make generic medicines under certain conditions.

Edwards declined to throw his support behind any specific bill, stating his company applauded multiple "interesting proposals," though he said any legislation would need to ensure medicines are affordable and accessible.