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COVID-19 Reveals Fissures in the Nation’s Prescription Drug Supply Chain

The pandemic is straining the global drug market, laying bare systemic failures that have long plagued the U.S. and spurring calls for change to better prepare for the future.

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With the virus ravaging New York, my 87-year-old father — fly-fishing author and former book publisher Nick Lyons — called his pharmacy and told them he was down to his last few pills of his statin, a cholesterol-lowering drug and one of five medications he takes every day. Much to his chagrin, the pharmacist said they were out of that drug and had no idea when they’d get more. When my father complained to the pharmacist that he’d been a good customer for more than 40 years and really needed his statin, the pharmacist suggested he go to an urgent care facility to see whether they had some to spare. But my father has been self-quarantined in upstate New York and was unable to get to such a facility.

There are countless stories more frustrating and scary than my father’s, but in the richest country in the world, his illustrates how fiercely Americans rely on their daily meds and have come to expect that they will be available whenever they need them; how quickly people become frustrated, even panicked, when they face the prospect that they can’t get the drug they need; and how wide-ranging the impacts of COVID-19 have been on the availability of prescription drugs at neighborhood pharmacies and hospitals.

As the pandemic’s death toll continues to climb — nearly 170,000 deaths globally by April 20, roughly 40,000 of which were in the U.S. — one under-explored consequence of the crisis is how the virus’s rapid spread is straining the demand, supply, and pricing of medications on which we depend. In short, the pandemic has laid bare fundamental flaws that have long existed — but have never been fully exposed — in the way the United States sources, manufactures, and distributes drugs.

“We are the wealthiest country in the world, we have very deep pockets... So how is it possible that we could have shortages?” asked Rena Conti, Associate Research Director of Biopharma and Public Policy at Boston University.

Drug shortages have suddenly appeared among medicines that were never in short supply before. Drugs touted as potential treatments for COVID-19 have been snatched up quickly by doctors and hospitals, even though there’s no medical evidence yet to suggest they work. Drugs needed to sedate patients for ventilators are increasingly difficult to come by. And consumers are stockpiling 90-day refills of their regular drugs, instead of placing usual 30-day orders, adding pressure to a system not designed to carry the extra load.

Health policy experts say the pandemic has opened a window through which they and the public can better view systemic flaws that have long been present in the U.S. but hidden from public view. Examining these flaws, they say, may lead to necessary change in the future once the pandemic eases.

“We’ve become very concerned about the fragility and the fragmentation of our supply chain,” said Kristi Martin, Arnold Ventures Vice President for Drug Pricing. She added that the crisis had underscored how easily the U.S. drug supply can experience “stock out” — a scenario when there are not enough products in the system to fulfill an order — and the crisis shined a light on the cracks in the system that merit closer examination once the crisis subsides.

“Hopefully, it will lead to a better system,” she said. “People will take it apart and will say, ‘There are probably policy changes that we can contemplate, or industry changes, so that this doesn’t happen again.’”

Signs of Trouble

The first indications that the pandemic was hitting the U.S. drug supply came as early as Feb. 27, when the FDA issued a notice warning of a drug shortage due to an “issue with manufacturing an active pharmaceutical ingredient.” U.S. pharmaceutical companies often source such ingredients — the building blocks of drugs — from China and India, where the pandemic has severely constrained and — in some cases — completely shuttered manufacturing and distribution.

Even as the pandemic has eased in China and factories are once again firing up, the Congressional Research Service has predicted that U.S. drug companies will continue to have trouble accessing the active pharmaceutical ingredients (APIs) needed to make generic drugs — which could in turn lead to price hikes, according to a recent report in Inside Health Policy. The United States sources many of its generic drugs from India, which imports most of its APIs from China, according to the Inside Health Policy article.

Among the drugs that experienced shortages are those needed by patients with lung function and cardiac issues, as well as drugs that assist in pain management. Demand has also increased for drugs to sedate patients while they’re on ventilators, such as fentanyl, midazolam, and propofol; and for albuterol inhalers, often used to help open airways in asthma patients.

One emergency room doctor, Dr. Tom Forsberg, who serves as the Medical Director for Emergency Medicine Education and the Trauma Co-Director for Centra Health in Lynchburg, Virginia, said he was notified of shortages for medications used for intubation, a medical procedure to insert a tube into the windpipe to help with breathing and prepare patients for ventilation, in addition to pain management and albuterol inhalers. Most notably, demand has dramatically increased for hydroxychloroquine, the anti-malaria drug touted by President Trump as a possible treatment for COVID-19 even though it has not received FDA approval, with hospitals and pharmacies in New York and other metro areas reporting shortages and competing for supply despite no clinical evidence yet to suggest that it’s effective.

Conti, of Boston University, said she, along with Erin Fox, Director of Drug Information at the University of Utah, have been warning for more than a decade about the vulnerabilities of the supply chain that have now been exposed by the pandemic.

“I had been concerned about the hospital-based products where there is really one manufacturer and that manufacturer supplies the U.S. and many other allied countries,” Conti said.

In other words, if, for whatever reason, one manufacturer is disrupted, how does that impact the chain of supply and the availability of alternatives? 

Supply of Generics is Concerning

Among the drugs most at risk of shortages are the generics that most Americans take. Nearly 90 percent of all prescriptions in the U.S. are generic drugs, heightening the urgency to ensure that the supply chain is adequate. Conti said that branded drugs likely are protected by supply and demand disruptions, since pharmaceutical companies have a vested interest in ensuring supply in order to generate revenue and meet shareholders’ forecasts in a given quarter. However, she noted that generic drugs operate on lower profit margins and do not provide as much incentive for pharmaceutical companies to invest in robust production mechanisms.

You know considerably more about where your craft coffee or beer is made than where your drugs are made.
Eric Pachman 46brooklyn Research

Conti’s research suggests that the facilities making the base ingredients for many generics are largely sourced in countries such as China, India, and South Korea, where there are lower labor costs, lower capital costs, and less stringent environmental rules than in the European Union and the U.S. However, she cautions that it’s next to impossible to know for sure where, exactly, a drug comes from, which makes it more difficult to predict and plan for possible supply disruptions.

Eric Pachman, who with Antonio Ciaccia formed Ohio nonprofit 46brooklyn Research to improve the accessibility and usability of U.S. drug pricing data, says COVID-19 has thrown a wrench in the assumption that our global supply chain can work efficiently without fail.

The problem, he said, is exacerbated by the lack of transparency as to where the building blocks of drugs are sourced.

“It all starts with the fact that we do not know where our drugs are being manufactured,” he said. “You know considerably more about where your craft coffee or beer is made than where your drugs are made.”

While the supply chain has so far avoided serious damage since COVID-19 struck, there have been meaningful and frightening disruptions of some drugs that could have been avoided if we had better access to information, Pachman said. For example, knowing exactly which factories were impacted by COVID-19, and which drugs were made at which factories, would make it easier to re-allocate supply when demand surged.

It may take months or even years to fully grasp the effects COVID-19 has had on the drug supply chain, but one issue the virus has already brought to the forefront is the notion that the U.S. could even be at risk for significant drug shortages, a concept many Americans may never have anticipated.

Pachman and Ciaccia, who recently launched a set of databases that cull publicly available data to serve as an early warning system of potential supply chain disruption, say they hope the pandemic spurs policymakers to take a deeper look into the supply chain to determine how it can be better strengthened for the future.

“How does COVID-19 make the world a better place?” Ciaccia asked. “As crazy as that sounds, it does if the pressure that is pushing on the system is making us all evaluate how we operate that system differently. Our hope is that the data that we’ve already been tracking and the new data that we’re creating, will help the country next time.”

This pandemic has shown that for people like my father, Nick, their greatest fear of being told that they can’t get a drug they need — a drug they’ve been taking for years — may be closer to reality than they once thought. After some back and forth, my father’s fear was finally allayed: He was able to find a generic version of his statin at an upstate New York CVS. Most people during the pandemic, in New York and far beyond, have not been so lucky.

Researchers Launch Drug Supply Chain “Early Warning System”

To better track the virus’s impact on our nation’s access to prescription drugs, the research team at 46brooklyn Research, a nonprofit dedicated to improving the accessibility and usability of U.S. drug pricing data, has unveiled new dashboards to help shed light on the potential impacts to the global supply chain and serve as an early clues where supply chain disruptions may be most likely to occur.

Concerns about the supply chain for drugs have already arisen during the pandemic for a variety of reasons, including reliance of ingredients sourced from one manufacturer in another country, where supply chains are being disrupted; Americans stocking up on their daily use drugs as a result of social distancing policies (90-day instead of 30-day) refills; and the reported stockpiling of drugs that have been touted as promising treatments for COVID-19.

In the absence of certain publicly available information, it’s impossible to predict with total precision when a drug shortage may occur. However, as COVID-19 continues to spread and the global drug market experiences swift and dramatic changes, it’s critically important for researchers, reporters, and policymakers to have tools to best understand how the pandemic may shape our drug supply, how unproven claims about potential promising medical therapies can create immediate and serious impacts on the global supply chain, and what implications may be facing Americans who rely on generic drugs to treat chronic conditions.

The 46brooklyn Research dashboards cannot declare drug shortages — the only authorized sources of information on current drug shortages are the FDA and the American Society of Health-System Pharmacists — but the tools can provide signals of dysfunction in the supply chain that merit deeper examination by researchers, reporters, and policymakers.

The 46brooklyn Research team has provided detailed instructions on how to use and access these free dashboards; for those who want to better understand how to use the data, contact Antonio Ciaccia at antonio@46brooklyn.com for assistance.