FDA Should Redefine “Security” of Drug Supply Chain

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Today I was planning to delve deeper into how outsourcing would be executed effectively in regulated industries such as Defence, Aerospace, Healthcare and Life Sciences. However, with the emerging COVID-19 situation, I decided to write on a more pertinent and urgent topic – the security of the drug supply chain, not only in times or crises, but also in normal times.

In the US, the Drug Supply Chain Security Act (DSCSA) was enacted in Nov 2013 to enhance FDA’s ability to help protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated or otherwise harmful. This is to be implemented through an electronic and interoperable system to identify and trace certain prescription drugs as they are distributed in the United States. European Union has a similar “directive” termed Falsified Medicines Directive (FMD).

Today FDA defines “Security” as an ability to trace the drug from manufacturer to consumer.

Since the release of these legal frameworks in 2013, Life Sciences companies in partnership with major software corporations have been working on implementation of serialisation of pharmaceutical products from the manufacturer to the consumer. Many initiatives are already live.

My view is that the security assured by serialisation is limited. It assures a consumer of the validity of the product once it is in the hands of the consumer. But what security does the consumer/patient have when the product may not reach him or her at all? As is now happening with several drugs that would potentially be treatment for COVID-19.

Drug supply security should equally include “availability” of the drug to the consumer at the right time and place.

Many makers of generics drugs that rely on APIs and other ingredients from suppliers in China and India are struggling to “know” when they will be able to procure the material. But this is not so much a problem – typically the drug maker would have a good relationship with the supplier, and would get a promise date for shipment and delivery.

But the supply chain goes deeper than that one manufacturer of API or raw material. The supplier too would have their own suppliers, and that’s where the supply visibility becomes foggy. How is supplier’s supplier doing? And that supplier’s supplier? How about getting control over the starting materials?

Major concerns expressed by several analysts in recent few days related to dependence on China and India for these materials. That concern is valid. India recently disallowed exports of hydroxychloroquine, a drug potentially useful in treating patients infected with COVID-19 virus.

But in this globalised economy, China and India cannot be wished away. Once COVID-19 settles down, China and India will again start exporting products and the market economics will take over. As it stands today, China’s manufacturing has already started churning.

China and India cannot be wished away from drug supply chain.

So not outsourcing to global manufacturers is not a solution. The challenge of supply chain opacity will be addressed by building visibility deep into the supply chain.

How would this work? When a drug brand owner outsources manufacturing to 3rd parties, they demand visibility into the manufacturing process, as well as into availability and quality of input raw materials. We extend this chain of transparency to subsequent suppliers deep in the value chain. It will look something like this:

No alt text provided for this image

The image shows a pharmaceutical corporation (Brand Owner) sourcing products from suppliers and making the product available through a supply chain comprising warehouses, logistics providers, distributors, pharmacies, and consumers (may be also hospitals). Serialisation is being fully implemented amongst parties to the left of the Brand Owner.

It is the supply chain to the right that is opaque, and needs to develop mechanisms to ensure the necessary data is available to the Brand Owner and regulators. For example, for the orders placed by this Brand Owner, supply information should be available not only from S1, S2 and S3, but also from S4, S5 and S6, and beyond them.

Sharing such information may not be simple or easy. For obvious business reasons, suppliers would like to maintain confidentiality of their sourcing and partnerships. Besides, a single order from S2 to S6 would cater to customers other than the Brand Owner, so why should S2 share all information with the Brand Owner?

FDA should expand the scope of term “security” to include availability of the product in the hands of consumer/patient at the right place & time.

These are valid problems and solutions to these problems need to be explored actively. Once the regulatory bodies (FDA) expand the scope of the term “security”, the need to establish such information sharing may be made mandatory – if only to the FDA. It may start with a few critical drugs, and be expanded to a larger volume of products. A plan akin to DSCSA implementation going over several years may also be put in place.

The time has now come to take a fresh look at drug supply chains to ensure the public at large is protected from unexpected shocks such as we are experiencing now.

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Outsourcing in Regulated Industries

Corporations outsource business activities to external partners for a variety of reasons – cost, flexibility, time to market, and core competence. Both manufacturing and services