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Virus Likely Curtailed China Drug Output, Raising Shortage Fears

March 25, 2020, 8:01 PM

Drug manufacturers in China may have cut production by almost 40% early this year as the novel coronavirus spread there, according to a U.S.-based group that supplies the basic tools for testing the quality of many medicines.

China is the backbone of the world’s drug supply. Any disruption in the country’s output could result in shortages of medications that will be in high demand as the U.S. grapples with Covid-19, the respiratory disease caused by the coronavirus.

Each year, United States Pharmacopeia typically sends 850,000 tiny brown bottles to drugmakers and researchers around the world of some 4,000 chemicals used to assess the quality of medications and their active ingredients.

Demand for the chemicals dropped 36% in China in January and February from the same period a year earlier, USP Chief Executive Officer Ronald Piervincenzi said in an interview, a possible indication that manufacturers were evaluating fewer products.

Among the medications that could become scarce are some that are routine components of care for patients being kept alive by ventilators, supply-chain experts say.

“We’re going to have rolling issues around the world,” Piervincenzi said. “It’s going to be challenging.”

Piervincenzi said USP, a 200-year-old nonprofit organization that sets drug quality, purity and strength standards, is getting ready to release its data publicly for the first time to help shed light on a complex and opaque situation. While its numbers indicate a decline in production in China, he said, they don’t provide an exact window into overall manufacturing levels.

USP is attempting to pinpoint which drugs could be most affected by the apparent slowdown. Drugs made almost exclusively in China, such as certain antibiotics including penicillin, will be hardest hit, Piervincenzi said, though he doesn’t think shortages will be long-lasting. Use of USP’s reference standards fell 45% in January but moderated to a 24% decline in February, suggesting any production problems could have eased over time.

So far, the coronavirus pandemic hasn’t caused widespread drug shortages in the U.S. The Food and Drug Administration has been in contact with pharmaceutical companies and only one drug is in shortage as a result of virus-related production issues, the agency said in a statement last month. Jeremy Kahn, an FDA spokesman, declined to comment beyond the statement.

The Department of Health and Human Services said there is a Strategic National Stockpile of specific drugs and supplies stored throughout the country but didn’t say whether any inventories are being increased to respond to shortages resulting from the coronavirus.

Global Disruption

In much the same manner that Covid-19 infections have rippled across the globe from Asia to Europe and then on to North America, there is concern that drug-supply chains could see a wave of disruption that follows a similar geographic pattern. South Korea, Singapore, Italy and the U.K. are also centers of pharmaceutical manufacturing that have had or are in the midst of severe coronavirus outbreaks.

As those effects spill outward, drug-supply watchers are looking for signs that nations could opt to limit exports. India, where a large number of generic medications for the U.S. market are produced, has said it will retain more of the drugs it makes there for its people.

Additionally, pinpointing which medications could fall into short supply at any given time is complicated by the fact that individual drugmakers may keep varying inventories of certain medications on hand.

Any new shortages could add to a long list of existing drug deficits that have bedeviled hospitals in the U.S. and elsewhere just as the need for intensive care surges. In recent years, several products used for basic care, including anti-allergy EpiPens and intravenous saline bags, have fallen into shortage because of production problems or natural disasters such as Hurricane Maria, which upended output in another industry hub, Puerto Rico, in 2017.

“The hospitals have a tsunami of patients coming at them but drug companies have a tsunami of orders coming,” said Erin Fox, a drug-shortage expert at the University of Utah.

It takes as many as a few dozen drugs to keep patients on ventilators. Some are already in short supply, including fentanyl injections for pain, vecuronium to relax muscles and the sedative midazolam, according to Michael Ganio, director of pharmacy practice and quality at the American Society of Health-System Pharmacists.

It’s well-known that some drugs are exclusively made in China, such as the antibiotics ventilator patients often need. In most instances though, drugmakers don’t disclose where treatments or their active ingredients are made despite China accounting for a large portion of manufacturing. Any decrease in production there could put an already stretched supply at risk.

Awi Federgruen, a supply-chain expert at Columbia University’s Graduate School of Business, says generics are likely to be harder-hit by the shortages given their small profit margins when compared with name-brand treatments.

Drugs that appear to be most at shortage risk because they are largely dependent on ingredients made in China include antibiotics, antivirals, steroids and some blood-pressure drugs, according to a note last week from Ken Cacciatore, an analyst at Cowen & Co.

Stretching Supplies

Fox is helping her university’s health system determine what supply of ventilator drugs it might need if all 74 of its machines are being used. At the same time, some distributors are limiting orders to prevent hoarding, Fox said, even though hospitals are expected to need larger supplies than normal to handle an influx of patients.

The squeeze is already palpable for hospitals that need inhalers to deliver a drug that relaxes airways to help patients breathe, Fox said. That drug, albuterol, is usually given through a nebulizer that creates a mist for patients to inhale. But out of fear of spreading Covid-19, doctors are switching to albuterol inhalers that are placed directly into the mouth. They haven’t been able to get enough, Fox said.

McKesson Corp., the largest medical-product distributor in the U.S., said the situation remains fluid and it is trying to respond to unprecedented demand.

“We are taking a proactive approach to protect inventory for our provider partners,” Gene Cavacini, chief operating officer of customer operations at McKesson’s pharmaceutical arm, said in an emailed statement. “We have a detailed process to increase allocations and fill orders in response to true patient demand from our hospital customers.”

Compounding the concern about shortages is fear that drug companies could be tempted to cut corners on quality and safety in an effort to meet unprecedented demand.

“In a supply-chain-disruption environment the only intelligent thing is to adapt,” said USP’s Piervincenzi, meaning buy from another supplier or switch inactive ingredients. “Anytime things change at all it creates a risk to quality.”

FDA inspectors have found numerous instances in recent years where generic drug makers ignored signs that their products failed to meet U.S. standards. One company that has been cited by FDA inspectors is Ipca Laboratories Ltd, based in India. The FDA lifted restrictions on three Ipca manufacturing plants last week in an effort to increase supplies of a malaria drug touted by President Donald Trump as a potential coronavirus treatment.

In 2014, FDA inspectors found Ipca workers had manipulated data generated from quality checks so drugs that failed to meet American standards appeared to pass.

Meanwhile, even as generics drugmakers could be facing historic demand for a range of products, on-the-ground oversight is going dark. Given the risk to staff members of contracting the coronavirus, most FDA inspections have been halted around the globe.

Trump’s comments about a Covid-19 treatment prompted a run on the malaria drugs, called chloroquine and hydroxychloroquine, both of which the American Society of Health-System Pharmacists say are now in short supply.

“All of this all at once is really straining the system,” Fox said.

To contact the reporter on this story:
Anna Edney in Washington at aedney@bloomberg.net

To contact the editors responsible for this story:
Drew Armstrong at darmstrong17@bloomberg.net

Timothy Annett, Heather Smith

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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