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US inks manufacturing deal for vital generic drugs used in COVID-19 patients

The U.S. government has inked a deal potentially worth $812 million with a cadre of American generic medicine manufacturers with the intent to shore up the nation's drug supply amid the global coronavirus pandemic.

The idea is to boost generic drug manufacturing in the U.S. and keep it inside the nation's borders rather than depend on companies in foreign countries for those medicines, particularly during emergencies, like the worldwide outbreak of COVID-19, the disease caused by the novel coronavirus.

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

Many of the drugs targeted for the U.S. contract are medicines used to treat hospitalized COVID-19 patients, including sterile injectable products, and are in short supply.

The U.S. Biomedical Advanced Research and Development Authority, or BARDA, awarded the joint contract to Phlow Corp. of Richmond, Va.; Civica Rx of Lehi, Utah; AMPAC Fine Chemicals of Las Vegas; and the Medicines for All Institute at the Virginia Commonwealth University's College of Engineering, also in Richmond.

Phlow is a recently formed company cofounded by drug industry executive Eric Edwards, while Civica Rx started up in 2018 with the idea of specifically targeting injectable generic medicines for production that were in short supply or inaccessible, marketing the products under long-term contracts to member health systems and cutting out the middlemen distributors.

The initial BARDA contract is for $354 million over four years but could be expanded to $812 million over 10 years, the agency stated. BARDA has placed Phlow in charge of leading the effort. The company is building a new manufacturing facility in Virginia.

About 80% of the active pharmaceutical ingredients, or APIs, used for medicines sold in the U.S. and 40% of the finished drug products Americans take are made overseas, according to the U.S. Food and Drug Administration.

The FDA's Janet Woodcock, director of the Center for Drug Evaluation and Research, told lawmakers in October 2019 that only 28% of the manufacturing facilities making APIs to supply the American market were in the U.S., while 72% of those plants are located elsewhere, like China, India and Europe.

Drug shortages

Drug shortages have been a longstanding problem in the U.S., but the COVID-19 pandemic has exacerbated that threat, Erin Fox, senior pharmacy director of Drug Information and Support Services at the University of Utah Health, said during a May 15 online forum hosted by the Alliance for Health Policy.

There were about 300 drugs in shortage in the U.S. before the COVID-19 pandemic, but since the beginning of 2020, 49 additional products have fallen into short supply, Fox said.

The FDA recorded its first coronavirus-related shortage of a medicine in late February.

While most drug shortages are related to manufacturing and quality problems, some now are due to increased demand because of the surge in patients with COVID-19, Fox said.

"The COVID-19 pandemic has reminded us how health threats or other sources of instability can threaten America's medical supply chains, potentially endangering Americans' health," Health and Human Services Secretary Alex Azar said in a May 19 statement. "America has the capabilities, resources and expertise to secure our medical supply chains."

Advanced manufacturing

BARDA said it would be working with Phlow to develop a prioritized list of APIs and finished medicines that are critical for healthcare systems in responding to COVID-19.

The organizations intend to use advanced manufacturing processes, including continuous manufacturing, with the aim of lowering production costs, reducing waste and improving yields of APIs, BARDA said.

"This advanced manufacturing capability will significantly fortify our nation's pharmaceutical supply chain for critical medicines, including many required to treat patients hospitalized with COVID-19," said Phlow's Edwards, co-founder, president and CEO of the company.

BARDA said the Phlow-led team would also "complete a technology transfer of novel continuous manufacturing process to organizations or businesses designated by the U.S. government."

The collaboration will be employing a continuous flow processing technology developed by VCU's Medicines for All Institute.

The technology is intended to eliminate the inefficient stops and starts of manufacturing APIs batch by batch. Using a continuous flow processing can generate less waste and quality tends to be higher and more consistent, VCU said in a statement.

Previous company

Before starting up Phlow, Edwards cofounded Kaleo Inc. with his twin brother, Evan Edwards.

Kaleo found itself in hot water on Capitol Hill in 2018 after it significantly increased the price of its auto-injector naloxone product Evzio.

Naloxone is an emergency reversal agent used to treat opioid overdoses.

A Senate investigation found that to compete with other naloxone products, Kaleo got doctor offices to use prior authorizations for Evzio prescriptions indicating it was medically necessary, which ensured the drug would be covered at the list price by government programs, like Medicare and Medicaid, despite less costly alternatives being available.

Some senators said that by using the prior authorization process, Kaleo was exploiting the U.S. opioid crisis to make a profit.

A spokesperson for Phlow told S&P Global Market Intelligence that Edwards had "departed Kaleo on good terms over one year ago and had no oversight of drug pricing during the end of his tenure."

"His mission now is to bring low-cost medicines made in America that are in acute shortage due to the pandemic," the spokesperson said.