Study: Limited API suppliers pose threat to generic drug supply chain

Surveillance of the generic drug supply chain has typically focused on the number of manufacturers of finished drug products, but that approach may overlook vulnerabilities from having a limited number of suppliers of active pharmaceutical ingredients (APIs), according to an analysis in Health Affairs.
 
“When there is only one API supplier for a certain generic drug, that drug will have a high risk for shortage regardless of the number of manufacturers commercializing the drug in the US. In addition, an API having a single supplier has the potential to increase the price of that API,” Mariana P. Socal, MD, PhD, and her colleagues at Johns Hopkins University wrote in Health Affairs.
 
Socal and colleagues analyzed global sources of generic APIs for the US market, focusing on facilities producing APIs for the US market in 2020-2021. They identified a total of 1,379 unique APIs that were manufactured by 565 facilities.
 
The researchers found that most API manufacturing for the US market is concentrated in a few countries outside the US and most APIs are produced at three or fewer facilities.
 
Overall, 42 countries had manufacturing facilities that produced APIs for the US market, with India accounting for the manufacture of 62.1% of generic APIs. Italy followed with 32.3% and China with 22%. The US manufactured just 14% of APIs during the study period. The analysis also revealed that there is “limited redundancy” in manufacturing of APIs, with only 35.9% produced by four or more facilities. One-third of APIs were produced at a single facility.
 
Currently the US Food and Drug Administration (FDA) gives priority to the review of abbreviated new drug applications (ANDAs) when there are three or fewer approved drug products listed in the Orange Book. However, this approach only accounts for the number of manufacturers of finished drugs, not APIs. The researchers identified 23% of markets where there was robust competition among finished drug manufacturers but few manufacturers of APIs. “These markets should be a concern because one or two manufacturers of APIs shutting down could create drug shortages even if there were four or more manufacturers of finished generic drugs licensed by the FDA,” the researchers wrote.
 
To strengthen the generic drug supply chain, Socal and colleagues proposed monitoring API manufacturing. They suggested that the FDA could maintain a list of API suppliers and consider using the number of API manufacturers for a generic product as a factor in identifying markets at risk for shortage. 
 
The researchers also proposed incentives for the domestic production of APIs, such as tax incentives and advance purchase agreements to buy American-made APIs. In 2021, the Biden Administration announced a commitment to use $60 million in funding from the American Rescue Plan to develop novel platform technologies to increase US manufacturing capacity for APIs. (RELATED: Biden administration outlines plan to address US supply chain vulnerabilities, Regulatory Focus 08 June 2021)
 
The research was funded by Arnold Ventures and a grant from the Agency for Healthcare Research and Quality.
 
Health Affairs article