Bringing drug production back to the US

Last December, Civica Rx, a nonprofit focused on supplying essential medicines to US hospitals, announced imminent shipments of heparin and seven other injectable medicines produced by a partner, Hikma Pharmaceuticals, to its hospital and health-care system membership.

Heparin, an anticoagulant predominantly manufactured in China, epitomizes the kind of injectable generic drug Civica seeks to secure against supply interruptions, such as the deadly one that resulted from adulterated Chinese heparin in 2008.

Earlier last year, the Medicines for All Institute, a manufacturing process development laboratory at Virginia Commonwealth University, announced a project to develop a cost-effective process for making the HIV/AIDS therapy lamivudine. Medicines for All develops flow chemistry and other continuous manufacturing techniques using funding from the Bill & Melinda Gates Foundation.

Both organizations are working to address two long-standing and closely related problems in the pharmaceutical supply chain—the perilous reliance on active pharmaceutical ingredients (APIs) from low-cost Asian producers and the high cost of manufacturing drugs in the West.

The directors of Civica and Medicines for All are among a handful of industry leaders who began meeting with lawmakers in Washington, DC, as early as 2018 to raise an alarm about pharmaceutical supply chain vulnerabilities. “Then COVID hit and changed the world,” says Martin VanTrieste, CEO of Civica. Government officials began talking about building domestic facilities dedicated to producing active ingredients and finished drugs currently made offshore.

VanTrieste, the former head of quality at Amgen, says he and B. Frank Gupton, CEO of Medicines for All, had ideas about how to accomplish this. The two, along with Eric Edwards, former chief science officer of the small drug firm Kaléo, formed a company in January coalescing around an API plant in Petersburg, Virginia, where Gupton once worked. That plant, formerly owned by the German drug company Boehringer Ingelheim, is now owned by Ampac Fine Chemicals, a California-based API maker. Ampac signed on to supply the new company, which is called Phlow.

Last month, the US Biomedical Advanced Research and Development Authority (BARDA) awarded Phlow a $354 million contract, with which it plans to build a so-called fill-and-finish plant, which combines APIs and other nonactive ingredients to create finished injectable drugs. The plant will be owned and operated by Civica at the Petersburg site. Phlow could get an additional $458 million from BARDA. The company claims it has already delivered over 1.6 million doses of five generic medicines used to treat COVID-19 to the US Strategic National Stockpile.

The contract announcement was accompanied by much fanfare from the White House. “Years from now, historians will see this innovative project as a defining moment and inflection point for protecting American families—and our country—from current and future public health threats,” said Peter Navarro, director of the White House Office of Trade and Manufacturing Policy. “We are now moving swiftly in Trump time to forge an American solution.”

A defining moment, perhaps, but VanTrieste and Gupton, who serve on Phlow’s board of directors, would be among the first to say that achieving supply chain security will not be easy. They and other industry players say they need clarity on which drugs require domestic supply. They would also like a greater understanding by lawmakers of the complexity of the drug supply chain, which includes chemical precursors, APIs, nonactive ingredients, and finished drugs.

China, a target in policies put forward by Navarro and several lawmakers, is not the only problem in the global supply chain, but it is arguably the largest one. By some estimates, the country is the source of up to 80% of the chemicals going into the drug supply chain.

Actual figures on the source of materials by volume don’t exist, largely because drugmakers are not required to disclose sourcing information. And even if drug production increases in the US, industry experts point out, the supply chain will persist as a network of firms around the world, many in China and India.

A road map

Big drug companies, now dependent on outsourced supply from around the world, push back on supply chain repatriation initiatives.

“Geographic diversity in the pharmaceutical supply chain enables manufacturers to make adjustments as needed to avoid shortages, which is especially important during national disasters and global pandemics,” says a statement from Pharmaceutical Research and Manufacturers of America (PhRMA), a trade association representing major drug and biotech companies. “Now is not the time for sweeping changes to the pharmaceutical supply chain that could cause disruptions.”

The generic drug sector, on the other hand, seems enthusiastic about repatriating the production of APIs and finished drug products. To that end, in May the Association for Accessible Medicines (AAM), a generics trade association, published “A Blueprint for Enhancing the Security of the U.S. Pharmaceutical Supply Chain.”

The document calls for a US Department of Health and Human Services–compiled list of critical generic drugs for which domestic production needs to be established. The AAM advocates incentives for bolstering domestic production, including grants, tax breaks, and guaranteed price and volume contracts. The association also recommends that contractors in “allied countries”—such as Canada, those in Europe, and even India—be included in a secure US supply chain, bucking the push in Washington for a hard-line “buy American” policy.

“Countries that have cheaper labor, cost of utilities, cost of land, cost of other inputs, are going to make it difficult to compete on a one-to-one basis,” says Jonathan Kimball, the AAM’s vice president of trade and international affairs.

He notes that the US is already meeting much of its finished-dose drug requirements domestically. “Our member companies manufacture about 70 billion doses of medicine in the US already,” he says. “It’s not like there is no manufacturing happening here, but we think there is room to expand that.”

Flow chemistry

Gupton at Medicines for All sees a lot of room for bringing production of chemicals outsourced to factories in China and elsewhere back to the US by employing advanced technologies that reduce cost and environmental impact. Flow chemistry–based continuous manufacturing, the institute’s specialty, will be a key component to making US production cost competitive, he says—a contention reflected in the name Phlow.

Gupton says he and others at Phlow have been involved in drawing up a list of critical medications comparable to the one suggested in the AAM’s blueprint. “We spent the last several months meeting independently and collaboratively with the federal government to try to identify close to 100 compounds, including the APIs, that need to be sourced domestically,” he says. “One of the objectives is to create a strategic API reserve, much in the way we have a strategic oil reserve.” Phlow is developing continuous processes for each of the drugs on the list, Gupton says.

Bernhardt L. Trout, a professor of chemical engineering at the Massachusetts Institute of Technology and former director of the Novartis–MIT Center for Continuous Manufacturing, a partnership that ended last year, says the coronavirus pandemic provides industry an incentive for incorporating new technologies such as continuous manufacturing, but he acknowledges a persistent cultural resistance to change.

Trout and colleagues from the International Symposium on Continuous Manufacturing of Pharmaceuticals published a paper in the Journal of Pharmaceutical Sciences outlining benefits of continuous drug production, including enhanced domestic supply to improve national security. The authors advocate for tax incentives for investing in continuous manufacturing and an expedited approval process for drugs made with continuous processes.

BARDA has made some money available for continuous manufacturing. Snapdragon Chemistry, a flow chemistry developer, recently landed a $700,000 BARDA contract for making nucleoside triphosphates for mRNA vaccines. Matthew M. Bio, Snapdragon’s CEO, sees flow and other advanced processing technologies as a true boost to repatriating production all along the supply chain.

“One of the interesting things about continuous processing is that a small footprint reactor can be turned up by just running it longer,” Bio says. “Maybe only 20% of your supply is being made domestically at any given time, but if the 80% supplier failed for some reason, you could easily increase the output of that advanced manufacturing footprint by running it longer or making another one of the same reactors.”

Not all chemistries lend themselves to continuous production, however. “The most successful organizations have taken a hybrid approach and used continuous where it makes sense,” Bio says, “but they are not religious about it.”

Nor is it realistic to think that drug supply stretching back to basic raw materials can be repatriated. “It would take a decade or more and probably wouldn’t make sense,” Bio says. “I think what you will probably see, more realistically, is not a replacement of the supply chain but an augmentation.”

Reverse offshoring

Western API contract manufacturers participated in offshoring to Asia, at the behest of their drug industry clients, and more recently have been working to bring production back to the US and Europe. They generally view the call for increased US supply chain security as advancing an ongoing effort rather than a fundamental change.

“Foremost, the trend will be to go to a Western manufacturing base,” says Stephan Haitz, president of sales and marketing for Cambrex’s contract manufacturing business. But other regions are likely to keep slices of the supply pie, he notes. Enhancement of production in the US will largely be a matter of drug companies establishing redundant suppliers.

“Companies will not rely on one supply chain,” Haitz says. “And don’t forget, the Asian market will also demand that their medicines are produced locally. It’s a rebalancing. What is increasing is the level of redundancy.”

Peter Pöchlauer, head of innovation management for Thermo Fisher Scientific’s pharma services group, agrees that advanced manufacturing will play a key role in repatriating offshore production. But he cautions that drug companies remain largely resistant to the cost and risk involved in converting well-honed batch processes to continuous techniques.

Consequently, Thermo Fisher focuses on developing advanced production technologies for new drugs that don’t yet have established processes, Pöchlauer says.

Aslam Malik, CEO of Ampac, which is already manufacturing APIs for Phlow, doesn’t expect the US to suddenly become self-sufficient. The supply chain remains complex and global, he says. Ampac itself was acquired by SK, a South Korean firm, in 2018. “We have partners all over,” he says about raw materials. “Many are in India and China.”

Still, the shift of manufacturing to the US is happening, Malik says, aided by improved technology. “Ampac has been on the forefront of flow chemistry, and so has SK,” he says.

Domestic backup

Mark C. Griffiths, CEO of Carbogen Amcis, a Swiss API maker, sees the push for supply security as a chance for drugmakers to establish local backup as a matter of their own risk management.

“A number of our customers over the years have single-sourced critical intermediates,” Griffiths says. “We always recommend that when customers get near commercialization that they have alternatives, because, geopolitically, you don’t know what will happen.”

One of Carbogen’s customers, the US antibiotic developer Paratek Pharmaceuticals, is doing just that. Paratek announced in April that it is onshoring supply of its antibiotic Nuzyra (omadacycline), which the FDA approved in 2018, under a $20 million BARDA contract. CEO Evan Loh says the company has identified contract manufacturers in the US and is in the process of assembling the network.

It wasn’t long ago that Paratek put together its initial, all-European supply chain. The company chose the Portuguese firm Cipan to produce crude omadacycline and Carbogen to upgrade it into a high-purity form suitable for formulation into the final pill and injectable drug. That final step is conducted by Almac Group in Northern Ireland and Thermo Fisher in Italy. Loh says the European suppliers will remain in place and active.

The BARDA grant accelerated plans that Paratek had all along for redundancy, Loh says. “We weren’t going to create a secondary supply chain for our Nuzyra product until we got to profitability.”

US supply will lead to no substantial modification to contracts with European suppliers, Loh says, adding that Paratek is on track to be the only antibiotic producer with a supply chain from API to drug product on US soil.

Edwards, Phlow’s CEO, sees financial and regulatory incentives from the government as a key to establishing domestic supply security. Though Edwards describes Phlow as being at the vanguard of public-private enterprises dedicated to supply chain security and a US API stockpile, he envisions the company as one of several that will emerge.

“It will take multiple companies multiple years and a significant effort,” he says. “No one entity should be responsible for doing this.” Edwards chalks big pharma’s objections up to traditional resistance to change.

“If I were in front of the PhRMA board, I would not say that we’re against the global supply chain,” he says. “But it’s difficult to argue that the US shouldn’t have a secure industrial base for the most critical essential medicines to sustain life.”

VanTrieste says supply chain security will likely develop as drug companies pursue supply chain redundancy around the world. He does not foresee companies in the US pulling back from their operations elsewhere. “You still have a tenet that says if you can make it as close to the customer as possible, that would be the best thing,” he says. “You wouldn’t pull everything out of China to make it in the US and sell it to China.”

And despite the US government’s commitment to ensuring domestic supply, and the huge boost it has given to firms like Civica and Phlow, the road ahead is long. “It’s taken us 20 years to offshore pharmaceutical manufacturing to the state where we are today,” VanTrieste says. “Clearly it will take a long time to reshore.”