US’s Self Sufficiency for Generic Drugs: A Supply Dilemma and Potential Solutions

The following are reviewed. 

 

1.     US Pharmaceutical supply vulnerability and an Antidote

2.     Thoughtless US government spending in the name of US’s self-sufficiency/ manufacturing technology

3.     US’s Pharma Supply Security

 

Landscape, perspective and potential solution presented are my own. They are a place to start. If US does not do anything, lack of supplies will come to haunt its population. There is no financial relationship with any entity. 

 

US Pharmaceutical (Generic Drug) Supply Vulnerability: 

 

Generic drugs make about 89% of the prescription drugs dispensed in USA ⁽¹⁾. Most of them are imported. US due to their continued supply may not consider them as its vulnerability. We need to recognize that US does not have the capability and capacity to produce many of the active pharmaceutical ingredients (API) and their formulations for the most generic  drugs. Lack of their continued supply can be used as a weapon to paralyze the country. Thus, a vulnerability exists.

 

The United States may be able to supply some drugs from its strategic stockpile ⁽²⁾ but as said earlier it does not be ability to sustain the long term needs. Unless US can produce its own generic/brand drugs, challenges will remain on an ongoing basis. This could be argued but we have recognize that the strategic stockpile ⁽²⁾ has limited supplies. This situation presents an opportunity to bring manufacturing home and lower the generic drug prices. 

 

Not much attention has been paid to this vulnerability. An old report about Homeland Risks ⁽³⁾ maybe still valid and very meaningful. An update is needed. Various plans, explanations and Executive orders have been proposed and nothing meaningful has resulted ^(4-10). Unless US takes bold steps to ward off the current situation, it will pay a heavy price for the healthcare of its population. 

 

We have to recognize that the current situation developed due to Hatch-Waxman law ⁽¹¹⁾ and lax environmental laws of other countries ⁽¹²⁾. US’s vulnerability can only be alleviated if it can manufacture its own drugs. Success in indigenous manufacturing as explained later could also lower generic drug prices. Effort will be necessary. However, the following will come in the way of bringing manufacturing home.

 

Industry has relied on manufacturing technologies that are more than 70+ years old. If the industry does not change its methodologies, generics produced in US will be the more expensive than the imports and US healthcare will suffer. For indigenous manufacturing, pharma will have to consider alternates business models/methods ⁽¹³⁾. 

 

US does not have many FDA approved API manufacturing plants that have the approved equipment to produce the needed/selected generic drugs. Unless planned, the processes will be fitted in the existing equipment. For formulations the existing plants will require product qualification and regulations will come in the way. Thoughtless fitting of the processes in the existing plants will result in high emissions per kilo of the product ⁽¹⁴⁾. Even if we had laboratory proven processes and the necessary commercial equipment, most likely the needed raw materials will have to be imported. This will be another challenge as US does not produce the needed fine/specialty chemicals that are the building blocks of the generic drugs. 

 

Since each process and product will have to have FDA approval, timely commercialization like “yesterday” due to any emergency will not happen. FDA’s track record in approval of generic drugs at best is dismal. They take about 36-48 ⁽¹⁵⁾ months for approval and would not admit this time per product. COVID-19 approval was an unsustainable exception. FDA will have to change its methods ^{(16, 17)}. Even if all of “t’s” are crossed and “i’s” are dotted by the companies and meet FDA’s requirements, its approval will be still needed. This means commercial availability of products will take time.

If through stroke of luck we had the approved product/process, equipment and raw materials and were able to produce the generic drug in the United States, their generic drug prices will go up by multiples of the current prices. This will be due to higher manufacturing costs and PBMs (pharmacy benefit managers) and supply chain participants insisting on keeping their profit margins. All this will make the drugs unaffordable. There are known ways to contain costs but will require different business model and operating strategies ⁽¹³⁾. They are discussed later. 

Antidote: 

Regulators ^(3-10) have been presenting plans for the last few years but the wheels have not resulted in anything meaningful.Legislators have had hearings but have no idea of how to solve the issue. They recognize the issue but have to depend on the industry (pharma companies, PBMs) and the regulators who due to profits and vested interests respectively have balked to address the issue/s. 

 

To assure continuous supply of the generic drugs and counter any strategic threat to US population, combination of methodologies outlined herein or something similar would have to be considered/adopted to assure US is not caught short-footed. Totally out-of-box thinking and execution would be needed ^{(13, 15)}. 

 

Four State Model (Puerto Rico Model):

 

A model similar to the one used in Puerto Rico ⁽¹⁸⁾ to attract pharma manufacturing could be used. US could create FOUR “pharma manufacturing zones” on the main land at the junction of four states each to produce generic drugs. This way SIXTEEN US states will benefit and support the pharmaceutical manufacturing ventures. 

 

For the “FOUR STATE MODEL” to succeed FDA’s rules and philosophies for generic approval and drug distribution will have to be modified ^{(19, 20)}. With generic factories being in sixteen states they could sell directly to patients at factory costs plus their reasonable margins. This would change the pricing landscape. Compliance with FDA regulations will not end. Spot checking of product quality will assure consistent quality. Any deviation would result in the factory not able to sell the products in the US market. An example of pricing is illustrated in Table 1 ⁽¹⁹⁾ . 

 

Drug	Metformin HCl	Ciprofloxacin	Levothyroxine	Atorvastatin
API cost $/kg (2)	4.00	25.00	4400.00	310.00
Inert excipients $/kg (@40%API cost)	1.60	10.00	1760.00	124.00
Conversion cost, $/kg(@40%API cost)	1.60	10.00	1760.00	124.00
Profit (@ 40% above)	2.88	18.00	3168.00	223.20
Total. $/kg	10.08	63.00	11088.00	781.20
Average Dose	500 mg	500 mg	0.112 microgram	20 mg
Formulator Sale price per tablet, $	0.005	0.032	0.001	0.008
Four State Model Factory Direct Sale price, $ per dose
Price, $ per tablet	0.03	0.10	0.10	0.10
Current Patient purchase price, $/tablet
Walmart	0.07	1.04	0.11	0.30
Rite-Aid With insurance	0.07	0.2	0.17	0.31
Rite-Aid Without insurance	0.7	4.77	0.82	3.97

 

Table 1: Factory sell prices vs. current sell prices ⁽¹⁹⁾

Many vested interests and that could include the legislators and the regulators will negate such plans on sight. PBMs and the supply chain will fight the above suggested plans “tooth and nail” as their profits would be drastically lowered. 

 

Focus on generic drugs would lead to manufacturing technology innovation which has been illusive to pharma as it has lived with its old “mortar and pestle” ways. We have all the knowledge and wherewithal to make the change ^{(13, 14, 15, 16, 17, 21, 22, 23)} if we incorporate principles of chemical engineering and chemistry from the onset of product/process development. Manufacturing technology innovation has been and is US HALLMARK but pharma has deliberately decided not incorporate it as their profits are assured. This is extremely ironic that pharmaceuticals, a subset of fine/specialty, has mostly ignored application of fundamentals of engineering and science ^{(13, 21, 22)}. As I have indicated naysayers will linger on and block any innovation. Unless bold steps are taken US could succumb to drug shortages and may not be able to take care of its masses. If we fail we will have no one but us to blame. With time learnings of generic success could be extended to brand drugs also.   

                                                            

Thoughtless US Government Spending:

 

As indicted earlier there is recognition of drug supply issues. US Government in its efforts to mitigate drug shortages and dependence has doled out monies that have no return. Funded enterprises have convinced US Government to spend close to billion dollars on pharma manufacturing technology innovation and bring manufacturing home. Some the technologies and methods to be developed in these programs are routinely taught at our universities and have been in existence for the last 70+ years. Since the companies are not using them commercially, there have to be rational reasons. Funding recipients and funders will disagree. Funding also begs a question “do the funders really understand what the funded organizations would do and deliver and their ROI?” For continued funding a periodic external audit of deliverables and their commercial viability is necessary. 

 

In 2020 BARDA, Biomedical Advanced Research and Development Authority of U.S. Department of Health and Human Services (HHS) granted PHLOW Corporation about $812 million in the pretense of bringing pharma manufacturing back to US when the company has no plant, no approved product or a process ⁽²⁴⁾. In the name of innovation and COVID-19, this company is outsourcing manufacturing at US based subsidiaries of foreign companies. This should not be considered as independence. Since the products or their processes that would be produced at this company’s facilities are not know or FDA approved, it is difficult to speculate their selling prices. If they are based on pharma’s current traditions, they will be higher priced than comparable imported drugs.  

 

Similarly Department of Defense (DOD) granted Continuus Pharmaceuticals $69.3 million to develop continuous manufacturing capabilities ⁽²⁵⁾ for critical drugs. Irony is that the company, with no commercial products, or DOD do not know which critical drugs they will test or are they FDA approved products/processes. Since this is research company, FDA does not know if the equipment is suitable to produce these drugs. Actually DOD or most of the companies including US FDA have created their own definition for a “continuous process” that is quite contrary to the established definition for continuous processes ⁽²⁶⁾ that have been practiced for the last 70+ years for the manufacture of fine/specialty chemicals but not API, a subset of fine/specialty chemicals. FDA would not detail on paper its definition.

 

To make a mockery of our engineering education and our universities’ intelligence US Congress through HR 4369 (National Centers of Excellence in Advanced and Continuous Pharmaceutical Manufacturing Act of 2021⁽²⁷⁾ and through S-2589 (Securing America’s Medicine Cabinet Act of 2021) ⁽²⁸⁾ are asking for funding for producing drugs using continuous processes which have been practiced for over 70+ years. HR 3851 Continuous Manufacturing Research Act Of 2021 ⁽²⁹⁾ fits the same frivolous spending category. 

Funding for Continuus Pharmaceuticals ⁽²⁵⁾,  HR 4369 ⁽²⁷⁾, S-2589 ⁽²⁸⁾ and HR 3851⁽²⁹⁾ are supported by FDA whose personnel have no hands-on experience in process development, scale up and commercialization of any  continuous processes per established definition ⁽²⁶⁾ practiced by chemical engineers for more than 70+ years. 

RAPID Institute (American Institute of Chemical Engineers, AIChE), New York, New York ⁽³⁰⁾ funding suggests that our universities have failed to teach chemical engineers and chemist how to practice chemical engineering and source raw materials. It is ironic that AIChE is the trade organization of chemical engineers where sourcing of raw materials is part of CHE101 classes.  

 

Universities teach the fundamentals that are creatively and imaginatively applied to commercialize excellent processes. However, pharma companies, as said earlier due to their “mortar and pestle” ways, have ignored the fundamentals when it comes to their manufacturing practices. Lack of application of the best practices of the fine/specialty chemical industry in pharma, a subset of this group, has been pharma’s way of life. This has resulted in it being the highest pollutant emitter per kilo ⁽¹⁴⁾ in the chemical segment. We have to remember that drugs are fine/specialty chemicals that have disease curing value. Thus, the best technologies that are being used elsewhere can be applied here also. 

 

US’s Pharma Supply Security:

 

US has been satisfied and content with its pharma supply chain as “half full” glass. However, the current global political turmoil, starting with oil and gas, very well could lead to global economic and business transformation. It could lead to “deglobalization”. Thus to assure the supply of essentials and that includes food and drugs, US needs to look at its “half full glass” differently as “half empty” and needs to assure it is full. Existing methods and technologies that have been applied successfully in the fine/specialty chemicals and overlooked in pharma could be applied differently to assure its continued supply. This will result in alternate business models. 

 

Pharma can be the easiest and quickest candidate for “deglobalization” as the relevant technologies needed for transformation are being practiced but inefficiently to furnish the current needs of US population ^{(14-17, 21, 22, 23)}. Outliers will be needed. They will result in a better landscape and alleviate the current drug dependence from other countries. Success will change healthcare practices of The United States. Even with the application of these newer methods development of new drug development will not be hampered. 

 

With respect to pharmaceuticals, we need to think rationally rather than act on the basis of useless euphoria. Till US does that we will go nowhere especially when it comes to addressing the “strategic needs”. We have the knowledge base ^{(14-17, 21, 22, 23)} and need to apply it. Piecemeal projects ^{(24, 25, 27-30)} are shear waste of monies, effort and time that United States of America cannot afford especially under the current global political environment. A project team ⁽¹⁵⁾ similar to Manhattan Project ⁽³¹⁾ has to be assembled for the task of bring pharmaceutical manufacturing home. 

 

FDA, PBMs, members of supply chain and even the legislators in the interest of wellbeing of the nation will have to shed their vested interests. Public welfare and needs have to come first. If US can send the human to the moon and bring him back safely, bringing pharmaceutical manufacturing home should be a cake walk. 

 

Girish Malhotra, PE

EPCOT International

 

1.     2017 Generic Drug Access & Savings in the U.S. https://accessiblemeds.org/sites/default/files/2017-07/2017-AAM-Access-Savings-Report-2017-web2.pdf  Accessed March 14, 2022 

2.     Sustaining the Stockpile:  https://www.phe.gov/about/sns/Pages/sustaining.aspx Accessed March 14, 2022

3.     Reliance on Foreign Sourcing in the Healthcare and Public Health (HPH) Sector: https://www.hida.org/App_Themes/Member/docs/GA/Industry-Issues/Emergency-Pandemic/Dept-Commerce-Study_Healthcare-Foreign-Sourcing.pdf  December 11, 2011 Accessed  March 20, 2022

4.     Executive Order 13944 of August 6, 2020, Accessed August 13, 2020 

5.     Executive Order 13588 -- Reducing Prescription Drug Shortages October 31, 2011, Accessed August 31, 2020

6.     Agency Drug Shortages Task Force, https://www.fda.gov/drugs/drug-shortages/agency-drug-shortages-task-force , Accessed September 1, 2020

7.     Woodcock, Dr. Janet: To Help Reduce Drug Shortages, We Need Manufacturers to Sell Quality — Not Just Medicine, October 24, 2019 Accessed November 6, 2019

8.     FDA Report | Drug Shortages: Root Causes and Potential Solutions October 29, 2019, Accessed November 6, 2019

9.     FDA is Advancing New Efforts to Address Drug Shortages, https://www.fda.gov/news-events/fda-voices/fda-advancing-new-efforts-address-drug-shortages  November 11, 2018 Accessed 

10.  Strategic Plan for Preventing and Mitigating Drug Shortages FDA October 2013 Accessed March 1, 2022

11.  Hatch-Waxman Law https://www.govinfo.gov/content/pkg/STATUTE-98/pdf/STATUTE-98-Pg1585.pdf September 24, 1984 Accessed March 10, 2022

12.  Malhotra, Girish: Why Have the Fine and Specialty Chemical Sectors Been Moving from the Developed Countries? Profitability through Simplicity February 9, 2009 Accessed March 10, 2022

13.  Malhotra, Girish: Active Pharmaceutical Ingredient Manufacturing: Nondestructive Creation Accessed February 28, 2022.

14.  Malhotra, Girish: Active Pharmaceutical Ingredient Manufacturing (API) and Formulation Drive to NET ZERO (Carbon Neutral)? Profitability through Simplicity April 29, 2021 Accessed February 28, 2022

15.  Malhotra, Girish: A road map for driving pharmaceutical manufacturing back to the USA by 2025 Profitability through Simplicity October 8, 2020 Accessed March 10, 2022

16.  Malhotra, Girish: Strategies to Increase Generic Drug Competition and Bring Manufacturing to The United States of America, Profitability through Simplicity March 16, 2020 Accessed March 11, 2022 

17.  Malhotra, Girish: ONE PAGE Road Map to Reduce Drug Shortages, Assure Quality and Improve Affordability, Profitability through Simplicity December 6, 2019 Accessed March 20, 2022

18.  MacEwan, Arthur: The Effect of 936 May 2016 Accessed March 15, 2022

19.  Malhotra, Girish: Systematic Demystification of Drug Price Mystique and the Needed Creative Destruction, Profitability through Simplicity October 2, 2019 accessed March 8, 2022

20.  Malhotra, Girish: ANDA (Abbreviated New Drug Application) / NDA (New Drug Applications) Filing Simplification: Road Maps are a Must Profitability through Simplicity May 17, 2017 Accessed March 10, 2022

21.  Perry, J. H. et.al. Chemical Engineer’s Handbook Fourth Edition: McGraw-Hill Chemical Engineering Series, 1963   

22.  Malhotra, Girish: Quick Review of Chemicals Related Process Development, Design and Scale up Considerations, Profitability through Simplicity November 7, 2018

23.  Malhotra, Girish: Chemical Process Simplification: Improving Productivity and Sustainability John Wiley & Sons, February 2011

24.  US government to grant up to $812M to newcomer Phlow Corporation for Covid-19 manufacturing: Bringing pharma home or ‘profiteering off pandemic’? Pharmaceutical Technology July 16, 2020 Accessed March 7, 2022

25.  DOD Awards $69.3 Million Contract to CONTINUUS Pharmaceuticals to Develop US-based Continuous Manufacturing Capability for Critical Medicines  https://www.defense.gov/News/Releases/Release/Article/2474092/dod-awards-693-million-contract-to-continuus-pharmaceuticals-to-develop-us-base/ January 15, 2021 Accessed March 8, 2022

26.  Continuous production https://bit.ly/2qAyc9f

27.  HR 4369 (National Centers of Excellence in Advanced and Continuous Pharmaceutical Manufacturing Act of 2021 https://www.congress.gov/bill/117th-congress/house-bill/4369/related-bills July 6, 2021 Accessed March 10, 2022

28.  S. 2589 - Securing America’s Medicine Cabinet Act of 2021 https://www.congress.gov/bill/117th-congress/senate-bill/2589?s=1&r=54 August 3, 2021 Accessed March 1, 2022

29.  H.R. 3851 Continuous Manufacturing Research Act Of 2021,  https://www.congress.gov/bill/117th-congress/house-bill/3851?r=6&s=1 June 11, 2021 Accessed February 27, 2022

30.  Commerce Department Awards $54 Million in American Rescue Act Grants to Increase Access to Advanced Manufacturing Opportunities https://www.nist.gov/news-events/news/2022/02/commerce-department-awards-54-million-american-rescue-act-grants-increase February 28, 2022 Accessed March 2, 2022 

31.  Manhattan Project  https://en.wikipedia.org/wiki/Manhattan_Project Accessed  March 15, 2022

 

Climate Change and Greening of Pharmaceutical Manufacturing

My last blog post “Active Pharmaceutical Ingredient Manufacturing (API) and Formulation Drive to NET ZERO (Carbon Neutral)?^“ (1) ends with the following statements. “Minimizing/reducing the “E-Factor” (environmental factor) ⁽²⁾ is a multiple win. It will lower manufacturing costs, protect public health and the environment and also lower the drug costs to the public. We need to ask ourselves “What would be our legacy for the generations to come?” Let us write it.”

This blog is not a criticism of the current landscape but a reality check of pathways for the Pharma industry, the largest emitter per kilo ⁽²⁾, has to take to minimize or eliminate and achieve Net-Zero ⁽¹⁾ emissions. It is not going to be easy due to internal and external challenges. 

Climate Change/Global Warming:

Over the years scientists, engineers and business professionals have made significant discoveries to advance the world to where we are today. Our lives have been facilitated by most of the discoveries and innovations. We are grateful to all who have made this possible. It is time that we do something for the generations to come especially when it comes to global warming ⁽³⁾. Our deeds will be our legacy. Perspectives shared are my own and are not influenced financially or otherwise by any governmental or non-governmental or regulatory body. 

With global warming ⁽³⁾ and the general thrust on ESG (environmental, social and governance) ⁽⁴⁾ and social media bruhaha, conservation ⁽⁵⁾ have suddenly become an important buzzwords in most conversations and a cause of concern. Till recently what was or has been considered “par for the course” ⁽⁶⁾ in pharma’s vocabulary has come to the forefront of conversations.  

Incorporation of elements of Climate change conference in Glasgow ⁽⁷⁾ has recently appeared on Pharma’s goals. In furtherance to my earlier perspective ⁽¹⁾, pharma will have to be proactive and do what is necessary if it wants to preserve our environment and address issues related to global warming ⁽³⁾. Pharmaceutical industry like others has its “once in life time opportunity” to significantly lower its emissions. Effort would be needed.  

Recently few brand drug pharmaceutical companies have put forth their plans ^{(8, 9)}. A review of the proposed plans indicate that emphasis of majority of the companies is on energy conservation. My conjecture is that these programs to achieve “Net Zero” have not even touched the tip of the iceberg. 

It is noteworthy that there except for Amgen ⁽⁸⁾ others have not mentioned anything about their API manufacturing and formulation practices. Pharma is the biggest contributor to the emission factor ⁽²⁾. Generics have not publicly presented any plans for reduction of “global warming ⁽³⁾”. Most emissions come from solvent use even when they are recycled and reused. 

The following triumvirate has to act in unison if anything meaningful has to happen in pharma’s effort for reduction of global warming ⁽³⁾. Each will face challenges if anything meaningful has to happen. Question is how they will cooperate to reduce global warming ⁽³⁾. 

Current Business Model and Manufacturing technologies:

• Current business model
• Manufacturing technologies 
• US Food and Drug Administration and other regulators

Before we review the pathways to minimize/reduce pharma’s E-Factor, we need to review how did we get to this stage. Discussion is applicable to brand and generic drugs. Biotech drugs are new to the landscape but their process manufacturing execution is similar to the methods of small molecules. Some may disagree but the same engineering principles apply to their manufacture also.  

About one hundred years ago the fine and specialty companies of the era started with producing dyes. These companies saw a much higher value in drugs and opted to become pharmaceutical companies ⁽¹⁰⁾. Chemistries and manufacturing methods for the active pharmaceutical ingredients (API) are same or similar to what were/are used for dyes, additives for the plastic, food, oil, paint and flavors and fragrances. Same or similar chemistries, unit processes ⁽¹¹⁾ and unit operations ⁽¹¹⁾ are used for manufacturing of most of these products. With these similarities and the equipment being available, it was and has been easy to use the existing equipment ^(12,13) to produce APIs and formulate them to a dose form. 

The only difference between drug molecules and other fine/specialty chemicals is that the drugs have to meet and comply with different and stricter regulations ⁽¹⁴⁾. Even with similar/same chemistry and manufacturing lineage many in the pharmaceutical industry treat drug molecules “cut-above” ⁽¹⁵⁾ the fine chemical industry products even when It has continued to use its manufacturing practices/methods and equipment inefficiently ⁽¹⁶⁾ and still looks down on it with disdain, which is ironic. 

Since seventies environmental issues have increasingly cropped up. Their recognition led to the adoption of environmental control regulations. As a result some in the chemical and pharma industries took necessary steps to minimize effluent or emissions using the technologies that were/are available. 

With the introduction of Hatch-Waxman Act ⁽¹⁷⁾ generic drug use expanded in the developed countries. Many companies entered/moved the pharma business to the developing countries where the labor costs are significantly lower and the environmental laws were/are lenient compared to the developed countries ⁽¹⁸⁾.      

Pharma manufacturing, brand and generic drugs have followed their own business and manufacturing technology model. Due to profitability, as reviewed later, It did not need to innovate and it has resulted in high emissions ⁽²⁾. Even after this recognition, it still lags innovation and the has had minimal concern for the global warming ⁽³⁾. 

Small quantity of active molecule serves the needs of many patients [one kilo of active ingredient can produce ONE million doses of one milligram each]. Thus large quantities of API were/are not needed to serve large population base. Table 1 ⁽¹⁹⁾ is an illustration of API needed per year, finished dose formulations dose (FDF) and population they can serve. 

Patients	Milligrams	# of Tablets/ person/yr.	API, Kilograms/year	Tablets/yr.
50,000,000	1	365	18,250	18,250,000,000
50,000,000	50	365	912,500	18,250,000,000

Table 1: API and Tablets per year Relationship ⁽¹⁹⁾

Theoretically both APIs in Table 1 can be produced at a single plant but is not the case as explained later. Due to the production volume, multiple plants would be needed for formulation of the APIs inTable 1. Many can be continuous but due to traditions and regulatory encumbrances, they are batch operations.

Since the drugs are generally sold at the highest price patients can afford, they lead to high profits as illustrated in Table 2 ⁽²⁰⁾. Table 3 ⁽²⁰⁾ illustrates price mark up by well-known pharmacies.  If formulators increased their margins multifold, Table 2 ⁽²⁰⁾, they will have minimal impact on the selling price of the tablet to the patient.  

Drug	Metformin HCl	Ciprofloxacin	Levothyroxine	Atorvastatin
API cost $/kg	4.00	25.00	4400.00	310.00
Inert excipients $/kg (@40%API cost)	1.60	10.00	1760.00	124.00
Conversion cost, $/kg(@40%API cost)	1.60	10.00	1760.00	124.00
Profit (@ 40% above)	2.88	18.00	3168.00	223.20
Total. $/kg	10.08	63.00	11088.00	781.20
Average Dose	500 mg	500 mg	0.112 microgram	20 mg
Formulator Sale price per tablet, $	0.005	0.032	0.001	0.008
Patient purchase price, $/tablet
Walmart	0.07	1.04	0.11	0.30
Rite-Aid With insurance	0.07	0.2	0.17	0.31
Rite-Aid Without insurance	0.7	4.77	0.82	3.97

Table 2: Formulator Drug Selling Price $/kg and Patient Purchase Price ⁽²⁰⁾
 

% Mark-up from Formulator Selling Price
Walmart %	1322.75	3314.29	8947.18	1920.12
Rite-Aid % With insurance	1322.75	634.92	13411.83	1969.90
Rite-Aid % Without insurance	13888.89	15130.16	66200.20	25387.58

Table 3: Percent Price Differential between Formulator and Patient ⁽²⁰⁾

With the profitability illustrated in Tables 2 & 3 many enter the pharma API and formulation business. Table 4 and Table 5 illustrate number of plants that produce API and finished drug formulations (FDF) for three specific drugs. Their average yearly volumes are based on certain assumptions. With number of plants producing the API and formulating them, every chemical engineer can expect that due to simplicity of chemistries they are being produced in equipment ^(12,13) that is available in most plants.  

	Omeprazole	Metoprolol	Modafinil
Population	7,800,000,000	7,800,000,000	7,800,000,000
Global need, %	14	1	0.06
# people	1,092,000,000	78,000,000	4,680,000
mg needed/day	40	50	200
Tablets used # days/yr.	50	365	365
Total mg needed/day	43,680,000,000	3,900,000,000	936,000,000
API need Kg/Yr.	2,184,000	1,423,500	341,640
Current Number of API Sites	94	29	51
Current Number of FDF Sites	768	70	338

Table 4: Annual API Need for the illustrated drugs ⁽¹⁾   

Any good chemist or a chemical engineer can modify the process chemistry of these or any other APIs to fit them in the existing equipment ^(12,13). Same can happen for FDFs facilities also. They will have to follow cGMP ⁽¹⁴⁾practices. This means the equipment would have to be cleaned to meet the established criterion so that the upcoming products do not get contaminated. 

Number of plants producing the same APIs and formulating them in the existing equipment ^(12,13) generally negate any value of economies of scale ⁽²¹⁾.  

	Omeprazole	Metoprolol	Modafinil
Current Number of API Sites	94	29	51
Current Number of FDF Sites	768	70	338
API Production, Kg./yr./plant	23,234	49,086	6,699
Hrs. for 100,000 Tablets/hour/plant/yr.	711	4,067	51

Table 5: Yearly production and hours needed for formulation 

With the number of plants producing the above three products each will be a batch process. This suggests that each plant producing these products will not be using their equipment efficiently and even might have less than optimum yield. Asset utilization would follow the norms of pharma industry which are less than 50% ⁽¹⁶⁾. In addition, as stated earlier processing equipment would require cleaning between batches to meet cGMP ⁽¹⁴⁾ requirements. Excessive use of solvents and reuse adds to “global warming” ⁽³⁾ or “climate change” ⁽⁵⁾. With the profitability assured, existing operations have not had any need to worry about their impact on “global warming” ⁽³⁾. 

In order to make any dent on emission factors, pharmaceutical manufacturing will have an arduous task as it will have to tackle its current business model, manufacturing methods, the regulatory bodies and Pharmacy Benefit Managers (PBMs) and rest of the supply chain.

Pharmaceutical Manufacturing and Regulations:

Pharmaceutical manufacturing has two components. API manufacturing and their formulations. Of the two API manufacturing is easier to simplify as most synthesis are conducted in solvents. Their flow and stoichiometry can be very well controlled and managed ⁽¹⁰⁾. Majority of the formulations are combination of solid and liquid blending to produce a consistent and uniform quality product that can be converted to a dose. Current short run batch processes would have to be converted to continuous blending and tableting processes. Such processes will have to be developed. It is best that they be done at the formulating company and not at equipment vendors. Any blending developed in the lab or the pilot plant would require commercial scaleup. This could be a challenge and would require time to perfect each process. If the short runs are not converted to continuous runs, solvent cleaning would be required between product switches. This would be the same practice as now and might not result in much or any solvent reduction, a cause of global warming.

If we hypothetically assume that pharma companies can deal with manufacturing technologies they will have to address their business model and comply with regulations. Each presents difficult challenges. For the business model to change it would mean reduce number of emission sites and manufacture products differently ⁽¹⁰⁾. This will not sit well with many companies as some will have to go out of business if they cannot reduce their emissions. Shutdowns could result in temporary drug shortages. 

Current manufacturing practices will have to be changed and this could take time. All of the necessary manufacturing equipment and tools are available and commercially used. Their use will have to configured and practiced differently to assure there are no shortages. A re-learning would be necessary ^{(10, 22, 23)}. Another question and it could be a critical question could be “do we have enough trained chemical engineers who could take on the task and meet the posed challenge?” 

If companies do adapt different business model and manufacturing methods to meet the environmental challenge, the biggest hurdle would be the regulatory bodies who will demand that every new manufacturing process/method be approved/re-approved before it can be commercialized ⁽²⁴⁾. Since drugs are used for human consumption, this request in not unruly. Regulations will also have to be changed. This in itself could take long time as the regulators do not exactly know what all is needed.  

It is ironic and totally arcane that USFDA [US Food and Drug Administration] ⁽²⁵⁾ and ICH [The International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use] ⁽²⁶⁾ have been through every mean possible, funding of institutions ^{(24, 27)} (tax payers money), too many to cite, have been pushing the pharmaceutical industry to change their manufacturing technologies/methods when most of the participants from these institutions have none or minimal experience in developing processes and commercializing them. It is ironic that none of these address “global warming” ⁽³⁾. In addition, it is most likely they also might not have complete understanding of the Pharma’s business strategies and models. It is well known fact that companies innovate and commercialize innovations and regulators just regulate.   

In addition, most regulators do not have enough hands on experienced staff who are familiar with chemistries and manufacturing practices or the business models and impact of regulations on businesses. Regulators will have to rely on the information provided by the filing companies. Their acceptance by the regulators could difficult. If efficacy of every manufacturing change has to be demonstrated and approved, it would take long time for pharma to reduce their “E-Factor” ⁽²⁾ emissions. Recently Department of Health and Human Services (HHS) launched an office to treat climate change as a public health issue ⁽²⁸⁾. Basically, it is manifestation of FDA/HHS’s ⁽²⁵⁾ and ICH’s ⁽²⁶⁾ lack understanding of pharma’s manufacturing processes, emissions ⁽¹⁾ and their impact on global warming ⁽³⁾. 

Current approval time delays will have to be changed. In addition, the regulatory bodies considering their current modus operandi do not have the staff that can react and rationalize manufacturing and approval practices. Producing companies will have to take the responsibility of making sure that the produced products meet the established drug performance and quality. If the current practices are not simplified, the approval processes will be extremely disruptive to the drug supply chain and shortages could result. 

If pharmaceutical manufacturing which included active pharmaceutical ingredient, biotech drug manufacturing and their formulations want to participate in reduction of global warming, every involved organization will have to participate. Regulations and patent laws might have to changed. Pharmacy Benefit Managers (PBMs) and every intermediary will have to reconfigure their business practices. Many would raise the drug prices to the patients. Alternate distribution of drugs through direct marketing to patients might have to be rejuvenated. Political and economic resistance would be there. 

For pharma producers to achieve their established Net-Zero goals API, biotech manufacturing and their formulation technologies will require re-engineering and alternate application of chemistry and chemical engineering principles. In addition, regulatory conformance and methods would also require re-engineering and re-look. Each task is not going to be easy. 

Net-Zero/Greening or addressing Global Warming in Pharmaceutical will have political and social interference making the task difficult. We need to overcome that so that our future generations will be proud of what we accomplish.  

Girish Malhotra, PE

EPCOT International 

 

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14. cGMP (https://www.fda.gov/drugs/pharmaceutical-quality-resources/current-good-manufacturing-practice-cgmp-regulations  September 21, 2020 Accessed December 20, 2021
15. Cut above https://www.collinsdictionary.com/us/dictionary/english/a-cut-above Accessed January 17, 2022 
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17. Hatch-Waxman Act https://en.wikipedia.org/wiki/Drug_Price_Competition_and_Patent_Term_Restoration_Act  Accessed January 17, 2022
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23. Malhotra, Girish: Chapter 4 Simplified Process Development and Commercialization” in “ Quality by Design-Putting Theory into Practice” 
24. https://store.pda.org/TableOfContents/17296_TOC.pdf co-published by Parenteral Drug Association and DHI Publishing© February 2011
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26. FDA https://www.fda.gov
27. ICH https://www.ich.org/page/process-harmonisation
28. H.R.4369 - National Centers of Excellence in Advanced and Continuous Pharmaceutical Manufacturing Act of 2021 https://www.congress.gov/bill/117th-congress/house-bill/4369?s=1&r=5 Passed House October 19, 2021
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