“We look forward to the day where we can get back to normal,” U.S. President Donald Trump said Monday at a COVID-19 news conference in which reporters sat every-other-seat apart. In an unusually somber tone, the president said it now looks like it will be at least July or August before the outbreak “washes through.”
However, to paraphrase Francis Bacon, a 16th century British philosopher, the remedy may be worse than the disease, as the reaction to the novel coronavirus will have a longer-term impact on the drug and device supply chain than the bug itself, with that impact growing exponentially the longer the virus lingers.
Efforts to flatten the curve of new infections – including social distancing, no-contact meetings, postponed inspections, delayed advisory committee meetings and closed courtrooms – are disrupting the routine processes of getting a drug or device from concept to market and then keeping it in stock.
Consequently, the full impact of COVID-19, which was raised Friday from a “public health emergency” to the level of a U.S. national emergency, will be felt months from now, particularly on the supply chain, Chad Landmon, chair of the intellectual property and FDA practice groups at Axinn, Veltrop & Harkrider LLP, told BioWorld.
In the U.S., possible shortages have been a concern ever since the virus first took hold in China, which manufactures many of the active pharmaceutical ingredients (APIs) and finished drugs used in the U.S. While demand for personal protection equipment is outpacing supply, only one manufacturer has yet linked a drug shortage to ingredient manufacturing issues caused by the outbreak. But as current inventories dwindle and companies and governments try to halt the spread of the virus with quarantines and shutdowns, other drug and device shortages could become a possibility over the next several months, Landmon said.
Aside from their employees’ health and safety, supply chain issues are one of the biggest concerns for his drug and device clients, Landmon said. Some of them have all their manufacturing overseas; others rely on foreign APIs or precursor ingredients that come from China or India. While there almost always are alternatives, companies have to locate them and then validate the use of the alternative in their product. That can lead to more cost and create disruptions.
Too much reliance
Concerns about overseas production of critical medical products or their components could lead to an even longer-term impact on industry, as U.S. policymakers are already rethinking the nation’s reliance on drugs, APIs, vaccines and devices that are made elsewhere.
Such reliance, and the security risk it presents, has become a common topic of late in House and Senate hearings, as 40% of finished drugs marketed in the U.S. and up to 80% of the APIs are manufactured overseas, primarily in China and India. For instance, 13% of the facilities that make APIs for U.S. drugs are located in China, and some of those are the only source for specific ingredients.
“The global coronavirus outbreak has heightened awareness around the vulnerability we have when it comes to American reliance on foreign-made medical supplies,” Sen. Dick Durbin (D-Ill.) said last week in introducing a bipartisan bill that calls for the development of an action plan to reduce that reliance.
“When a public health emergency or national security crisis occurs in China or other countries that disproportionately provide us with medical supplies, the United States is at risk of a shortage of drugs or health care equipment. We have to develop a strategy to strengthen domestic production and supplies,” Durbin continued.
The Commission on America’s Medical Security Act, which also was introduced in the House last week, would direct the National Academies of Sciences, Engineering and Medicine to assess the country’s dependence on critical drugs, devices and medical equipment sourced from or manufactured in foreign countries. The bill then directs the academies, in consultation with federal agencies and stakeholders, to provide recommendations and an action plan to improve the resiliency of the U.S. supply chain.
It’s unlikely that such measures would bring a lot of that manufacturing back to the U.S. because of the cost, but drug and device companies will be looking for multiple suppliers based in diverse areas of the world, Landmon said. “Companies always evaluate … their supply chains,” he added.
Given China’s and India’s current dominance, they would be the biggest losers if other sources were developed.
Inspection, litigation impact
Another part of the COVID-19 reaction that could impact the industry over the next several months is the FDA’s temporary halt of most inspections. The agency is proactively looking for alternatives to on-site inspections, such as stepping up its efforts to assess the quality of products coming into the U.S. But the curtailing of inspections could delay new drug approvals and facilities coming back online after previous compliance issues, Landmon said. It’s hard to say how many products might be impacted or how long they would be delayed since much of that information is proprietary.
Depending on how long the emergency lasts, there also could be delays in FDA enforcement efforts, Landmon said, as warning letters and import alerts generally stem from on-site inspections.
Another confounding issue could be delays in litigation. Although the U.S. Court of Appeals for the Federal Circuit, which hears all patent-related appeals, has said it will continue to hear cases by teleconference or by ruling on the briefs, several lower courts throughout the country have shut down jury trials, and the Supreme Court said Monday it was postponing the oral arguments set for its March 2020 session. In addition, travel restrictions are making it difficult to get depositions from people overseas, Landmon said.
Patent litigation can be a major component of developing generics and biosimilars, so a delay in court proceedings could push back the entry of some competition, Landmon said. It also could delay settlements, which he noted are typically driven by imminent trial dates.
Speaking of competition, the effect of all these measures will be felt by more than industry, as patients may have to pay the price at the pharmacy. Landmon said price increases are possible due to the broad impact the measures will have on competition.
Another long-term impact that will be harder to measure is the opportunity cost caused by the delays in competition and new approvals, as well as the pipeline pivots as companies put other R&D on hold to pursue COVID-19 therapies, vaccines and diagnostics.