A recent executive order signed by President Donald Trump calls for the government to build a Strategic Active Pharmaceutical Ingredients Reserve to stockpile a six-month supply of key drug components. While health system leaders see potential to strengthen the drug supply chain, questions remain about how the initiative will be executed and what the long-term effects will be.
For some health systems that have navigated chronic medication shortages and fragile supply chains, the move provides an overdue opportunity to increase supply chain resiliency.
“This initiative could significantly reduce drug shortages, particularly when manufacturers face challenges in obtaining active pharmaceutical ingredients,” Nilesh Desai, MD, chief pharmacy officer at Louisville, Ky.-based Baptist Health. “By strengthening the U.S. API reserve, we may see improvements in sourcing reliability and increased availability of essential medications.”
A strategic stockpile
Under the executive order, the assistant secretary for preparedness and response has 30 days to identify an initial 26 critical medications and 120 days to ensure the SAPIR facility is ready to receive APIs. Over the next year, HHS is expected to expand the list to 86 medications and develop a proposal for a second SAPIR facility.
The move follows a Section 232 investigation launched in April to determine whether foreign pharmaceutical imports pose a national security risk. In a CNBC interview, President Trump also floated imposing tariffs of up to 250% on imported pharmaceuticals as part of a strategy to bring more drug manufacturing to the U.S.
However, he signed an executive order Sept. 8 aiming to modify the scope of certain tariffs, adding pharmaceuticals undergoing Section 232 investigations and exempting them from additional tariffs. The order clarified pharmaceutical products would be granted a reduction only if a trading partner signs a deal that helps reduce the U.S. trade deficit.
Although the API order marks a step toward bolstering pharmaceutical resilience, Zach Hagen, PharmD, director of medication at St. Louis-based Ascension, cautioned it addresses only one layer of a far more complex supply chain.
“Access to the API in the U.S. would strengthen the medication supply chain for critical medications like bupivacaine and lidocaine with epinephrine,” Dr. Hagen said. “While this is a great start, access to key starting materials and raw materials to make API is equally, if not more, important.”
He emphasized that the distinction is critical because APIs are synthesized from KSMs and other raw chemical inputs that rely heavily on international production.
“That is why we are focused on working closely with manufacturers who produce finished drug products to fully utilize the API and increase the resilience of our supply chain,” Dr. Hagen said.
Operational impact may be limited for now
While the executive order is framed as a strategic investment, pharmacy experts say the reserve is not likely to affect pricing or purchasing strategies in the short term, unless activated as a response to disruptions.
“The strategic API reserve is not expected to have an immediate effect on sourcing or pricing for pharmacies,” Michael Ganio, PharmD, senior director of pharmacy practice and quality at the American Society of Health-System Pharmacists, told Becker’s. “However, in the event of a disruption of the API supply, whether due to a natural disaster, geopolitical conflict or other cause, the API reserve can help maintain API availability for drug manufacturers and compounders. This may help prevent shortages on pharmacy shelves that could otherwise result from an API supply disruption.”
Even in the circumstance of a natural disaster, however, accessing the reserve could be difficult, Dr. Ganio added.
“Manufacturers may have to revalidate their processes and quality assurance testing using this new API, which may delay the availability of the finished drug product if API supply is disrupted,” he said. “Currently, existing contracts and purchasing history can limit allocation levels or availability of drug products for some purchasers.”
