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International Treaty, Transparency Measures Recommended to Build Resilience of America’s Medical Product Supply Chains
News Release | March 3, 2022
WASHINGTON — To address medical product shortages and ensure patients and medical personnel can access essential drugs and devices, the U.S. Food and Drug Administration (FDA) should take steps to make sourcing, drug manufacturing volume and capacity, and quality information publicly available for all medical products approved or cleared for sale in the United States, says a new congressionally mandated report from the National Academies of Sciences, Engineering, and Medicine. The public should have access to information about where and how medical products are made, and where they are in the supply chain.

Medical product supply chain disruptions affect people’s health and lives, cost medical facilities millions of dollars annually, and can halt clinical research, says Building Resilience Into the Nation’s Medical Product Supply Chains.

The supply chain refers to the flow of medical products, from raw materials, to production facilities, to the “last mile” of getting products into the hands of providers and patients. Natural disasters, infectious disease outbreaks, geopolitical conflicts, and quality issues at manufacturing facilities are all examples of events that could lead to supply chain disruptions.

Demand surges and supply constraints for medical products have been a long-standing issue, but the COVID-19 pandemic put the consequences in perspective. Throughout the pandemic, hospitals, nursing homes, and federal and state officials increased orders of products such as ventilators, masks, and surgical gowns. Simultaneously, the pandemic prompted some manufacturing facilities to close, and companies developing diagnostics, therapeutics, and vaccines had to compete for raw materials and supplies.

The U.S. is heavily reliant on other nations for medical products. However, on-shoring entire medical product supply chains is costly and often not feasible, the report concludes. Given the global nature of supply chains, on-shoring offers little protection if key components of products, such as active pharmaceutical ingredients, are sourced from other countries. Moreover, concentrating production inside the U.S. can make supplies more vulnerable to regional disasters, such as hurricanes.

“Disruptions in the supply chain have greater implications than making people wait for a new television set. They have the potential to seriously compromise patient care,” said Wallace J. Hopp, distinguished professor of business and engineering at the University of Michigan, and chair of the committee that wrote the report. “This report offers a vital framework to help stakeholders determine which products are medically essential and vulnerable to shortages, the level of protection they need, and the right measures to take if a disruptive event does occur.”

The report makes seven recommendations to improve the resilience and security of U.S. medical product supply chains, both during public health emergencies and so-called normal times. The recommendations fall into four categories: awareness, mitigation, preparedness, and response.

Enhancing awareness about medical product supply chain risks requires transparency from manufacturers and regulators, the report says. FDA should make sourcing, quality, volume, and capacity information publicly available for all medical products approved or cleared for sale in the U.S. It should also establish a public database to promote analyses of these data by interested parties, which would produce several benefits. For example, a public database will enable health systems to make better purchasing decisions; enable policymakers to focus programs on supply chain vulnerabilities; and empower people to act upon data that is vital to their health, as well as place pressure on regulators and lawmakers, if appropriate.

Mitigation includes actions to help prevent a disruptive event altogether, or reduce its magnitude. The report recommends that health systems incorporate quality and reliability into their purchasing decisions, in addition to price. Health systems should make suppliers pay penalties for quality issues and defects, and preferentially award contracts to suppliers that can demonstrate superior quality and reliability. Medical product wholesalers and health systems should routinely enter into emergency purchasing agreements, guaranteeing that a set list of products will be delivered in the event of a disaster.

Preparedness actions include preventing a supply shortage from impacting patients and medical personnel. The report recommends ways the Office of the Assistant Secretary for Preparedness and Response (ASPR) can make the management of the Strategic National Stockpile more effective than it was during the COVID-19 pandemic. ASPR and FDA should complement stockpiling with capacity buffering strategies such as setting a list of guaranteed “crisis prices” that the government would pay for certain products under specified conditions. Such measures would incentivize companies to find creative ways to meet high demand during emergencies, the report says. It also recommends the federal government fund research on advanced manufacturing technologies that would make on-shoring a reasonable strategy for some medical products.

Response includes actions taken after a disruption to minimize harm from the shortage and return the supply chain to normal. The report calls for an international treaty among major exporters of medical products, including the U.S., under the World Trade Organization that prohibits export bans on components of critical medical products. Any country that violates the terms of this agreement should be subject to reputational, economic, or legal sanctions by other signatories. Treaty negotiators could consider including provisions that facilitate information sharing, particularly during health emergencies. The report also recommends the establishment of a working group of users who represent the end of supply chains, such as clinicians, pharmacists, and public health workers. One contribution from this working group could be the collection, standardization, and dissemination of best practices, to inform last-mile management in the event of medical product shortages.

“The more secure the medical product supply chain is, the more trust people will have in its ability to deliver essential medicines when they’re needed most,” said Victor J. Dzau, president of the National Academy of Medicine. “Increasing transparency about the availability and quality of medical products — a major aspect of this report — is a fundamental step in earning the public’s trust and confidence.”

The study — undertaken by the Committee on the Security of America’s Medical Product Supply Chain — was sponsored by U.S. Department of Health and Human Services Office of the Assistant Secretary for Preparedness and Response.

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