By Louis Garguilo, Chief Editor, Outsourced Pharma
Will you become a founding signatory to the U.S. “50 By 25” Declaration Of Drug Independence?
It’s statement of establishment:
We hereby dedicate ourselves to the goal of reducing U.S. dependency on foreign sources for drug materials, intermediates, substances, and finished products to 50% or less by the end of the year 2025.
This is an aggressive and realistic national objective, undertaken on behalf of American patients and consumers.
It’s a bulwark against a prevailing “all or nothing” mentality filibustering even incremental steps towards national supply-chain security.
Consider this public Declaration of Drug Independence (DDI) a response to statements from the pharma industry pointing out (correctly) how immensely difficult it will be to affect wholesale supply-chain outsourcing and manufacturing changes, but then unfortunately using this as code for, “Thus we’ve little intent to try.”
But this is also a positive declaration for our pharma industry.
The DDI serves as a reality check. On both those in government and the public who cry out for all drug supply chains to be reshored immediately. The outcry is understandable, but lacks the recognition it is in fact an unrealistic demand.
I reached out to The Pharmaceutical Research and Manufacturers of America (PhRMA), an organization representing our leading innovative biopharmaceutical research companies, for a comment on its stance regarding repatriating supply chains to the U.S.
“We agree that we should always be seeking ways to enable even greater domestic development and manufacturing of medicines,” a PhRMA spokesperson said on behalf of Stephen Ubl, President & CEO.
PhRMA added: “We support efforts to invest in building advanced manufacturing and related technologies, capabilities, and capacity in the United States, as well as well as potential incentives to grow manufacturing jobs in the United States.
“But now is not the time for sweeping changes to the pharmaceutical supply chain that could cause disruptions. Biopharmaceutical companies are doing everything they can to meet patient needs in the face of unprecedented circumstances. For the biopharmaceutical industry, that includes helping to increase COVID-19 testing capability and capacity, developing potential treatments and vaccines and ensuring the safety of the pharmaceutical supply chain.”
Best wishes regarding those efforts, and agreed. In fact, the DDI is a metered proposal, a compromise on both time and scope.
But now is the time for public commitment to correct supply chains post-coronavirus pandemic.
A Gang Of Four
To turn declaration into future reality, four constituencies must sign on. I list them in order of leadership:
- Members of the pharmaceutical and biotechnology industry –and their U.S.-based contract development and manufacturing organizations (CDMO)
- The federal government
- The health-care system: Insurance companies, PBMs, 3PLs, pharmacies, hospitals, doctors and nurses
- The U.S. citizenry
The order is important. For national cohesion through the process (and beyond) the goal of “50 by 25,” the U.S. citizenry has the most to gain – in greater health and national security – but will need the others to lead to acceptance of personal responsibilities.
David Dodd, Chairman, President & CEO, GeoVax Labs, recently stated:
“Outsourcing - to China or elsewhere - was implemented primarily for cost reduction, and due to more stringent domestic regulations. This was entirely driven by our own domestic market demands, and open competition in the free marketplace.
“Historically, the quality of off-shore work and ingredient sourcing has been consistent and competitive, without any other political and/or societal implications of concern. As a result, as the cost advantages versus domestic manufacturing continued to increase, off-shore manufacturing of products, as well as various ingredients and components, became more attractive economically.
“The negative result has been our critical dependency on non-domestic manufacturing and ingredient/component sourcing. This clearly needs to be revisited and re-balanced towards domestic operations.”
Many will take issue with Dodd’s evaluation on quality, but his overall point stands: We got ourselves into this situation mostly in the pursuit of cheap; now we need to extrapolate ourselves.
Let’s interject here no effective extrapolation will occur without a major contribution from domestic contract development and manufacturing organizations. Strap your CDMO helmets on.
And we’ll need much more than supply chain adjustments.
A Healthier System
The U.S. health-care system is oft-times said to be the best in the world. Let’s agree with that for the moment.
At the same time, few dispute that throughout our entire health-care system – its own convoluted “supply chain” – there is much room for improvement (i.e., see our third constituency listed above).
Also, the federal government must take a fundamental leadership role, including one of education as well as policy support.
However, this should be as light a regulatory and mandate-driven role as possible. We don’t want to lose Dodd’s free-market workings in his statement above.
To allow for that light-touch government intervention, we circle back to the role of the pharmaceutical industry: It must be the first to publically sign up for the cause, and drive a meaningful and realistic debate.
It would be an error for the industry to assume that once again – as the China coronavirus pandemic dissipates – the chorus for domestic supply chain security will also evaporate.
It will not. Not this time.
Clear In Objective?
Instead, pharma should initiate a leadership role. Move forward to explain and clarify business and market realities — the real nuts-and-bolts of sourcing and capacities — as well as costs and pricing. (Here are some details.)
Required will be transparency, and validated measurements of results – call it truth-telling.
For example, we must avoid the tyranny of averages. A large pharma might be tempted to take an average of drug products to gain a 50% or less dependency number. But if within that there remain critical drugs still 90% reliant on supply chains in China (or anywhere offshore), then the letter and spirit of our declaration is voided.
Despite the paragraph directly above, we need to always stay realistic. There will be the need to seriously consider the production of common generics – and our propensity for them.
An industry professional recently said this to me (off the record) while discussing bringing supply chains back to the U.S.:
“Reshoring can work for branded companies. But if you take the pool of generics, the hundreds of molecules supplied from China and India, and add the razor-thin profit margins, it's more of a long shot. Even if branded pharma drives more of the repatriation of manufacturing to the U.S., including reagents, starting materials and intermediate, ‘complex’ is not a word that describes what we are dealing with. Perhaps there’s a ‘bi-modal distribution’ to this.”
And so, much more to come in coming weeks.
But for now, how about it? Sign on to this “50 By 25” Declaration Of Drug Independence. It’s the start to our next battle for independence.
Follow-up “50 By 25” editorials are here: