New Group Will Focus on Shoring Up Drug Supply Chain, White House Says

— 50 to 100 essential drugs will be chosen to bring their production onshore

by Joyce Frieden, Washington Editor, �ڴ�Ů�� June 8, 2021

A smiling male physician with his hand on a stack of medicines in a supply room

WASHINGTON -- The Biden administration announced Tuesday that it will form a group to focus on the pharmaceutical supply chain.

HHS will establish a "public/private consortium for advanced manufacturing and onshoring of domestic essential medicines production" as permitted under the Defense Production Act, the White House . "The consortium's first task will be to select 50-100 critical drugs, drawn from the FDA's essential medicines list, to be the focus of an enhanced onshoring effort."

"The administration is taking immediate action to address vulnerabilities and strengthen resilience with the launch of a new effort aimed at addressing near-term supply chain disruptions," the fact sheet noted. "These efforts are critical because, as the COVID-19 pandemic and resulting economic crisis have shown, structural weaknesses in both domestic and international supply chains threaten America's economic and national security."

In addition to the consortium, HHS will commit about $60 million from funds available in the American Rescue Plan to develop new ways to increase manufacturing capacity for active pharmaceutical ingredients (APIs), the administration said. "Greater API production domestically will help reduce reliance on global supply chains for medications that are in shortage, particularly during times of increased public health need."

In a issued as part of the review, the White House introduced the idea of a "virtual stockpile" of APIs."

"The second pillar of supply chain resilience strategy is to build emergency capacity to ensure that we do not have shortfalls of critical drugs during times of crisis," the report noted on page 209.

"Specifically, under this strategy, we would explore the creation and expansion of a virtual strategic stockpile of API, other critical materials, and finished doses focusing on the most critical medications to have on hand for the American public and relying to the extent possible on domestic suppliers, especially small and small disadvantaged businesses. Managed by the Strategic National Stockpile, a virtual stockpile would involve contracts with API and drug suppliers to hold surplus together with support for surge manufacturing capacity rather than keeping APIs and drugs physically stockpiled in a central location," it continued.

The measures to shore up drug supplies were among the results of a 100-day-long government review of the nation's supply chain for critical items, which was mandated by President Biden in an executive order he signed at the end of February. "Last year in the early months of the pandemic, we saw shortages of masks, gloves, and other critical personal protective equipment (PPE)," a senior administration official told reporters in a background briefing on the executive order. "President Biden committed last year to directing the U.S. to take a comprehensive approach to securing supply chains, and the executive order ... kicks off that process."

Food supply is another focus of the White House initiative. The administration announced that the Department of Agriculture will spend more than $4 billion in a series of initiatives to "rebuild" the U.S. food system and diversify supply chains for food production, food processing, and food distribution. The initiatives will "seek to provide improved access to nutritious food, address racial equity and justice as well as climate change, make markets fair and competitive, provide ongoing support for producers and workers, and create greater resilience in the food supply chain," according to the fact sheet.

On a larger scale, the administration said it will establish a new Supply Chain Disruptions Task Force to address near-term supply chain challenges. Task force members will include the secretaries of Commerce, Transportation, and Agriculture and will focus on specific areas of mismatch between supply and demand: home building and construction, semiconductors, transportation, and agriculture and food. The group will convene stakeholders to identify problems and find solutions to help alleviate bottlenecks and supply constraints.

Joyce Frieden oversees �ڴ�Ů��’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.