Experts detail progress made, next steps to fortify US drug supply chain

Packing medications into box

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Private industry and the US government must work together to address the country's longstanding prescription-drug supply chain weaknesses and their massive societal costs, say the authors of and consultants to a 2022 book on the topic commissioned by the National Academies of Sciences, Engineering, and Medicine (NASEM).

The contributors to Building Resilience into the Nation's Medical Product Supply Chains published recommendations for strengthening the US prescription-drug supply chain this week in Health Affairs. They highlight recent supply chain disruptions, some exacerbated by the COVID-19 pandemic, that have led Americans to search for or go without essential prescription drugs such as amoxicillin, Adderall, saline, and epinephrine, or accept inferior substitutions.

The team synthesized findings from 22 reports from government agencies, academia, think tanks, consulting companies, and other industry experts to describe recent actions to shore up pharmaceutical supply chains; lay out the steps to advance transparency, inventory management, and onshoring (moving manufacturing back to the West, including the United States, from overseas); and discuss the need for financial incentives and effort prioritization.

One of the referenced reports is from the Resilient Drug Supply Project, among the first on drug shortages published after the COVID-19 pandemic began. The Resilient Drug Supply project is part of the University of Minnesota's Center for Infectious Disease Research and Policy (CIDRAP), publisher of CIDRAP News.

"Patients would benefit immensely from the advice put forth in the NASEM report, as they would receive safe, effective, and dependably sourced medications," said David Margraf, PharmD, PhD, an RDSP pharmaceutical research scientist. "Enhancing the security of the drug supply chain can significantly reduce the risk of counterfeiting, contamination, and other dangers to drug delivery. Through the assurance of reliable suppliers, patients can have peace of mind that they are receiving the highest-quality medication."

Enhancing the security of the drug supply chain can significantly reduce the risk of counterfeiting, contamination, and other dangers to drug delivery.

David Margraf, PharmD, PhD

Recent government, industry advancements

Recently some progress has been made to improve transparency and inventory and capacity management, according to the authors. For example:

  • The Administration for Strategic Preparedness and Response (ASPR) brought together 179 industry and government partners to improve information sharing and collaboration on supply chain issues. It also built an industrial base and supply chain management program and worked with federal, state, tribal, and industry partners on stockpiling and vendor-managed inventory systems.
  • The Food and Drug Administration's (FDA's) Center for Drug Evaluation and Research expanded its surveillance capabilities to develop early warning signals of shortages.
  • The FDA is pursuing legislative proposals to narrow gaps in surveillance.
  • The FDA's Office of Pharmaceutical Quality began working to create a way to measure and rate quality-management maturity.
  • Distributors report that they have been refining allocation practices based on better measures of demand.

Influence of supply chain characteristics

Supply chains have three important characteristics that bear consideration when formulating next steps, according to the researchers:

  • More than 20,000 approved prescription drugs and 13,000 facilities are registered to make active pharmaceutical ingredients (APIs) or finished-dose products, and 78% of those APIs are made overseas. In addition, "These statistics underestimate complexity, as they do not account for raw ingredients, components such as vials, parts such as machine parts, or for that matter drugs that predate current FDA approval systems."
  • Onshoring is not easy, fast, or inexpensive because the causes of supply chain problems are vast and interconnected. "Even if we move facilities to the US to address potential geopolitical risks, domestic manufacturing alone does not guarantee reliability," the researchers said. "After all, production disruptions in US-based facilities are the most common cause of shortages."
  • Narrowing the gap between the societal benefits of strong supply chains and manufacturers' need for profit is not a simple venture, because manufacturers want to take advantage of the lower cost of overseas resources, just-in-time manufacturing (producing only what is needed at a given time), and keeping supply chain makeup confidential.

Much more to be done

The authors make several recommendations for the federal government on ways it can strengthen the supply chain. For example:

Even if we move facilities to the US to address potential geopolitical risks, domestic manufacturing alone does not guarantee reliability.

  • Transparency: The first step is determining who needs information and why. The government can ask manufacturers to provide transparency on business-confidential demand spikes and supply disruptions, or it can help process data so as to minimize confidentiality concerns. Group purchasing organizations rely on transparency for selecting vendors and developing contingency plans, and doctors need it to decide if and how to change care practices. "Other opportunities include exploring payment models that reward greater transparency as well as information technologies such as blockchain that can make data exchange more secure," the researchers wrote.
  • Inventory management: Manufacturers have little incentive to go beyond just-in-time manufacturing, which is one reason the government built the Strategic National Stockpile (SNS) of drugs. "But the sheer scope of US prescription drug supply chains suggests that the SNS neither can nor should undertake to solve all supply chain issues alone," the authors said, when the private sector is better suited to solve routine problems. They also advised the government to work with stakeholders to continuously monitor and update products that should be prioritized by level (eg, wholesaler) and form (eg, raw material, API, finished-dose form).
  • Onshoring: "It would be impossible to produce all these substances in the US, so assessing which supply chains are most important to the health and well-being of Americans is critical, as is assessing which are the most vulnerable," while considering financial incentives to promote onshoring, the researchers said.

Ultimately, they concluded, private industry needs to take action to bolster drug supply chains. "However, the federal government plays an important role in prioritizing industry efforts and providing the data, incentives, and mandates to steer the industry to make these investments. Congress plays a role in funding these steps."

Margraf said the government should take the initiative by providing policy guidance and oversight, setting requirements for manufacturers and other stakeholders, and investing in the development of data systems and tools to improve medical product supply chain resilience.

"Additionally, the government should take a leading role in helping to coordinate key stakeholders, such as industry, academia, regulators, and the public, to ensure that knowledge and resources are shared and used effectively," he said.

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