CPA Conference Day 1: Making Generic Pharmaceuticals A National Security Imperative

Eric Edwards, CEO of Phlow, is the kind of guy who volunteers on ambulance runs. He’s clearly not squeamish. He recalled during a panel discussion on healthcare during our Annual Conference opening day how he was once in an ambulance looking for a specific drug to help someone with acute cardiac arrest. They didn’t have enough. On the fly, he had to mix something else to serve his purpose.

“A lot of this goes unseen, where medical staff and emergency personnel don’t have the supply of critical drugs that they need,” he said. “We have a Third World drug distribution system. We are in the business of resecuring the supply chain in order to ensure that everyone has the access to critical medicines. We can’t do it alone.”

He’s not. There has been a sea change in terms of direction on reshoring part of the essential medicines that are largely made overseas. Last year, the Trump Administration ordered the Food and Drug Administration to come up with a list of essential medications. That’s the starting point. Those are the ones we need stockpiled and made here sooner rather than later, with the help of government procurement contracts and a private sector that is at least as keen on drug safety as they are low costs, panelists led by host Rosemary Gibson agreed.

Senate leader Chuck Schumer (D-NY) is coming out with a bill that is focused on national competitiveness. He said he wanted to bring it to a floor vote by the spring. We hope that the FDAs essential drugs list is part of that and that the US government invests in restocking that lackluster national emergency stockpile of medication and advanced pharmaceutical inputs, which is essentially the medicine before it becomes an injectable, or put in a capsule, for those out of the pharma loop.

“I am glad that both Trump and Biden took this issue seriously,” said Missouri Representative Vicky Jo Hartzler. She kicked off the panel discussion in a recorded greeting. She highlighted some of the progress, such as a Department of Defense and a Department of Health and Human Services $20 million contract with On Demand Pharmaceuticals to build out API and another $69.3 million to CONTINUUS Pharmaceuticals to start the year. The Biden administration is undergoing a 100-day review to address the vulnerabilities in the pharma supply chain. “It’s going to take a whole of nation approach to fully secure our supply chain,” she said.

Usman Ahmed, CFO of Nexus Pharmaceuticals and a CPA board member, serves as a testament along with Edwards of American companies investing in local production, from API sourced here, to final drugs made here in new labs being built today.

“When we first started to build our own manufacturing facilities, everyone in the business thought we were crazy and said why not India, why not China,” Ahmed said. “But we own this place; our family runs it, and we had done audits of facilities overseas and there are quality issues there. With new technologies and government support, we think we can be successful here.”

It’s an uphill battle.

Hospitals want to make money so they can keep costs down. To them, if the drug is FDA approved, it doesn’t matter if it came from a lab in Germany, India, or – increasingly – China, said Ahmed.

Both Ahmed and Edwards said that quality had to mean more than just the FDA’s stamp of approval, but also reliability, safety, and reliance. Many times a drug maker in India, for example, is given a warning letter after a failed inspection, yet their drug is still sold to the US. Hospitals won’t hear about that until months after the fact, if at all.

And then there was the pandemic crisis. In March 2020, India shut down all exports of API.

“You must have a critical stockpile,” said Edwards, who also suggested local labs get a six-month product line exclusivity for new, off-patent drugs that would be a big boost for domestic generic drug makers. “Watch what would happen if companies knew that they would be prioritized first when a branded drug went generic and they knew they would get rights to that first if they were making it here,” he said.

CPA Chairman Zach Mottl asked why hospitals are not held liable for bad drugs brought in that come from companies on the receiving end of an FDA Warning Letter.

“It is so hard to show that it was that medicine that caused harm,” said Gibson. “You can’t even find out what batch this medicine came from because the hospital won’t tell you.”

Edwards said that sometimes medical staff have no option but to administer substandard medicine because there is no other alternative, so even if they knew the lab had a problematic inspection, they would sometimes be forced to make a choice between that medicine on hand, or none at all.

The takeaway is that lawmakers are happy to find out that companies like Phlow and Nexus exist and they do want to help. Importantly, there is interest from lawmakers in both political parties.

“We’re not against a global supply chain, but it is just as important to protect these essential medicines as it is to make the next vaccine. It requires new thinking.”

See Eric Edwards’ May 2020 interview on CBNC here.