U.S. and EU efforts to manage supply chain shortages are slowly converging. However, the political winds in the Rest of World (ROW) may be diluting required oversight. Both the U.S. and EU have published either a draft guidance or frameworks to identify potential risks. These efforts have been carried forth by organizations such as the Duke-Margolis Institute for Health Policy and its launch of the Duke-Margolis ReVAMP Drug Supply Chain Consortium, of which Lachman Consultants is a founding member. Such efforts are answering the call to action for public/private partnerships. Through these efforts, additional hidden issues are being uncovered, which enables targeted mitigation plans that are needed to address global supply chain problems. A few of these data points provide additional insight to these issues:

• An EU pilot exercise to assess supply-chain vulnerabilities identified that all eleven of the products included in its initial phase have over 30% of their supply coming from a single country.
• Not only have finished drugs been scrutinized, but excipients have been as well. A body of research by Marta E. Wosińska, T. Joseph Mattingly II, and Rena M. Conti, published in Health Affairs and titled, A Framework for Prioritizing Pharmaceutical Supply Chain Interventions, highlights that, “Magnesium Stearate, an inactive ingredient, is common to over 30,000 oral solid dosage drug products. Disruption in the production of Magnesium Stearate could affect care for many millions of patients because the compound does not have good substitutes.”

In the U.S., the exchange of communication from Congress to the FDA and vice versa continues to challenge the foreign inspection program and weaknesses in companies complying with the CARES Act. Meanwhile, certain bipartisan bills have been introduced, such as the Pharmaceutical Risk Assessment and Mitigation Act, which are moving the conversation from patient safety to national security.

However, this article would be remiss in not highlighting the public recognition given to manufacturers that have been recognized for execution of outstanding mitigation efforts. The FDA has created the Drug Shortage Assistance Award which “recognizes efforts of drug companies and manufacturers who have worked in cooperation with FDA and have implemented strategies to help provide a steady supply of medically necessary drugs for patients at a time when critical drug shortages pose a challenge for health care providers and patients nationwide, while maintaining a commitment to quality manufacturing.” With all the criticism in play, awards such as these can play a big part in changing mindsets for early intervention with agency cooperation.

Conversely, some new risk indicators have emerged. For example, the tightening of China’s espionage laws has resulted in a growing concern that more shortages are on the horizon. As stated in this article, “Four out of Germany’s 16 states have now cancelled routine quality control trips to China by their inspectors as they’re concerned they could fall foul of the law.”  This trend is corroborated by additional reporting by the Financial Times of western companies warning of increased risk of supply-chain disruptions due to the inability to certify manufacturing sites.

In addition to known indicators, the absence of inspection data continues. The Associated Press recently reported that, as of September, FDA inspections still have not recovered to pre-pandemic levels as 42% of firms registered to supply product to the U.S. are overdue for inspection.

As these risks increase, companies are advised to understand their own vulnerabilities across the complex global supply chain. Waiting for inspections to discover problems is counter to the continuous-improvement culture expected of companies to protect patient safety.  Additionally, the FDA is publicly recognizing companies when they come forth to collaborate in mitigating potential shortages. 

If your firm is concerned about the robustness of its shortage efforts or would like more information about shoring them up, Lachman can help. Reach out to us at LCS@LachmanConsultants.com to schedule a consultation.

---

Patrick Day is a Principal Consultant in the Compliance Practice at Lachman Consultants.