Coronavirus raises fears of U.S. drug supply disruptions

Federal officials, pharmaceutical companies and public health experts are closely monitoring the coronavirus outbreak in China, which is a major producer of drug ingredients.  (iStock)

The Food and Drug Administration is stepping up its monitoring of the drug supply for potential shortages, including 20 products that may be at risk due to the coronavirus outbreak that has shut down much of China and is raising concerns about the nation’s convoluted and highly outsourced pharmaceutical supply chain.

The crisis highlights a growing vulnerability: Not only are many medications used in the United States manufactured overseas, but critical ingredients — and the chemicals used to make them — also are overwhelmingly made in China and other countries. The supply chain’s roots now run so deep that it’s difficult to fully anticipate where critical shortages could emerge.

Rosemary Gibson, author of the book “China Rx” and a senior adviser at the Hastings Center, a bioethics think tank, said China has a “global choke hold” on the chemical components that make up key ingredients.

“In the age of a few clicks in a keyboard and items get delivered, we overlook where products come from and the components to make them,” she said. “We are dependent on others, and they will keep medicines for their own people.”

Rep. Anna G. Eshoo (D-Calif.), chairwoman of the Energy and Commerce Subcommittee on Health, has similar concerns. “The red lights are blinking,” she said. “It’s one thing for China to make athletic wear for us, but to depend on them for our drug supply? That’s not acceptable.”

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The FDA said that no companies are reporting drug shortages linked to the coronavirus. But in a sign of its efforts to get ahead of any problems, an FDA spokeswoman said the agency has contacted 180 China-based prescription-drug manufacturers asking them to evaluate their supply chains and remind them they’re required to notify FDA of any coming disruptions. Many U.S. drug companies buy Chinese-made active pharmaceutical ingredients, called APIs, in bulk, insulating themselves against a supply disruption for weeks, months or even a year.

The 20 products the agency is watching especially closely use raw materials that all come from China, the FDA said.

With the course of the outbreak unpredictable, and information scarce on when Chinese factories will resume normal operations, FDA commissioner Stephen Hahn warned that “the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products” in the United States.

The drug supply chain is opaque and complex — for the most part, consumers and even hospitals can’t find out where their drugs or the ingredients that go into them are made. Even the FDA has acknowledged it doesn’t know the amount of drug ingredients being shipped from China.

“We cannot determine with any precision the volume of API that China is actually producing, or the volume … entering the U.S. market,” Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research told Congress last fall.

The agency does track where factories are, and reported last year that about 14 percent of the facilities that make active pharmaceutical ingredients are in China.

The number of factories situated in China has risen sharply in recent years due to low-cost labor, less stringent environmental regulations and the need for large factory sites, Woodcock told Congress.

Eshoo and others complain there isn’t enough publicly available information on the complicated supply chain for drugs. Much of the information is proprietary, and closely held by drug companies and regulators.

Former FDA chief Scott Gottlieb, at a recent hearing about U.S. preparedness for pandemics, warned not only about U.S. reliance on the active ingredients in drugs but also on their chemical precursors — “lower margin, low-technology starting materials and components that — over time — have become sole sourced in China.” Many of these materials are made in China’s Hubei Provence, the epicenter of coronavirus, he said.

“We may not even be aware of the full scope of these vulnerabilities,” he added. “In many cases, we don’t have established systems for tracking down to the level of these components.”

There are 44 pharmaceutical manufacturing facilities in Hubei that are approved by the FDA or its European counterpart to make products for the highly regulated U.S. and European Union markets, according to Fiona Barry, associate editor of GlobalData PharmSource, a data and analytics company.

Of these, 35 produce active pharmaceutical ingredients, five make finished-dose drugs and four manufacture both.

Some lawmakers are focused on getting more information on potential shortages. Legislation introduced by Sens. Susan Collins (R-Maine) and Tina Smith (D-Minn.) would require drug makers to report looming shortages of pharmaceutical ingredients, not just finished products.

“The FDA needs greater visibility into the drug supply chain so that they can better assess risks and potential disruptions,” Collins said in a statement.

If the threat from coronavirus subsides quickly, there may be minimal impacts on the pharmaceutical supply chain. But the effects are likely to vary by company; some may have up to a year’s extra supply on hand and multiple factories in multiple countries, while others may have less redundancy built in to their supply chain.

Novartis spokesman Eric Althoff said the company had taken steps to prevent shortages, including keeping a safety stockpile and sourcing ingredients from more than one supplier, and doesn’t anticipate a supply chain disruption “for the time being.”

Manjira Ghosh Sharma, a spokesperson for Lupin Ltd., an Indian generic pharmaceutical company, said, “Currently there are no shipments coming out of China and the situation on ground is very dynamic. However, we are comfortably placed with 8 to 10 weeks of key inventory in place.”

On an earnings call in early February, another Indian generic company, Sun Pharmaceutical Industries, described the complexity of the supply chain. Some raw materials come almost exclusively from China, Dilip Shanghvi, managing director of Sun said, including antibiotics such as azithromycin, penicillin and cephalosporin. In a sign of how the supply chain can be hard to unravel, he noted that raw materials that were purchased in India might depend on ingredients sourced in China.

Some say the drug supply chain is too complicated and goes through too many countries. But Ronald Piervincenzi, chief executive officer of U.S. Pharmacopeia, a nonprofit organization that sets quality standards for drugs, disagreed, arguing that a diverse supply network is a bulwark against disruptions caused by civil unrest, outbreaks and natural disasters like hurricanes.

“In the event of Hurricane Irene,” he said, referring to a massive storm that affected much of the Caribbean and the East Coast in 2011, “You wouldn’t want all your drugs to be made in New Jersey.”

But it is a problem, he said, that such a big chunk of active ingredients is made in one country — China — and that it us so difficult for American health care providers and consumers to know where their drugs, and their drugs’ components, are made. If a hospital wants to know if its supply of antibiotics is vulnerable, it needs to know where the drugs and the component parts are coming from, he said.

Currently, he said, “There’s no way to know where antibiotics come from, or where the ingredients come from.”


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