The outbreak of the new coronavirus has forced a large number of Chinese drug manufacturers to shut down. That could be bad news for the United States, which depends on China and India for its drug supply.
How dependent is the United States on other countries for its drug supply?
Since the 1990s, U.S. companies have increasingly imported pharmaceutical products from India and China, where ingredients are cheaper and manufacturing is subject to fewer regulations. As a result, the United States now relies heavily on China and India for its drug supply.
China is the second-largest exporter [PDF] of drugs and biologics, or drugs from natural sources, to the United States and the largest for medical devices, according to the U.S. Food and Drug Administration (FDA). It is believed that about 80 percent of the basic components used in U.S. drugs, known as active pharmaceutical ingredients (APIs), come from China and India, though the exact dependence remains unknown since no reliable API registry exists.
The United States also relies on these two countries for its supply of generic drugs, which account for 90 percent [PDF] of the medicines that Americans take. India supplies 40 percent of over-the-counter and generic prescription drugs used in the United States.
Should U.S. consumers worry?
U.S. consumers should not panic, but they have reasons to be vigilant. So far, the FDA has only warned of one drug that is in short supply. (It did not specify which drug.) It said that it is monitoring twenty other drugs but that all of those are considered “noncritical.”
The situation in China is improving—factories are reopening and the number of new coronavirus cases is going down—and is anticipated to be under control by the end of April. But Chinese factory closures have slowed production in India, which gets three-quarters of APIs in its generic drug formulations from China. The Indian government recently ordered its pharmaceutical industry to stop exporting twenty-six pharmaceutical products, most of which are antibiotics. That decision could make shortages of certain drugs, especially antibiotics, in the United States more likely.
What medications are at risk?
The FDA has not said which medications are at risk of supply-chain disruption. Probably most at risk are APIs that only China supplies, including types of antibiotics and vitamins. Chinese pharmaceutical firms have captured 97 percent of the U.S. market for antibiotics and more than 90 percent of the market for vitamin C. In 2018, 95 percent of ibuprofen, 91 percent of hydrocortisone, 70 percent of acetaminophen, and 40–45 percent of heparin imported to the United States came from China, according to the U.S. Commerce Department.
Many over-the-counter and generic drugs [PDF] sold in the United States are made in China, including antidepressants, HIV/AIDS medications, birth control pills, chemotherapy treatments, and medicines for Alzheimer’s disease, diabetes, epilepsy, and Parkinson’s disease. Pharmaceutical imports from India include antibiotics, painkillers, hormones, antiviral drugs, and vitamins B1, B6 and B12.
How is the United States preparing for possible shortages?
Many U.S. drugmakers have several months’ supply of APIs, but if Chinese factories operate at low capacity for a sustained period, U.S. pharmaceutical firms could face difficulties replenishing their inventories and potentially increase prices.
The FDA has asked U.S. pharmaceutical producers to evaluate their supply chains and notify the agency of any anticipated disruptions. To mitigate potential shortages, it is imperative that the U.S. government work with the Chinese government to help Chinese manufacturers resume production and ship products to the United States as soon as possible. The top priority should be factories that produce APIs and drugs that the FDA deems are most at risk of experiencing disruptions.
The United States should consider scaling up the manufacturing capacities of U.S.-based facilities that make APIs, to compensate for shortfalls in China and India. In the long term, U.S. pharmaceutical companies should also rethink their supply chains, including by changing the practice of replenishing their inventories just in time and diversifying API supplies to reduce dependence on Chinese and Indian manufacturers.