(This is an unedited transcript. For accurate quotes and presentations, please refer to the full-event video.)
Good afternoon, everybody. I am Sarah – president and CEO of the Alliance for Health policy. Welcome to the 9th week of our covid-19 webinar series for those who are not familiar with the alliance. We are a non partisan resource for the policy Community dedicated to advancing knowledge and understanding of Health policy issues. We launched this series to provide insight into the status of the covid-19 response and shed light on remaining gaps in the system that must be addressed to limit the severity.
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In history and the system and disruptions to manufacturing have drawn national attention to vulnerabilities in the supply chain today. Our panelists will explore the impact of covid-19 on different facets of the drug supply chain and way policy options to strengthen the system today. I am thrilled to be joined by an All-Star lineup first.
We have Aaron Fox who is the senior Pharmacy director of drug information and support services for the pgy to drugs information residency at Our city of Utah health care. Aaron is a nationally recognized drug shortages and supply chain expert next we’ll hear from Tom Cosgrove who is a partner at Covington & Burling previously. He held several senior level positions in the center for drug evaluation and research at the Food and Drug Administration next. We will hear from dr. Nicholas Nicolette Louis. St. Who is the executive director of healthcare ready an organization dedicated to strengthening health care supply chains during National emergencies.
These previously. Dr. Lewis ain’t worked for the Department of State where she oversaw issues related to health intellectual property trade issues and the 2014 Ebola response. And finally we’re pleased to have dr. Rena Conti who is the associate research director of biopharma and public policy at Boston University’s Institute for health system Innovation and policy. Thank you all for joining us today, and I’m going to turn it over to dr. Aaron Fox for opening remarks. Go ahead.
Thanks so much.
So if we go to the first graphic, I’d like to set the stage and make sure everyone is aware that drug shortages have been a long-standing problem and the US these are data that my team and I track we publish these at the American Society of Health System pharmacists public website just to orient you to this graphic on each bar shows the number of brand-new shortages that occurred during that calendar year so you can see that We’ve had quite a variety of numbers of drug shortages, but we’ve been fairly High recently and even into the first quarter of this year.
We’ve already had 49 brand new drug shortages and if we look at the next slide, you can see that this is on top of active and ongoing shortages just because a shortage begins in one calendar year doesn’t mean that it ends in that same calendar year many many of these drug shortages Linger on and are problematic and so you can see You know, we’re almost back up into that 300 active and ongoing shortage range. So this is something that hospitals and health systems and pharmacies are dealing with on a daily basis and to add additional shortages on top of this is is really quite difficult. So if we go to the next slide just you know, just making sure that the people understand that it’s this is not something that is an easy fix.
Especially went with the pandemic we’ve had unprecedented demand because of the surge of patients. So we see the worsening drug shortages of many of these products that were already in short supply to begin with we didn’t come from a whole place. We had shortages of Sentinel and midazolam and many of the paralytics already going into this and so dealing with a very very large surge of patients has really strained.
And the pharmaceutical supply chain and you know, what’s unusual is most shortages are actually due to manufacturing problems and poor quality.
And so we’re in an unusual state of shortages right now dealing with shortages that are due to some quality problems, but also dealing with shortages that are due to that increase demand and you know, I have to just make sure everyone is aware that patients are harmed by these poor quality products this the warnings that Manufacturers get from FDA or not. Just minor infractions in many cases patients have definitely been harmed earlier this week. There was a great health fair’s blog by Janet Woodcock and really the message there is that we must must improve medication quality. So if we go to the next slide, what are some ideas to fix this problem, you know, this is actually not a very new idea. We’ve been talking about quality and improving quality to improve our shortage.
State for years this quote is from a paper from 2014 and really to eradicate shortages. We have to improve manufacturing quality. So what are some ways to do that right now? There’s absolutely no requirement for a drug company to disclose even which company made the final dosage form or the factory or where it came from. All of that is in a black box and it’s considered to be a proprietary secret that lack of transparency makes it extraordinary.
Really difficult to follow the quality data. We know that FDA sees very different levels of quality between manufacturers and products but those are not disclosed publicly. We simply have a pass/fail system but FDA sees very clear delineation. So, you know, even a grading system, you know, but a plus factories are very different from the C minus D plus factories and yet all of those products are lumped together and on the market available for patients.
One way to help with this is to really provide public quality ratings that will allow payers and even patients to reward those companies that have higher quality products. I know that I would rather purchase higher quality products for our hospital system. They’re going to be much less likely to be on recall much less likely to go on shortage and it’s worth it to have have those higher quality products.
We’re not going to have patience harmed from contaminated products we need These quality ratings. These are something that was suggested even from fda’s drug shortages task force. And so I hope that we can all Focus certainly on getting through this pandemic getting through the surge. But at the end of the day if we truly want to fix this problem we have to do something to improve quality and I will turn over the time to the next speaker.
Great. Thank you so much Aaron. I just want to ask you really quickly as a follow-up before we turn to Tom in your in your slide where you showed shortages kind of Dipping down and then dipping back up to you to what do you attribute that decline in shortages and then the and then the more recent increase kind of before covid so, you know that that dip down, you know in the 2013-2014 era honestly, we had so many.
Shortages in 2010-2011 that were still lingering it was almost as if there weren’t more drugs to go on shortage. That was very very extremely difficult time. We had rationing of a pediatric oncology treatments during that time. It was we had at least 30 percent of manufacturing closed in the United States during that time. And so the number of new shortages wasn’t wasn’t really quite keeping keeping pace.
As factories improved, you know things started to get a little better as well. We also saw fda’s notification requirements go into effect. So really before 2011 drug companies didn’t have to tell the FDA if they were going to have a shortage or not that became law in 2012 with the fatigue Asia law. And so that notification helps the FDA try to prevent shortages from happening in the first place.
And so that’s another reason why we’ve seen Lower numbers since then great. Thanks so much for that clarification, please now to turn the mic over to Tom Cosgrove Tom. Go ahead.
Thank you very much. And I want to thank the organization for having me and I also want to encourage everyone out there as soon as you possibly can come be a panelist because you will the clock will be turned back on your aging for about 20 years. I think my assistant must have sent in the wrong head shot. This is me right out of law school 21 years ago.
So if you come you get to turn back the clock to So since since this young man graduated from college part of me law school had a long career and ask ta and and now I’m a partner at Covington & Burling and let me just sort of start off with a few remarks.
First of all, you know, the the comments just before I think are incredibly important important think about and one of the things you know, I worry about when it comes to public workers of drug qualities.
What is it that you’re measuring some of the best companies and some of the highest quality companies are actually very transparent with FDA and sort of are very rigorous about tracking manufacturing deviations correcting manufacturing deviations and making sure that the Asian agency understands where they are with things and it’s important to think about how That phenomenon actually track forward into a public reading system some of the companies that we have most concerned about. They actually don’t honestly track their manufacturing issues. And therefore it’s a lot harder to fit them into a metric system that would be public and and kind of used for consumers.
Anyway, you know, I just I would say FDA is always in the Crosshair is between Innovation and safety and that balance and I think we’re seeing See that more and more now and sort of right in between those two issues Innovation and safety is our drug access access issues. And if we think about that the age core functions, we have drug review and compliance. What should be on the market and how does FDA kind of enforce those standards? But how do those two things now come together to help facilitate drug safe drugs being on the market and avoiding shortages.
Right. Now, of course FDA and Industry are moving at Breakneck speed to bring new drugs to Market and one question is how will these new products exist along already existing Medical Products, you know, if it’s true that will need a billion new vials next year for a vaccine. If it’s if it’s approved where will those vials come from? You know so industry and FDR working together on questions like that to help ensure. There are no shortages for existing.
And that we can ramp up the production of new drugs and new drugs are covid-19 specifically as quickly as possible.
I think one of the things I’m here to talk about is how does FDA and Industry work together to sort of communicate shortages and to avoid shortages as a lot of people know there’s a vigorous and very active FDA drug shortages staff that engages with industry and to try to head off shortages whenever Possible and actually this has been quite successful. Although there are still too many shortages.
We find you know, you know, those have been much better tracked better understood and there’s better opportunities for remediation now, So I think I’ll leave it at that. I think there’s a lot of great questions on the agenda for today and look forward to hearing hearing from the moderator hearing from you all and again sign up so that you can turn the clock back 20 years. Thank you so much Tom. Well, we you know where the Fountain of Youth over here. So appreciate you joining us and sharing your experience next. We’re pleased to hear from Nicolette Lewis.
Ain’t neglect take it away. Hello, depending on your time zone. Good morning or good afternoon. I don’t know that the time, you know gods were in my favor on this but I am certainly glad to be with you all today. Thank you for raising this very important conversation and pulling together a breath of perspectives on this and as I am also enjoying the speaker’s I’m very much looking forward to questions from the attendees.
These and learning more in that discussion as well. So with that I’m happy to turn to the next slide and discuss a little bit about just who we are and what we do Healthcare ready is a rather unique partner in this supply chain space. We were actually created as a public-private partnership by the supply chain specifically the associations from the end-to-end supply chain recognizing that there needed to be a partner in place to serve as a coordinator.
An information sharer to make sure that information was being shared across not just across the supply chain in crisis, but as we’re thinking about and building preparedness plans and taking that a step further recognizing that as Tom mentioned the next extension of how the supply chain works with one.
Another is how they work with government and oftentimes, we think about the relationship between the supply chain and government as being the FDA but there are a lot of additional Components of that relationship that needs to be in place especially in these issues of supply chain continuity during disasters and so our role is to really serve as that linkage point to service at coordinator both in peacetime and in times of strain and on the next slide, I’ll just begin to talk through kind of how we see this so during covid we are looking at it from multiple Vantage points, one of the things that’s very important to us as we can.
Need to do this work is to really think about the entire supply chain some of the conversation around supply chain resilience is focused on sometimes a specific component of the supply chain, which is not really the entire thing or sometimes we focus on the availability of a single product in a single location and it may be that the product is available, but it may not be in that location which is more of a movement issue rather than an overall availability issue.
And so we are looking at the the entire A landscape. We are not just thinking about what it looks like to ramp up production of products, but they’re you know, I’ve heard a lot of folks talk about the national supply chain when you think about the health supply chain globally for the Us and other countries, there is really no such thing as a national supply chain. It is a global supply chain.
So when we’re thinking about product that needs to be created manufacturer develops, it also has to be moved and so it’s not enough to just make more product we do have Make sure that that product is able to through the logisticians that are across the supply chain the Distributors that are moving product be able to move that product through what we like to call the middle mile.
So a lot of our focus is there and then coordinating with the federal government and also state governments on this issue because again at the end of the day we have to make sure that the coordination that needs to happen can happen to that available products can get to those facilities that needed most and then making sure that That we are working with our Health Care Partners so that as we are getting visibility across the supply chain. We’re also beginning to get a better picture of demand and things that may shift demand because when we’re talking about an event like covid we’re going to be at a historical demand levels. And so the more visibility we’re getting on demand and the better Adam and projection we get for where we anticipate being in the short term as well as the long-term that helps to make.
That that partnership across the supply chain can absorb that information and begin to consider strategies to react to it on the next slide.
I just wanted this is one of my favorite slides it is busy and I apologize but I did want to just give a picture of the current operating picture from our vantage point because for an organization like healthcare ready when we talk about the supply chain, we are really talking about every piece of it which for us we think about finished product supply chain mostly which means we are Less in the raw material space we track those things. We are thinking about the vials and and all of those elements, but our real Focus has for thinking through the process of getting to finish product and then the movement of that finished product which means that every component of the supply chain has to be a primary consideration for us ultimately serving patients. So for us in covid, it’s understanding at the manufacturing level continuity of operations.
There was a lot of discussion early on about Early on in the code the covid outbreak about the Chinese New Year and the lag in production that was related to that and then the workforce is disruptions thinking about how critical product is being Surge.
And if there are trade-offs that have to be made in order to make the product that is most necessary right now for covid and what the implications of that maybe in the midterm understanding also how to allow for the Rd the trials to be able to continue in you and what that means for production of a other product on the distribution side, we’ve had massive challenges being able to get product because of Customs issues in other countries getting product into the us but also other other parts of the economy as we’re seeing passenger planes begin to decrease a lot of finished product moves on those planes in the bellies of those claims, so if we’re not able to have flights continuing to move from Europe and User into the u.s. It’s been very constraining to be able to maintain the consistent flow of product and then making sure that at the end of the day work force protection provider protection and communication so that we can really have a picture of demand and be able to respond to it is all very critical for us. So with that I’m happy to stop my remarks the next slide this has additional information about how to think through some of these concerns.
I know there’s a lot to really Unpack here. I do want to draw your attention to the bottom, right because as we’re thinking through the supply chain and understanding components of the supply chain as it relates to covid. We also have to understand that we are no longer in a system where we are allowed to think about one disaster or one strain of the system at a time.
And so as we are responding to covid we also have to think about the upcoming hurricane season, which is about two weeks away as well as Season this is normally the time where we would be preparing for flu season and production ramp ups and other adjustments would be happening and we’ve not had the ability to do that. So it’s not enough for us to just think about the pandemic response. We also have to think about the other things that are on the horizon like thank you so much and and neglect. Let me actually get a few go back to that slide for just a second because because that’s a really helpful slide.
I can’t can you give us a window, you know, as far as people, who are In this business, whether from the business side the industry side or the government side. Like how do how do you even begin to start to prioritize to Think Through, you know how to manage all of these really incredibly important concerns.
Can you just give us a little bit of a window into kind of how that might take place sure, so I think I think the The true answer is that you try to prioritize them all but different parts of the supply chain may be more acutely focused on parts of these issues because they have a bigger role to play.
For example, if we’re thinking about movement challenges logistical issues, even International movement down to the last mile you’re going to see Distributors be a lot more involved in that as well as being able to build a clearer demand picture we see Errors in GPS working really hard with one another as well as with Health Systems to be able to understand not just availability of product which is something that Distributors have a really clean picture into but also demands because one of the challenges that we do run into in a time like this is that we may see over ordering or Panic buying, you know, it’s the same thing that many of us are doing on Amazon right now.
It manifests in thinking about how you are ordering products that anticipate having a legitimate need for should the demand or should the number of cases continue to increase but that may not actually result in true demand so you’ll see that Distributors for example have a role there and then you’ll also see that from our vantage point we’re thinking about how to marry up that demand picture with thinking about visibility and Manufacturing resilience and that’s another that’s an upstream part of the system and so and some ways the policies that we are thinking about advancing have to include all of these components and that’s why it has to be so nuanced because it truly is complicated but on the other side we have to think about how to make sure that we’re integrating Partnerships because there are different parts of the supply chain that are going to be so integral and being able to really build what is the true vision of resilience for the end-to-end supply chain Thank you. Let’s now turn to Rena can see after your presentation and then we’ll get even more into the audience Q&A just as a reminder to folks. If you do have a question, feel free to go ahead and send it in now and send as many of you like we’ll do our best to get to them during the conversation Reena. Go ahead.
Yes. Hello, and thank you so much for the alliance. And also that’s all star panel. I am an economist and for the better part of the past two decades. I’ve studied the supply chain and of these drugs and their implications for pricing and also demand I’m going to show you some facts related to foreign Supply and other other issues in this market that really do.
Matter for formulating policy response next slide, please next slide, please.
So first, very important fact to know is that competition among the drugs and other words the number of suppliers making the Workhorse of all products needed in the u.s. Is actually quite limited more than 60% of all drugs in the US. I’m so sorry. There is a lawn mower something going on the background.
I have no control over that but percent of all drugs sold in the US have on have one or two suppliers and Supply is even more constrained when you get into non-oral products that are commonly used in the hospital setting and the other thing that you should note here is that these are shares of units these are actually volume adjusted counts of suppliers over the past decade next slide please in some sense this very constrained Supply is another surprise in that from our work we can see that the median drug sold in the u.s.
is only making for the manufacturer 1 million dollars per quarter or 1 million or 4 million dollars per year so in addition to just the therapeutic obsolescence that happens many of the manufacturers of June Drugs that are used commonly really aren’t real moneymakers for their manufacturers next slide, please.
Now there’s also a significant amount of slippage when we want to go ahead and count manufacturers or identify who the manufacturer is on in the supply chain. So there are really three different potential manufacturers that matter. The first is the manufacturer of the base ingredients. The second is a manufacturer of the cylinder finish for the actual drug product and then lastly is the contract manufacturer.
so the entity that holds the license to make that product from the fda’s perspective can also contract out to another manufacturer to make out of these ingredients or other still in Finish products next slide, please So the FDA has very graciously given myself and colleagues data on where the base ingredients API and the fill and finish or drug. Drugs are made from 2014 onwards.
I’m going to show you the last day that we have and what you should really note here is that overwhelmingly the based ingredients is API is Made in the foreign setting and in non us setting there is drug Supply that is being made in the u.s. It is largely being made in the Sun Belt or in putting whether prone areas in the southeastern United States, when we move to the mill and finish drugs, there would be actual drugs that we consume. Yes. There is u.s. Supply. We are here we are highly reliable.
Lion on China and maybe even more importantly on India. There’s one other thing that’s very important to note.
When you see these statistics the statistics that come from the Food and Drug Administration or the Share of products units sold in the US are coming from China India or Italy all I can tell you is the count of Manufacturers and where they are delivered next slide, please.
As many of my colleagues have noticed I’ve already noted Hospital generally are going it alone. And I apply for these products. They are meeting a very complex supply chain, which includes broker such as group purchasing organizations next slide, please.
The the current determine issues are facing very significant challenges when there’s worldwide demand for certain Hospital these product meeting very fragile and increasingly fragile supply for particularly. These non oral drugs are used in the hospital setting.
I’ll just note here that really the hospitals and states are reporting in countering a bill wheel during set of procurement rules which include export and import restrictions and a number many shady middlemen and also shoddy products and I would say trade here and Customs has his own special sir.
Lapel for those who are who are charged by their hospitals and going and trying to go and find out for sure certain products next slide, please the policy responses on layered on top of hot milk and States going alone are largely rooted in political philosophy of federalism and here I’m just going to Simply highlight by American as being really the Trump Administration.
Ation, Vandy and call if you will for for going out and getting these products, but frankly that is largely non-actionable for many of these products that are solely manufactured overseas. And for which this kind of the Little Wheel during a way of trade rules apply.
And even if we did by American it would take many years to actually Implement and it would likely raise significant costs next time I Echo Aaron’s concerns related to transparency across the entire supply chain next slide, please.
He’s and I’ll end with three suggested reforms. The first is again much more increased transparency on drug Supply chains, which include the identity of the volume and the actual products being made in specific places. Secondly, I would say there is a role for American Supply.
There is also a and other product securement with our allies, but that needs to be very targeted to specific products and I would even argue stronger that we might want to focus on specific Texas apply a base ingredients and Manufacturing capacity for certain types of essential products that when my even considered to be ones of National Security and one thing that people haven’t mentioned yet but is certainly consideration is not only to increase supply of some of these products are secure, but we might also want to assure stable demand and that might include instead of going to boom and bust cycles of wanting these products and and then the supply chain responding and setting If I could be the blood it to kind of smooth out some of the surgeons in there and if needed and then lastly there are no federal price gouging rule only state price gouging and this has been a serious concern among the hospitals and other people trying to secure these products spacing again middlemen who are really trying to take advantage.
Age of of America needed time with Tara I’ll stop there. Thank you.
Thank you Reena. Alright, so thank you to all of you shared a room will press and up information on the supply chain issue. So now is our chance to get into some deeper QA. So again to our audience if you want to go ahead and use that question mark button send us a question. I’d like to start by kind of just going a little deeper into characterizing the the supply the supply shortages themselves, and we we have a question from the audience.
Audience about whether quality and shortage issues differ across brand generic and biologics or specialty drugs and Reena you let’s start with you just because you spent a fair amount of time talking about kind of the generic Market.
Can you start with that question and then we’ll see if others on the panel would like to chime in Absolutely outstanding question. Yes. So in General brand small molecule and biologic based products have dual or even triple First Supply chains both for the base ingredients and also for the filling finish products. And so the fragility of the supply chain is much less of an issue for those products. The concern is really in the generic.
Small molecule or biologic based products think insulin and antibiotics and pain medications which are largely coming through for and Supply chains and or even if they’re not the base ingredients are being made overseas and then shipped to the US for for packaging and kind of completion in many of those products. There are simply one Supply.
They are not one supplier is is in China or India and it’s facing their own export restrictions their own surgeon Supply surge in demand for their own populations. That’s diverting American capacitors, and it’s easy to access these products.
And this might be a really super basic question. But let’s say there’s that one supplier. Does that mean they have one Factory one location or would it be multiple locations where ingredients or medicines are being made? Like how does that work? Yeah, great question. We don’t know.
And that’s a simple answer because there is no transparency over dual Supply or multiple supply for the base ingredients for the filling finished product in in the generic space. The only entities that no are the manufacturers themselves and then manufacturers in the u.s. Again, or if it’s me or highly International complex supply chain. Do you have to kind of go individual drug by individual drugs actually?
That question and again, it’s known as obvious even if folks are selling these products on it should be and I would say the the other thing is is that again particularly for these base ingredients their commodity products. They are manufactured by companies that don’t make a lot of money on them.
They know they have an advantage by being So supplier and the world and they take advantage of that they do not face incentives to manufacturer for quality and they certainly do not say it’s incentives to ensure additional capacity in the case of weather events or app endemic or other type of trade Wars.
For example Alright, thanks for that. Answer Aaron Tom or Nicolette. Would you like to add anything to that kind of how do we sort of start to characterize the differences in terms of what drugs are being impacted and you know, perhaps if one of you might kind of jump in as well and talk about in addition to the differences between sort of the generic brand biologic specialty drugs. Just give a little bit more color a little more data around sort of covid related.
Eggs, and and those for people who maybe are not impacted by covid, but obviously have other health care needs, you know, are we talking are we talking just you know, the the drugs for really people with really serious conditions are we talking drugs? Like people take on a daily basis?
Let me just kind of for the sake of being orderly kind of see if Aaron wants to take a start at that and then see if others want Answer. Thanks so much. You know Rena’s answer was brilliant. And so just just add on the typical drug that we see in short supply year-over-year month after month is a generic injectable and many of the same products that we have in short supply right now that are related to covid a lot of those are injectables.
A lot of those are needed not only to help maintain patients on ventilators and the IC use but also These are the same drugs that we need to do elective surgeries and some of the procedures and so as states are opening back up and hospitals are maybe no longer facing a huge surge of patients, but are wanting to start back on some of the some of the elective procedures. It’s a very it’s a tightrope walk to try to make sure that you have enough propofol and decrement atama Dean and Centinela midazolam. Not only for your ICU patients.
But also so that you can restart some of those elective surgeries and care for patients that may have been putting off care during during this pandemic time. Some of the patients May everyday medications may be affected right now as well. We’ve definitely seen shortages of Albuterol inhaler, ‘s part of that is every hospital normally uses a nebulizer treatment, which is like a Mist that you breathe in. Normally. This is a very inexpensive and very effective.
To help give a hospitalized patient a breathing treatment.
However, it’s not a good idea if you’ve got an infectious agent because it could potentially be an aerosolizing procedure and so during this pandemic hospitals on a dime had to all switch to going to using more inhalers that really stress the system and we saw a lot of shortages of those inhalers FDA has done some approvals during this time and things do seem to be easing up but you know, this could be going to their Pharmacy and maybe not being able to fill fill a prescription or maybe get as many inhalers as they normally would.
All right. Thank you and a nickel at you talked a lot about the need for data on demand and to really figure out kind of what people need one and maybe asking if you’d like to comment on you know, as hospitals maybe start to reopen to elective procedures or non emergency procedures.
I should say, you know, how how do you see that playing out sure, so I think One of the challenges that we have is how hospitals or or States really begin to work together to prioritize those non emergency procedures. So what we do know is that in the current system for the the volume of surge in demand and the type of search and demand it was going to strain the system similarly.
I think if we are not careful intentional about Shall we resume those non-emergency functions those not emergency procedures we could do we could see the same thing. So from our vantage point, it’s a few things that are all coming into play at the same time one is tracking reopening procedures and as states are making decisions or counties in some cases are making decisions about their reopening plans.
We do have to consider how those re-openings are going and whether or not that’s going to cause a Another surge of covid cases and what that means for the medicines that need to be available for those patients as well as those non emergency procedures. So there are a few things and as I mentioned in my talk also considering hurricane season, so when you are thinking about those who are directly impacted by a hurricane, you’re also going to see a surgeon acute care needs.
So and those all may require different types of But it all could strain the system in various ways. So that’s how we’re thinking about it. Also trying to really get a good sense of how to resolve some of these Logistics challenges internationally. So that product that is finished in Asia and Europe can actually get into the u.s. That is critical for us.
So making sure that we do have the ability to also allow for Customs procedures and other things to not impede our ability to get that this product in Oh Tom. Hi. Sorry. I wanted to I apologize to everybody. I made a rookie mistake. I was on mute. I wanted to ask Tom Cosgrove About who is actually responsible for monitoring and Reporting drug shortages and other disruptions in the supply chain.
And could you share a little bit more deaths as far as kind of how exactly that information gets shared and then if you would maybe maybe just give a little bit of more insight into you know, are there new technologies that are helping is blockchain or AI, you know a new kind of Source of information around drug shortages go ahead and take a stab at that if you would.
Sure. Thanks. I was going to jump in but I wasn’t sure if I had lost the call. So thank you. I mean before I start I think I just want to Echo the comments on before about what I think are driving the majority of shortages which is sort of generic complex products and we’ve seen that from kind of urine you’re out and you know from my time at FDA was really the sterile injectables that were subject to intense price competition moving.
Foreign manufacturing sites and having poor quality which raised the issues. It’s really interesting right now is that we’re not seeing large scale Supply disruptions, you know because of covid actually the international drug supply chain is holding up quite well.
We see some of the of the same problems that have existed before but to your question as I mentioned in the beginning their requirements of the law that companies need to communicate your potential drug shortages to FDA. I think there was a time many years ago when companies could drop out or there might even be enforcement actions taken by the FDA that could inadvertently lead to shortages and that’s really not the case anymore for at least the last seven years FDA has be very sensitive to shortages and I think Tunes it’s a Tunes its actions quite well to sort of prevent them.
If FDA finds out about a woman drug shortage, one of the things they’re going to do is they’re going to go out and talk to competitors to see if they can scale up to see if they can fill the Gap and this even goes so far as to from time to time exercising enforcement discretion. So that drugs from overseas can be brought in to fill the supply Gap. Now, you know, it’s a it’s a I think a situation where FDA does have more information.
Nation that it’s allowed to let on but I think that’s where they’re very good reason companies. These are proprietary Supply chains and companies fight very hard to be competitive and to try to frankly stay in business if they’re the details of all their commercial Arrangements were to be to be laid out. I would that would provide some very difficult situations commercially and might actually lead to the lack to a lack of competition and A disruption of the supply chain.
Eventually, so FDA is collecting this information and it’ll put on the website and communicate to the public if there’s a situation where a company can’t meet the demand and will stock out are there new technologies coming coming into play. I guess I can say that companies themselves particularly on the brand inside one of the reasons, you’re not really seeing shortages is because they are very technically sophisticated in both multi-sourcing projecting out their supply.
Needs and we acting accordingly. So I think within companies you’re seeing an increase level of sophistication that leads on the brand side. I don’t think this is quite yet making its way to FDA and the way FDA communicates or collects information, but I think that’s a real opportunity for growth and change in the future.
ER great, thank you. We yeah, go ahead. I just wanted to add a ton of comments and I agree that after uh, June absolutely admirable job in unprecedented situation and really the work that has been done on the shortage, of course really have to put the administration in a really really good position to handle these short-term issues.
However, it is really important to note that the FDA was having issues as securing enough Workforce to do the inspections for existing and new facilities before depends on they started and inspections have also been halted at both domestic and foreign suppliers in the wake of the cuz they crisis and again making sure that FDA has the resources they need to continue to do.
Do an outstanding job is going to be an incredibly important job of both the administration. Also Congress. I guess. The only other thing I would say is that it has been the advanced in the industry’s position that the location of product manufacturing and and the quantities of product manufacturing is a trade secret and I would argue considering this ongoing issue Related Disorders, particularly.
Essential medications that presumption actually puts a lot of stress on our system and across many different players and might need to be reconsidered.
And if I have to anyone else would like that I actually would like to know II think I ran into Tom a great point and I and I agree and I think one of the other parts that we have to think about is the amount of resilience or flexibility we expect from the commercial Supply Chain versus the capacity that we expect the federal government to hold and so, you know from our vantage point we often think about the from Healthcare.
Eddie’s vantage point we think about Normal, supply chain and the disaster supply chain, but there are many conversations about the role of the Strategic National stockpile right now. And I think when you’re considering an event of this nature there is going to be a point at which we have to think about the additional redundancies and the way in which that the SNS or other tools could be used to create additional resilience in the system whether that is having the ability to to hold additional product.
Having the ability to rotate that through a vendor managed inventory or expanding those capabilities, but we have to put everything on the table.
And I think that is a very important consideration to include right now because even with the amount of visibility that the FDA has if we do not create changes in the other side of that resiliency, which is the other parts of the federal government in the ways in which they can play a role in building and resiliency in the interest of National Security through S&S another tools, we’re still going to be in a position where we are reacting and not being proactive.
Make this and I allow no, no, go ahead. Go ahead. Yeah, thank you. I just I just couldn’t agree more with Nicolette that this is both again.
We need to smooth out supply and demand for many of these products and send a signal that to the manufacturers that we need assured Supply at Specific level of quality in order to get the system really working in normal times and specifically as we move into the comic phases of the process right thing. I have to say if I could say one thing I couldn’t agree with that more but one of the challenges and I think it’s sort of really hampers the debate on this is that in some cases, especially with generics. It means that maybe people are paying too little to generic drugs.
He’s right. It may be maybe there’s too much price competition drugs are too cheap. And therefore we find ourselves in single supplier situations career, whether our political system is really ready to have that conversation as to whether the prices of some drugs should actually go up.
So it’s something I think about a lot very very very interesting point Andrea, you’d kind of talked about ensuring that there’s some reserves of drug Supply or I forget exactly how you phrased it, but Does that with that gets a little bit of what Tom is saying you’re kind of guaranteeing that there’s sort of a purchaser there for those drugs. Exactly.
So what many factors care about is revenue price times quantity so we can continue to pay relatively low prices if we assure if we assure more quality guaranteed manufacturers or alternatively we can raise the price that we’re willing to pay and I suspect Going to have to do both to ensure high quality products for many of these for many of the products that were talking about. I think I attended an incredibly important and you want to point it’s not just about paying more. It’s about really reforming the way in which we reimburse some of these products currently so many of these facts that are used in inpatient setting or bundled with other.
Medical Care and that really makes the system very price-sensitive for these products if we unbundled these products from the bundle and let them have a price that’s loaded on the actual market conditions that might also help relieve some pressure and this is Aaron. I think the other thing around the pricing issue is, you know, drug shortages cost so much in labor.
ER and time and hardship, I would actually pay more a little bit more at our hospital system to be assured a quality Supply that of something that’s not going to be recalled and not going to be on shortage. I just don’t want to pay more for a product without some kind of an assurance of quality and that’s what we don’t have right now. The pass/fail system isn’t working.
All right. We have a few minutes left and we’ve actually gotten a few questions in from our listeners hear about the global supply chain and the impact of by Americans. I want to spend a couple minutes on that. There’s been legislation in the Senate to ban Federal payment for many drugs manufactured in China. And you know, can you can you talk reading you talked a little bit about this? So I want to maybe start with Nicolette, you know, what are the trade-offs of increasing domestic?
Take production of drugs versus global. How do you see that playing out? Sure, I think are my co-panelists have had various this already around the pricing.
I think one thing that is often forgotten is that we did not get into a highly globalized Supply Chain by chance and there are both economic and environmental reasons that we got here and we often do not talk about the A regulations that would need to be adjusted to increase production in the United States, especially of a large volume of products. It’s one thing to think about, you know, a handful of products and increasing resiliency.
But if we’re really talking about moving the bulk of the supply chain, we really have to get into issues of Workforce capacity having a stem Workforce being able to actually create that type of infrastructure where we would put those facilities and then the environment little considerations and the regulations that may be a hindrance to enabling that type of production domestically. So it is complex. I think there is agreement that there can and should be more that’s done to consider ways in which we can bring parts of those Supply chains back to the the u.s.
In the interest of National Security as well as economic security, but there are other considerations that we have to consider and first in my And you know, the pricing pieces are are definitely there. But also we have to think about those those environmental regulations and whether we would be comfortable rolling those back in the interest of production, which is something that I don’t often hear in the policy discussions. Thank you. Another dimension.
I completely agree with Nicolette and I think that there are real environmental rules that would restrain if not completely prohibit the American manufacturer of many of these products and there is no economic reason why we cannot rely on our trade Partners to continue to supply these products at adequate levels and inadequate qualities, but that entails trade relationships with our allies that put both quality and also a sure apply as being really important shared objectives that would be a dick that would be a different direction than where we have gone with trade policy to date rheumatism you know this is Aaron a just do want to add that we do have domestic plants made for many injectable products and and that hasn’t gone that hasn’t gone so well over the years we’ve had significant quality problems their significant shortages so just buying American or Manufacturing in America doesn’t prevent us from having shortages and it doesn’t always guarantee a higher level of quality All right. Thank you. I just want to ask maybe I’ll pinpoint Rena here really quick because we do have a kind of wonky question around the role of consolidation in the wholesaler or PBM Marketplace, and we had had another question around what role can PDM play and dealing with supply shortages. So, I wonder if you could just spend briefly kind of press on that question before we move to our final question. Sure. Thank you.
Pretty much the same in terms of the second is potentially reform failure.
The gpos basically have it out in their contracts.
If they can’t Supply the products the hospital that needs it is on the hospital to figure it out and there’s a significant amount of transparency that the hospitals can’t really possible couldn’t really go figure that if they wanted to and so having reforming the GPO contract so that they actually have a fiduciary duty to demand quality assurance, but also Supply Assurance would really go a long way here. Okay the custom great. Thank you. We’re unfortunately already out of time. But I mean I think modern responsive and just go like two more minutes because I really want to ask you to do a final question, which is obviously we’re still very much in the midst of a crisis but you know as Nicolette pointed out when looking at a food season were looking at hurricane season in the short term and then you know that in the long term there will be other natural disasters or supply chain disruptions. So it is very brief.
Each of you could go through and just share. What do you think is like the top thing that needs to be done to shore up our supply chain for the future and we’ll just go in reverse speaking order if that’s alright. We know we’ll start with you all you’ll yield my time to my colleague. Thank you. I think we need to be talking about the replenishment of the SNS. We do know there’s a lot of Focus right now on.
On what is happening in the commercial supply chain?
There are a lot of adjustments being made discussions about ramping up production of not just the pharmaceutical components but the medical-surgical components and the raw materials that are necessary, but I’ve not seen as many discussions about not just S&S replenishment, but composition of the products that are in the SNS and as we are approaching, you know, we’re only five months into a very busy year already as we’re approaching hurricane season and other critical I think we need to be looking at what our stockpiles have and determining if we need to make adjustments to what’s in them.
Thanks, Tom. Well, I could list a bunch of things. But let me pick the the top couple. I think right now, of course the points that were made earlier about resourcing FDA are really important. I think we depend on the international supply chain and it really it has to work. What would it take the supply chain to come all the way back to the US what simple it would take decades and billions. It’s the supply chain.
We’re stuck right now we need To empower FDA to make it work beyond that in the covid era. We really need to start thinking about how to expedite scale-up of manufacturing quickly and at the a has a role to play in that as does industry and I think discussions are starting but we’re going to have a situation soon where we have a few vaccines and if you Therapeutics and literally billions of people are going to want them and I don’t know if the industry is prepared to deliver.
That given that it takes maybe three to five years to significantly significantly scale up an operation. That’s the big challenge with the right kind of Engagement between FDA and Industry. I think we can meet the challenge but it’s going to require new ways of thinking literally on for all parties involved.
Great. Thanks. And Erin will give you the final word. I couldn’t agree more with Nicolette and and Tom’s comment. I will just add that it would during this time. We should be thinking more about National strategies for rationing products. I will tell you that the REM does severe allocations are extraordinarily difficult without National guidance on who should actually get the product hospitals are faced with with developing these.
Korea on their own. We’re lucky. We have an academic Medical Center with an Ethics Committee and lots of very smart people but each hospital is on their own, you know, you may get an allocation of four doses or eight doses. How are you going to decide we’re going to have other therapies and and other products even vaccine. How are we going to decide who gets vaccine? So I do want people to start thinking about a national strategy for for allocating scarce resources as well. Thank you.
Well, you have all given us a lot of insight into the supply chain as well as raise some really interesting and important issues for future conversations. So I want to thank all of you I want to thank our audience for for listening in and again, you can check out all Health policy dot-org for the recording. Thanks again to Arnold Ventures the Commonwealth fund the National Institute for Healthcare Management foundation for making this discussion possible and Aaron Nicolette Rena and Tom. Thank you all for joining us.
us this can confuse our thank you. Thank you. Bye.