Issue Date: September 5, 2011
Striving For Secure Supply
Drug shortages have become a health crisis in the U.S., according to the American Society of Health-System Pharmacists. ASHP is a 35,000-member professional group that supports legislation to give the Food & Drug Administration greater power over supply chain issues. Shortages have been rising rapidly, from 61 drugs in 2005 to 178 in 2010, FDA’s figures show.
Also keeping track, ASHP already has more than 150 drug compounds on its 2011 list of shortages. As in 2010, most of the problems lie with sterile injectable drugs. But also on the list are painkillers as well as amphetamines used in attention deficit hyperactivity disorder (ADHD) therapies. Such drugs rank among the larger quantities of materials categorized as controlled substances.
The production of controlled substances is strictly regulated by the Drug Enforcement Administration, which tries to ensure an adequate and uninterrupted supply for medical purposes while preventing diversion to illegal uses. Companies that produce controlled active pharmaceutical ingredients (APIs) must obtain a DEA registration and then operate under a closed system that covers manufacturing, distribution, dispensing, imports, and exports, as well as R&D and chemical analysis. The quantity of substances produced is in accordance with DEA-determined quotas and under inventory restrictions.
Controlled-substance suppliers can find themselves working in a situation where DEA is “literally running the supply chain,” according to one industry participant. In regard to shortages this year, drug companies point to multiple causes: manufacturing issues, lack of raw materials, increased demand, and decisions to discontinue a product. For those making controlled substances, there can be added complications.
One such complication is slowing markets, which can easily present the risk that a supplier will exceed inventory limits and have to slow its production. In situations where the demand swings, any slipup can potentially lead to problems, explains G. Michael Laidlaw, president of Pinnachem, a Virginia-based consulting firm. On the plus side, he says, “DEA will really work with you, particularly if you are very open about having a problem in production.”
Laidlaw has spent 45 years in the fine chemicals industry, most recently at Boehringer Ingelheim Chemicals. Along with Covidien and Johnson & Johnson’s Noramco unit, Boehringer is among the larger companies making controlled-substance APIs. Because of the tightly monitored environment, an enormous amount of coordination and expertise is required from everyone involved, he says. “You need to have a very close relationship with DEA and with the company you are supplying because you can easily get tripped up.”
Despite the challenges, pharmaceutical chemical makers are attracted to this niche market. Compared with making standard APIs, the biggest differences come in “managing the manufacturing quotas, import and export quotas, and licenses, in addition to more rigorous standards for procedures, materials reconciliation, and training,” says Jean-Paul Monteau, director of engineering services at Albany Molecular Research Inc.
“AMRI’s API manufacturing facility in Rensselaer, N.Y., has been producing a variety of controlled substances for nearly 100 years,” Monteau says. The company makes metric-ton quantities of Schedule I, II, and V compounds, including amphetamines and lisdexamphetamine, which is the API in Shire Pharmaceuticals’ ADHD drug Vyvanse. For controlled substances, DEA uses a five-tiered ranking system with Schedule I drugs being the most restricted.
AMRI recently received a DEA license to handle Schedule III compounds at its aseptic formulation facility in Burlington, Mass. And the company uses its Holywell, Wales, plant to produce nabilone, a synthetic cannabinoid recently reclassified by U.K. authorities as a Schedule II drug.
Since 2009, Aesica Pharmaceuticals has had licenses to produce Schedule II drugs at two U.K. facilities, says business development director Scott Silaika. The licenses cover API production at the multi-hundred-ton scale and formulated products at the billions-of-tablets level, he says. “The U.K. has closed borders, but we can export and have the opportunity to also serve clients within Europe and other countries that have open borders.”
Aesica’s output includes potent synthetic narcotics. “We recently invested in a facility to manufacture a solid oral-dose controlled substance,” Silaika explains. “It is capable of handling not just the potency, but also the controlled substances.”
Controlled substances may be a restricted market, but it’s a growing one. Worldwide, it expanded by 6% to about $42 billion in finished drug sales for the 12 months through March, according to figures from Thomson Reuters’ Newport database. The U.S. accounts for about 60% of controlled drug sales.
Given the closed nature of some country markets, geography can be an advantage. Johnson Matthey, for example, produces controlled substances both in the U.K. and in the U.S. In December 2010, the company’s Macfarlan Smith business, through its Hebei Aoxing API Pharmaceutical Co. joint venture, was granted a license to make and supply narcotic APIs in China.
Meanwhile, Siegfried has API facilities in Switzerland and in the U.S. through its 2005 acquisition of New Jersey-based Penick. Germany’s Archimica has been producing bulk controlled substances in the U.S. since 2005, and Ampac Fine Chemicals has been working toward registering its site in California. Among contract manufacturers of finished-dose drugs, DSM has a registered facility in Greenville, N.C., and Almac recently got a DEA license for handling clinical materials at its new North American headquarters in Pennsylvania.
Most controlled substances are being made for generic drugs, “but it is not the same as normal generics,” Laidlaw points out. Not only are there fewer manufacturers, but in closed countries that don’t allow foreign trade in controlled substances, manufacturers don’t face competition from low-cost overseas suppliers. And the combination of regulatory requirements and limited output allows companies to get high prices for these products.
“We’re seeing increased requests for existing and new controlled substances, including those which are highly potent materials,” says Eric P. Neuffer, vice president of business development at Cambrex. For example, the ADHD market is growing, he says, as more adults and children are being treated. The company has a license to produce amphetamines and other controlled substances at its Charles City, Iowa, site.
Cambrex is among a handful of companies that has a narcotic raw materials license allowing it to import opiate raw materials, Neuffer says. The company makes the painkiller fentanyl and is developing the more potent analog sufentanil, which also requires its high-potency compound-handling capabilities.
When it comes to opiate-based pain medications, Aesica’s Silaika says, physicians have become less resistant to prescribing them, particularly in conjunction with cancer therapy and in palliative care. Helping this trend is the emergence of new abuse-deterrent formulations.
It is more common that companies are registered to make Schedule II–IV substances, and fewer handle Schedule I materials, Laidlaw says. In the U.S., DEA quotas for Schedule I substances total 7 metric tons, compared to more than 1,400 metric tons for Schedule II. According to DEA, about 525 manufacturers at all levels of the supply chain had registrations in 2011.
DEA’s role isn’t to manipulate markets, but its quotas do have an impact. As the agency allocates quotas among manufacturers, any company applying must have firm and bona fide customer orders. “Otherwise, everyone would just apply for as much quota as they could get and hope to sell,” Silaika says. “There’s sensitive balance that goes on.” Manufacturers can request increases in quotas as they did when FDA recently declared the shortage in the ADHD markets, one company manager tells C&EN. Unfortunately DEA’s response time to such requests has nearly doubled and the resulting slowdown has affected the entire supply chain.
Controlled substances are manufactured not only for pharmaceutical and medical markets, but also for research and testing uses. “There are two types of competitors—ones who make and supply forensic, or analytical, samples and the API manufacturers,” AMRI’s Monteau says. “The lists of both have been rather constant for the last five years.”
Most companies participating in this niche market say the production regulations present significant barriers to entry. At the same time, one manager points out, if a new supplier wants to start manufacturing, those already registered can petition DEA to suggest that enough capacity is available.
“Companies think they are going to make a fortune because it is a domestic market and they think it is going to be easy, but it won’t be,” Laidlaw says. “It’s a very, very tricky business of going back and forth with the supplier, working closely with regulators, and being well ahead of the market.”
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