Panel Discusses Need for Drug Supply Chain Reforms

As the coronavirus disease 2019 (COVID-19) pandemic continues to hinder medicine production and trade, including for biosimilars, a panel of experts from the BIO Digital International Convention discussed the challenges of reforming current trade policies without cutting the United States off from the rest of the world.

During the pandemic, over 80 countries have implemented export restrictions on personal protective equipment, medicines, other medical supplies, and equipment, making it difficult for the United States to secure sufficient supplies for its population.

Brian Pomper, panel moderator and a partner at Akin Gump Strauss Hauer & Feld in Washington, DC, said there have been calls to make the United States' supply chain less reliant on foreign sources. Policy change advocates argue that the pandemic has made clear that restoring the medical supply chain is a national security imperative and that doing so would create jobs for American workers.

“The key here is to try and minimize the risk to the supply of essential goods and services, and the way to do that is to perhaps diversify more of your supply chain and to incentivize people to produce [in the United States], or at least not provide a disincentive to produce,” said panelist Keith Rockwell, director, Information and External Relations Division at the World Trade Organization.

The Trouble With Diverse Supply Chains

Currently, 70% of US medications are made domestically, while just 44% of active pharmaceutical ingredients (API) originate in the United States, according to panelist Jeff May, vice president of global public policy at Merck. According to an October presentation by Janet Woodcock, director of the Center for Drug Evaluation and Research, 13% of the API manufacturing facilities that supply the US drug market are located in China; 18%, India; and 26%, Europe.

Panelist Wendy Cutler, vice president of the Asia Society Policy Institute and managing director of its Washington, DC, office, discussed how the Trump administration has committed to bring jobs back from oversees and how COVID-19 has exposed the dangers of overreliance on certain countries for essential products. She warned that the United States should think before imposing protectionist measures.

“Once we put in trade restrictions, and we can learn this the hard way, other countries don't sit back and make concessions. They feel that they have the green light to do the same thing. And then that hurts US interests, not just in the medical sector but potentially in other sectors as well. So, I think we need to be smart. We need to be thoughtful…about the costs and benefits of any policies we put into place,” said Cutler.

She added that any US trade policy going forward needs to be accompanied by a competitive agenda and should also include trade adjustment—type programs for the countries the United States would be leaving behind.

“I think we need to broaden and deepen the gains not just from trade, but from economic growth, and one of the ways to think about doing that is to make ourselves more competitive through better infrastructure and better education,” said Rockwell.

Companies Have to Be the Main Advocates for Change

Cutler argued that companies, not the government, will likely have to be the driving force to fix supply chain problems. “To a large degree, how supply chains move and how they're adjusted is really up to private companies. The government could put incentives in place to encourage these companies to bring their supply chains home. They can also put in penalties if they don't come home, but at the end of the day, the companies will weigh the costs and benefits," she said.

May suggested that it's not feasible to move manufacturing because it is costly to do so and takes a very long time.

Supply chains should not rely too much on 1 or 2 suppliers or the origin of supplies. “I think that's a decision companies have to very carefully analyze, and they have to be the ones who come forward and say this is the best way to do it,” Rockwell continued.

“I think we have to look at pretty much everything now with fresh eyes and try and figure out what is it that can come out of this horrible crisis that might actually lead us to embark on a better path in terms of our economic policies,” said Rockwell.