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Coronavirus outbreak helps lawmakers make case on drug shortage bills

Concerns raised over China’s place in the drug supply chain

The coronavirus outbreak is prompting fears of drug shortages in the United States because of how deeply the pharmaceutical supply chain relies on China. For lawmakers who were already working on bills to address shortages and bring more drug manufacturing back to the U.S., the epidemic is helping them prove their point. 

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No drug manufacturers had notified the Food and Drug Administration about any risks to their supply chains as of earlier this month. But with no end in sight for the outbreak, experts predict it will happen sooner or later. 

“We have to figure out a way to bring manufacturing of pharmaceutical drugs and generics back to the United States,” Rep. Anna G. Eshoo, D-Calif., told CQ Roll Call’s CQ on Congress podcast last week. “Now, it’s one thing if China makes T-shirts and sportswear and shoes and whatever, but we cannot be dependent on a foreign source, especially a country that is not exactly a 100 percent ally.”

Eshoo, who chairs the Energy and Commerce Health Subcommittee, has been looking at this issue since last fall when her panel held a hearing on the drug supply chain. Now she says she’s launched a working group with committee members and that the issue is a priority for her this year. 

“I don’t think it’s going to be easy,” she acknowledged. 

Experts and lawmakers point to several options for improvements, including making supply chains more transparent and having the government make investments to bring manufacturing back to America. And despite a national discourse on the high cost of drugs, experts say in some cases they may be too low. 

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Many finished branded drugs are made in the U.S. But more commonly used generic products are mostly made in China and India, and the raw ingredients needed for them are predominantly made in China, according to the U.S.-China Economic and Security Review Commission. 

That raises fear of a supply disruption if China’s government ever wanted to play geopolitical hardball, or because of other circumstances outside of its control — such as a massive outbreak. 

“Any types of delays on producing drugs in China because their workers are sick, or they have isolation or quarantine bans in place, that could affect the supply chain and we could see potential drug shortages,” Nikki Clowers, the Government Accountability Office’s managing director of health care, told the CQ on Congress podcast.

Even before the outbreak, lawmakers from both parties were ringing alarm bells about the extent to which pharmaceutical ingredients, the most basic parts of what gets mixed into finished drugs, are made in China. An odd coalition of senators, including Massachusetts Democrat Elizabeth Warren and Arkansas Republican Tom Cotton, wrote to the Pentagon in December, concerned about how a pharmaceutical supply chain disruption could affect military readiness. 

Later that month, Senate Minority Leader Charles E. Schumer asked the GAO to examine U.S. reliance on China for pharmaceuticals, which the office is now investigating.

Profits and proposals

Manufacturing has moved to China because it’s far cheaper to produce pharmaceutical ingredients there, thanks to lower costs for labor and electricity, as well as looser environmental regulations. 

Former Food and Drug Administration Commissioner Scott Gottlieb told senators at a Homeland Security and Governmental Affairs hearing last week that China supplies the raw ingredients for many generic anti-infective drugs made in India — a class of products that includes antibiotics and antiviral medications, both of which could actually play a role in treating coronavirus patients.  

The products in shortage typically have in common one thing: They’re cheap. Manufacturers have small profit margins, which means they make money on volume. That leads to industry consolidation and fewer manufacturers, so if something happens to one of them, there are fewer companies to fill the void. 

“We ought to think about how to identify these choke points, where things can go awry. We have to think about reimbursement schemes to drive incentives back into these markets to make it profitable to develop these drugs,” Gottlieb said. “We’re getting a lot of these drugs at very low prices. That’s very good for consumers, until there is a shortage.”

Lawmakers are pushing several bills that address drug shortages and manufacturing issues, some of which potentially could be considered for inclusion in a broader package of bills to renew health programs that expire in May. 

Sens. Susan Collins, R-Maine, and Tina Smith, D-Minn., have a bill to give the FDA more power to prevent shortages and attempt to shed more light on the problem’s root causes. 

The bill would allow the FDA to prioritize reviews and inspections for drug applications if they are for a new version of a product already in shortage. While drugmakers themselves are already supposed to notify the FDA about interruptions that could lead to shortages, under the bill, the ingredient manufacturers also would have to do that. It would also require drugmakers to report contingency plans to the FDA in the event of shortages. 

The bill would also require a report to Congress on how to create incentives to ensure it is financially viable to make cheap generic drugs and how to bring more manufacturing back to the U.S. One idea for that is investing in so-called advanced manufacturing. 

Experts distinguish advanced manufacturing from the status quo by highlighting how drugs are typically made in batches, but with better technology, plants might be able to run a continuous assembly line of product that would make the process more efficient and provide better quality control. An advanced process might require less in terms of labor and electricity but would rely more on knowledge and skills more prevalent in the U.S. To support the more advanced processes, researchers say artificial intelligence could even be employed to ensure quality and guide the process. 

While the FDA has actively tried to boost advanced manufacturing and Congress has provided some funding to facilitate it, some drug companies are hesitant to try new manufacturing practices involving things like AI when there is a risk that they might not be approved by the FDA, says Kelvin Lee, a University of Delaware professor and director of the National Institute for Innovation in Manufacturing Biopharmaceuticals, a collaboration between industry and many universities.  

“There are a lot of unknowns about how the government regulatory authorities would view the use of those approaches, because frankly nobody has done it before,” Lee added. 

Energy and Commerce Chairman Frank Pallone Jr., D-N.J., and Rep. Brett Guthrie, R-Ky., are seeking to authorize $80 million in grants over five years for the FDA to partner with universities that would research advanced manufacturing techniques that private sector companies could use. Eshoo’s subcommittee held a hearing on their bill in January. 

“We need to find ways to incentivize people to stay here, come back here and at least make sure we have a backup system so we have ability to get to it quickly if something like this [outbreak] happens,” Guthrie said.  

Other lawmakers say the government might need to intervene more heavily. California Democrat John Garamendi and Missouri Republican Vicky Hartzler wrote a bill that would require the Defense Department to “Buy American” when it comes to drugs used for its servicemembers. 

“The military alone can create a pull so that some manufacturers say, ‘I’ll make those drugs,’ and create that marketplace,” Garamendi said. 

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