If some countries decided to stop producing active pharmaceutical ingredients or shipping them to the U.S., it could be catastrophic for the entire U.S. pharmaceutical industry, the Defense Department's Inspector General wrote in a report analyzing the department's handling of the pharmaceutical supply chain.
The report, released Sept. 20, found that just 28 percent of API manufacturing sites supplying the U.S. are in the U.S.; 31 percent are in China and India; and 41 percent are in other foreign countries.
Five takeaways from the inspector general's 70-page report:
- The report was intended as a follow-up to a March 2019 order for the Defense Department to mitigate risks of pharmaceutical supply chain disruptions. The inspector general noted that while some efforts have been made, more can be done and that U.S. reliance on foreign drug manufacturing is still a security risk.
- While the Defense Logistics Agency — the largest agency within the Defense Department — has begun assessing the risks of foreign reliance, it hasn't fully developed mitigation strategies, the report states. The Defense Department only has processes to respond to drug shortages after they're discovered or when the drug becomes unavailable.
"Since the DoD is a consumer of the commercial pharmaceutical market, which is dependent on ingredients from foreign suppliers, the drug shortages would ultimately compromise the standard of care for Service members and DoD beneficiaries," the inspector general wrote. "Ensuring the DoD pharmaceutical supply chain has protective measures in place to mitigate the risks of a pharmaceutical supply disruption would provide a defensive capability and mitigate public health and national security risks."
- Not knowing the country of origin for finished drug products and APIs makes understanding the supply chain more difficult, but the Defense Department hasn't made any attempts to compensate, the report said.
- The inspector general made several recommendations to address the issues noted in the report, including recommending that various entities in the Defense Department develop and issue guidance on supply risk management; create the authority for the government to require drugmakers to include API and final drug product country of origin information; create a chartered work group to assess risk and critical products; and make a policy outlining the allocation of scarce pharmaceutical resources.
- The report has been reviewed by the Defense Department, which revised certain recommendations but agreed to implement most of them.
Find the full report here.