The Covid-19 perfect storm is expanding from China to the entire globe; Europe is greatly concerned as important countries involved in the global pharmaceutical supply chain (i.e. Italy, Germany and France) are heavily impacted. The WHO has just declared the status of pandemic while we are writing. “We expect to see the number of cases, the number of deaths, and the number of affected countries climb even higher,” said Director General Tedros Adhanom Ghebreyesus.

A communication released by EMA on March 10th confirmed the Agency and its partners closely monitoring the potential impact of the outbreak on pharmaceutical supply chains into the European Union. “No reports of current shortages or supply disruptions of medicines marketed in the EU due to this outbreak have been received at this point. As the public health emergency develops, shortages or disruptions cannot be excluded”, warned EMA. On March 24th the Agency communicated the first cases of shortage due to an increased demand for some medicines, both linked to their use to treat Covid-19 patients or because patients are requesting more than their usual supplies.

Criticalities for the Chinese key pharmaceutical hubs 

Only time will tell the exact effect of the new SARS-CoV-2 virus on healthcare systems and pharmaceutical supply chain, which are currently experience an enormous stress to face the increasing numbers of patients needing assistance. 

From the pharmaceutical industry perspective, the closing of Chinese suppliers of active ingredients (APIs) and key intermediates experienced in January as a consequence of the first outbreak of the epidemic in the Hubei province is starting to show its effects as a possible cause of drug shortages. According to a report from Global Data (see here more on Pharmaceutical Technology), the Hubei province only is seat of 42 CMO companies in the pharmaceutical field, mainly in APIs manufacturing. The city of Wuhan, the main epicentre of the Chinese epidemic, hosts many pharmaceutical companies, as do the provinces of Guangdong and Shangai, which have been also greatly impacted by the effects of the coronavirus. A survey on the possible impact of epidemic on APIs supplies was conducted by Kemiex at the beginning of the Chinese outbreak (see here more). 

The current situation in Europe

A letter from Medicines for Europe to the European Medicines Agency (EMA) and the EU Commission published at mid February was confirming the effort the manufacturers of generics and biosimilars are playing to monitor and inform the authorities of circumstances which could affect the supply of medicines. “An extended shut down of Chinese production or block on Chinese exports would certainly affect global pharmaceutical production and likely materially affect global production costs. In addition, Chinese manufacturers are large producers of ingredients for almost all medicines so a major production blockage could impact global production across most therapeutic areas”, wrote Medicines for Europe, highlighting also China’s near global monopoly situation for certain essential medicines such as pain killers or anti-infectives. According to the Association, there were no immediate risk of drug shortages, due to the availability of stocks maintained in Europe by pharmaceutical companies for their manufacturing networks. Additional stock would be also available with chemical traders, but there is a risk the supply might see an increase of prices due to the uncertainty of the global situation.

A second letter issued at mid March highlights the many problems resulting from block of borders across EU countries and asked for “a coordination mechanism to get those supplies to different EU countries on a national or a regional basis“. A critical point is the possibility to secure regular and predictable flights between the EU and 3rd countries and priority space allocation for essential goods like medicines. “We must understand that medicines supply in this crisis is not about static stock levels. The keys are to keep medicine production levels at maximum capacity and to move supplies to wherever they are needed“, writes Medicines for Europe. The association also created a dedicated page on its website where to find all information on the current Cover-19 emergency.

The request for a strong coordination action at the EU level was also confirmed by EFPIA, representing the innovator pharmaceutical industry. Challenges to be faced include the difficulty to organise shipments of medicines, vaccines and semi-finished products across Europe. “There are demand pressures on some treatments used to manage the symptoms of Covid-19, these pressures can be exacerbated by unilateral decisions by Member States. In addition, there can be supply challenges as a result of failure to manage ‘panic’ buying of prescription medicines at the pharmacy level“, also adds EFPIA in a note published on its website .

The EU Commission has launched the “coronavirus response team”, an initiative supervised by five different EU’s Commissioners aimed to coordinate all needed actions to fight the emergency; Stella Kyriakides is the responsible for the coordination of all health issues, including shortages of medicines. On 23 March, the EU Commission issued new practical advice on border management in order to keep freight moving across the EU. A green lane of border-crossing points on the trans-European transport network (TEN-T) should be created with the collaboration of each European country; these lanes should remain open to all freight vehicles, and  any checks and health screening should not take more than 15 minutes.

The many elements of the complex global situation

The Chinese epidemic is apparently lowering down while we are writing and the city of Wuhan is starting to be re-opened. The situation is rapidly evolving in Europe, where Italy (the main EU’s exporter of medicinal products) has become a locked  down country. It is still impossible to predict how and when Chinese manufacturers and exporters might resume a normal flux of supplies. According to Fierce Pharma, some sites in China (i.e. WuXi Biologics and the two Astra Zeneca’s ones) already resumed manufacturing at mid February.

Following the explosion of the outbreak in Italy, the local industrial associations of the pharmaceutical industry (Farmindustria), the generic and biosimilar manufacturers (Assogenerici) and the APIs suppliers (Aschimfarma) – together with all other players of the pharmaceutical supply chain, including associations representative of pharmacists (FOFI and Federfarma) – released a joint statement to reassure about their commitment to guarantee the manufacturing and distribution of medicines, avoiding blocks of the production.

EMA informed on March 10th that the Agency, the European Commission and national competent authorities in the Member States have organised the first meeting of the EU Executive Steering Group on shortages of medicines caused by major events to discuss measures aimed at addressing the impact of the outbreak of Covid-19 on the supply of medicines in the EU. Among others, EMA is reviewing all manufacturing information for centrally authorised human and veterinary medicines to identify those most at risk of shortages and disruptions and prioritise them for discussions about remedial actions with the MAH.

The international situation is further exacerbated from the decision taken at the beginning of March by the Indian government to limit the export of a dozen of active ingredients, including paracetamol, tinidazole, metronidazole, acyclovir, B1, B6 e B12 vitamins, progesterone, chloramphenicol, neomycin, erythromycin, clindamycin and ornidazole (see here the official act). India’s complete lockdown started on March 25th and it involves 1,3 billion people; its impact on the pharmaceutical supply chain may be dramatic, being the country the second main manufacturer of medicines worldwide. The first issues of shortages, both internal and for export, have been already reported (see The Economic Times). According to the Reuters, at the beginning of the Chinese epidemic the Indian government said there were enough stocks to manufacture formulations for two-to-three months.

India is dependent on APIs import from China for 70% of its productions, says the article; it is thus not difficult to understand the possible impact on the export of finished medicinal products to Western countries. “Irrespective of the ban, some of these molecules may face shortages for the next couple of months. If coronavirus is not contained, then in that case there could be acute shortages” Dinesh Dua, chairman of the Pharmaceuticals Export Promotion Council of India, told the Reuters. In another article, the news agency tells about a “panicking” reaction to this decision by the European pharmaceutical industry. “I am getting a huge number of calls from Europe because it is very sizeably dependent on Indian formulations and we control almost 26% of the European formulations in the generic space” declared Dua to the Reuters. “We are very alarmed that other countries would pursue other, more narrow strategies, which won’t solve the issue,” added Adrian van den Hoven, director general of Medicines for Europe, adding that the restrictions did not seem to affect large export volumes to Europe and stockpiles would last a few months.

At the beginning of March, the Indian government reassured there were no shortage of raw ingredients or medicines in the country for next three months, reported The Economic Times. “A task force has also been set up regarding APIs and I am leading it. We have decided to increase the production of APIs in the country so that we are not dependent on any country for them,”, said the Indian Minister of State for Chemicals and Fertilizer Mansukh Mandaviya. 

The possible impact for European countries is exemplified by the case of Germany described in an article on DW, reporting the Federal Institute for Drugs and Medical Devices (BfArM) currently lists a total of 277 drugs that are hard to get. 

The point from a regulatory perspective 

A highly flexible regulatory system able to rapidly accommodate emergency variation procedures and accelerated regulatory reviews for both active ingredients and finished products is the central message from Medicines for Europe to the European authorities in order to prevent the risk of disruptions in the supply chain. As said, EMA and national competent authorities are closely monitoring the situation; the dedicated page on EMA’s website is the reference point to look for all updates on the situation.

On the other side of the Atlantic, the FDA announced in February the activation of new active surveillance measures on APIs manufacturers in order to prevent shortages (particularly in China), without waiting for the notification from pharmaceutical companies. Among other measures, the FDA will utilise, where appropriate, its authority to request records from firms “in advance or in lieu of” drug surveillance inspections in China, and consequently prioritise early inspections on those deemed most needed, based on the records. On February 27th, the Agency informed about the first case of drug shortage linked to the coronavirus emergency; the note released on its website does not mentioned the exact medicinal product, and just refers to a “human drug that was recently added to the drug shortages list”. FDA’s Commissioner Stephen Hahn said there are “other alternatives that can be used by patients”, and that the Agency is working with the manufacturer as well as other manufacturers to mitigate the shortage (see also the note from the Association for Accessible Medicines). 

A main reason for the undisclosure of the API involved is represented by confidentiality of this type of information, according to an article by Kat Eschner published on Popular Science. We need the cooperation of the drug companies in order to obtain accurate information as we proactively take steps to mitigate drug shortages, and companies will be less willing to provide this voluntary information if they cannot trust FDA not to disclose commercial confidential information such as drug names, company names or exact location of facilities.”, said the FDA’s spokesperson, according to an article on Regulatory Focus. The central issue is linked to the fact manufacturers are not legally required to provide the detailed information on their supply chain in order for regulatory authorities to monitor the drug supply since the onset of the outbreak, adds the article. With this regard, adds Popular Science, a possible innovation of the relevant US legislation is under discussion, and the Mitigating Emergency Drug Shortages (MEDS) Act is pending before the Senate Committee on Health, Education, Labor and Pensions.

The companies producing the three possible candidates of the US’s shortage case, pindolol (Mylan), fludarabine phosphate for injection (Pfizer) and ceftazidime + avibactam (Allergan) told Regulatory Focus the reason for the shortage is not linked to the coronavirus emergency.

The economical risks of the crisis

The European association of generics and biosimilars manufacturers also highlights in its letter the possible risks coming from the impact on “the price of those ingredients with a knock-on effect on the cost of goods of pharmaceutical production globally”. A possible unsustainable market situation might arise for pharmaceutical companies due to the regulated pricing policy, often combined with price control policies, which is in place in many European countries in order to contain pharmaceutical expenditure. According to Medicines for Europe, potential risks include difficulties in meeting delivery deadlines in procurement contracts due to force majeure, the impossibility to legally sell products at a loss, possible hoarding phenomena put in place by distributors in order to comply with public service obligations, difficulties for hospitals and pharmacies to supply patients should the reference price become negative. 

The DW’s article points the attention on the relocation of many German productions to lower costs’ countries as one of the main factors contributing to the current difficulties. An additional one is linked to times required for shipment from China and India to Europe (up to four weeks by sea), resulting in evidence of shortages when the supply chain is interrupted for half a year or longer.

In the US, reports Fierce Pharma, the FDA determined there are 20 products impacted with criticalities as for the import of APIs or finished products from China; all of them are “considered non-critical drugs”, and they would not suffer any interruption in supply. Should the sanitary emergence continue, some “spot shortages” may emerge in the second or third quarter of 2020, says the article. According to the cited Bernstein’s analyst, prices of key starting intermediates have already start to increase, up 10% to 50%, “and generics producers are beginning to look to their clients to absorb those increases”. Antibiotics would be among the mainly affected active ingredients, due to the monopoly of China in their production.