The new crown epidemic has exposed the vulnerability of the U.S. drug supply chain, and how to reduce dependence on China’s pharmaceutical industry has once again become the focus of attention in the United States. Experts say Washington needs to rethink the national security implications of a globalized drug supply.
Last week, U.S. Senators Elizabeth Warren (D-Mass.), Tina Smith (D-Mass.) and Marco Rubio (R-Fla.) reintroduced two pieces of legislation that would reduce reliance on China to secure the U.S. drug supply chain.
These members of Congress have suggested that the United States needs to develop a list of “critical drugs,” provide financial assistance for domestic production investments, require pharmaceutical manufacturers to report sources of materials to the U.S. Food and Drug Administration (FDA), and require an investigation into the impact of foreign direct investment on domestic drug production capacity.
Drug shortages have plagued the U.S. for years, and the challenge of maintaining the drug supply chain was highlighted again during the new pandemic when demand for drugs surged, forcing pharmaceutical plants to close, delaying shipments and disrupting the supply chain.
According to the Center for Infectious Disease Research and Policy at the University of Minnesota, nearly half of the 40 drugs needed to treat patients with neo-crown experienced shortages in 2020. There is a shortage of the common analgesic Tylenol, and the supply of acetaminophen, the active ingredient in this drug, is virtually monopolized by China.
Drug Dependence on China
The United States, like many other countries, imports most of its drugs, and the FDA estimates that 80 percent of drug ingredient manufacturers are located outside the United States, most of them in China and India. But just 20 years ago, the United States, Europe and Japan were the producers of the vast majority of the world’s key drug ingredients.
Debbi Ford, a spokeswoman for Civica Rx, a U.S. nonprofit dedicated to solving drug shortages and quality control problems, said the majority of U.S. doctors’ prescriptions are for less expensive generic drugs, and the shift in the production chain is due solely to cost.
Drug manufacturing has shifted to China and other low-cost producers for the same reasons that other manufacturing industries have left the United States: lower costs, including labor, regulatory and environmental compliance,” Ford told Voice of America. In addition, the Chinese government has in some cases directly supported the growth of pharmaceutical manufacturing.”
Diversifying the supply chain is a good thing, Ford noted, but it is not in the U.S. interest to have drug production concentrated in one place.
When it comes to commonly used drugs, China virtually dominates the global supply chain. The Center for Infectious Disease Research and Policy reports that “China accounts for nearly 100 percent of the APIs used in drugs such as penicillin, levodopa and acetaminophen, and more than two-thirds of the APIs used in other major drugs, including antidiabetics, antihypertensives, antiretrovirals and other antibiotics.”
Even for India, known as the “pharmacy of the world” and an ally of the United States, nearly 70 percent of APIs are imported from China. According to Credit Suisse Group, India supplies more than 40 percent of generic drugs to the United States, but relies on China for the ingredients in those drugs.
External shocks are also testing the resilience of the U.S. drug supply chain. In the early days of the new crown outbreak, India announced restrictions on exports of 26 drug ingredients and medicines that use them, involving key drugs such as acetaminophen. Later, India’s border conflict with China heightened concerns about the future of India’s pharmaceutical industry.
Growing tensions between the U.S. and China also played a role, especially since Beijing has not hidden its intention to weaponize its drug supply.
In an article last year, a commentator for the Chinese official media Xinhua noted, “If China retaliates against the U.S. at this time by announcing strategic controls on medical products and banning exports to the U.S., in addition to a travel ban on the U.S., the U.S. will be caught in a sea of new coronaviruses.”
Stabilizing the drug supply chain
To be sure, the United States has not turned a blind eye to the national security threats arising from drug import dependence.
The Biden administration’s recently introduced American Jobs Act calls for a $30 billion investment to protect Americans from future pandemics, including efforts to bring drug ingredient production back to the United States.
This comes after the administration has already taken some incentives. According to the New Coronavirus Assistance, Relief and Economic Security Act, passed last year, manufacturers will receive direct funding to increase production of medical products. The executive order directs federal agencies to purchase the maximum amount of domestically manufactured medical products and drugs.
The government department has also called for the advancement of drug manufacturing technologies. the FDA has launched the Emerging Technologies Program, which is designed to promote innovation in drug manufacturing. The department believes that advanced manufacturing technologies can make domestic drug manufacturers more competitive than foreign manufacturers.
But these efforts are only preliminary, and much work remains to be done. There are still many question marks surrounding the upstream supply chain for drugs, and while the FDA has been closely monitoring the supply chain, it does not have a clear picture of which suppliers manufacturers use for production.
We need to build a repository of information to collect information on ingredient manufacturers,” Mariana Socal, an associate researcher at Johns Hopkins University School of Public Health, told the Voice of America. The biggest problem right now is that we don’t know the source of these drug ingredients because there is no requirement to disclose this type of information.”
Sonkar explained that many times, even though a drug is produced by a different manufacturer in the U.S., it is likely that the initial raw material comes from the same manufacturer, which would likely lead to a shortage of the drug at the same time.
She also emphasized that the goal is to bring more, but not all, production back to the U.S. to ensure that the U.S. drug supply chain does not lead to continued shortages of essential drugs and can respond to global public health emergencies such as pandemics.
In a recent report, Sonkar’s Johns Hopkins research team recommended that Congress should authorize the FDA to impose mandatory ratings on the resilience of drug manufacturers’ supply chains. the FDA implemented a similar program in 2016, but only required voluntary participation.
Mary Denigan-Macauley, director of health care for the U.S. Government Accountability Office, told Voice of America that bringing more of the pharmaceutical industry back to the U.S. will require long-term support from the government under multiple coordinated efforts such as taxation, infrastructure investment and approvals.
Macauley told Voice of America, “Strict environmental regulations, the cost and time required to build facilities, and access to knowledgeable staff can all be challenges to manufacturing medical products in the United States.”
She said the cost of building an FDA-approved drug manufacturing facility in the U.S. could be as much as $2 billion and take five to 10 years to complete. In addition, the U.S. faces competition in bringing facilities in as other countries struggle to bring manufacturing back home.