Senate Hearing on Pandemic Discusses Reshoring Pharma, PPE

(Updated in the third paragraph after subheading with more information on sourcing for advanced pharmaceuticals on April 15.)

The Senate Homeland Security and Governmental Affairs Committee spoke with former officials from Homeland, Health and Human Services, and the CDC on Wednesday about our response to the pandemic. Two Senators brought up supply chain resilience.

“It’s nice to play Monday morning quarterback but I don’t know how we could have done this better,” said Sen. Ron Johnson (R-WI), who later asked former CDC and HHS director between 2002 and 2009, Julie Gerberding (pictured), about pharmaceutical supply chains.

“What about the precursor chemicals that go into making advanced pharmaceutical inputs,” he said. “From what I understand a lot of it comes from China, is that right?”

Gerberding, who is also a medical doctor, said “a lot of it comes from China, but it also comes from India and other parts of the world.”

Most of our API comes from Asia.

Johnson was arguing not just for the API, the medication that goes into tablets and injectables before being marketed to patients, but also the chemical and organic compounds that go into making some of them. “We need the precursor chemicals to API as well,” he said.

Gerberding’s recommendation has already been put into practice in the Trump years – get the FDA to compile a list of essential medications, including those that are in shortage.

Johnson did not say these drugs should be made domestically, though we think he would agree with the Committee Chairman, Sen. Gary Peters (D-MI), a big advocate for reshoring pharmaceutical supply chains.

Michigan Senator Gary Peters chaired today’s Senate hearing on the nation’s response to the pandemic in the early days of 2020.

CPA believes that at a minimum the Biden administration should take that critical medicines list by the FDA and place an order with private manufacturers to replenish the national stockpile. In addition, generic drugs used by Veterans Administration hospitals and those administered to military soldiers should all be made domestically. This should not be taking months to figure out.

Everyone at the hearing agreed that the pandemic showed America’s blind spot along medical supply chains, be it medication used for anesthesia, to the ubiquitous facemasks everyone has been wearing for the past 13 months.

Sen. Josh Hawley (R-MO) asked for panelists’ advice on “what can be done immediately for supply chains”.

Elizabeth Zimmerman, the former Associate Administrator of the Office of Response and Recovery of the Federal Emergency Management Agency (FEMA) at the U.S. Department of Homeland Security under Obama said one thing to do immediately was to rebuild the Strategic National Stockpile.

The CDC’s Strategic National Stockpile (SNS) is a national repository of medicines, vaccines, and other medical supplies stored in strategic locations around the nation.

“See what are the key, critical things we need and make sure we have a way of getting them in this country. This is an opportunity right now,” she said.

Another Obama-era official, Joseph Nimmich, ex-Deputy Administrator at FEMA said that stocking the SNS was not enough. “You should use the Defense Production Act to provide incentives to hospitals and local medical centers to keep 110% of their daily PPE and drug requirements, so you will be instantly distributing your stockpile across the nation to the medical centers that need it,” he said.

Reshoring the Pharmaceutical Supply Chain

CPA has been banging the drum on this issue in the national press for over a year. We have seen some progress over the period, with government contracts to local generic drug manufacturers like Phlow, and the FDA essential medicines list, published in the fourth quarter of 2020.

The U.S. can expand its footprint domestically. Labs already exist to do research and development and can make existing vaccines and new ones. American manufacturers of API account for roughly 28% of the market.  The remaining 72% of the API manufacturers supplying the U.S. were overseas, with 26% coming from Europe, 18% from India, and 13% in China, the Food and Drug Administration’s director for drug evaluation and research, Janet Woodcock, noted in her October 30, 2019 testimony before the House Committee on Energy and Commerce, Subcommittee on Health. This was for the percentage of API manufacturing facilities for all drugs by country or region.

However, it is important to note that the data above includes API manufacturing for both branded drugs and generics. The API for branded is much more likely to be made in the U.S. to protect intellectual property. Generic API is where the big problem is, as is where the key starting material to make API. For that, China controls 80% to 90% of the global supply.

Still, any government procurement to fill the national stockpile has to take a new view of existing Buy American laws. Trump signed an Executive Order in August that eliminates the exemptions for 20 countries that are part of the World Trade Organizations’s Government Procurement Agreement (which includes Hong Kong, a China gateway) and makes those countries no different than a domestic one.

To rebuild our local supply, we need strict Buy American rules, a subject not touched upon in today’s hearing. One example, make Medicare participation hinge on procuring USA-made essential generics.  If not, we will be using U.S. tax dollars to create a jobs program at pharmaceutical firms from Ireland to Germany, India to China. CPA thinks that defeats the purpose of building resilient supply chains and growing the manufacturing base post-pandemic, both hallmarks of Biden’s American Jobs Plan.

From the American Jobs Plan:

“Protect Americans from future pandemics. This funding provides $30 billion over four years to create U.S. jobs and prevent the severe job losses caused by pandemics through major new investments in medical countermeasures manufacturing; research and development; and related biopreparedness and biosecurity. This includes investments to shore up our nation’s strategic national stockpile; accelerate the timeline to research, develop and field tests and therapeutics for emerging and future outbreaks; accelerate response time by developing prototype vaccines through Phase I and II trials, test technologies for the rapid scaling of vaccine production, and ensure sufficient production capacity in an emergency; enhance U.S. infrastructure for biopreparedness and investments in biosafety and biosecurity; train personnel for epidemic and pandemic response; and onshore active pharmaceutical ingredients.”