Safeguarding Pharmaceutical Supply Chains in a Global ...
Safeguarding Pharmaceutical Supply Chains in a Global Market
- Testimony of
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House Committee on Energy and Commerce, Subcommittee on Health
Introduction
Madam Chairwoman, Ranking Member Burgess, and Members of the Subcommittee, my name is Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER) at the Food and Drug Administration (FDA), which is a part of the Department of Health and Human Services (HHS).
The United States, through its substantial investment in biomedical research, has become a global leader in drug discovery and development. However, drug manufacturing has largely shifted out of the country. Historically, the production of medicines for the U.S. population was domestically based. In recent decades, however, this manufacturing has moved increasingly overseas. This is particularly true for manufacturers of active pharmaceutical ingredients (APIs), which are the core components of drugs. As of August 2019, only 28 percent of the API manufacturing facilities supplying the U.S. were located in our country. By contrast, 72 percent were overseas, with 13 percent located in China. (See Figure 1) FDA’s data indicate that the number of registered API facilities in China more than doubled between 2010 and 2019.
Figure 1: Manufacturing Sites of APIs for U.S. Market by Country or Region, August 2019
Several reasons contribute to this shift. Traditional drug production processes often require large factory sites and can have significant environmental liabilities. They also utilize low-cost labor forces. According to a 2009 World Bank study, if a typical Western API company has an average wage index of 100, this index could be as low as 8 in China and 10 in India. Additionally, China benefits from lower costs for electricity, coal, and water. Chinese companies are also interconnected within a network of raw material and intermediary suppliers, resulting in lower shipping and transaction costs. They face fewer environmental regulations regarding the handling and disposal of toxic chemicals, which reduces their direct costs. This study noted that API manufacturing in India can reduce production costs for U.S. and European companies by 30 to 40 percent.
Traditional pharmaceutical manufacturing technology makes it challenging for U.S. companies to offset the labor and cost advantages China enjoys. However, advanced manufacturing technologies could allow U.S.-based pharmaceutical manufacturing to regain its competitive edge. These technologies can ensure a stable supply of critical drugs for U.S. patients. Advanced manufacturing is a collective term for new production technologies that improve drug quality, address medicine shortages, and speed up time-to-market. Examples include continuous manufacturing and 3D printing. FDA supports these innovative technologies through its Emerging Technology Program (ETP), which offers a smaller facility footprint, lower environmental impact, and more efficient use of human resources than traditional methods.
However, reliance on foreign-sourced materials creates vulnerabilities in the U.S. drug supply. For example, FDA issued an alert in August 2018 that a Chinese API manufacturer was recalling certain lots of porcine thyroid API due to inconsistent quality. This thyroid API is used to make a medicine for hypothyroidism. FDA laboratory testing confirmed that the API had inconsistent levels of active ingredients, posing potential health risks for patients. Another example involves a Chinese manufacturer that produced baclofen API, which was deemed unsuitable for compounding sterile injectable drugs due to contamination risks. This API posed serious safety risks for U.S. patients using injectable drugs compounded with the affected API.
Today, I would like to share CDER’s information on the location of API manufacturing facilities in China, the United States, and other parts of the world. I will discuss the implications for national security and explain how advanced manufacturing can enhance the security and reliability of the U.S. drug supply.
Explanation of CDER’s Data and its Limitations
From a national security perspective, it is crucial to examine the locations of facilities for three categories of drugs:
- All drugs on the U.S. market, including brand and generic drugs under approved applications, over-the-counter (OTC) drugs, and compounded medications.
- Drugs on the World Health Organization (WHO) Essential Medicines List that are marketed in the United States.
- Drugs on the medical countermeasures (MCM) lists, which include drugs for countering biological, chemical, nuclear, or radiation threats and influenza.
CDER maintains a Site Catalog of all manufacturing facilities making drugs for the U.S. market, whether through an approved application or those registered to supply drugs to the U.S. This includes API and finished dosage forms (FDF) suppliers. The APIs produced in these facilities may be used in prescription drugs, OTC drugs, and compounded medications.
Data available to CDER have several limitations, including:
- Facilities listed in the Catalog may or may not be actively producing APIs. The production of APIs is a business decision made by the company.
- Manufacturers are not required to report to the FDA whether they are actually producing an API at a facility or the volume of production.
- APIs produced in listed facilities may be used for both U.S. and other markets, and some APIs may be later formulated into FDF that are exported.
- Some FDF applications list multiple API suppliers, and the FDA has no visibility into which API supplier an FDF manufacturer uses.
- CDER has limited information about API suppliers for products that do not require an approved application from the FDA to be marketed, such as OTC monograph drugs. API suppliers for such products may not register their facility with the FDA if they are sending material to an external drug product manufacturer.
- The Catalog is continually updated, and the snapshot presented represents listings from August 2019.
These limitations mean that, although CDER can describe the locations of API manufacturing facilities, it cannot determine with precision the volume of API that China is actually producing or the volume of APIs entering the U.S. market, either directly or through finished dosages manufactured outside China.
API Manufacturing Facilities for All Regulated Drug Products
CDER's analysis reveals that overall, China has a modest percentage of facilities capable of producing APIs for the U.S. market. China has 230 facilities (13 percent), the U.S. has 510 (28 percent), and the rest of the world has 1048 (59 percent). This includes prescription, OTC, and compounded drugs. (See Figure 2) The actual percentages of APIs produced at these facilities may vary and cannot be determined from available data.
Figure 2: Number and Percentage of API Manufacturing Facilities for All Drugs by Region, August 2019
API Manufacturing Facilities for WHO Essential Medicines on the U.S. Market
The 2019 WHO Essential Medicines List includes 461 drugs selected to meet the most critical needs of a health system. FDA matched 370 of these drugs with products listed for the U.S. market and determined the location of the facilities making their APIs. There are 1,079 API facilities globally making these 370 drugs for the U.S. market: 166 (15 percent) are in China, 221 (21 percent) are in the U.S., and 687 (64 percent) are in the rest of the world. (See Figure 3)
Figure 3: Number and Percentage of API Facilities for the 370 U.S.-Marketed Drugs on the 2019 WHO Essential Medicines List
FDA’s data also show that three WHO Essential Medicines’ API manufacturers are based solely in China: capreomycin, streptomycin (both for treating Mycobacterium tuberculosis), and sulfadiazine (for treating chancroid and trachoma).
API Manufacturing Facilities for Medical Countermeasures
FDA maintains a list of drugs used as medical countermeasures (MCM) against biological, chemical, influenza, and radiation threats. Many of these drugs are in strategic stockpiles, including the Strategic National Stockpile.
| MCM Type | U.S. API Sites | China API Sites | Other Foreign API Sites |
|---|---|---|---|
| Biological (14) | 19 (11%) | 37 (21%) | 117 (68%) |
| Chemical (10) | 24 (29%) | 6 (7%) | 52 (64%) |
| Influenza (3) | 2 (11%) | 0 (0%) | 16 (89%) |
| Radiation (7) | 13 (46%) | 0 (0%) | 15 (54%) |
Table 1: Number and Percent of API Manufacturing Sites for MCM Drugs Against Various Threats, August 2019
Ciprofloxacin and doxycycline are critical MCMs used to treat anthrax and plague. The U.S. has one facility for ciprofloxacin, while China has three, and other countries have 21. For doxycycline, the U.S. has two facilities, China has three, and other countries have six. (See Table 2)
| MCM | # (%) U.S. API Sites | # (%) China API Sites | # (%) Other Foreign API Sites |
|---|---|---|---|
| Ciprofloxacin | 1 (4%) | 3 (12%) | 21 (84%) |
| Doxycycline | 2 (18%) | 3 (27%) | 6 (55%) |
Table 2: Number and Percent of API Manufacturing Sites for Ciprofloxacin and Doxycycline by Region, August 2019
Implications for National Security
The security of the nation’s drug supply hinges on three main factors: dependence on foreign API sources, resilience of the domestic manufacturing base, and the reliability of manufacturing facilities.
Dependence:How dependent is the U.S. on foreign sources for the APIs used in drugs? Has this dependence changed over time?
The number of Chinese API facilities supplying the U.S. market has increased over the past decade, driven by cost savings and less stringent environmental regulations. Absent any intervention, this trend is likely to continue. However, FDA cannot calculate the exact volume of APIs imported from China or India, nor the percentage of U.S. drug consumption this represents.
Resilience:How resilient is the U.S. manufacturing base? Can domestic manufacturers quickly ramp up API production if overseas supplies cease?
To determine resilience, FDA needs information about unused U.S. manufacturing capacity, the additional API it can supply, its sufficiency to meet U.S. demand, and the time required for increased production. However, without data on current production volumes and dependencies, a reliable gap analysis is not feasible.
Reliability:How reliable is the manufacturing base producing APIs for the U.S. market?
FDA analyzed 163 drug shortages from 2013 to 2017 and found that 62 percent were due to quality problems. Drug shortages can negatively impact patient health by causing delays or requiring less-effective treatment alternatives. Ensuring a stable supply of safe and effective drugs involves addressing all these dimensions.
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Summary of National Security Findings
FDA's data show that China’s number of API facilities is somewhat smaller than the U.S., but comparable and growing. However, limitations in data prevent an accurate assessment of U.S. dependence on China, including API volumes produced in China or entering the U.S. through other countries. Similarly, the resilience of the U.S. manufacturing base remains uncertain, particularly in the face of potential supply disruptions from China. Nonetheless, drug shortages, often due to manufacturing quality problems, compromise the U.S. drug supply.
Advanced Manufacturing Offers a Multi-dimensional Solution
Advanced manufacturing employs innovative technology to enhance products and processes. While it is widely used in industries like automotive, aerospace, and semiconductors, its adoption in pharmaceuticals is emerging. New technologies like continuous manufacturing and 3D printing can produce finished drug products as a continuous stream, offering many advantages over traditional batch methods.
For instance, product quality can be controlled with modern automation and monitored using high-resolution analytics. High-tech, computer-controlled facilities can respond quickly to demand changes and produce various dosages and forms without scale-up issues common with traditional methods. These platforms also have smaller footprints, portable equipment, reduced environmental impact, and lower production costs. By investing in advanced manufacturing, the U.S. can reduce dependence on foreign API sources, enhance the resilience of its manufacturing base, and alleviate drug shortages.
Emerging Technology Program (ETP)
Launched in late 2014, the ETP encourages adoption of innovative technology to modernize pharmaceutical development and manufacturing. The Emerging Technology Team (ETT) facilitates early discussions of innovative technologies even before a candidate drug is identified. ETT supports advanced manufacturing at CDER by providing experts and coordinating within FDA. Based on ETT's efforts, CDER has published guidance on continuous manufacturing and approved drug applications utilizing continuous manufacturing and 3D printing, with these drugs currently being produced in the U.S. and the U.K.
Regulatory and Policy Initiatives
The adoption of advanced manufacturing technologies may challenge the current regulatory framework, which is based on traditional methods. FDA is working to implement needed changes, including managing data-rich environments, evolving process validation concepts, and overseeing post-approval changes. In collaboration with BARDA, FDA is also developing strategies for miniature, mobile manufacturing platforms. Additionally, FDA is active in international regulatory harmonization efforts through ICH.
Intramural and Extramural Research
CDER's Office of Pharmaceutical Quality (OPQ) conducts and coordinates advanced manufacturing research. OPQ has established the Center of Excellence for Manufacturing Science and Innovation, publishes research on continuous manufacturing, and provides training. Extramurally, OPQ funds research grants, contracts, and participates in academic and industry consortia to advance manufacturing technologies.
Thanks to Congress's support, FDA is aiding the pharmaceutical industry's transition to advanced technologies. This investment can rejuvenate the domestic pharmaceutical manufacturing base, ensuring a secure and reliable supply of medicines.
Promoting Domestic Manufacturing
In FY19, Congress approved appropriations to promote domestic manufacturing and advance drug and biological product technologies. CDER's strategic goals include expanding support for innovative technologies through assessment, policy, surveillance, research, and extramural outreach. Efforts include collaborating with the National Academies of Sciences, Engineering, and Medicine and other forums.
Conclusion
The growing number of API manufacturing sites in China and other countries indicates increasing U.S. reliance on foreign sources. FDA collaborates with industry and other agencies to mitigate the national security risk posed by this reliance. While FDA cannot dictate where APIs are manufactured, it can incentivize domestic production through new technologies and methods. With proper strategies, these innovations could revitalize U.S. pharmaceutical manufacturing.
Green Chemistry in the Pharma Industry
With rising sea levels and climate change impacting communities worldwide, industrial nations are striving to manage output and reduce environmental impact. One approach gaining momentum since the 1990s is green chemistry, which focuses on "the invention, design, and application of chemical products and processes to reduce or eliminate the use and generation of hazardous substances."
Paul Anastas and John Warner co-authored a book in 1998 setting out 12 principles that form the basis of green chemistry, offering ways to reduce the environmental and human impact of chemical production. Despite its advantages, some industries view green chemistry practices as an unjustified compromise to profitability.
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