Pharmaceutical industry must fix broken supply chain: Phlow

People both inside the pharmaceutical industry and outside share many common concerns about the state of the pharma supply chain. Interruptions caused by the COVID-19 pandemic, global unrest, severe weather catastrophes, and other events stand to disrupt the supply of essential ingredients and products; these challenges have pharma professionals, government leaders, and others looking for ways to shore up the supply chain and avoid interruptions.

Eric Edwards, CEO and co-founder of Phlow discussed issues with the supply chain, and possible ways to fix these problems, to keep much-needed medications circulating.

OSP: Would you please tell us a bit about Phlow—who you are, what you do, key capabilities/services, and what sets you apart from any other company in the field?​

EE: As a medical doctor and research scientist, I founded Phlow on a mission to deliver a reliable supply of high-quality, affordable essential medicines using advanced manufacturing processes. I believe that all Americans should have uninterrupted access to essential medicines, especially in challenging times, such as what we are experiencing with the current pandemic.

Too many Americans are unable to access key essential medicines. A fundamental reason for this is our dependency on foreign sources. Phlow is building end-to-end, US-based manufacturing capability for essential medicines and their key ingredients while also rebuilding critical infrastructure in the US to reduce our nation’s overreliance on imports from foreign nations.

Traditionally, pharmaceutical medications have been produced using a method known as batch manufacturing, a multi-step, lengthy process that involves sizeable facilities and the use of large-scale equipment. Batch manufacturing can have a significant adverse impact on the environment due to toxic waste, which has been one of the reasons manufacturing moved offshore to other regions or countries with fewer environmental protection regulations and where labor costs are relatively low.

A small number of innovator medicine companies use advanced manufacturing technologies such as continuous manufacturing, but US generic medicine manufacturers have been very slow to adopt this due to the expense required to change from their current batch manufacturing processes, as well as regulatory hurdles. To overcome these challenges, Phlow leverages state-of-the-art flow chemistry and advanced manufacturing processes to re-imagine the domestic production of key starting materials (KSMs), active pharmaceutical ingredients (APIs), and finished pharmaceutical products critical to the health and well-being of Americans while re-constructing our essential medicine supply chain.

We recently launched a first-in-kind Children’s Hospital Coalition to provide increased certainty in availability and access for key essential medicines necessary to sustain life and conquer disease for some of our most vulnerable patients, our children. We have partnered with some of the most distinguished and prestigious children’s hospitals to change the way pediatric essential medicines are provided to patients.

OSP: Please tell us about how the US pharma supply chain has changed and evolved (or devolved) in recent years.​

EE: In 2018, the American Medical Association announced that medicine shortages now pose an urgent public health crisis in the US. Essential medicine shortages have a strong impact on healthcare systems, including higher medicine costs, additional hospital staffing, overtime wages, increased overhead, and most importantly, compromised patient care and treatment when medical procedures are postponed, or less preferred treatments are substituted.

While essential medicine shortages have been a persistent challenge for the US healthcare system for more than a decade, the COVID-19 pandemic has exposed further vulnerabilities in the overall US hospital supply chain. The threat of pandemics like COVID-19 has exposed our heavy reliance on foreign pharmaceutical manufacturers, especially for our active pharmaceutical ingredient supply. In times like these, we need reliable, essential medicine access within the U.S to prevent shortages or delay in receiving these critical medicines.

For essential medicines, it has not been cost-effective for generic companies to manufacture in the US, thus, offshoring API production with foreign suppliers has been a common business practice over the last few decades. There is a very limited domestic capacity to make these essential medicine ingredients; the US manufacturing base to make them has drastically eroded over the last several decades, and most of the supply now comes from abroad.

This dependence on a few foreign sources of these critical ingredients that are vital for the health of Americans means that our supply of finished essential pharmaceutical products is vulnerable to international economic, political, and public health crises.

Reliable quality continues to be a consequence of the shift to foreign suppliers. In March 2021, the GAO published a report raising concerns about the FDA being behind on foreign inspections primarily due to the pandemic. Additionally, the limited resources available to FDA for its foreign inspections program leave the quality of many imported APIs largely to the honor system. As a result, there is less certainty that essential medicines being shipped to the US meet quality standards making the supply chain even more vulnerable.

At Phlow, we believe that the availability of an uninterrupted supply of fully domestic-made life-saving medicines is essential to ensure the nation’s health security. This is a complex problem that will take time and the effort of many to fix.

In addition to building our own US-based essential medicine, end-to-end manufacturing capability, Phlow is leading the effort to address the supply chain shortfalls now by working with a variety of strategic partners who will be instrumental to providing greater reliability, quality, and access to these critical medicines.

OSP: What are some of the key challenges facing the domestic supply chain in the US?​

EE: The domestic supply chain is most vulnerable during international economic, political, and public health crises due to our nation’s over-reliance on foreign sources of APIs, key starting materials, and finished drug products of the most critical essential medicines needed to sustain the life and health of Americans.

Inconsistent and unreliable quality continues to be a predominant cause for essential medicine shortages. As I mentioned previously, the limited resources available to FDA for its foreign inspections program leave the quality of many imported APIs largely to the honor system. Bringing back essential medicine manufacturing to the US allows us to have access to faster and more efficient inspections while improving access to these medicines.

A significant gap in our essential medicine, the domestic supply chain is the lack of consolidated demand and supply signals to predict and indicate that a shortage is about to occur. Only when manufacturers and wholesalers become aware of shortages, being unable to provide an adequate supply, do hospitals then feel the brunt of the issue.

At this point, it can be too late to have a meaningful, timely, and effective response to resolve the shortage due to the lack of US-based surge capacity and manufacturing infrastructure.

Ensuring America has a resilient supply chain will require a paradigm shift in the way we approach essential medication manufacturing, including new chemistry processes and implementation of advanced manufacturing, including continuous manufacturing. By doing so, we can re-establish the US-based infrastructure and capacity – in a cost-effective manner - necessary to compete with foreign sources.

 OSP: Please tell us about the Strategic National Stockpile—how it works, how it might not work, and why it’s important to take a look at this specific component of the country’s SC strategy.​

EE: The Strategic National Stockpile’s (SNS) current inventory and its process for securing essential medicines is an important and necessary tool. However, we believe the SNS can be augmented by other solutions that help provide adequate resiliency against public health emergencies.

The COVID-19 crisis has placed the pharmaceutical supply chain under unrivaled stress and demand for high-quality injectable drug products. Today, the SNS serves as an important resource and should remain the primary warehouse for finished products and large molecule drug therapies.

Because storing finished drug products can be inefficient and expensive due to their shorter shelf life, need for various dosage forms and drug concentrations, and the risk of obsolescence should the product not be required or utilized, operationalizing a US based Strategic Active Pharmaceutical Ingredient Reserve (SAPIR) to store the key ingredients for our nation’s most essential medications provides greater efficiency and flexibility to respond in the case of major supply disruptions, whether from trade disputes, natural disasters or future public health threats.

SAPIR is a long-term, national stockpile to secure the key ingredients used to manufacture the most essential medicines on US soil, reducing America's dependency on foreign sources to support its medicine supply chain. Compared to the SNS, the SAPIR provides greater efficiency and response flexibility when facing a major supply disruption, whether from trade disputes, natural disasters, or future public health threats.

Storing APIs and KSMs versus finished drug products can help address the resiliency of our domestic supply chain for an extended period of time since the shelf life of API stored in bulk is much longer than that of a finished product, and the physical space required for storage is significantly smaller.

OSP: What will it take to bring drug manufacturing back to the States? What pieces are already in place, and what components of this strategy need to be added, or beefed up?​

EE: It is important to work together with other manufacturers, and the US Government, to subsidize and catalyze a shift from batch manufacturing to continuous manufacturing. By doing so, we will be in a better position to re-shore our essential medicine supply chain.

This approach will ensure greater quality, reduced environmental impact, and improved cost efficiencies which will allow us to be cost-competitive to foreign sources even within the highly regulated US environment.

The Biden administration Supply Chain Task Force has recently released a report highlighting what is needed to create a resilient pharmaceutical supply chain. One of the strategies to do this is diversifying the supply chain by enhancing domestic manufacturing as well as providing diversity in foreign sources by leveraging partnerships with the private sector and international partners.

We hope that the Biden administration will continue in a bipartisan fashion to offer incentives to domestic manufacturers, especially those for essential medicines, and prioritize those healthcare spending entities over which they have control. Secondly, we hope the Biden administration provides the right economic and tax incentives, along with other incentives to companies who choose to take the risk on bringing back manufacturing to the US leveraging advanced manufacturing approaches.

OSP: How can companies contribute to SAPIR and help bolster the US pharma supply chain?​

EE: Companies should be looking for innovative business models to allow for surge capacity and to link with both the US government and companies, such as Phlow, to support the SAPIR initiative, especially through the rapid conversion of API from the SAPIR into finished products.

For example, Phlow is working with some current abbreviated new drug application holders to build a network of ultra-responsive manufacturers. These manufacturers will support future pandemics by accepting API from the SAPIR that can then be converted into finished dosage forms that may be distributed to the SNS or direct to hospitals in need in case of substantial supply disruptions.

OSP: What else would you like to add?​

EE: Everything Phlow does is designed to solve the broken essential medicine supply chain, which has led to critical essential medicine shortages, by offering a resilient end-to-end solution that is US-based, comprehensive, and fully integrated. Our commitment is to patients and communities across America.

The Phlow team is dedicated to delivering on our vision to make the US a country where every human being has access to the essential medicines necessary to sustain life and conquer disease.