Tony Hagen is senior managing editor for The Center for Biosimilars®.
Supplies of active pharmaceutical ingredients (API) are difficult to track and anticipate owing to limited information that manufacturers are required to provide, an issue that can make it difficult to respond to the COVID-19 pandemic, according to an interview with a Vizient executive.
As the COVID-19 crisis deepens, the United States is ill prepared to track the flow and availability of drug raw materials, according to Dan Kistner, group senior vice president of pharmacy solutions at Vizient, a member-owned supply chain contractor that serves over 5000 not-for-profit health systems in the United States.
In an interview, Kistner said that lessons learned from Hurricane Maria in 2017, which devastated Puerto Rico’s drug manufacturing industry and created acute drug and saline solution shortages, prompted Vizient to ramp up its information requirements when contracting with new manufacturers. However, he said the United States is partially blind in the pandemic created by the novel coronavirus, which is caused by a virus named SARS-CoV-2. There is simply not enough information about what manufacturers are producing or how conditions will affect overall drug supplies.
A recent FDA statement indicates, for example, that 13% of brand and generic active pharmaceutical ingredient (API) manufacturers are based in China, but that doesn’t indicate how much volume is coming from those plants or what types of materials they are producing, which makes it difficult to predict the impact from localized shutdowns in China or other countries, Kistner said. “The FDA today doesn’t have the authority to get that type of information.”
Limited information obtainable by the FDA makes it difficult to understand supply matters clearly, said Janet Woodcock, MD, director of the Center for Drug Evaluation and Research (CDER), in an October 2019 statement about safeguarding the US drug supply. “Although CDER can describe the locations of API manufacturing facilities, we cannot determine with any precision the volume of API that China is actually producing, or the volume of APIs manufactured in China that is entering the U.S. market, either directly or indirectly by incorporation into finished dosages manufactured in China or other parts of the world,” she said.
As borders close around the world to contain the spread of the virus, and the FDA withdraws its personnel from foreign manufacturer inspections, it becomes more critical to have that knowledge so that COVID-19’s impact on US drug supplies can be understood more clearly. In the past week, Puerto Rico announced that it was ordering nonessential businesses to close as a result of COVID-19, raising fresh concerns about how its extensive pharmaceutical sector and the pharmaceutical supplies coming from that direction will be affected.
The COVID-19 crisis is demonstrating the interdependence and vulnerability of the international supply chain. India, which is heavily dependent on China for APIs (70%) for its own pharmaceutical industry, announced earlier this month that it would block 26 APIs and finished pharmaceutical products from being exported (roughly 10% of India’s pharmaceutical export volume). India supplies the United States with 18% of its API volume.
The FDA has said Indian imports accounted for 24% of medicines and 31% of medicine ingredients in 2018. Late last month, the agency reported the first COVID-19—related shortage, and said this was the result of a manufacturer affected by COVID-19 that produces an API. At the time, the FDA was reaching out to manufacturers reminding them of their legal requirements to provide notice of any anticipated drug supply disruptions.
Major pharmaceutical manufacturers, including Mylan, Johnson & Johnson, and Teva Pharmaceuticals have said in statements that they are monitoring their supply chains and do not anticipate near-term shortages, although Mylan has said if COVID-19 persists, “this could change.”
Manufacturing information, including supply back-up plans, should be available in real time so that hospitals and other healthcare systems can plan effectively to meet sudden demand situations with preparedness, Kistner said.
Part of the problem is that pharmaceutical companies believe that plant operations and drug manufacturing locations are trade secrets that need to be protected. In Puerto Rico, following Hurricane Maria, lack of shared information about manufacturing capacity and source info was blamed in part for the lack of preparedness for that event. “There are dozens of pharmaceutical manufacturers on the island of Puerto Rico, but no one knew what was being made there,” Kistner said.
Incorporating lessons learned from Hurricane Maria into its business strategy, Vizient now requires of manufacturers that they share information on where drugs are made when they sign new product contracts, Kistner said. “That way, we can quickly see all the products that we’ve added and what manufacturers we need to call right away.” Vizient considers that this policy has significantly reduced its own exposure to potential supply disruptions.
The vulnerability of US API supply to foreign manufacturing fluctuations is reflected in FDA data showing a total of 1079 facilities worldwide that make the 370 drugs on the World Health Organization‘s Essential Medicines List that are marketed in the United States. Just 21% of those facilities are based in the United States.
In a recent statement, the trade group Association for Accessible Medicines sought to reassure the public with a message that pharmaceutical manufacturers plan in advance for potential supply disruptions. “Diversifying the supply chain and ensuring there is no single point of failure is key to these efforts. While no one could have predicted that an outbreak would seemingly close all of China, an event such as the coronavirus outbreak is handled by our member companies in the same manner as other emergency situations, with an immediate review of their individual supply chains,” the statement read.
One factor that may buffer immediate impacts from manufacturing slowdowns abroad, related to COVID-19, is that companies tend to hold long-term supplies of product on hand—6- to 12-month supplies, Kistner said.
With respect to biologics and availability, brand manufacturers that don’t have competition tend to have more supply backups in place because their markets for product are secure. When it comes to a marketplace with multiple producers of a single drug, “these manufacturers are having to compete every day to sell their product, and so they may have less redundancy around biosimilar biologics specifically. It doesn’t help that biosimilars are more complex and have different processes, which could only further the potential disruption,” Kistner said.
Earlier in March, the FDA announced that it was suspending foreign site inspections of pharmaceutical makers to protect its employees from COVID-19 transmission and that inspections would occur through remote means, such as data review, or at US ports of entry, wherever product flows in.
Ultimately, Kistner said, more data on manufacturing supply chains will provide transparency and aid in responding to COVID-19 and similar crises effectively and promptly. “We’re watching the supply chain every day to get as much information as possible. If we start to see that there’s a shortage on a potential medication, whether it’s due to a production or an API issue from China, or another country that has a large outbreak of the coronavirus…we’ll look at how we can work with manufacturers to bring new supply to market, to give them insight on where they need to ramp up production.”
Price gouging as a practice that often emerges during shortages is a very real concern with COVID-19 and pharmaceutical products, Kistner noted.
“We have for years been requiring some form of price protection in our contracts to prevent manufacturers from being able to take advantage of a situation that they shouldn’t be taking advantage of,” he said.
This form of protection is written into about 79% of Vizient’s drug contracts. The company hasn’t arrived at 100% yet, “given that some manufacturers have no competition,” Kistner said. “I think we’ve done a really good job, protecting our members, but it’s still something that we have to be ever, ever vigilant on.”