How Pharma and Life Science Distributors Avoid Supply Chain Disruption During COVID-19 Outbreak
Life science supply chain disruptions avoided with advance planning during COVID-19 outbreakFirst, consumers and professionals in the pharmaceutical industry feared that the trade wars would cause supply chain disruptions. Now, a more insidious risk has emerged, one more challenging to conquer. In this challenging time of the COVID-19 outbreak, many consumers have expressed concern over potential supply chain disruptions to prescription drugs, medical supplies such as personal protective equipment (PPE), test kits, hand sanitizer and medical devices. Unlike the Johns Hopkins COVID-19 tracker, this is not something consumers can track online. Breaking news: for many Americans, this may be a matter of life and death. Fortunately, advance planning across the life sciences supply chain may quell many fears.
Even as this black swan event, the coronavirus pandemic was foreseeable, supply chain management professionals and business leaders planned for the potential of supply chain disruption to global supply chains. Before the start of the novel coronavirus in Wuhan, China, an area known for biopharmaceutical research, many suppliers in China stocked up, replenishing ingredients and supplies in advance of the Chinese new year holiday. This helped to prevent shortages further down the life sciences supply chain.
Backup Plans in Effect for Prescription Drugs and the Life Sciences Supply Chain
Across the global supply chain, at each juncture, life science goods were stockpiled, typically for a month or more in case of supply chain disruptions to prevent critical goods being listed as in short supply. Most of the larger drug wholesalers and pharmacies maintain a minimum of one to two months of supply of prescription drugs. In addition, pharmaceutical manufacturing companies maintain a storage of medications as a failsafe for supply chain disruptions, including maintaining critical inventory at distribution centers and warehouses that are a distance away from high risk areas.
In addition, many large health care organizations have made special arrangements to enable insured and Medicare patients to receive a 90-day supply of maintenance prescription medications. In addition, some pharmacy benefit managers are waiving early refill limits on 30-day prescription maintenance medications. While this may help allay patient fears about accessing the prescription drugs they need, it may have unintended consequences on medication adherence and the supply of available medications as well as other factors.
It is important to note that prescription drugs are different from other products on the market today. Everything involved with the manufacturing process of a drug product, including the identity of the manufacturing facility which produces it, to each raw material that is used and where it is sourced is considered to be a pharmaceutical trade secret. It is so secret, in fact, that the FDA does not even have access to this information.
Other than the FDA, drug manufacturers are not legally obligated to notify anyone other than the FDA, not even patients or pharmacies, about a drug shortage. To change this would require Congressional action.
In late January 2020, the FDA reached out to over 180 manufacturers of human drugs in order to:
- Provide a reminder of applicable legal requirements for notifying the FDA regarding any anticipated supply disruptions
- Request that drug manufacturers conduct an evaluation of entire supply chain. This includes not only finished drug products but also active pharmaceutical ingredients (the primary ingredient in the drug which produces the intended effect) and all components manufactured in China.
20 pharmaceutical products or ingredients were determined to be manufactured exclusively in China, leaving open the potential that the Covid19 pandemic would be disrupting supply. After identifying drug products which solely source active pharmaceutical ingredients (APIs) or finished drug products from China, the FDA made contact with the companies to determine the drug shortage risks due to the COVID-19 outbreak. All drug products are ranked as non-critical drugs and have not reported any shortages to date.
With respect to animal drugs, the FDA has contacted the 32 manufacturers which produce animal drug products, either finished goods or which source active pharmaceutical ingredients in China for the U.S. No shortages have been reported, however six companies noted that they have visibility in the supply chain which indicates that there are issues that may soon lead to shortages. The FDA is collaborating with these organizations on potential interventions to mitigate the potential animal drug shortages.
Although no laws currently exist requiring medical device manufacturers to notify the FDA of a circumstance which could lead to a potential shortage. Medical device manufacturers are not legally required to respond when the FDA requests information about a potential supply chain disruption. The FDA proactively takes steps to keep in communication with medical device manufacturers to help mitigate supply chain risks to these important products.
The FDA contacted the 63 medical device manufacturers that represent 72 facilities in China which manufacture essential medical devices. Several of these facilities were adversely impacted by the COVID-19 outbreak however no reported shortages for these medical devices have been reported within the U.S. market.
In addition, the FDA is not aware of specific widespread shortages of medical devices but has been made aware of reports by the CDC and other U.S. partners of increased ordering of a variety of human medical products via distributors due to the U.S. healthcare facilities ramp up in preparation for an increase incidence in the COVID-19 outbreak.
The FDA has been working on other ways to help mitigate or even prevent medical product shortages. Within the President’s budget, the FDA has advised Congress of a few ways that it could help, if its current response capabilities were strengthened:
1. Lengthen the Expiration Dates of Specific Critical Drugs to Help Mitigate Drug Shortages
Some critical drug products have “unnecessarily short expiration dates” and shortages of these products can occur when the drugs must be discarded when the shelf life on the product label has been exceeded. The FDA would like to expand its authority to require the submission of studies and labeling of drug products with the longest possible expiration date that can scientifically be justified. This can help to mitigate or prevent shortages of particular pharmaceutical products.
2. Require Risk Management Plans to Improve Critical Infrastructure
The FDA is seeking approval so that it can require application holders of specific drugs to conduct periodic risk assessments so that vulnerabilities in the manufacturing supply chains, including contract manufacturing facilities can be identified. Application holders would be required to submit plans to mitigate the supply chain risks associated with these vulnerabilities and provide contingencies for emergency situations.
3. Require More Information Sharing and Accurate Supply Chain Data
The FDA is requesting the authority to require the data needed to assess critical infrastructure, as well as manufacturing capacity and quality. This data would help to improve the accuracy and timeliness of supply chain monitoring, aiding in better recognition of supply shortage signals.
4. Establish Reporting Requirements for Medical Device Manufacturers
Surprisingly enough, the FDA lacks the same authority for medical device shortages that it has for drugs and biological products. As many medical devices are instrumental in aiding in, extending or safeguarding human health, not having the authority to require the timely and accurate data regarding the shortage of these products is problematic.
Impact of COVID-19 and Global Sourcing on Pharmaceutical Supply Chain
India and China are two of the world’s largest global producers of active pharmaceutical ingredients (APIs) and generic drugs.
In mid-March, Chinese manufacturers began bringing production lines back to life. Unfortunately, India imposed restrictions on the export of 26 active pharmaceutical ingredients, approximately 10 percent of their export capacity. This is likely to have a far-reaching impact on a handful of drugs, including paracetamol, antibiotics erythromycin and tinidazole and vitamin B12. India imposed the restrictions because its manufacturers depend heavily on imports of APIs from China, which were slowed down dramatically due to the COVID-19 outbreak and resulting manufacturing work stoppage. The export restrictions were initiated to prevent domestic shortages in India in the long term.
As the largest consumer of pharmaceutical products (40-50% of the market), it would seem likely that the United States would, at some point, be impacted by pharma supply chain disruptions in India and China.
Not only has pharmaceutical manufacturing been disrupted but also the transportation and logistics needed for product order delivery. With significant restrictions now placed on population movements, shipping and distribution is facing major challenges. This includes not only the distribution of the finished goods, but also that of all the raw materials and components which need to be brought together to manufacture each product.
Currently, it remains unknown to what extent American drug distributors and pharmacies carried safety stock to cover gaps in drug manufacturing. As consumers have become increasingly fearful about potential difficulties to obtain goods including prescription drugs, they naturally tend to hoard drug products, and this can lead to an artificial shortage.
Pharmaceutical distributors work closely with federal and state health officials. Communication and collaboration between supply chain partners and officials is essential to ensuring adequate drug product supply. To help prevent drug shortages, pharmaceutical manufacturers and distributors execute business continuity plans, including alternative suppliers, multiple distribution sites and other actions.
Conclusion
Can you hear Alexa delivering wake up calls across the global life sciences supply chain? Have you grown weary of your inbox filling up with invitations to webinars on crisis management in the time of the coronavirus pandemic? Does it feel like both an earthquake and tsunami have wiped the world clean and restarted global supply chains? If so, you are not alone.
We live in an era filled with supply chain risks throughout the world, from cybersecurity attacks to broken supply networks due to natural disasters. Somehow, we make it through, use our backup plans and soldier on. Life sciences industry experts have recently been weighing in on the potential for a second wave of a COVID-19 outbreak. Seems like the perfect time to assess, analyze and create new improved backup plans to see the world through the next global pandemic.
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