10 Ways To Strengthen U.S. API: Part I
By Katie Anderson, Chief Editor, Pharmaceutical Online
After a flurry of executive orders, proposed tariffs, presidential letters and national reserve plans, the U.S. pharmaceutical industry is feeling mounting pressure to bring more drug manufacturing stateside. Matter of fact, over $250 billion has been pledged by major drug makers to expand and build new manufacturing facilities in the U.S.
The goal? Strengthening U. S. pharmaceutical manufacturing is intended to improve national security by reducing the reliance of foreign manufacturing for drugs. It is also intended to strengthen the economy by bringing in more revenue, creating more jobs and driving drug prices down for Americans.
The problem? Over 90% of medicine taken by Americans is generic, and most of the APIs used in both branded and generic medicines are produced overseas.
“At the end of the day, this is an economic problem. All drug shortages and the problems that we're facing are driven by economics. So, if we can fix the economics and make it at least cost-competitive to be made here in the United States, we have a fighting chance to solve this,” explained Webb.
Highlighting The Problem
If the lack of drug manufacturing in the U.S. is 30 years in the making, why has it only been a hot topic in the last five years? If you suggest the culprit might be COVID-19, you would be right.
“All of a sudden, it was a shock to see how very fragile the supply chain really is. COVID didn’t cause drug shortages, but it helped illuminate the problem. If an event like COVID happens again, we might not be so lucky,” noted Webb.
Bringing the API supply chain closer to home not only strengthens the supply chain for U.S. drug makers, but it also strengthens the U.S. reserve of critical medicines. Like others, Webb finds that the United States’ reliance on medicine from foreign countries creates not only a public health risk but also a national security risk. To make the U.S. cost-competitive for manufacturing these APIs; however, advanced manufacturing technology is a must, according to Webb.
1. Invest In Technology
API manufacturing was moved overseas decades ago for economic reasons. It was cheaper to make it in foreign countries, where labor rates were lower and key starting materials were more accessible. Manufacturers were able to keep costs down by batch manufacturing, which worked. And because it worked, many manufacturers didn’t have to worry about new technology.
“It might have been inefficient and might have been clunky, but they were able to keep their costs down with batch manufacturing. And they knew what to expect. They knew the outcome. They knew when they turned this machine on to make a pill, they knew what that outcome was going to be, and the FDA knew what that outcome was going to be. So, there was no reason for anybody to change until something like COVID happened. Then, we became aware that the process is inherently inefficient and only works because we’ve been lucky,” explained Webb.
Manufacturers had three choices to reduce the cost of making API to move it back stateside, according to Webb. Either they could not pay fair labor rates, bypass federal regulations or reduce manufacturing costs. Since they couldn’t do the first two for obvious reasons, reducing manufacturing costs was a must.
Most of the medicine taken in the United States is small molecule oral drugs, and continuous manufacturing is the technological answer for most small molecule oral drugs.
2. De-risk the Investment
Investing in new technology doesn’t come easy…or cheap. The primary deterrents to bringing in new technology to make API manufacturing more efficient are upfront cost and production/regulatory risk.
When it comes to production risk, the API Innovation Center helps companies work through the kinks of adopting the new technology.
APIIC works with advanced manufacturing technologies (AMTs) such as continuous flow manufacturing to help streamline the manufacturing process for APIs. It invests in developing that technology to help reduce the risk for manufacturers.
Regarding cost, Webb also noted that manufacturers should partner with their state or government to reduce the financial burden. “Advanced technologies, whether it be continuous flow manufacturing or some other advanced manufacturing, needs to be adopted, but it's expensive. Many API companies and generic manufacturers are on razor-thin margins, but the government can help offset some of the capital cost. That’s the role of government, to invest in those new technologies and stand them up.
The government can also aid the technology adoption process by offsetting some of the capital cost,” added Web.
Once the investment is made and the technology is created, the manufacturer then has to sustain that technology and put it into a successful production process.
“We’ve de-risked that investment, and as a result, you've introduced new efficiencies, higher quality and purity of product. You've now accelerated speed to market with this new technology,” added Webb.
3. Collaborate With Regulatory
Bringing the supply chain closer to the point of care creates efficiencies. According to Webb, “it’s a lot easier managing a 500-mile supply chain than is a 5,000 mile supply chain.”
Producing API in the United States allows the manufacturer to be in close proximity and communication to the FDA, which can only lead to better outcomes. Webb recommends being in constant communication with the FDA. “What a drug manufacturer does not want is for them to do all this work and the FDA says, no, not good enough, do it over again,” added Webb.
The FDA is invested in the development of the industry and willing to partner with companies adopting new technologies. The U.S. Pharmacopeia also works with the FDA to develop standards for new technology, so keeping in contact with the FDA is important.
The closer ties you have with the government, FDA, USP, etc., the better the outcome. These partnerships help reduce surprises, such as a complex issue with the manufacturing process. Close relationships would lead to catching these issues earlier to prevent recalls or a contaminant.
4. Develop The Workforce
With bringing advanced technology to API manufacturing and adding more API manufacturing in the United States, there is a need for workforce development.
Webb believes that onshoring API manufacturing creates career pathways beyond just pharmaceutical manufacturing. “You've created career pathways for them to jump into and move into other industries, as opposed to just manufacturing drugs,” he noted. These individuals are keen on technology and can translate that acumen to roles in other industries.
5. Reduce Steps In Manufacturing
The reasoning behind applying advanced technology like continuous flow to a drug’s manufacture is to streamline the process and reduce steps. Whether it reduces the process just a few steps or more, it brings the product to the market faster and ultimately reduces cost.
“What you're trying to do now is get it to the point where that low-cost generic can compete against a drug that's coming in from India or some other place, and at least you're on the formulary now. A manufacturer or a purchaser of drugs has an option because it's no longer driven by cost. It is driven by value now, and that's what we're trying to get to,” added Webb.
While the reduction in API costs can’t alone produce the lower costs needed to produce the most favored nation pricing for branded drugs, it can certainly help get us there. Just by reducing the API manufacturing costs, you are lowering the cost of final drug product.
Stay tuned for the second part of this series, which will get into the role of KSMs in strengthening U.S. API production, opportunities in existing facilities and connecting the major players in the process.