Building a Resilient and Secure Pharmaceutical Supply Chain: The Role of Geographic Diversification

Summary:

Global supply chains deliver many of the medicines on which American patients and health care providers rely. A significant proportion of pharmaceutical manufacturing, especially for active pharmaceutical ingredients, occurs abroad, including in India and China. Policymakers have expressed concerns about the risks and vulnerabilities associated with geographic concentration of manufacturing sites in these countries, including the risk of disruptions caused by geopolitical conflicts, challenges with regulatory oversight in certain countries, the possibility of theft or misuse of advanced biomanufacturing technologies, and the risks of localized disruptions due to natural disasters or other discrete events that could affect major manufacturing sites.

It’s important to balance these reasonable concerns about the risks of geographic concentration abroad with an understanding of the desirable efficiencies that global drug supply chains offer. Furthermore, it’s critical to recognize that reliance on manufacturing sites in foreign countries is not the direct or sole cause of many recent drug shortages, though it is, in some cases, related. Policymakers often have sought to relocate manufacturing sites to the U.S. – onshoring manufacturing – as a response to the risks detailed above, but simply relocating manufacturing sites to the U.S. will not, absent other steps, resolve the issues that have contributed to severe and chronic drug shortages in recent years. Global pharmaceutical supply chains are very complex and the risk of unintended consequences of interventions intended to shift locations of manufacturing is high. Before pursuing policies to increase domestic manufacturing of a given product, policymakers should assess what risks exist in the current supply chains for that product, how domestic manufacturing might alleviate them, and whether international partnerships to promote manufacturing of that product in diversified, geopolitically stable locations might achieve the same aims efficiently.

Read the full paper here.