How US Generics Firms are Responding to COVID-19 Supply Chain Risks

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AAM Interim President Jeff Francer outlines the vital role that biosimilar and generics firms will play in filling supply chain gaps during the ongoing coronavirus pandemic.

 

Like the rest of society, executive and scientific teams working in the US generic and biosimilar pharmaceutical industries have never experienced anything quite like the COVID-19 (novel coronavirus) crisis sweeping across the globe. But this is a community with extensive capabilities and a profound belief in supporting public health. AAM and our members are committed to enhancing access to life-saving and health-maintaining medicines.

Above all, our member companies are driven to handle this emergency in a manner rooted in the following priorities:

 

Maintaining a trusting relationship with the patients who rely on our products

Generic medicines fill 9 out of every 10 US prescriptions, and the quality, safety, effectiveness and tremendous affordability of these medicines allow for access that maintains and improves health. (Read more.) In times like this, AAM’s Code of Business Ethics should reassure patients as well as the health care community. Every member company pledges to “conform to high standards of quality, safety and efficacy as determined by regulatory authorities in each economy in which they operate.” We uphold this commitment to quality, safety and efficacy regardless of where medicines are manufactured, and, in response to the heightened sensitivity around the supply chain, we are ready to work with FDA on risk-based inspections of our facilities.

 

Manufacturing and distributing medicines for those infected by COVID-19

Member companies are prepared to collaborate with authorities to ramp up production to address public health needs. For example, our members are donating doses of the potential COVID-19 treatment, Hydroxychloroquine Sulfate, working in collaboration with the White House Coronavirus Task Force and public health leaders. At the time of publication:

  • 3M is doubling its global output of N95 respirators and getting them to health care providers on the front lines of the pandemic.
  • Accord’s UK arm is donating two million doses of hydroxychloroquine to the National Health Service, for use in the world’s largest trial.
  • Amneal is donating one million hydroxychloroquine sulfate doses to the Texas State Pharmacy, for direct distribution to hospitals, two million doses to New York and 400,000 to Louisiana.
  • Apotex is donating 240,000 doses of hydroxychloroquine for a clinical study to prevent infection from COVID-19 with front line health care workers.
  • AAM associate member Direct Relief is providing personal protective equipment and essential medical items to health workers and delivering protective masks, exam gloves and isolation gowns to health care organizations in areas with confirmed COVID-19 cases.
  • Sandoz is donating up to 130 million doses of hydroxychloroquine sulfate to support ongoing clinical trials and 30 million doses to the Strategic National Stockpile.
  • Sun Pharmaceutical is donating 2.5 million doses of hydroxychloroquine sulfate.
  • Teva is donating 10 million doses of hydroxychloroquine sulfate to hospitals nationwide.

 

Reinforcing a robust and diverse supply chain that serves the public interest

Our nation’s robust prescription drug supply should never be taken for granted. Viruses, natural disasters and market forces are just some of the threats that responsible companies and government agencies must plan for. Pharmaceutical companies—brand-name and generic alike—devote substantial time and resources planning for contingencies.

Our members thoroughly review their own supply chains and make adjustments necessary to keep supply, manufacturing and distribution on course to the greatest extent possible. Our members are working with federal and state authorities to minimize disruptions during this moment. Among other things, they follow the protocol established by the Food and Drug Administration Safety and Innovation Act (FDASIA) of 2012 for collaboration with authorities conducting active supply chain surveillance.

Our industry recognizes that we can do more now and after this crisis to ensure the FDA has the information necessary to respond to this or other crises that may develop. AAM member companies are committed to providing FDA with necessary information so that public health officials can mitigate the risks of dependence on manufacturing in specific regions that might be compromised by the spread of the virus or other issues. The AAM staff and I appreciate the role we can play as a resource for policymakers and officials whose duty it is to assess the risks of COVID-19 and concerns about the manufacture of generic and biosimilar medicines domestically and abroad.

According to FDA:

  • 80 percent of brand and generic active pharmaceutical ingredient (API) manufacturing facilities are located outside of the US,
  • 13 percent of brand and generic API facilities are located in China.
  • A total of 1,079 API facilities worldwide that make the 370 drugs on the WHO Essential Medicines List that are marketed in the US Of these factories, 15 percent are in China.

These facts will inform decisions about how best to monitor the global supply chain as it relates to the patients we serve. For now, China is a foremost concern, but as the pandemic subsides there, and transportation and other sectors recover, the focus could shift.

 

Addressing long-term risks to diversify the supply chain

COVID-19 concerns should galvanize government and industry alike to take action to prevent drug shortages. Diversifying the pharmaceutical supply chain is a reliable way to mitigate risks that might befall one country or region. MIT’s Yossi Sheffi, author of The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage (2007) has explained, “Because the numbers and types of threats that can undermine a supply chain are now greater than ever, resilience has taken on even more significance in supply chain management.”

Even before this crisis, drug shortages were on the radar of companies and regulators. In “Drug Shortages: Root Causes and Potential Solutions,” a report published last fall and updated recently, the US Food and Drug Administration (FDA) zeroed in on the market factors causing shortages and suggested measures to rectify them. “Manufacturers of older generic drugs, in particular,” the authors state, “face intense price competition, uncertain revenue streams, and high investment requirements, all of which limit potential returns.” Another concern for our industry is what the FDA report calls “race to the bottom” pricing dynamics. “Low-price clauses,” which allow purchasers to unilaterally walk away from a contract if a competing manufacturer is willing to supply the same product or bundle of products for a lower price, are a part of this worrisome phenomenon. They also address the challenges of recovering from a disruption.

AAM and our member companies support efforts to diversify the supply chain and therefore to make it more resilient. A key part of this effort will be working with the United States government to ensure that the investment climate for manufacturing pharmaceutical ingredients and finished pharmaceuticals is attractive and competitive relative to other global markets. Moreover, we pledge to collaborate with the US and other governments on policy measures that could potentially incentivize companies to diversify their respective supply chains — including bringing manufacturing back to the US under the right economic conditions.

This is the time for collaboration between regulators and industry leaders to diversify the supply chain and coordinate global manufacturing. Over time, incentives and subsidies to bring manufacturing back to the US may be advisable, but this must be seen as a long-term project measured in years.

Addressing issues to strengthen pharmaceutical supply chains in a deliberate and collaborative manner could save lives and have the added benefit of making the market more efficient and, therefore, enabling developers of generic and biosimilar medicines to better serve patients and their families.

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