In the spring of 2020, supply chain interruptions throughout the world drew long-overdue attention to the possibilities and dangers of drug shortages. We wondered how such shortages might affect our clients in the CMO/CDMO world, so SCORR’s president Krystle Buntemeyer asked Heather Sugrue, senior vice president of sales and marketing at Recro Gainesville, for her perspective.
Buntemeyer: We know that shortages can occur in intermediates and dosage forms. With this in mind, what factors are affecting the availability of both today? And of these factors, which are most critical?
Sugrue: If we are considering intermediates that impact dosage form manufacturing, then I would include APIs, reagents, raw materials, packaging materials, lab supplies, etc. Every entity that is part of the supply chain in the drug development process can be a factor in triggering a domino effect in shortages, from raw materials for manufacturing the APIs to PPE needed for manufacturing a drug product to shipping materials needed for delivery to its final destination. That said, today, many resources are being diverted to combat COVID-19, putting a strain on the availability of some commonly used items that are usually easy to source. Companies are having to be proactive in stockpiling material so they have enough to support either current forecasted commercial material or ongoing projects in the development space. Both upfront payment and long term material storage can become costly. As for which factors are most critical, I believe they are all tied together.
Buntemeyer: Even back in 2011, the U.S. Department of Commerce Bureau of Industry and Security was reporting on the very high degree of foreign sourcing and dependency for critical components, materials, and finished products required for U.S.-based health-related manufacturing operations. To what extent are shortages a new problem related to COVID-19, versus a preexisting issue?
Sugrue: COVID is an international pandemic and therefore is impacting all areas of product need. All entities of drug manufacturing require the same things at the same time on an international level. Refocusing efforts toward COVID drugs and vaccines will draw down the “normal” inventory that is used for marketed commercial products. Delays in delivery could also impact shortages as shipping companies are having increased volume requests with increased pressure on delivery alongside shelter-in-place policies and travel limitations. That said, we as an industry often rely on just-in-time or on-demand delivery for many of our resources from all over the globe. Our focus needs to shift toward more of a stockpiling approach in order to build emergency stock levels. Vendors and CDMOs need to ensure they possess all necessary intermediates to support their efforts 6–12 months out or beyond. Of course, this draws down inventory further, creating yet more shortages across the board.
Buntemeyer: How are these shortages affecting your business and the industry overall, including sponsors and patients?
Sugrue: Many companies have created task force teams focused on COVID-19-related issues, with representation across all departments, having daily meetings. The focus here at Recro Gainesville is on the review of materials needed to support employee safety and the manufacture of existing commercial products. The goal is to keep inventory at a level that will allow continued delivery of drug product to clients and patients. However, the pandemic has been impacting companies’ ability to engage with new potential clients. Companies have also run into financial constraints as venture capital monies may be frozen or turned toward COVID activities, or as clinical trials are being dismantled and/or delayed, causing timelines to be pushed out.
Buntemeyer: To what extent do you believe this situation is going to affect eventual efforts to produce therapies and vaccines for COVID-19, once we know what to make?
Sugrue: It could potentially affect those efforts greatly if we aren’t able to find the balance between what we are manufacturing today for commercial purposes in other indications and what resources need to be shifted to focus only on COVID-19. Global outreach and cooperation will be necessary in order to drive appropriate supply to the correct demand.
Buntemeyer: What do you see as our options to alleviate or prevent API and drug product shortages?
Sugrue: For the near term, 12–18 months, the industry should continue to build larger amounts of inventory of materials needed to support current commercial programs. Companies could also begin to vet second (or third) source CDMOs for manufacturing their drug substances and drug products in order to diversify their vendor bases and spread out the risk of running into shortages. Some companies may already have these alternative source CDMOs in place. Where that is the case, companies should start to engage by bringing these additional CDMOs online now, rather than later.
Buntemeyer: Last fall, Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, told a House of Representatives subcommittee on health that only 28% of the manufacturing facilities making APIs to supply the U.S. market were in our country. Furthermore, the number of facilities in China supplying APIs had more than doubled since 2010 to 13% of all those serving the U.S. market. This does not account for the large number of APIs China supplies to India, a major supplier of generic drugs. (And, of course, these percentages are for numbers of facilities, not quantities of drugs produced.) To what extent do you feel the COVID-19-related drug supply shortage may be a question of national security?
Sugrue: The U.S. is currently relying on a multitude of other countries for many of our current needs in keeping up with the fight against COVID spread and the search for a vaccine/drug. Efforts need to focus on safeguarding the world’s supply of essential materials and medicines from the vulnerabilities inherent in relying on any one region.
Buntemeyer: How do continuing pressures for CDMOs to consolidate, along with Big Pharma’s growing tendency to outsource to CDMOs, affect the shortage problem?
Sugrue: Small, emerging biotech and virtual companies appreciate smaller, more flexible outsourcing options while Big Pharma typically aligns with larger CDMOs to handle greater numbers of assets under development, requiring more commercial capacity. As Big Pharma’s tendency to outsource increases as the CDMO industry consolidates, smaller companies will begin to be squeezed out of facilities and therefore lose the opportunity to partner their assets with smaller CDMOs. Ironically, the “research arm” of Big Pharma is often believed to be that of the very companies they are pushing aside. Therefore, a shortage in Big Pharma’s own development pipelines could emerge.
Buntemeyer: Gil Roth, president of the Pharma & Biopharma Outsourcing Association, has been telling me about his program to solve manufacturing capacity shortages. There’s an article about it in ContractPharma, but essentially, the FDA would prequalify CDMO facilities with strong inspection histories in specific dosage forms as Shortage Manufacturing Establishments. That way, a license holder — knowing that they’re facing a manufacturing-facility-related shortage — could tap one of these pre-vetted facilities to do the necessary manufacturing. The FDA would then speed up the process by waiving their preapproval inspection, permitting release with concurrent stability studies, and otherwise streamlining approval of the new facility without risking public safety. What do you think of this idea?
Sugrue: I think the approach around prequalifying facilities proactively as Shortage Manufacturing Establishments is a very effective way to decrease risk for any potential future crises. As COVID-19 began to unwind in the U.S., there was dinner table chat around whether local CDMOs could pick up the manufacturing of a potential COVID drug if increased capacity was needed. The current FDA guidance would certainly not lend well to this approach. Given time is of the essence, having a process in place that will allow for a quick startup in manufacturing around a drug that will have a positive impact for patients with COVID-19 should be acted upon without debate.
Buntemeyer: What is the single most important point you’d like to make about drug shortages and CDMOs?
Sugrue: Shortages on raw materials, APIs, packaging materials, shipping capacity — anything along the supply chain needs for manufacturing drug products — can have a huge impact on shortages and therefore on our ability to supply medications to patients in need. With COVID-19 well entrenched within our U.S. boundaries, the lack of planning and resource procurement on a national basis has put us in a position of chaos and desperate need. Efforts must to be made to build “in-house” sources for raw materials and manufacturing.
Buntemeyer: Heather, this has been an eye-opening conversation. It’s gratifying to get an expert perspective on a topic that concerns all of us in the life sciences industry and that I, for one, have certainly been wondering about. Thank you so much for sharing your insights and your time.