COVID-19 forced us to reimagine the pharma supply chain – and that’s a good thing

“The pandemic has exposed our country’s dependence on other countries for essential prescription drugs,” began Steve Scully, contributing editor at The Hill and moderator of Tuesday’s virtual program, Reimagining the Pharma Supply Chain.

“This threatens the security of the supply chain, and it leads to shortages of essential prescription drugs like amoxicillin and Adderall. So, how do we ensure our healthcare manufacturing practices and supply chains are sustainable?” he asked.

Supply chain disruptions made a comeback during the COVID-19 pandemic. (Source: Statista/IMF)
The supply chain issue was the first harbinger of a problem. (Source: Statista/IMF)

There is little doubt the pandemic exposed the cracks in a supply system that needed to be renovated. And these cracks are further expanded by the looming economic recession – which is not driven by capital or worker shortage but a shortage of goods. Major producers like China and India are struggling to get production back up to speed to meet global demand, while banks and investors are sitting on money they cannot spend. The need for an economic slowdown to allow manufacturing and international supply chains to respond is being met by a public ready to get back to business combined with daily medical needs that must be maintained for the health and well-being of global populations.

With medical technology, innovation, and access at the vanguard of social need, it is not surprising that the biotech and manufacturing industries in the U.S. have teamed up with legislators and healthcare professionals to solve the supply chain problem and make sure the country is prepared for the next inevitable pandemic, economic slowdown, or natural disaster.

As the guests on the program reflected on current pharma supply chain issues, three areas of focus became apparent:

  1. identifying vulnerabilities in the U.S. supply chain
  2. responding to the needs indicated by those vulnerabilities, and,
  3. ensuring resiliency after new systems and responses are put into place.

Vulnerabilities in the U.S. pharma supply chain

The supply chain issue was the first harbinger of a pandemic – even before governments knew what was going on.

“The Assistant Secretary for Preparedness and Emergency Response told the Doctors’ Caucus that in the fall of 2019, they noticed a downtick in the amount of PPE that was coming from China,” recalls U.S. Rep. Buddy Carter (R-GA). “We didn’t even know about the pandemic until February 2020. [Chinese leaders] knew what was going on then, and they started withholding the amount of PPE that they were sending to us.”

“That should send a strong message to us of the importance of having either our manufacturing taking place here in America, or at least having our allies have the ability to manufacture prescription drugs so that we are not held hostage by our adversaries and dependent on them for PPE, pharmaceuticals, and [anything else] that we’re going to need during the pandemic,” he continued.

BIO’s Chief Policy Officer, John Murphy, echoed this concern, explaining how dependence on foreign suppliers does not just jeopardize access to drugs and equipment but also jeopardizes access to the materials needed for manufacturing stateside.

“It leaves us vulnerable to disruptions,” he said. “Where demand spikes [due to something like] a natural disaster or in the case of COVID, for instance, you lose the ability to transport in the early stages of [an emergency] those raw materials to the production sites in Europe and the United States.”


Responding to the supply chain crisis

The U.S. government has worked to respond to the supply chain crisis and prepare for the future in a variety of ways – including onshoring, or the practice of transferring a business operation (or the storage of its goods) that was moved overseas back to the country from which it was originally relocated.

This has been a crux of the MADE in America Act, sponsored and discussed on the program by Rep. Buddy Carter (R-GA) and Rep. Darren Soto (D-FL). The law is “designed to increase reliance on domestic supply chains and ultimately reduce the need to spend taxpayer dollars on foreign-made goods,” according to its website.

“It would provide 25 to 30% tax incentives to boost more domestic manufacturing so that we’re not shipping drugs all the way across from the Pacific or from the Atlantic, so that we’re sourcing more raw materials here,” explained Rep. Soto. “It’s about capacity. Certainly, we’ll still be importing pharmaceuticals going forward. But we have to build back our capacity, much like we’re doing with the CHIPS Act (an industrial strategy to revitalize domestic manufacturing, create good-paying American jobs, strengthen American supply chains, and accelerate the industries of the future), [in areas like] telecommunications and other sensitive sectors of the U.S. economy.”

BIO’s Murphy reminded panelists and the audience of global responsibilities, as well: “I think a brief challenge is to ensure that we don’t get so subsumed by this idea of onshoring that we lose sight of the fact that, on the health care side, patients in the industry are global and so onshoring and creating a resilient supply chain just for the United States does not help the broader global population of sick individuals in the case of a pandemic or in the case of broader global health policy challenges.”

What is a resilient pharma supply chain?

Ultimately, the success of the work is not just a matter of what systems and responses are being put into place now, but also how resilient they will be in the long run.

“What does resilient mean?” reflected Murphy.

“I think resilience in a perfect world means a situation [where the change in] demand facilitates an immediate shift and surge [to meet] that new demand – so you have the ability of a supply chain to pivot in a way that goes from cost of day to day production to move over to assess and take care of demand that is unexpected,” he continued. “You know that at some point you will have to take a plant offline to do a thorough reboot or a thorough cleaning, and you can shift production. What we have heretofore done a fairly poor job of is anticipating how to respond to unanticipated demand in products or unanticipated shocks to the supply chain.”

“The government has a key role to play here because they can help facilitate the movement of key supplies around where you have unexpected demand,” Murphy continued. “So, we are not just creating a strategic national stockpile for the sake of saying we have them, but we are managing them in a way so that when we need to go to that stockpile in an unanticipated circumstance, things are not expired, and the necessary medicines are prioritized in those stockpiles. That creates an incentive for manufacturers to keep production online, it creates a backstop for the patient community when there’s a demand, and it again highlights the role of the government to help ensure that supply chains are resilient by being a purchaser and a facilitator in cases of unmet need.”

But there is a bright spot in the tough conversation of addressing the supply chain issue: this long-overdue conversation is happening.

“Hardly anybody cared about [supply chain issues before COVID],” said Erin Fox, senior pharmacy director at the University of Utah. “Very few people really thought about drug shortages, and so I think this is a great opportunity for the government to change and manufacturers to change, and hopefully we can add that resiliency back into our supply chains.”

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