ANNOUNCEMENT 19 May 2020

The aim of the Strategic Active Pharmaceutical Ingredients Reserve is to provide a national stockpile to secure key ingredients used for the domestic manufacture of essential medicines, reducing U.S. dependency on foreign supply chains.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 19 May 2020 | Removal date: open ended

Public procurement localisation

The Assistant Secretary for Preparedness and Response (ASPR) in the Department of Health and Human Services (HHS) announced a policy initiative on May 19, 2020 that is aimed at reducing U.S. dependence on global supply chains for essential medical supplies. A core element of this initiative is the development of a Strategic Active Pharmaceutical Ingredients Reserve (SAPIR), described by pharmaceutical manufacturer Phlow Corporation — one of ASPR’s private sector partners — as “a long-term, national stockpile to secure key ingredients used to manufacture the most essential medicines on U.S. soil, reducing America's dependency on foreign nations to support its drug supply chain.”

ASPR announced that it will work with Phlow and other private industry partners “to expand pharmaceutical manufacturing in the United States for use in producing medicines needed during the COVID-19 response and future public health emergencies.” The most immediate aim is to provide “U.S.-based capacity to produce the active pharmaceutical ingredients (APIs) and the chemical compounds for those ingredients to make critical medicines to help alleviate or prevent drug shortages, particularly during the COVID-19 pandemic.” ASPR explained the underlying strategic rationale of the program in the following terms:

Currently, a majority of APIs or their precursor chemical ingredients for critical medicines are manufactured outside the United States. They are typically manufactured using slower, less efficient processes. Shipping the ingredients or finished drugs to the U.S. also adds time that is not available during pandemics or other public health emergencies. The U.S. national medical supply also is placed at risk during a global health emergency when individual countries can close borders and potentially eliminate access to these critical materials.

In addition to producing the active pharmaceutical ingredients, the team will expand advanced manufacturing capability in the U.S. to provide further capacity for producing finished generic drugs. The pandemic has created a surge in the number of hospitalized patients which may create a shortage of supplies of critical medicines. The team will be able to rapidly provide U.S. health care systems with finished, sterile, injectable generic medicines at risk of shortage.

The first manifestation of this policy comes in a contract with Phlow that ASPR’s Biomedical Advanced Research and Development Authority (BARDA) concluded that same day (May 19). That contract will initially provide $354 million for advanced manufacturing of essential medicines that are at risk of shortage, including medicines for the COVID-19 pandemic response. The total contract value could be up to $812 million, with the additional $458 million being an option after the four-year base award is exhausted. “The threat of pandemics like COVID-19 has exposed the United States' heavy reliance on foreign pharmaceutical supply chains,” Phlow noted in a press release announcing the contract, observing that “[o]ver 80 percent of APIs and chemical ingredients used in the U.S. to manufacture generics and over-the-counter drugs are produced abroad, the majority coming from China and India.”

AFFECTED SECTORS