Outsourced Drug Manufacturing Is a Disaster Waiting to Happen

“Don’t put all your eggs in one basket,” says the old cliched warning. Right now, when it comes to medicines that Americans need to save, extend and improve their lives, the United States has three-quarters of its eggs in two very questionable baskets.

It is estimated that the United States relies on China and India for 75 to 80 percent of its supply of active pharmaceutical ingredients. This rising number tells us that millions of Americans take life-saving medicines that may have been manufactured with limited quality control and the supply could also be cut off at any time for a variety of reasons. It’s a disaster waiting to happen.

The disaster has already happened specific to a number of medicines. The most famous is probably the 2018 recall of an entire class of angiotensin II inhibitor blood pressure medications including valsartan, one of the most prescribed drugs on the market. This recall was a result of nitrosamine impurities discovered in product lots coming from an API manufacturer in India. Millions of patients were exposed to carcinogenic contaminants for six years — from 2012 to 2018. Patient safety was put at risk and people got hurt.

This is unacceptable, yet our reliance on foreign API production continues to increase. Let’s first examine why this dependence exists, consider the risks and then discuss possible solutions that will keep our pharmaceutical supply and manufacturing chain secure and safe.

The main reason for this increase over the past decade is a desire to drive down the cost of prescription medicines. However, these efforts, while well-intentioned, are attached to unintended consequences. Policies ranging from currency manipulations and state-sponsored subsidies to lax or non-existent environmental damage controls and low wages, are a driver for what makes production of APIs in China and India extremely cost-effective. As a result, the lion’s share of many common and essential medications needed by U.S. citizens are imported from these countries, including 97 percent of all antibiotics, 95 percent of ibuprofen, 91 percent of hydrocortisone and 70 percent of acetaminophen.

Today, we face an even graver threat: The COVID-19 pandemic has exposed new vulnerabilities in our global supply chain felt across industries. At the spike of the pandemic, anticipatory purchasing of medicines drove demand at unprecedented levels while drug factories in China and India shut down to avoid the spread of the virus. The United States had no control over this and no capability to shore up production at home. The result was a drug shortage impacting patients. Even a year later, India faces a COVID-19 crisis that is unprecedented, and we have yet to understand its impact on our supply chain.

The risks of this dependence on foreign manufacturing are multifactorial. Quality and safety issues stemming from lax oversight are well-documented. In its 2019 report to Congress, the U.S.-China Economic and Security Review Commission identified serious deficiencies in the health and safety standards in China’s pharmaceutical sector, including inadequate regulation by the government, fraudulent tactics of many manufacturers and the inability of the U.S. Food and Drug Administration to adequately inspect Chinese manufacturing facilities and guarantee the safety of these exports. This lapse in quality also has real potential to fuel drug-resistant infections caused by harmful environmental practices.

Second to this is a lack of transparency in pharmaceutical labeling. The United States does not require drug companies to disclose the country of origin on their product labels. Consequently, many consumers may not know that their “made in the U.S.” medications contain APIs made elsewhere, where oversight of quality, safety and efficacy is not as robust.

But perhaps the most serious threat is that the Chinese or Indian government can, at any point in time with absolutely no warning, decide to simply stop medical exports to specified countries or altogether, or vastly increase the cost of exported medications.

As a collective industry, we in the pharmaceutical arena need to act now to protect the health of our citizens. Our end goal must be to bring manufacturing back to the United States and other regulated countries in the Western Hemisphere to ensure the quality, consistency, safety, availability and reliability of our pharmaceutical supply, and the supply chain on which it depends.

The path forward will require a focus on two core areas: adopting new technologies and incentivizing local production.

Manufacturers should be encouraged to utilize new technologies that increase efficiencies while reducing the environmental footprint. We have the technology and engineering capabilities to achieve this. An excellent example is “Continuous Manufacturing,” in which drugs are produced in a continuous stream — unlike today’s process where APIs and the finished product are made in separate batches, often in different hemispheres. The manufacturer has much greater control and therefore a much better ability to increase quality.

API and final dosage forms manufacturers from FDA-approved manufacturing countries should be able to get tax incentives and/or subsidized loans to develop new production facilities in the Western Hemisphere. It has worked for other industries, and it will work for drug manufacturing.

A bipartisan bill entitled “Securing America’s Medicine Cabinet Act of 2020 (S. 3432)” has been introduced to in the U.S. Senate to “bring drug manufacturing back to the United States, where ingredients and processes can be more easily verified.” The bill would expand the FDA’s Emerging Technology Program, encouraging the adoption of innovative approaches to product design and pharmaceutical manufacturing.

I fully understand that decreasing our reliance on foreign APIs isn’t an easy task and there are far too many wheels in motion to turn this around on a dime. But we have to start a path forward with significant dialogue to increase awareness of the issues at hand and the very real risks they pose. While the pandemic has shined new light on the vulnerabilities that exist, we will continue to court disaster until we take the decisive actions outlined herein to turn this situation around. If we continue to rely on two baskets for most of our eggs, the consequences can be serious.


Jonathan Gilinski is the executive director of CapsCanada, a Lyfe Group company, a well-respected global manufacturer of pharmaceutical products as well as customized empty capsules for pharmaceutical and nutritional supplement products.

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