• Market Crumbs

Drug Manufacturing Is Coming Home


Image via Markus Spiske on Unsplash

One of the news stories that seemingly caught many by surprise amid the outbreak of COVID-19 is how dependent the U.S. is on other countries, particularly China, for drugs and other medical supplies.


According to the U.S. Food and Drug Administration, 90% of drugs in the U.S. are imported, with the bulk of them coming from China. The number of facilities in China that manufacture active pharmaceutical ingredients (APIs) more than doubled between 2010 and 2019. Only 28% of the facilities manufacturing APIs for the U.S. market were within the U.S. as of August 2019.


As a result, the Trump administration has decided to make moves to eliminate the dependency on other countries to manufacture drugs.


Last week it was reported Trump is preparing an executive order that will require certain essential drugs to be manufactured in the U.S. As part of the order, the FDA could streamline regulatory approval for American-made products. The order could also encourage the U.S. government, including the Department of Defense, Department of Health and Human Services and Department of Veterans Affairs, to purchase only American-made medical supplies.


On Monday, the Trump administration signed a $354 million contract with generic drug manufacturer Phlow Corporation to create the country's first strategic stockpile of ingredients used in the production of medicines.


Using federal funds from the Biomedical Advanced Research and Development Authority, the goal of the agreement is to give the U.S. the capability to produce drugs that are in shortage as well as create a stockpile of APIs.


"We believe this work can revolutionize America's generic drug manufacturing model by enabling Phlow to produce affordable ingredients used to manufacture essential medicines in the U.S.," Phlow Corporation co-founder Dr. Frank Gupton said.


Phlow Corporation, which will partner with Civica Rx and AMPAC Fine Chemicals to produce the drugs, has the possibility to see the contract increase to $812 million if the project proceeds over the long term. Citing national security concerns, Phlow Corporation declined to reveal which drugs and ingredients it will manufacture.


"When there is a trade dispute or a natural disaster or a pandemic that creates a vulnerability in the supply of one or more drugs, as soon as we see that vulnerability begin to manifest itself, Phlow Corporation will pull that active ingredient out and we'll work with our conversion partners, such as Civica, to make the finished dosage form, then get it into the Strategic National Stockpile," Phlow Corporation CEO Dr. Eric Edwards said.


It's hard to argue with not wanting to depend on foreign countries to manufacture vital medical supplies. It will be interesting to see if this program expands and whether it causes other industries dependent on foreign manufacturing to follow in the footsteps.


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