U.S. Has No Backup Plan if Foreign Generic Drugmakers Bow Out: Rick Scott

 The U.S. has no good backup plan if major overseas suppliers decide to stop selling prescription drugs or their raw ingredients here, Sen. Rick Scott (R-Fla.) said Thursday during a hearing of the Senate Special Committee on Aging.

Ninety-one percent of prescriptions in the U.S. are for generic drugs and 94% of those use active pharmaceutical ingredients (APIs) produced and processed overseas, primarily in India and China, with "little to no FDA oversight," said Scott, the committee chair.

"If the government of Communist China -- a self-described 'enemy of the United States' -- or India wants to stop the supply of prescription drugs to the United States, they can do so at any moment. If that happens, the United States has absolutely no plan to keep these generic life-saving drugs needed by millions of Americans available," Scott said.

Such scenarios may sound "far-fetched," Scott said, but he noted that during the COVID pandemic, India blocked the export of critical pharmaceutical ingredients. "If we can't solve this problem, it's only a matter of time before more American lives are unnecessarily lost," he said.

In addition to national security risks of withholding drugs, experts also worry about quality concerns stemming from inadequate oversight. In 2007 and 2008, officials discovered U.S. patients were being sickened by contaminated heparin from China, now thought to be responsible for around 100 deaths, according to a Special Committee on Aging report. And in 2023, contaminated eye drops were linked to drug-resistant infections, which led to permanent vision loss and at least one death.

Despite the fact that most foreign facility inspections are pre-announced, there are still reports of "skittering lizards and birds flying around," Scott said. "Does that sound safe and sanitary to anybody here?"

Scott's bill, the CLEAR LABELS Act, would require country-of-origin labeling for finished drug products and their APIs, providing consumers with information about the location of original manufacturers, packers, and distributors on the label or through a searchable electronic portal, he said. He called the bill a "simple and common-sense reform."

Witnesses supported the push for greater transparency, as did other committee members. Sen. Ron Johnson (R-Wis.) called country-of-origin labeling an "incredibly important first step."

John Gray, PhD, a business professor at the Ohio State University in Columbus, said his research testing the idea of country-of-origin labeling found that both consumers and hospital pharmacists prefer drugs manufactured domestically or "near-shored" (made in countries closer to the U.S.) over those manufactured in India or China, even when told that all drugs were FDA-approved.

In opening remarks, he stressed his support for sharing basic drug information with consumers, including country-of-origin-labeling, as well as "some valid assessment of drug quality risk."

"This kind of transparency would allow generic manufacturers to compete on something other than price, and it could help slow or even stop the 'race to the bottom' that has been present in this industry for the past several years," Gray said.

Gray posited the idea of a five-star quality rating scale, where all marketed drugs receive at least three stars. Drug packaging could include a QR code with a link to a website searchable by National Drug Code (NDC) that shows both the manufacturing location of the finished dosage forms and the APIs, as well as quality rating scores.

Quality scores must be carefully designed "to avoid discouraging patients from taking necessary medication," Gray said. He also emphasized the need for stronger foreign manufacturer inspections and increased testing of drugs, particularly imported ones.

In late 2022, as part of a pilot project, the FDA started testing unannounced inspections in India, Gray said. His own research has found that the agency is three to four times more likely to issue a warning letter after an unannounced inspection versus a pre-announced one, he said.

Stephen Schondelmeyer, PharmD, professor of pharmacy at the University of Minnesota in Minneapolis, said the U.S. could learn from New Zealand's approach. New Zealand's equivalent of the FDA developed a public online database that tracks every prescription drug in the country, provides information on where key starting materials and APIs are made, including the factory name and address, who packages the product, and who labels it, he said.

"Every step along the way is transparent," Schondelmeyer said.

Michael Ganio, PharmD, senior director for pharmacy practice and quality for the American Society of Health-System Pharmacists (ASHP), also voiced support for country-of-origin labeling, but urged the committee to also prioritize other measures such as directly incentivizing manufacturing domestically and in nations considered allies of the U.S.

Narrow profit margins are one driver of offshoring to countries like China and India, where labor is cheaper, he said. But to prevent drug shortages, a diverse supply chain is needed.

Hurricanes and other vulnerabilities can create disruptions. "So more diversity geographically creates a more robust supply chain," Ganio said.

Circling back to profit margins, Johnson said most generic drugs are "pretty cheap" and that he thought most consumers would "pay a little bit more to be assured of quality, so they don't ... die from heparin contamination or something like that." He asked how much generic drug prices would increase with additional rules and regulations meant to ensure quality. "Would it be ... 33%? Would it double?"

Ganio said the amount would vary by manufacturer, however, a 2023 survey he conducted with colleagues, showed ASHP members, were willing to spend 10% to 15% more on drugs.

Asked whether country-of-origin labeling would encourage investment in domestic U.S. pharmaceutical manufacturing, Schondelmeyer said such labels would provide "some encouragement" for reviving U.S. manufacturing and for "near-shoring" manufacturing in Canada, and possibly Mexico and their neighbors in Latin America.

Schondelmeyer said one reason China and India dominate the pharmaceutical supply chain is that they have less stringent environmental regulations and labor laws, and lower wages. "Companies take advantage of that," he said. However, using advanced manufacturing processes which "make products leaner and greener," the U.S. and its "near-shore neighbors" can overcome some of those challenges.

Puerto Rico was once a "hotbed" of pharmaceutical production that declined over time, Schondelmeyer noted. "I think that could be reinvigorated, along with other neighboring entities," he said.

https://www.medpagetoday.com/washington-watch/washington-watch/119677