Provider groups call for drug supply chain restructuring to avoid shortages


The federal government should offer incentives to encourage drugmakers to manufacture critical medicines and active pharmaceutical ingredients, a coalition of provider organizations urge in a set of policy recommendations issued Thursday.

Rewarding pharmaceutical suppliers for developing continuous manufacturing infrastructure in the U.S. and abroad could help mitigate drug shortages, the American Medical Association, American Society of Anesthesiologists, American Society of Health-System Pharmacists, Association for Clinical Oncology and United States Pharmacopeia urge in the report.

Continuous manufacturing, unlike batch manufacturing, uses fully integrated assembly lines that produce smaller quantities but can quickly pivot to make different medications.

“Those batch manufacturing facilities are vulnerable because it’s hard to transition those lines to other products,” said Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists. “Continuous manufacturing sites can produce various ingredients on-site on a smaller scale compared to large plants that produce enormous volumes of one drug extremely efficiently.”

The COVID-19 pandemic magnified vulnerable links in the healthcare supply chain as access to overseas supplies of drugs and personal protective equipment abruptly stopped. Employee safety and care quality suffered while providers scrambled to find alternative sources.

The Strategic National Stockpile largely failed to fill those gaps. “There was no transparency. Different agencies were sending out different messages about what was in the Strategic National Stockpile and how to access it,” Kraus said. “There are ways to incentivize stockpiling by the private sector like favorable financing from the government that allows health systems, [group purchasing organizations] or manufacturers to hold inventory.”

The federal government could boost medicine supplies by offering tax incentives of grants to pharmaceutical companies that incorporate continuous manufacturing, the provider groups recommend.

In addition to encouraging reliable drug and active pharmaceutical supplies, policymakers should enact legislation that bolsters the Strategic National Stockpile, improves collaboration with foreign manufacturers, rewards high-quality manufacturers and boosts reporting requirements, the organizations argue.

Regularly updating the Strategic National Stockpile’s inventory, including monoclonal antibodies for various pathogens, would help during public health emergencies, according to the groups. Wholesalers and distributors should also report supply levels and the locations of their contract manufacturers, which are often the source of quality mishaps.

“The location of contract manufacturers is something we continue to be concerned about. If a pharmaceutical or device supplier has multiple manufacturers, it may seem they have a diverse network but that isn’t the case if they rely on one contract manufacturer,” Kraus said. “We need the FDA to have clear visibility into those supply disruptions.”

Health systems created U.S.-based PPE manufacturing facilities as a stopgap during the pandemic. While providers expect to diversify their suppliers rather than largely rely on China-based sources over the long term, many of those local ventures fizzled out as lower-cost foreign manufacturers resumed production.

The healthcare system historically relied on lean, just-in-time inventory strategies under which providers stored limited amounts of personal protective equipment on-site and ordered more as needed. But many providers have stockpiled more equipment and entered into long-term contracts with suppliers and distributors, so they have more at their disposal.

Civica Rx and some GPOs have also helped shore up supplies of persistently short generic drugs and the government could do something similar, Kraus said.

The Food and Drug Administration should require medication and device manufacturers to publicly report quality metrics that measure reliability, which would boost high-quality facilities and forecast supply disruptions, the provider organizations advise.

Currently, the only tool the FDA has to press for greater transparency is attempting to shame companies through public letters. Deeming failure to report a “prohibited act” would pave the way for more substantial penalties, according to the provider groups.



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