The U.S. Needs to Reimagine Its Pharma Supply Chain
3/26/23, 11(00 AM
Business And Society
The U.S. Needs to Reimagine
Its Pharma Supply Chain
by Eric Edwards
August 12, 2021
MirageC/Getty Images
Summary. The pandemic has only exacerbated a previously existing problem: U.S.
dependence on foreign manufacturers of drug ingredients and finished products
that has resulted in shortages of critical medicines. The remedy is to create a
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domestic manufacturing capability, adopt new production technologies, and
change what’s kept in the Strategic National Stockpile. This will require a
partnership between the public and private sectors. close
When Americans go to a hospital or visit a doctor, they expect that
the drugs they need will be on the shelf — whether to treat an
infection or save a life. They can’t imagine that a hospital might
tell them their cancer treatment has to be delayed for weeks
because of a drug shortage, or that the safest and most effective
medications for their condition simply aren’t available.
It’s not unthinkable: We’re living that reality today, because of a
poorly designed global supply chain we depend on for our
nation’s most essential medicines.
The flaws in that system were already taking their toll before
Covid-19; the pandemic made shortages even more acute. While
the economics of a global supply chain might drive better profits
when everything works smoothly, the human cost of the current
system is enormous when it fails. In fact, some basic essential
medications and IV solutions that are used every day in
emergency departments and outpatient clinics have been in short
supply for more than a year.
These shortages have included medicines to control blood
pressure, place patients on ventilators, manage pain, as well as
key antibiotics and normal saline. The U.S. Food and Drug
Administration (FDA) currently lists shortages of 115 basic drugs,
and the American Medical Association (AMA) considers drug
shortages to be an urgent public health crisis.
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It is an intolerable situation, and it need not be this way —
provided we rethink our dedication to these global supply chains.
Instead, we should secure a fully domestic capability to produce
the most commonly used and vital medicines — from pain
relievers to asthma inhalers to antibiotics — and be able to
activate it at a moment’s notice when a potential global shortage
looms.
The Weak Link in the Chain
While the United States likes to think of itself as having the most
sophisticated and advanced health care system in the world, its
ability to provide that care is inexorably linked to a global
pharmaceutical supply chain that has evolved over the last two
decades.
Most finished pharmaceuticals, whether made abroad or in U.S.
factories, depend almost entirely on the availability of active
pharmaceutical ingredients (APIs), the primary functional
components of the drugs we take. These ingredients include
everything from the active substances in over-the-counter pain
medications to life-saving IV solutions. Without APIs,
pharmaceutical manufacturing grinds to a halt and shortages
quickly follow.
There is a very limited domestic capacity to make these essential
medicine ingredients; the U.S. manufacturing base to make them
has drastically eroded over the last several decades, and most of
the supply now comes from abroad. For many materials, there is a
single, foreign source of supply.
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The global over-reliance on China and India for APIs, the
precursor key starting materials (KSMs) required to produce
them, and essential medicines is especially worrisome. An
estimated 80% of the world’s APIs come from China, India, and a
handful of other foreign countries. U.S. dependence on these
limited sources hit home when India imposed an export ban on
medicines during the pandemic.
This dependence on a few foreign sources of these critical
ingredients that are vital for the health of Americans means that
our supply of finished essential pharmaceutical products is
vulnerable to international economic, political, and public health
crises. A fire or other disaster at a key factory can have the same
effect on drugs that a fire at a chip factory in Japan had on
automobile production. So can the inability to obtain the
materials because of shipping interruptions; the disruptions that
contributed to the devastating shortage of personal protective
equipment (PPE) during the pandemic also led to shortages of
drugs. In fact, the resurgence of Covid-19 cases in India this
summer will likely lead to a severe ripple effect on worldwide
drug supplies.
Building a New National Stockpile
Given the fragility of the global supply chain, the logical response
should be to create a domestic supply of key ingredients.
However, due to challenging economics associated with many of
these essential medicine ingredients, there has been limited
private investment in domestic capacity. Many of these
medicines are viewed more as commodities than strategic assets
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critical to the health of our country. Although this is beginning to
change and some infrastructure is being re-shored domestically
through novel public-private partnerships, this will take time.
In its extensive 100-day review and through a new Supply Chain
Disruption Task Force, the Biden administration has highlighted
many of the challenges facing our nation’s pharmaceutical supply
chain that have been amplified by the Covid-19 pandemic. The
administration recognizes that creating a resilient
pharmaceutical supply chain will require enhancing domestic
manufacturing and has begun to outline a series of
recommendations for diversifying the supply chain and
leveraging partnerships with the private sector.
In the meantime, the United States is revamping its program for
stockpiling the most vital medicines. The federal government
created a strategic national stockpile of medical supplies — drugs
like antibiotics and medical devices — several decades ago in
order to be able to respond to a short-term disaster or even a
biological attack. Dispersed in locations around the country, it is
intended to provide an immediate stopgap for a sudden incident.
The problem with this stockpile is that it never was designed to
address long-term shortages such as those the nation has been
experiencing during the pandemic. The stockpile holds
inventories of finished medicines that have an average shelf life
of two years; if these costly items aren’t replaced often, they will
be outdated when they are needed.
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Recognizing this deficiency, the U.S. government is extending the
stockpile so it includes enough key pharmaceutical ingredients to
provide domestic factories with the inputs required to
manufacture whatever essential medicines are needed at that
moment, in the right presentation and dosage, through any trade
dispute, natural disaster, or pandemic. In partnership with the
federal government through a contract with Biomedical
Advanced Research and Development Authority (BARDA), the
organization I lead, Phlow, has begun to operationalize this
stockpile of ingredients, the Strategic Active Pharmaceutical
Ingredient Reserve (SAPIR).
This initiative solves two problems.
The first is shelf life. APIs are not only far less expensive than
finished medicines but also can be stored for much longer
periods: With testing and analysis, they can be kept for more than
five years.
The second is ensuring the stockpile can supply the medicines
that are actually needed in a crisis. Since APIs can be made into a
wide range of finished products and different doses, the SAPIR
stockpile is much more flexible in meeting those needs.
Revamping Domestic Manufacturing
While the SAPIR provides the key essential medicine ingredients
for a crisis, we must still address the manufacturing process itself.
Our pharma manufacturing system is not set up to make efficient
use of APIs. Making matters worse, the nation’s current process is
expensive and can have significant adverse impact on the
environment. To fix the dangerously broken supply chain, we
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must reimagine a domestic, end-to-end solution for turning APIs
into vital finished medicines while at the same time lowering
costs and waste and improving quality and yield.
Historically, the pharmaceutical industry has relied on a a stepby-step process for manufacturing medicines one batch at a time.
This means that in order to manufacture a medicine or its active
ingredient, each individual step must be completed for the next to
begin. There can be many steps involved in each batch of
production, requiring many different machines, manufacturing
lines, and teams to create one finished product. This is an
antiquated process that is often costly, both financially and
environmentally.
We should be prioritizing new approaches that move from a batch
to a continuous-manufacturing model to reduce costs, improve
quality, reduce the environmental footprint, and allow
manufacturing programs to scale quickly. Innovations such as
flow chemistry — where a chemical reaction is run through an
uninterrupted, continuously flowing process — and other
advanced manufacturing technologies allow for faster production
of essential medicine APIs and lower manufacturing costs. This
enables U.S. producers to become competitive with foreign
manufacturers of APIs and allows for greater control of product
quality and the ability to rapidly respond to demand, with
substantially reduced environmental impact.
Realistically, pharmaceutical companies are going to be reluctant
to transition to these new manufacturing technologies due to the
significant upfront investment and resources needed. The most
effective way to accelerate this necessary paradigm shift is for
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manufacturers to work together and for the U.S. government to
subsidize and catalyze a shift from batch manufacturing to
continuous manufacturing. By doing so, the United States will be
in a better position to re-shore its supply chain for essential
medicines.
In addition, the public and private sector should work together to
create a shared cloud-based IT network that would allow
manufacturers and hospitals to get real-time information about
needs and shortages. This system would allow all parties to work
together to address supply-and-demand challenges and manage
inventories.
Revamping the supply chain and stockpiling of essential
medicines could have substantial economic and health benefits
that go beyond rare crises like the pandemic. It would save the
hundreds of millions of dollars that U.S. hospitals pay each year
to cope with shortages, including those occurring in children’s
hospitals.
The care of America’s children is unnecessarily impacted by
essential medicine shortages, which sometimes lead to
compromised patient care, clinician frustration, and increased
hospital pharmacy costs and inefficiencies. With limited options
and no access to the medications their patients need, children’s
hospitals often find themselves needing to purchase adult doses
of certain medications in order to treat their patients, throwing
away much of the unused portions. The SAPIR and the addition of
modern, continuous-manufacturing capacity would make it
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possible to economically produce pediatric doses of common
medicines in the United States, eliminating the needless cost and
waste that now exist.
Global supply chains are crucial but rarely noticed until
something breaks a link in the chain. By changing the supply
chain so it includes a domestic stockpile of key essential medicine
ingredients and advanced manufacturing processes, we can
ensure the nation is never again short of critical essential
medicines.
Eric Edwards, MD, is cofounder and chief
executive officer of Phlow, a public benefit
pharmaceutical corporation that is reimagining
the domestic production of active
pharmaceutical ingredients (APIs), key starting
materials, and finished pharmaceutical
products critical to U.S. health care.
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