Remedy of US’s Drug Supply Chain Shortages and Domestic Production of Generic and Brand Drugs

USA is the largest consumer of Brand and Generic drugs. Discussion here is centered around generics as they are the largest volume (84%) ⁽¹⁾ to serve the needs of US population but is very applicable to brand drugs also. Most of the US drugs are imported. Threat of US not having sufficient supply of these drugs has been there and is real. It has been talked about and discussed for quite some time. Conversations and congressional hearings ⁽²⁾ have been held. Projects ^{(3, 4, 5)} have been initiated by HHS (BARDA) and others to alleviate problem/s have no meaningful results and the problems still prevail. From my perspective all these attempts have been a charade. There is nothing meaningful on the horizon. With potential of tariffs on drugs, US needs to wake up and remedy the situation before it is too late. 

                                                               

National Academy of Sciences ⁽⁶⁾ in its most meaningless report even suggested that US should build foreign alliances to curb shortages ⁽⁷⁾. For national security reasons these recommendations ⁽⁶⁾ should have been questioned. Different US presidents have issued executive orders as far back as 2011 ^{(8, 9)} and nothing meaningful has resulted to reduce shortages or attain self-sufficiency. To bring pharma manufacturing home revamp of pharma’s business model, discussed later, along with US’s creativity and imagination is needed. This is critical. Since the industry is profitable need to change has never been a consideration. 

 

Why US has not made any progress in brining pharma manufacturing home when it can send man to the moon and bring him back. Pharma, my conjecture, has not addressed issue and/or may be does not understand the real root cause of the problem even after repeated discussions and attempts. Perspective presented is my own and is not influenced by any for profit and/or not for profit organization.  

 

Pharma companies are stuck in the current business mode (Figures 1 & 2) since middle of the last century. This is due to what I label as “equipment centricity ⁽¹⁰⁾” (Figure 1) rather than “process centricity ⁽¹¹⁾”. Since pharma has been profitable it considers itself invincible and no need to change its operating and business model has been on their radar. Figure 2 is the result of Figure1. 

Pharma’s “equipment centricity ⁽¹⁰⁾” i.e. fitting different chemistries in the same equipment has forced companies to follow stringent drug safety regulations and prescribed cGMP regimen. Downside has been low asset utilization ⁽¹²⁾. All the related costs become part of the product cost. It also has the highest hydrocarbon emissions per kilo of product ⁽¹³⁾. All of the related costs are passed on to the patients. Since the customer pays for the added costs, need for “process centricity ^{(11 )}” has not been a consideration.

With the prospect of tariffs on pharmaceuticals unless immediate steps are taken US population could suffer immensely. If US is really serious about bringing generic and brand drug manufacturing home, it has to emulate an effort like going to moon and/or create a consortium that has no outside political and regulatory meddling. Alternate business and operating model, not a rocket science, has to be adopted. Pharma manufacturing has to move from “equipment centricity ⁽¹⁰⁾” to “process centricity ⁽¹¹⁾”. If it does not this discussion will continue. 

 

Why Equipment Centricity:  

 

Why has the pharmaceutical industry dwelled on and is content with “equipment centricity”? The answer is simple. Since inception ^{(14, 15, 16)} manufacture of active pharmaceutical ingredients (API) and their formulations can be accomplished by modifying the processes to fit in the available existing equipment. This minimized new capital investment. With this pathway it accepts rigorous drug safety regulations and less than optimum use of processing equipment ⁽¹²⁾. “Equipment centricity ⁽¹⁰⁾” related costs are born by the patients.  

 

Process Centricity ⁽¹¹⁾:

 

This is not a new concept for the chemists and chemical engineers. It is pure and simple application of fundamentals of chemistry, chemical reaction engineering, processing and economics taught in our business, science and engineering curriculums ^{(14, 15, 16)} to create an excellent process. It is widely used in the fine/specialty chemical industry, older cousin of pharma. It is ironic that every reaction chemistry tells us how the “process centricity ^{(11 )}” works and how it can be exploited. Even then pharma lives in its old tradition of fitting a square plug in a round hole “equipment centricity ⁽¹⁰⁾” (Figure 1). 

 

By overlooking “process centricity ⁽¹¹⁾” especially in active pharmaceutical ingredient (API), pharma is not involving the “village” ^{(14, 15, 16)}from product inception. As a result it misses out on applying nuances of mutual and social behavior of chemicals, Sociochemicology ^{(14, 15, 16, 17)}, to create excellent processes. Some might consider this combination to be difficult. It is not. We are taught everything we need to know but have not fully capitalized on their value. We have the knowledge, creativity and imagination to accomplish the impossible. 

 

Path Forward:

 

If US wants to bring pharma manufacturing home, companies will have to internalize move from “equipment centricity” ⁽¹⁰⁾ to “process centricity” ⁽¹¹⁾. My estimate at least 180 days working 24/7 hours might be needed for each product provided it has the needed processing equipment, infrastructure, available raw materials, approved site and process. It is very possible that US might not have properly trained manpower for such task. 

 

In order for US to bring pharma manufacturing every “t” will have to be crossed and every “i’ will have be dotted. Brand and/or generics cannot be manufactured tomorrow in any available equipment . It will take time as the process and the facilities have to be approved. Processes to manufacture products just cannot be fitted in any available equipment. On top of it US does not have much of any raw materials needed for the drugs. Processing methods, equipment centric or process centric, have to be tested. Drug efficacy has to be tested. All of the above issues have to be dealt with and addressed. 

 

Companies interested in reducing/alleviating drug shortages and bringing pharma manufacturing to USA should be carrying the baton from product identification, process development, their commercialization and distribution. They have to transition from “equipment centricity” ⁽¹⁰⁾ to “process centricity” ⁽¹¹⁾ based model for the API and their formulations. Village ^{(14, 15, 16)} would have to be involved. This can happen by as stated earlier by capitalizing on mutual social behavior of chemicals ^{(14, 15, 16, 17)}, proper unit operations ⁽¹⁸⁾ and incorporating “process centricity” ⁽¹¹⁾. It will be able to accommodate variable volumes to meet patient needs in a properly designed plant. 

 

Simply said pharma’s marriage and addiction to “equipment centricity” ⁽¹⁰⁾ has been insurmountable and inseparable as significantly less effort is needed to commercialize a product. Had the chemical/pharmaceutical industry been “process centric” ⁽¹¹⁾ things would have been different. It would have had the agility to produce many different products with minimal investment. It is possible that the industry would not have gone “offshore” as USA would have led the manufacturing technology knowledge curve.   

 

CDMOs (contract development and manufacturing organization) and equipment suppliers will resist the suggested shift to “process centricity” ⁽¹¹⁾ based manufacturing. For their success they will have to support “process centricity ⁽¹¹⁾. Since CDMOs rely on “equipment centricity” ⁽¹⁰⁾ there should not be any surprise if US based CDMOs move overseas. It is time for pharma to consider alternate business model if it wants to bring pharma manufacturing to the largest market, USA. 

 

FDA will have to reconfigure itself and its approval processes for NDA (new drug application) and ANDA (abbreviated new drug application) by reducing their approval times to 90 days ⁽¹⁹⁾. Environmental and other regulatory approval times will have to be reworked. Every “K Street” ⁽²⁰⁾ residents would be an influencer. Legislators will have to participate in bringing manufacturing home by creating a FOUR STATE model and rejuvenating “Puerto Rico” ^(21,22) type model. It will be an added opportunity to bring jobs home. 

 

Companies (pharma and Pharmacy Benefit Managers (PBMs) will have to guarantee product quality and would have to accept sever penalties for any and every deviation ⁽¹⁹⁾. Companies will have to have total complete knowledge and command of the production and distribution process. Since every NDA and ANDA drug is FDA approved drug tiers ⁽²³⁾ have to go. They artificially raise prices. Direct sales to patients have to be allowed. Price, quality and drug efficacy based competition is the best way to reduce shortages. 

 

Unlike the past efforts that have resulted in nothing a collective thought through effort needs to be made. There will be resistance from every vested interest. 

 

Recent announcements by Eli Lilly ⁽²⁴⁾ $27 Billion, Johnson & Johnson ⁽²⁵⁾ $55 billion, Novo Novartis ⁽²⁶⁾ $23 billion are “equipment centric” ⁽¹⁰⁾ projects for their brand products. These are not going to be commercial at least for the next 4-5 years and will not produce products to fill tariff related immediate needs. Once patents for their drugs expire these investments could become the “white elephants” of no value looking for home.   

  

Simply said pharma’s marriage and addiction to “equipment centricity” ⁽¹⁰⁾ that has been inseparable and insurmountable needs to change. My conjecture is that “process centricity” ⁽¹¹⁾ effort will be a  “win-win” situation for the companies and a BIG win for the patients. Task is going to be challenging. US has never shrugged from any challenge. Let us be brave and get going.  

 

Girish Malhotra, PE

EPCOT International 

 

References:

1.     U.S. Pharmaceutical Statistics

2.     Woodcock, Dr. Janet: SECURING THE U.S. DRUG SUPPLY CHAIN: OVERSIGHT OF FDA’S FOREIGN INSPECTION PROGRAM December 10, 2019 

3.     Phlow Corporation Pharmaceutical Technology July 16, 2020

4.     DOD Awards $69.3 Million Contract to CONTINUUS Pharmaceuticals to Develop US-based Continuous Manufacturing Capability for Critical Medicines   January 15, 2021

5.     API Innovation Center  

6.     BUILDING RESILIENCE into the Nation’s MEDICAL PRODUCT SUPPLY CHAINS National Academies of Sciences, Engineering, and Medicine, 2022

7.     Malhotra, Girish: Has US lost its Business Acumen, Creativity and Imagination for its Healthcare Needs? Profitability through Simplicity, June 6, 2022

8.     EO 13588 Reducing Prescription Drug Shortages October 31, 2011

9.     EO 13944 Combating Public Health Emergencies and Strengthening National Security by Ensuring Essential Medicines August 6, 2020

10.   Equipment centric https://images.app.goo.gl/Qi2UZKqu4qHdLWvu6

11.   Malhotra, Girish: Process Centricity is the Key to Quality by Design, Profitability through Simplicity April 6, 2010

12.   Schrader, Ulf: McKinsey & Co. Operations can launch blockbuster in pharma, February 16, 2021

13.   Sheldon R.A. The E factor 25 years on: the rise of green chemistry and sustainability, Green Chemistry

14.   Malhotra, Girish: Active Pharmaceutical Ingredient Manufacturing: Nondestructive Creation De Gruyter May 2022 

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

16.   Malhotra, Girish: Chapter 4  “Simplified Process Development and Commercialization” in “ Quality by Design-Putting Theory into Practice” co-published by Parenteral Drug Association and DHI Publishing© February 2011

17.   Malhotra, Girish: Sociochemicology, May 30, 2013

McCabe W. L & Smith J. M. Unit Operations of Chemical Engineering McGraw-Hill Book Company Second Edition 1967

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

20.   K Street

21.   Malhotra, Girish: US’s Self Sufficiency for Generic Drugs: A Supply Dilemma and Potential Solutions, Profitability through Simplicity, March 31, 2022 

22.   MacEwan, Arthur: The Effect of 936 May 2016  

23.   Understanding Drug Tiers Accessed October 22, 2023 

24.   Eli Lilly  April 14, 2025 

25.   Johnson and Johnson April 14, 2025

26.    Novartis April 14, 2025

 

Are US FDA 483 Citations a "Medal of Honor" or “Rite of Passage” to Disgrace for the Pharma companies?

Lately frequency of FDA 483 ⁽¹⁾ citations for companies from China and India have increased. Should they be considered a badge of honor for making the elite club or sign of poor management? Conclusion depends on reader’s perspective. Perspective presented here is mine and there is no financial or any other obligation with any educational/commercial or regulatory body.

To each engineering purist and practitioner every process’s design and practice are execution of precise science. Defined practice results in repeatable quality product. Any deviations will result in off-specification results. Corrections to produce quality are expensive and negatively impact financial results of every operating company. This is a known fact and does not need to be repeated over and over again.

Getting a 483 citation is telling of mindset and culture of every manufacturing company. It is an indication that they have difficulty living up to their commitment they have made to the regulators and their shareholders. They also tell everyone that their manufacturing and product quality has issues and every element of the manufacturing process needs attention. Without crossing every “t” and dotting every “i” they will suffer on an ongoing basis. Corrective actions are needed for their mind set, thought process and execution of their strategies. All this might seem demanding and difficult but would be needed for their longevity. Corrective effort is needed. 

As they say it takes two to tango. My conjecture is that manufacturing companies and the regulators are equally responsible for 483 citations. For product quality each has a role to play. Best is to start with the regulatory approval process as it defines expectations for the product quality and manufacturing behavior. 

Current ANDA Filing Process:

FDA’s current ANDA approval process is cumbersome and iterative at best. FDA might believe that it has a simple and precise filing and approval process but unfortunately the overall process is long and expensive. Since it takes few multiples of 90 days to get an approval, everyone calls the process burdensome and festered with “continuous back and forth busy work”. Simply, I call the current process a “Quality by Analysis (aggravation)” exercise. USFDA needs to simplify the process, define a clear road map and directions to facilitate the process ^(2,3,4,5). FDA has been preaching companies to practice QbD (quality by design) but it cannot follow it. They have to practice if they want companies to follow ⁽⁶⁾. Once such practice is put in place, my hope is we will see increased competition and significant drug cost reductions. 

Manufacturing Company Obligation:

Generally ANDA approval process demands manufacturing company using FDA instructions detail what and how it intends to manage and control every nuance of their manufacturing process, product quality as well as the needed paperwork. It is company’s moral as well legal obligation to abide by all of its commitments that are spelled out in their ANDA application. 

If any company for any reason does not and cannot follow its commitment outlined in its ANDA, regulatory body should not be suggesting repeated “voluntary corrective actions ⁽⁷⁾” but issuing “official action ⁽⁸⁾” to stop manufacture and shipments. Prolonged voluntary actions and ensuing corrective action delays suggest that the company is playing with the regulators. In addition, I believe regulators are also hesitant to make hard decisions. 

My conjecture is that 483 citations should not happen at all if company clearly knows and understands its manufacturing process, all of its nuances and files all of the necessary information from the get go for regulatory approval. Process centricity at companies is the key for a robust process ⁽⁹⁾. 

It is very possible that FDA personnel due to lack of manufacturing experience might not understand technology innovations. Companies might have to prove their value to FDA. Companies know more about their process than the regulators. I believe repeat product quality from such processes should be proof enough. 

Since the ANDA filing and approval process is long, a blatant question needs to be answered. Does FDA have people who have hands on chemists and engineers who understand nuances of manufacturing. Can they lay out necessary and simple road maps for ANDA filings? If not, the ANDA approval process will remain flawed and prolonged like we have.                

Can 483s be Minimized/Avoided?

Answer is unequivocal YES. If I was running a pharma company and received a 483 citation, it would be the most humiliating thing happened. This would be totally unacceptable as we failed to live to the commitment made. To avoid 483s from happening again, situations that led to citation have to be corrected. This would include a complete review of products, their process design, manufacturing practice, equipment design and production scheduling. Their batch process instructions have to be reviewed and everything has to be electronically recorded and monitored. Process might sound stringent but is necessary for continued success. 

I can see why these citations are happening. They could be combination of too many products being produced in the same equipment, scheduling, raw material, cGMP and personnel issues. Training might be an issue also. Equipment upgrades might be necessary and that could be a financial strain. Operating strategies and methods have to be reviewed. 

Based on my experience if a company does not have control of its manufacturing process and related actions, the process will deviate from its established norms. These deviations will show up in its paperwork no matter how much effort is made to conceal them. This is normal. 

Companies have to be on top of their game 24x7x50 hours per year. They have to be held responsible and accountable for every processing step. Product quality is serious business especially in healthcare. “C” and “E” levels at every company understand the ramifications of less than quality. 

Companies have to bear financial consequences of repeat 483s and their shareholders should question company’s management on a corrective action schedule. If I were a regulator, after the first 483, I would recommend Official Action be taken against the site. Only then companies will understand that product quality is critical for their own ongoing existence. 

Unless regulators take a tough stand, I just don’t see much changing. To companies repeat ⁽¹⁾ 483s are just a game of “cat and mouse” as they can get away with minimum compliance. 483’s now are Medal of Honor. 

Girish Malhotra, PE

EPCOT International

1.     Frequently requested or proactively posted compliance records, FDA.gov, October 14, 2019 

2.     Malhotra, Girish: What Is Needed for a Regulatory Approval of NDA/ANDA Filings in 90 Days? Profitability through Simplicity, October 24, 2018

3.     Malhotra, Girish: ANDA (Abbreviated New Drug Application) / NDA (New Drug Applications) Filing Simplification: Road Maps are a Must, Profitability through Simplicity, Amy 11, 2017

4.     Malhotra, Girish: Simplified Roadmap for ANDA/NDA Submission and Approval will change Pharma Landscape, Profitability through Simplicity, November 25, 2018

5.     Malhotra, Girish: Can the Review and Approval Process for ANDA at USFDA be Reduced from Ten Months to Three Months? Profitability through Simplicity, March 25, 2017

6.     Malhotra, Girish: Impact of Regulations, Drug Manufacturing and Pharma Supply Chain (PBMs and allies) in Drug Shortages and Affordability Part 1, Profitability through Simplicity, March 9, 2019

7.     Volunteer Action Indicated, FDA.gov Accessed October 14, 2019

8.     Official Action Indicated, FDA.gov Accessed October 14,  2019

9.     Malhotra, Girish: Process Centricity is the Key to Quality by Design, Profitability through Simplicity, April 6, 2010

Could Pharma’s New Movers and Shakers Make a Difference?

Mergers and acquisitions in Pharma like any other M&A have consequences. They are:

·       Higher Revenue

·       Increased Profits

·       Loss of jobs

·       Lot of money for some in “C and S” suites

Generally the first three happen due to economies of scale and elimination of redundancies. The last happens due to contractual obligations.

Generally economies of scale and better manufacturing technologies can be easily incorporated to improve the overall business. In pharma M&As incorporation of better manufacturing and related practices is not easy. In brand mergers it is impossible due to short patent life. For the generics after the low hanging fruits have been collected companies have to sort out their product portfolio. Companies that cater singular products [single active formulated in different doses] have to decide the future course. If they want to increase the market share, they have two options.

1.     Stay with the existing practices irrespective of their efficiencies or inefficiencies. This will depend on their market position.

2.     Capitalize on economies of scale and use better and efficient technologies to expand their market share. Upside would be higher revenue due to larger market and higher profits. Downside would be the investment (unknown) necessary to ensure the product meets accepted efficacy and performance. Process economics can justify their course.  

I do not believe that patients in either case will see much or any reduction in their drug costs. Most likely the drug costs after the mergers go up and that is especially true for the brand drugs. We have seen that in the recent case of HCV.

Focus of the pharma companies is to maximize their revenue and profits while suggesting that their more expensive drugs are better for the disease. A recent opinion by Dr. Jeremy A. Greene (1) is in an interesting and excellent overview about drug strategies and pricing. Reformulation of existing drugs through patent extensions and charging higher prices (2) is another strategy. I just wonder why in the name of better drug, which may be no better or marginally better than the existing drugs, companies are charging higher prices. It is obvious revenues and profits are the focus rather than the patient. Mutually subsidized healthcare systems really camouflage the real sales prices. Higher drug price are justified for longevity and convenience but generally patients are the losers as they cannot afford their higher priced drugs.

Recent merger frenzy involving Teva, Mylan and Perrigo has an interesting cast of CEOs (3). They are not pharma bred. Their demeanor during their consulting careers has been to maximize profits and shareholder values. They could be the “creative destructionists” pharma has needed to move from “regulation centricity” to “process centricity” which would bring significant change in the generic pharma model.

Generics have the best opportunity to increase their revenues by including almost 1.4 billion people, due to lower drug prices, in their patient base through the use of better manufacturing technologies and business practices. Economies of scale and “process centricity” could release pharma from the regulatory guideline and directive shackles that have impeded “operational excellence” in pharma. If they venture out to include “manufacturing excellence” they could save as much as $200 billion dollars. Using the current estimated monies needed to develop and commercialize a new drug could result in the development of one hundred new drugs. With this money developers for the new drugs could be busy for the next forty years and may save many jobs.

May be Pharma’s movers and shakers will change the generic landscape forever.

(1) http://www.forbes.com/sites/matthewherper/2015/04/23/when-old-drugs-are-made-new-again/
(2) http://www.bloomberg.com/news/articles/2014-09-16/actavis-sued-by-new-york-attorney-general-over-namenda-switch
(3) http://www.wsj.com/articles/meet-pharmas-newest-movers-and-shakers-1429750065

Girish Malhotra, PE

EPCOT International