HQ Team
November 2, 2022: Supply chain issues are impacting the availability of certain drugs in the United States.
Healthquill reported a shortage of Adderall, Ozempic (diabetes and weight loss medication) and Amoxicillin, recently. Now more medicines have been added to the list. The Food and Drugs Agency ( FDA) has flagged shortages of more than a dozen drug ingredients, two of which are included in Adderall. Others include bacteriostatic saline, used in IV injections, and compounds used in anaesthesia drugs, and calcium deficiencies.
The chemotherapy drug fludarabine, which was available for $110 till recently, is now priced at $2.736.
Bindiya Vakil, CEO of Resilinc, a California-based firm that helps companies from a variety of industries mitigate supply chain problems, says the problem of shortages is here to stay.
“What we don’t appreciate as much is that our drug supply is highly vulnerable because a lot of the source materials that go into developing the active pharmaceutical ingredients come from China,” Vakil said in an interview. “India is a huge market for generic manufacturing that we rely on in the U.S. And India is heavily dependent on China for those source materials that they transform into the APIs. We don’t have independence in our drug supply at all.”
China, India dependence
The global pharmaceutical supply chain is dependent on China and India for the key starting materials, intermediates, and active pharmaceutical ingredients or APIs used to produce generic drugs and many branded products. It is believed that 60 per cent of the world’s API is made in China.
The United States and the European Union each account for one-quarter of FDA-registered facilities around the globe, while China and India combined account for 31%. The EFCG believes that more than 80% of chemicals used to make drugs sold in Europe come from China and India. The United States, meanwhile, reportedly accounts for nearly 50% of the worldwide pharma market and imports more than 50% of APIs and finished products, with some pegging the level at over 70%.
The Pandemic disrupted manufacturing and clinical trials of drugs, and the cascading effect is being felt in the supply chains now.
Research firm GlobalData found that production of as many as 57 drugs (ranging from calcium supplements to cancer drugs, HIV treatments, and antibiotics) made by both large and small pharma companies could be at risk due to “general manufacturing and export fallbacks across China.
Also, there might be a research shift, and a heavy reliance on viral drug findings is anticipated.
Biopharma supply chain
Vakil also pointed to the recent FDA warning on the shortage of raw materials. Biopharma’s supply chain is highly vulnerable to world events compared to other business areas. Vakil said that the industry trails high-tech by some ten years.
“The drug industry is not really taking a proactive approach to understanding their supply chain dependencies. And they continue to be surprised time and time again,” Vakil said. “It isn’t easy to build resiliency but the time to do it was yesterday. The problem is not going away. And here in the U.S., as the population ages, the demand for medications is only going to go up.”
The API for the cancer drug Fludarabine comes from China but from a supplier that is not approved by the FDA, requiring the supplier Areva Pharmaceutical to undergo thorough testing, reporting and quality control at its plant in Europe. The result is the prohibitive price rise.
There were already reports of drug shortages in the world before the Pandemic outbreak. The FDA reported an increase in the number of drug shortages from 2017 to 2018. Over 60% of shortages in 2019 were attributed to supply disruptions due to manufacturing and/or quality issues.
An IDC white paper that surveyed 532 global supply chain leaders across organizations said that the COVID-19 significantly increased problems with drug diversion, theft, and counterfeiting of critical products such as test kits, vaccines and anti-viral medicines.
Stockpiling medications, transportation delays, and increased costs were the other primary concerns after drug shortages.
Post Pandemic reality
Even before the advent of the pandemic, governments and pharma companies worked towards local production to feed their needs rather than outsourcing. The over-dependence on China for vital ingredients was not a feasible long-term plan for many.
According to the United Nations Industrial Development Organization, local pharmaceutical production (LPP) can help vulnerable populations gain access to quality medicines, reduce dependency on international donations, and facilitate control of fraudulent drug products entering emerging markets.
Also, a viable module of the supply chain matrix with data visibility is needed to plug the gaps. Companies need to conduct a detailed value stream and risk analysis of their end-to-end supply chain.
