How Can the U.S. Preserve Its Medical Supply Chain?

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WASHINGTON — Onshoring medical manufacturing is part of a strategy to shore up the nation’s medical supply chain, but it can’t be the entire strategy, according to a new report from the National Academies of Sciences, Engineering, and Medicine (NASEM).

“If you are thinking about onshoring the entire global supply chain, that would be a daunting logistical task, and associated with a huge price tag as well,” said Ozlem Ergun, PhD, professor of mechanical and industrial engineering at Northeastern University in Boston. “Onshoring can be part of a cost-effective strategy for increasing resiliency of our medical product supply chains — however, it should be treated as part of a resiliency strategy, but not the one [and only] solution.”

That is because supply chain shortages can arise in a number of ways, ranging from public health emergencies to reduced production or transportation capacity to failures in coordination.

“All sorts of resilience strategies, including onshoring, should be evaluated through a framework, so that we can end up with coming up with the best strategy for a given set of products that is cost effective and most impactful,” said Ergun, a member of NASEM’s Committee on Security of America’s Medical Product Supply Chain, at an online event Thursday announcing the report’s release.

Among the committee’s recommendations is that the FDA make sourcing, quality, volume, and capacity information publicly available for all medical products approved or cleared for sale in the U.S. This is going to require that drug manufacturers and device makers publicly disclose their manufacturing locations and other data, explained committee member Erin Fox, PharmD, senior pharmacy director at the University of Utah, Salt Lake City.

A public database with this information can be used “in part to just better understand the vulnerabilities of where we can target the resources to shore up the most vulnerable parts of our supply chain,” Fox said. The data also can be used to predict potential medication shortages, and “we can also involve third-party companies who can help with rating scales and other rating systems for rating quality that can then be used by purchasers.”

“And of course, all of this truly hinges on Congress making the changes and the necessary amendments to permit the public disclosure of this information,” she said.

Equipped with supply data, health systems would be able to do their part by deliberately incorporating quality and reliability — in addition to price — in their contracting, purchasing, and inventory decisions.

Whether they’re a large system contracting on their own or part of a group purchasing organization making contracts for large numbers of hospitals across the country, “make sure to award contracts to suppliers that have superior quality and reliability, and award multiple contracts versus single-source contracts for that diversification and more reliability,” Fox said. “This marketplace reward can hopefully drive companies to choose to improve their supply chains.”

According to the NASEM report, FDA also needs to work with the Assistant Secretary for Preparedness and Response (ASPR) to cultivate “capacity buffering” for critical medical products as protection against long-lasting supply disruptions or demand surges.

For example, the agencies could do an “analysis of what ‘crisis price lists’ might look like for the supply chain of critical medical products,” said committee member W. Craig Vanderwagen, MD, a manager at East West Protection and former ASPR under President George W. Bush.

“ASPR could develop and manage a database of that kind of information … [and] FDA and ASPR should fund research and development in advanced pharmaceutical manufacturing techniques,” which might help with onshoring of certain parts of the manufacturing process, he suggested.

“It begins with awareness, transparency, and the database,” Vanderwagen concluded. “Without data and evidence, it’s almost impossible to rationally approach the notion of how we’re going to mitigate, prepare, and respond to” shortages.

The NASEM group also recommended that the ASPR develop strategies to respond to medical product shortages at the national and regional levels. This would include strategies for modernizing inventory stockpiling management for the Strategic National Stockpile and beyond, according to the committee.

Ultimately, major exporters of medical products, including the U.S., should negotiate a plurilateral treaty under the World Trade Organization that prohibits export bans and restrictions on medical product supply chains. Any country that violates the terms of this agreement should be subject to sanctions by other signatories of the agreement, explained committee member Lee Branstetter, PhD, professor of economics and public policy at Carnegie Mellon University in Pittsburgh.

“We think that a trade agreement like this is likely to be self-enforcing,” he said. “Any country that seeks to restrict export of key products or components out of its borders, is likely to find itself quite vulnerable to the reaction by its trading partners to restrict its access to key products or components that it does not itself produce.”

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    Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

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