COVID-19 Supply Chain Considerations

Summary

As the novel coronavirus disease (COVID-19) continues to change daily life, concerns about the impact on global supply chains and possible drug shortages have increased. Additionally, changes to FDA processes may limit its ability to perform essential drug related activities.

Please note: This is an archived post. Some of the information and data discussed in this article may be out of date. It is preserved here for historical reference but should not be used as the basis for business decisions. Please see our main Insights section for more recent posts.

The Effect of China’s Closures on the Global Supply Chain

Many manufacturing sites in China remain closed due to the COVID-19 pandemic, affecting global medical product supply chain. Significantly, the closures impact the sourcing of active pharmaceutical ingredients (APIs), crucial for drug production; 13% of all APIs are sourced from China. On February 27, FDA received the first notification from a pharmaceutical manufacturer that due to COVID-19-related issues, procurement of an API was no longer feasible, and the manufacturer expects that the drug would soon be in short supply. Additionally, the FDA has identified 20 drugs, which solely source their active pharmaceutical ingredients or finished drug products from China; however, FDA has yet to be notified of a shortage of one of these drugs.

Foreign Site Inspections

Previously, on February 24, the FDA announced it would suspend operations in China due to the level 4 travel advisory, underscoring the seriousness of the COVID-19 pandemic. On March 10, the FDA announced it would be postponing most foreign inspections through April due to COVID-19 safety concerns, in view of the US State Department and Centers for Disease Control and Prevention travel advisories. The suspension of physical inspections of foreign manufacturing sites is a significant attempt by the agency to prevent the spread of the virus and ensure the safety of FDA personnel. The FDA has stated they will be applying additional tools to ensure the safety of imported pharmaceuticals, including product sampling. In addition to affecting current products, the FDA notes that its action may impact other responsibilities, including product application reviews.

The Effect of COVID-19 on Broader Supply Chain

As the pandemic continues to unfold across the world, the issues facing the FDA—particularly with respect to the ex-US drug supply—will likely continue to increase in number and severity. Although we have already observed the impact of China’s COVID-19 containment strategy on the sourcing of API, most APIs are produced outside of China. Three of the top 4 API-producing regions—the United States (28%), the European Union (26%), and China (13%)—have already been severely impacted by the COVID-19 pandemic. The US and many countries in the EU have implemented social gathering restrictions and encouraged personnel to work from home. Inevitably, these measures are expected have an impact on drug production and distribution.

While there has yet to be a COVID-19-related drug shortage announced outside of China, the implementation of containment measures and effects on manufacturers may result in additional future shortages. On March 10, members of the House Energy and Commerce Committee called on the FDA to disclose COVID-19-related supply chain issues. Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research, stated that the FDA does not intend to disclose the list, citing that disclosing shortages could incite panic. The FDA remains involved in the effort to maintain the integrity of the drug supply and is continually monitoring the supply chain to identify potential shortages. Moreover, the FDA seeks to minimize the harms resulting from the impact of COVID-19, including taking action against companies selling fraudulent products making unsubstantiated claims.

Conclusion

As the virus continues to spread to other countries, it is expected that supply chain issues will become more pronounced. Disruptions in countries that manufacture and export pharmaceutical products—or reagents used in their manufacture, including APIs—will continue to be of concern. While drug shortages are not uncommon—indeed, currently about 100 drugs are in shortage for various reasons, mainly quality problems—most shortages do not arise from a global concern such as the one we face today. The FDA continues to monitor the supply chain and regularly updates the Drug Shortages page of its website. As the COVID-19 situation continues to unfold, the FDA will likely need to formulate and execute a plan to address existing and emerging shortages in the weeks to come.

To receive Avalere updates, connect with us.

Find out the top 2020 healthcare trends to watch.