No Easy Fixes for Drug Supply Chain Problems


Better leadership is needed on both ends of the chain, expert says.

The U.S. drug supply chain works well in the middle, but the beginning and end leave much room for improvement, according to Stephen Schondelmeyer, PharmD, PhD, of the University of Minnesota in Minneapolis.

“When a manufacturer imports a drug into the U.S. and sells it to wholesalers and then it goes to group purchasing organizations and through hospital institutional systems, that system works very well,” Schondelmeyer said last week at a public workshop of the National Academies of Science, Engineering, and Medicine’s Committee on Security of Medical Product Supply Chain. “But where problems occur is when the API [active pharmaceutical ingredient] is not being produced or is not available, or is not shipped to the finished dose manufacturer to make enough.” With the current “just in time” manufacturing system, “inventories may only last a month” before supplies dry up, he said.

Leadership on this issue “is certainly needed at the top, but also needed at the end,” said Schondelmeyer, who is co-principal investigator of the Resilient Drug Supply Project at the university’s Center for Infectious Disease Research and Policy.

For example, he said, “I routinely meet with groups of pharmacy directors at major hospital systems. I have heard stories from pharmacy directors … who have said they had remdesivir allocated by their state; it showed up in their hospital’s lab. Nobody in the lab knew what it was or why it arrived, and it sat there for several days before they figured out this was a drug and pharmacy should be managing this You can run a marathon, but if you don’t finish the last 200 yards, you don’t finish the marathon, and that’s what happened with remdesivir.”

“We need to be predicting not only demand changes but what things can create a supply disruption, because a lot of shortages we have are from supply disruption,” Schondelmeyer said. In the COVID-19 era, this could include unexpected political moves such as export bans — such as those recently put in place in India and the United Kingdom — which could mean that “we could find whole categories of drugs not available in the U.S., and we don’t have the capacity to replace that supply, in the short run at least,” he said.

Pharmaceuticals are a very unique market, he added. “We established a pharmaceutical market based on monopolies when drugs first come on the market, via intellectual property, and even later on, when you’re down to two or three generics they function like an oligopoly. We have a marketplace that has extreme asymmetries of information, where people selling a drug know a lot more than people buying the drug. We have to establish an infrastructure to understand the pharmaceutical market and the flow of products so we can correct the market when it’s not working.”

“Our current system of fixing drug shortages is a ‘fail and fix’ system,” he said. The list of shortages “is a list of products that have already failed. I think we should have a system that has supply chain maps that identify critical stages — even pre-API — that can suggest where we might have a failure, and do something before the failure occurs. I suggest we move from ‘fail and fix’ to ‘predict and prevent.'”

Schondelmeyer said he and his colleagues are trying to build such supply chain maps, “but really the government should be doing that … I don’t fault the FDA; the FDA may or may not be the right place to do that.” But more agencies and other players need to be involved because “no one player in the market can solve this problem alone.”

Schondelmeyer displayed percentages of various drug types that were in shortage. Among 156 “critical acute care drugs” — those that must be used within hours or days of an illness’s onset to avoid serious outcomes or death — the FDA found 25.6% were in shortage, while the American Society of Hospital Pharmacists (ASHP) found that 41.7% of them were in shortage, “and this was even before COVID-19,” he said. Among a list of 40 “critical COVID-19 drugs,” the FDA has listed 45% of them as being in shortage, while the ASHP rated 75% as being in shortage. “Most were in short supply even before COVID-19 hit,” he added. “These are alarming levels of shortage and they have persisted.”

Many people suggest that the supply chain problem can be solved by moving manufacturing for particular drug products from overseas to a U.S. plant, but that doesn’t quite solve the problem, said Schondelmeyer. “If we manufactured our entire supply of drugs in the U.S., it doesn’t solve the problem if you put all the manufacturing in one facility and it gets wiped out by a hurricane,” he said, recalling what happened when a hurricane hit Puerto Rico, the home of several medical product manufacturers. “Hospitals were scrambling to get things like normal saline. So simply bringing production back to the U.S. but concentrating it in one place doesn’t solve the problem — it just moves the problem.”

Khatereh Calleja, president and CEO of the Healthcare Supply Chain Association, agreed. “We’ve got to focus on this very issue of geographic diversity,” Calleja said. “Otherwise we’re creating a risk when we create that concentration.”

When people are discussing the supply chain, having a common language among institutions is also important, said Chris Liu, director of enterprise services for the state of Washington, “In hospitals, ‘conservation’ of PPE [personal protective equipment] means something different at every hospital you go to,” he said.

Another thing that needs to be taken on is the vulnerability of drug precursors, said James Lawler, director of international programs and innovation at the University of Nebraska’s Global Center for Health Security. “It’s one thing if the plant that makes the final small-molecule antibiotic … is in the U.S., but if all the precursor chemicals they require to synthesize that product come from overseas, you haven’t necessarily fixed your supply chain vulnerability.”

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