Pharmaceutical Industry: Enhancing Supply Chain Resilience

June 24, 2024 By admin Comments are Off

Explore the pharmaceutical industry is enhancing supply chain. Learn strategies and innovations that strengthes supply chains to ensure reliable access.

Identifying and addressing vulnerabilities in the upstream pharmaceutical supply chain is crucial for preventing and alleviating drug shortages, ensuring that patients have consistent access to essential medical treatments. In the United States, persistent and increasing drug shortages since 2014 have significantly impacted patient care, leading to treatment delays and the use of less effective alternatives, often resulting in unfavorable health outcomes. These shortages arise when supply fails to meet demand due to sudden spikes in demand, disruptions in supply chains, or both.

Acknowledging the Existing Gaps

Currently, there is a lack of comprehensive insight into the upstream supply chain for medicines, which encompasses the entire manufacturing process from raw chemicals and key starting materials (KSMs) to active pharmaceutical ingredients (APIs) and finished dosage forms (FDFs). Basic metrics like factory counts are inadequate for gauging production volumes, and assessing raw material inventories poses additional challenges. Unpredictable demand-side shocks during emergencies further complicate supply chain management.

Addressing vulnerabilities in the upstream supply chain is essential for building resilience against drug shortages, complemented by efforts to strengthen downstream supply chain reliability. Despite various governmental and nongovernmental initiatives aimed at enhancing supply chain resilience, no single entity has a comprehensive view of the entire medicines supply chain in the U.S. This lack of clarity impedes understanding of supply chain risks and hampers effective mitigation strategies.

To improve supply chain resiliency and reduce drug shortages, both pharmaceutical companies and the U.S. government must gain better visibility and mapping of their complete supply chains. This enhanced clarity is crucial for identifying root causes of shortages and deploying resources effectively. By addressing these challenges comprehensively, stakeholders can work towards ensuring a stable and uninterrupted supply of medicines, thereby safeguarding patient health and well-being across the United States.

Measures Suggested by USP

U.S. Pharmacopeia (USP) advocates for policymakers, regulators, and industry leaders to take decisive action in identifying and mitigating risks and vulnerabilities within the upstream pharmaceutical supply chain to reduce disruptions in medicine supply. This proactive approach involves implementing robust risk mitigation strategies, fostering both public and private investment, and enacting policy reforms that are guided by a comprehensive understanding of the factors driving drug shortages and a thorough mapping of the U.S. medicines supply chain.

1. Building Early Warning Capabilities:

USP emphasizes the need for establishing and funding an Early Warning System and Research Coordinating Center. This initiative would involve continuous surveillance of the pharmaceutical supply chain, issuing timely alerts, and conducting research to address gaps in the mapping of the U.S. pharmaceutical supply chain. By enhancing early warning capabilities, both the U.S. Government and private sector stakeholders in the pharmaceutical supply chain can adopt a proactive stance to prevent shortages and mitigate their impact effectively.

2. Establishing a Vulnerable Medicines List:

USP recommends the creation of a vulnerable medicines list within the United States. This list could operate independently or as part of an essential medicines list, specifically targeting supply chain vulnerabilities. These vulnerabilities include factors such as reliance on sole or limited suppliers, geographic concentration of manufacturers and suppliers of APIs (active pharmaceutical ingredients), excipients, and key starting materials (KSMs), as well as risks associated with political and geopolitical instability, climate change impacts, manufacturing complexities, pricing dynamics, and other relevant factors. Developing and utilizing vulnerable medicines lists will facilitate prioritization of critical medicines and enable targeted policy interventions and allocation of resources to enhance the resilience of the medicines supply chain, thereby ensuring continued patient access to essential medications.

3. Coordinating Supply Chain Resilience and Reliability Efforts:

USP underscores the importance of coordinating efforts to enhance resilience and reliability across the medicines supply chain involving federal agencies and non-governmental stakeholders. This coordination should encompass multi-disciplinary initiatives aimed at aligning strategies and resources effectively. It involves defining measurable outcome metrics to assess the success of implementation efforts, ensuring that activities are strategically planned to maximize their impact. Furthermore, USP advocates for allocating necessary authorities and adequate funding to lead these cross-cutting efforts. By enhancing coordination, stakeholders can collectively strengthen the resilience and reliability of the drug supply chain, mitigating risks of disruptions and shortages effectively.

- Strengthening the Manufacturing Base for Drug Products: USP supports reforms aimed at bolstering the security of the U.S. manufacturing base for drug products to minimize risks of disruptions and shortages. Key measures include:
- Economic Incentives: Implementing economic incentives to encourage multiple suppliers for critical drugs, promoting geographic diversification of manufacturing facilities, and establishing redundancies in manufacturing locations and component supplies.
- Promoting Domestic Manufacturing: Encouraging increased domestic manufacturing of APIs and finished drug products within the United States. Priority would be given to medicines or ingredients deemed most vulnerable to supply disruptions.
- Market-Based Incentives: Creating market-based and pricing incentives to utilize excess domestic manufacturing capacity, which is estimated to be up to 50 percent underutilized in the United States.
- Financial Support for Advanced Manufacturing Technologies (AMTs): Providing financial incentives to support manufacturers in establishing facilities equipped with advanced manufacturing technologies on U.S. soil. This is particularly crucial for manufacturers producing low-margin drug products that are more susceptible to shortages due to limited profitability.
- Development of Tools and Standards: Facilitating the adoption of advanced manufacturing technologies by developing tools and standards that reduce technical barriers. This initiative aims to streamline the integration of AMTs into pharmaceutical manufacturing processes, enhancing efficiency and resilience.

4. Coordinating Supply Chain Resilience and Reliability Efforts:

USP emphasizes the critical need for coordinated efforts to enhance the resilience and reliability of the medicines supply chain involving collaboration among federal agencies and non-governmental stakeholders. This coordination should encompass multifaceted initiatives aimed at aligning strategies and optimizing resource allocation. Central to this approach is the establishment of measurable outcome metrics to gauge the effectiveness of implemented strategies. By strategically planning these initiatives, stakeholders can maximize their impact in mitigating risks of disruptions and shortages effectively. USP advocates for the allocation of necessary authorities and adequate funding to lead these cross-cutting efforts, ensuring comprehensive support for bolstering the resilience and reliability of the drug supply chain.

- Strengthening the Manufacturing Base for Drug Products: USP supports comprehensive reforms aimed at fortifying the security of the U.S. manufacturing base for drug products to mitigate risks of disruptions and shortages. Key measures include:
- Economic Incentives: Introducing economic incentives to foster multiple suppliers for critical drugs, promoting geographic diversification of manufacturing facilities, and establishing redundancies in both manufacturing locations and component supplies.
- Promotion of Domestic Manufacturing: Encouraging increased domestic production of Active Pharmaceutical Ingredients (APIs) and finished drug products within the United States. Priority would be given to medicines or ingredients identified as highly vulnerable to supply disruptions.
- Market-Based Incentives: Developing market-driven and pricing incentives to utilize excess domestic manufacturing capacity, which is estimated to be significantly underutilized—up to 50 percent—in the United States.
- Financial Support for Advanced Manufacturing Technologies (AMTs): Providing financial incentives to assist manufacturers in establishing facilities equipped with advanced manufacturing technologies within the United States. This support is particularly critical for manufacturers of low-margin drug products, which face heightened susceptibility to shortages due to limited profitability.
- Development of Tools and Standards: Facilitating the adoption of advanced manufacturing technologies by developing and implementing tools and standards that reduce technical barriers. This initiative aims to streamline the integration of AMTs into pharmaceutical manufacturing processes, thereby enhancing operational efficiency and supply chain resilience.

5. Valuing supply chain resiliency for sustainable generic medicine pricing:

The primary driver of drug shortages is often attributed to unsustainable low prices. These economic pressures hinder efforts to fortify supply chain resilience by limiting manufacturers’ capacity to reinvest in essential areas such as facility maintenance, updates, quality assurance, and management. Consequently, manufacturers may opt for lower-cost manufacturing locations, exacerbating supply chain vulnerabilities. Recognizing the urgent need for a paradigm shift in the pricing of generic drugs, the US Pharmacopeia (USP) advocates for a dual focus on both price stability and supply chain robustness.

To address these challenges, USP proposes the following initiatives:

- Measuring and Rating Supply Chain Resiliency: USP supports initiatives that assess and rate manufacturers based on their supply chain resilience, sustainability, and reliability. This approach aims to integrate supply chain redundancy and resilience efforts into procurement decisions, regulatory frameworks, and industry practices.
- Promoting Payment and Purchasing Models: Encouraging policymakers and stakeholders in the public and private sectors to adopt payment and purchasing models that prioritize and incentivize supply chain resilience and reliability. Such models could include mechanisms that recognize and reward manufacturers for investing in redundancy measures and supplier diversification.
- Long-Term Guaranteed-Volume Contracts: Advocating for the establishment and use of longer-term guaranteed-volume contracts where prices are assured for a specified volume of medicines. These contracts can incorporate provisions that mandate manufacturing redundancies and diversification of suppliers, thereby enhancing supply chain resilience over time.

Addressing vulnerabilities in the upstream pharmaceutical supply chain is paramount to reducing drug shortages in the United States. By implementing comprehensive strategies such as early warning systems, vulnerable medicines lists, coordinated resilience efforts, strengthened manufacturing capabilities, and sustainable pricing models, stakeholders can enhance supply chain robustness and ensure uninterrupted access to essential medications. These initiatives not only safeguard patient health but also fortify the resilience of the pharmaceutical sector against future disruptions, ensuring a more reliable and sustainable supply of medicines for all Americans.