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Chris Lo: countries must consider all options for safe API production, including repatriation
The pharmaceutical supply chain is an incredibly complex network of developers, manufacturers and distributors that spreads across many countries. In recent decades, the manufacturing of active pharmaceutical ingredients (APIs) has increasingly been outsourced to India and China, two exporting powerhouses that have made pharma production a major focus.
Manufacturing facilities in these countries appeal to drugmakers for their reduced input costs and speedy delivery, but major quality control scandals have exposed regulators’ struggles with oversight and ensuring that every facility meets acceptable standards. To be clear, API manufacturing centres in the West are hardly exempt from these concerns, as Mylan’s West Virginia plant and its run-ins with the US Food and Drug Administration (FDA) make clear.
But the scale of certain failures, as well as the volume of regulatory actions being taken against Chinese and Indian API producers, is eye-opening. According to analysis by the Pharmaceutical Journal, 49% of the FDA warning letters issued between early 2018 and August 2019 went to manufacturers in India and China alone, while 64% of compliance notices sent by the European Medicines Agency (EMA) were issued to the two countries. This uptick in notices may be partly a natural result of the countries’ dominance in the area – around 40% of APIs for drugs sold in the US come from China, while Indian firms manufacture around a quarter of drugs marketed in the UK.
But the global recall of valsartan in 2018 – primarily made in China and prompted by contamination with potentially carcinogenic chemical NDMA – and the frequent reports of deceptive and potentially fraudulent activities at some overseas plants raise questions about the security of supply for many of the world’s most-used generic medicines.
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Given the added difficulties that regulators like the FDA and EMA have been having with oversight of far-flung facilities, it’s logical to ask whether such an intense concentration of supply from just a few countries is healthy. Diversifying sources of supply for certain key APIs – including repatriating manufacturing where appropriate – could help reduce the risk of the kinds of shortages the global markets saw after the valsartan scandal or the 2016 explosion at a Chinese factory responsible for producing the important antibiotic piperacillin-tazobactam. Germany and France are considering ways of boosting domestic antibiotic manufacturing, with a joint call for action on antimicrobial resistance last year noting that the two states would consider “possibilities for large-scale [antibiotic] production”.
And of course, for countries such as the US that rely on a steady supply of APIs from China, there are strategic concerns. In recent months, American politicians and security officials have voiced their concerns that, in light of the simmering trade tensions between the two countries, China could cut API supply or manipulate prices in retaliation for tariffs increases, with potentially disastrous effects for American healthcare.
The globalisation of API manufacturing has created greater competition and reduced prices for healthcare industries the world over, the trademark benefit of free-market economics. But in the face of recurrent safety lapses and a tangled web of oversight that regulators are struggling to keep up with, in countries that heavily import APIs from just a few sources it’s important to have the conversation about whether they should diversify the supply of key ingredients, or take over production themselves.
After all, choice is another hallmark of the free market, and concentrating supply in countries like China puts a limit on the market’s ability to choose. Global supply chains have delivered tremendous savings in pharmaceutical manufacturing, but it’s up to governments to ensure that these advantages don’t come at the cost of public safety.
Allie Nawrat: instead of API repatriation, regulators and pharma firms should focus on their own responsibilities
The pharma industry is global in scope; different parts of drug discovery and development occur in a range of countries as part of an attempt to accelerate processes and reduce costs.
India and China being a prime location for API manufacturing is simply part of this general trend. Beginning in the late 1980s, and consolidating itself in the 2000s and 2010s, today Bloomberg estimates at least 80% of APIs for the US market are made in these two Asian countries.
The global nature of the pharma industry makes repatriating API manufacturing a much larger undertaking in practice than it seems on the surface, and it would be incredibly expensive for companies to do. Consequently, they would require new ways to save money.
Since it was the industry’s desire for cost-savings that was the primary cause for these impurities in the first place, repatriation, which would lead to the pharma industry seeking new ways to, cannot in itself resolve safety issues in the supply chain.
An investigation by Bloomberg determined the main reason why the carcinogen N-nitrosodimethylamine was first introduced into the blood pressure medicine valsartan manufacturing process was because Chinese company Huahai was seeking to streamline its production process by using a new solvent.
Instead of repatriating API production, there needs to be better implementation of regulation and more stringent scrutiny of API manufacturing facilities in India and China. The same Bloomberg investigation showed that the US FDA checks less than 1% of drugs entering the country for impurities, and has significantly downgrading its non-US inspection capacity.
Currently the FDA believes that the individual manufacturer is responsible for detecting impurities and for the quality of API produced. Although this would be the ideal situation, it is naïve, especially because it is known that health and safety laws are less stringent in India and China.
Instead regulatory agencies must focus on their own responsibilities to patients; they need to ensure drugs they have approved are safe for patients in their country, and this requires double checking products and properly reprimanding companies who violate the rules, not simply sending easily ignorable warning letters.
A successful regulatory response would require global collaboration between different agencies to enforce a standardised process to ensure the safety of medicines being taken by patients. There has been a move towards this since the valsartan carcinogen scandal with the FDA and EMA setting up an interconnected probe, but this momentum needs to be maintained over time to prevent similar future incidents, rather than simply as part of a reaction after patients have been affected.
Not only do regulators need to take more responsibility for ensuring the safety of drugs, but so do the pharma companies who have outsourced API manufacturing in the first place. It is not good enough that pharma companies in the valsartan scandal have tried to omit themselves of all responsibility for the existence of impurities. Instead they must ensure their partners are reputable and that any cost-cutting initiatives will not have an impact on the drugs themselves, and therefore patients.
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