"When you control the supply of medicines, you control the world."
Senior Advisor to the Hastings Center, a US-based Bioethics Research Institute and author of
the book, China Rx: Exposing the Risks of America's Dependence on China for Medicine.
There is no doubt that the ongoing novel coronavirus (COVID-19) is posing a threat to the health of the world population. However, the impact of the outbreak is multifold on the life science industry, especially the availability of drugs and medical equipment. While US pharma companies are in the race to develop a vaccine to beat the deadly virus, they are also battling with a handicapped supply chain.
COVID-19 has created a significant manufacturing disruption in China that is translating into supply disruptions for Chinese dependent countries. The figure below demonstrates how the world is dependent on China for imports of intermediate products.
The COVID-19 outbreak is exposing vulnerabilities in the drug supply chain, and the Food and Drug Administration (FDA) is actively contacting pharma companies to raise a red flag on drug shortages. Now that COVID-19 has found its way into the European region and the US, US pharma companies are braving cost escalations.
Impact on API Supplies
The World Health Organization (WHO) claims that more than 20% of the global output of active pharmaceutical ingredients (APIs) comes from China. Approximately 72% of all API manufacturers are outside of the US, according to a recent FDA study.1 The FDA is in constant touch with 180 pharma manufacturers and is actively monitoring the entire supply chain. Additionally, 20 drugs have been identified as solely depending on China for their APIs, which poses a significant shortage risk in the US.2
In the US, 9 out of 10 prescriptions filled are for generic drugs3, most of which are manufactured in China and India. Nearly all antibiotics consumed in the US come from China, including penicillin, which is no longer manufactured in the US.
Impact on Medical Devices
30% of medical devices are imported into the US, with China accounting for 11% in 2018.4 This number is increasing year on year as the US remains China's largest export market. Adding to that, a large amount of personal protective equipment (PPE) like surgical gloves, masks, and gowns used extensively to prevent pandemic diseases like the coronavirus is also heavily manufactured in China. With the widening global scope of the virus, there is a shortage of these medical supplies all around the world.
Impact on FDA Inspections
As much as the unavailability of drugs is hitting the US pharma industry, the FDA is also facing a challenge in imposing regulations and conducting inspections in China and other countries. Due to travel restrictions to these locations, the FDA has suspended most of the inspections, and there is an increasing doubt looming around the quality of drugs and devices manufactured in China. As per the FDA, inspections outside the US deemed mission-critical will still be considered on a case-by-case basis.5
Slowdown of New Drugs
Innovative drug developers are facing a challenge due to a potential slowdown of sales in China. Companies like Merck and AstraZeneca have their manufacturing plants in China to cater to the Asian and European markets. These companies are already forecasting a drop in financials owing to fewer sales and lower manufacturing capacity. Commercial sales within the US are also taking a hit as sales reps have been advised not to meet HCPs in-person due to the risk of being exposed to the virus. With drug manufacturing and drug marketing taking a backseat, new drugs entering the market are facing barriers more than ever.
"If China shut the door on exports of core components to make our medicines, within months our pharmacy shelves would become bare, and our health care system would cease to function," said Rosemary Gibson.
With lockdown in China, restrictions on travel and trade and the closing of factories across the country have led to a shortage of vital drugs, face masks, and medical devices in the US.
How to mitigate the supply chain challenges
The US government and FDA play a very critical role in preparedness and are putting efforts in place to mitigate these supply chain challenges:
Look Out for More Manufacturers
FDA spokeswoman Stephanie Caccomo has explained that the FDA has connected with more than 180 drug manufacturers to remind them that any shortage or disruption in drug supply must be reported to the FDA. The FDA agency has also been in touch with more than 63 medical device manufacturers and has no reported shortages.6
Lawmakers Put Pressure on US Pharma for Drug Supply
US lawmakers are aligning long term solutions to bring drug manufacturing back to the US. A fund introduced a bill that would funnel $100 million to develop US manufacturing of drugs.7
Lengthening Expiration Dates to Mitigate Critical Drug Shortages
The FDA is re-evaluating certain critical drugs and extending their shelf life to the maximum to beat the drug shortages.
Improving Critical Infrastructure Against Risks of Derailed Supply Chain
The FDA is now proactively identifying vulnerabilities in the manufacturing supply chain of pharma companies and is developing plans to mitigate the risks that arise due to broken supply chains. The FDA is also chalking out plans to reduce the dependency of APIs for critical drugs. In addition, the FDA is now empowered to assess information on manufacturing quality and capacity to improve the ability to recognize a shortage of red flags.
Establishing Reporting Requirements for Medical Device Manufacturers
Until recently, the FDA did not have the authority to monitor medical device shortages as the manufacturers were not required to report the discrepancies to the agency. The FDA is now enabled to have timely and accurate information of essential devices to take action to ensure continued availability of devices that hold public health importance.
Given the global lockdown due to the coronavirus severely impacting global healthcare and its drug supply chain in many perspectives, response and preparation to handle the supply chain crisis are incredibly complicated in the current situation of the COVID-19 outbreak.
The US' vulnerability and dependence on China has been exposed due to the COVID-19 outbreak. The US government, along with the public health agencies, are taking steps to ensure that the pharma supply chain shouldn't be affected by such outbreaks in the future.
- Safeguarding Pharmaceutical Supply Chains in a Global Economy, published on October 30, 2019 - US Food & Drug Administration
- Coronavirus (COVID-19) Supply Chain Update published on February 27, 2020 – US Food & Drug Administration
- Generic Drugs published on November 21, 2019 - US Food & Drug Administration
- US Medical Devices: Imports and Exports, the Role of Tariffs and of the FDA - Fimeshow
- Coronavirus Disease 2019 (COVID-19) published on March 23, 2020 - US Food & Drug Administration
- FDA identified 20 drugs with shortage risks due to coronavirus outbreak published on February 25, 2020 - Reuters
- Lawmakers pressure Big Pharma on drug supply chains amid coronavirus outbreak, published on March 11, 2020 – CNBC.com