It is inevitable that the Irish medicine supply chain will face disruption and shortages due to Covid-19, and it is likely that these shortages will manifest sooner than we think. Months, rather than days or weeks, but soon.
The good news, in theory, is that there is safety stock built into all pharmaceutical companies’ demand planning processes, enough to fulfil demand for medicines for an average of three to four months.
The bad news, in practice, is that this is based on “normal” demand without any of the stockpiling that we know is happening. The risk we now face is that this safety stock will not last as long as it should, and that shortages will come sooner rather than later.
The Irish medicine cabinet
The most at-risk medicines are the staples of the Irish medicine cabinet, like antibiotics, statins (for lowering cholesterol), and paracetamol. Most of these are off-patent generic medicines and, as such, subject to high levels of price erosion.
As a result of this price erosion, generic medicine companies have diverted the procurement and manufacturing of active pharmaceutical ingredients to the lowest-cost countries, mainly China and India. Active pharmaceutical ingredients, or “APIs”, are the essential part of the drug that produces the desired therapeutic effect.
China supplies about 40% of the world’s APIs. At the height of its Covid-19 crisis, Chinese production was halted for almost three months. The knock-on impact of this has meant that Indian generic manufacturers, who are dependent on China for 70% of their APIs, are now facing significant shortages of active ingredients, as well as supply-driven price increases.
While Chinese supply is now slowly starting to resume, India remains the immediate concern, having restricted the export of 26 APIs and the finished medicines made from them to supply its own domestic market. The Indian government has just imposed a national lockdown of its 1.3 billion inhabitants.
Adding to this potential crisis is the situation here in Europe, where we produce 27% of global APIs. Unfortunately, the biggest suppliers on the continent are the two countries worst hit by Covid-19: Italy and Spain.
Globally, the country that is most at risk for shortages is the United States, as it is hugely dependent on the Indian and Chinese pharmaceutical supply chains.
However, two factors will help to mitigate the risk: first, the US Food and Drug Administration has already been highly proactive in engaging with pharmaceutical companies; and second, the US pays more for generics than any other market.
The potential is that a responsive and lucrative US market will significantly increase supply pressures in others, namely smaller, cheaper and less profitable European countries, including Ireland.
Defending Ireland’s pharmaceutical supply chain
Generics comprise some 70% of all medicines consumed by Irish patients – if there are shortages of even a few months’ duration, they will have a big impact on our national health. In keeping with the State’s macro approach to date, speedy, specific measures are required.
Irish authorities can start by limiting the dispensing of at-risk prescription medicines to one month’s supply per patient. Furthermore, for the duration of the crisis, supply of paracetamol could be limited exclusively to pharmacies, and similar to the situation in France, purchases could be limited 24 tablets at a time.
Government and pharma companies must work together to take stock of all available medicines in the country relative to monthly demand and use that knowledge to anticipate potential shortages. Medicines that are likely to run into short supply could be limited for export, similar to measures enacted in the UK.
Where it is clear that shortages are imminent, this knowledge should be disseminated to the healthcare community, so that doctors and pharmacists are aware of the defined alternative therapies where supply is readily available. All of this can be done in a way to protects commercial sensitivities of the pharmaceutical sector by aggregating the data in a centralised way.
Advice to GPs and patients alike would be helpful in order to reduce patient pressure on GPs, particularly in terms of prescribing potential Covid-19 drug treatments, such as chloroquine.
The root of the issue
As Covid-19 infects the world and disrupts the global medicine supply chain, immediate advance planning in Ireland is critical to prevent shortages becoming a national emergency.
But once life returns to normal, and it will, we have to consider the more fundamental question: how did we leave the essentials of the Irish medicine cabinet potentially so exposed to such disruption?
It is not enough to say this was down to a one-off global pandemic. Price erosion is a major issue. For local manufacturers, it is simply not feasible to deliver a month’s supply of medicine for less than the cost of a takeaway coffee (for example €2 reimbursement for a month’s supply of Metformin 500mg which is essential for the treatment of Type 2 Diabetes).
At the same time, if pharmaceutical companies continue to outsource the development and manufacture of the most essential pharmaceutical ingredients and medicines to lower-cost countries, we leave ourselves continuously exposed. Current pricing agreements between pharmaceutical manufacturers and European governments, including Ireland, make the production of the majority of generic medicines on this continent extremely expensive and thus unlikely.
All medicines – even the medicine cabinet staples—have value. We need to do all in our power to make sure that it remains attractive for pharmaceutical companies to develop and produce their medicines closer to home, in Ireland and in Europe, where supply chains – and the patients they serve – can be more easily protected.
Sandra Gannon is the managing director of Azure Pharmaceuticals. She is the former President of pharmaceutical representative body, Medicines for Ireland.
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