The recent US Administration announcement regarding domestic manufacturing of Pharmaceuticals demonstrated the intent to facilitate onshoring of drug manufacture and included meaningful measures to support this goal. This announcement, coupled with the more recent executive order to reduce the costs of prescriptions in the US and the FDA announcement regarding unannounced foreign inspections, happened against a background of escalating tariffs on foreign products. Taken together, these announcements represent a great start for dramatically increasing US manufacturing of finished pharmaceuticals, APIs, and materials.
First, some background: It is estimated that 90% of the prescriptions currently written by US doctors are filled using drugs made outside the USA, with 40% of those same prescriptions being generics produced in India. Historically, the US produced a much larger fraction of its own supply of drugs, but the drive for cost management and cheaper prescriptions drove the offshoring of this production to India and other Asian countries. Today’s reality is that everyday staple medicines are usually supplied in generic form, made by foreign manufacturing plants, where cost is the driving factor in determining the source.
At the same time, the US is dominant in the research and development of complex, advanced therapies, such as cell and gene therapies, radioligands and other high-value, life-saving medicines. This is because the US is very good at basic science, applied research and innovation in product development. Therefore, the current state is that most generics are manufactured outside of the US, while many branded drugs are manufactured within the US.
The FDA announcement regarding unannounced foreign inspections has highlighted how the playing field, from the perspective of assurance of product quality and compliance to US regulation, is not level. FDA has the responsibility to evaluate (and approve, if appropriate) new drugs for the US market. FDA is also tasked with monitoring drug manufacturers who supply the US, regardless of their location. When FDA conducts inspections of domestic manufacturers, they usually do so unannounced, so there’s a good chance of the investigator seeing the true state of that manufacturer. However, for a number of reasons, including logistics, visa applications, politics and other considerations, FDA’s inspections of foreign manufacturers are typically arranged with lots of notice up front, sometimes months. It's easy to see how a foreign manufacturer can present a positive aspect when given plenty of warning of an inspection. On top of that, regulatory standards in other countries may not be as stringent as within the US. In fact, many Indian manufacturers operate to dual standards – one for product destined for the US, another for markets in lower middle-income countries without regulatory oversight.
More than half of the US population takes at least one oral solid dosage medicine for chronic disease. When we add that fact to the combination of the reduced level of assurance of quality from some foreign manufacturers, and the uncertainty of assurance of supply of foreign-made medicines, for geopolitical, logistics and other reasons, we have a national health and security risk.
FDA is also commonly (and sometimes unfairly) seen to be resistive to change. In particular, FDA is seen to be slow to adapt to or enable innovation in manufacturing technology. Manufacturers conservatively hold to established methods and processes for the production and testing of even new products to reduce the uncertainty and risk around application review or during routine inspection. Precedent and established standards are seen as safe harbor, even if technically inferior to the state of the art.
And so, now we get back to the White House and FDA announcements. To be clear, we consider this announcement and all its provisions as positive and very helpful. It includes:
- Requiring quicker and more efficient review of approval of domestic manufacturing plants
- Instructions for increased fees charged to foreign manufacturers for review of new applications and inspections
- Stronger requirements and enforcement of clarity and reporting on the origin of the chemical components of medicines
- Requiring improvements in cooperation by the EPA for new domestic construction
- Instructions for increased inter-agency coordination and cooperation in supporting construction of domestic manufacturing plants
- Measures that level the playing field when it comes to inspections
However, what this does not address is the cost pressure, brought about by both the administration itself and the insurance companies (and their Pharmacy Benefit Managers). Making a drug in the US, using the same technology as in, for example, India, will cost more, in labor alone, aside from other basic costs and fees. The solution here is to play to America’s great strength in biosciences… innovation. For example, most medicines are still made by batch processes. The regulatory community favors this approach since it allows for specificity and segregation of drug product identity. However, other industries, such as the food industry, have adopted continuous processing to a great degree. While FDA has many programs to enable and accelerate the introduction of therapies for unmet medical need, it has precious few initiatives for introduction of improved technology and methods for manufacture, especially for production of established products. So, in addition to the recently announced measures, we need FDA to be more flexible in assessing changes to existing products and in evaluating novel technology for domestic supply of everyday medicines. Our case studies and projections indicate that using state of the art manufacturing technology, it is possible to make staple drugs and medicinal products to equivalent or better quality standards, domestically, under the watchful eye of unannounced FDA inspections, at a cost that is comparable to those seen with production in Asia. And we can do all of this in the US, for the US, thus avoiding the national security risk of dependence on foreign supply.
As consultants and advisors to the pharma, biopharma and device industry, Quality Executive Partners understands the technical and organizational challenges that come with this opportunity, and we can help you take advantage of this shifting landscape.
Bottom line: The current thrust towards domestic supply of medicines is very positive and will need to be supported by greatly increased flexibility and adoption of new or improved manufacturing technology if it is to be successful financially. Getting the right expertise and support in place early will enable maximum advantage.
Mark Roache, QxP VP of Cell and Gene Therapies, has spent his 30-plus year career in GXP. Mark was the Chief Quality Officer for AveXis (now Novartis Gene Therapies) at the time of Zolgensma launch. He was previously Senior VP of Quality for KBI (a CDMO with cell-therapy capabilities) and has held other senior Quality roles at Novartis, Merck and Bayer.
Glenn Barbrey, a Consultant on the Quality Executive Partners team, has more than 35 years of diverse domestic and international experience in Biologics, Pharmaceuticals, and Medical Devices. He was previously Senior VP of Quality for a CDMO and has held other senior Quality Assurance, Technical Operations, and Consulting roles at Novartis, Seqirus, FujiFilm, KBI, and Barry-Wehmiller.
