Pharma Groups Address Impact of API Mfg and Supply in EU Due to Coronavirus
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Pharmaceutical groups, including Medicines for Europe, address the impact on starting regulatory materials, intermediates, and APIs in the EU after the coronavirus outbreak in China.

Medicines for Europe address impact

In a letter to the European Medicines Agency (EMA), Adrian van den Hoven, Director General of Medicines for Europe, which represents generic-drug companies and active pharmaceutical ingredient (API) manufacturers in Europe, said that although there is limited immediate risk to production or supplies in Europe due to the coronavirus outbreak in China, he is calling on European Union (EU) authorities to take measures in worst-case scenarios to mitigate disruptions to the drug supply chain.

“Based on the information we have received, there is limited immediate risk to production or supplies in Europe resulting from this situation,” he said in a February 18, 2020 letter to Fergus Sweeney, Head of Inspections and Human Medicines Pharmacovigilance Division, European Medicines Agency (EMA). “This is because companies typically maintain certain stocks in Europe for their manufacturing networks. In addition, it is likely that some additional stock would be available with chemical traders or due to stockpiling for the recent Lunar New Year holiday period, where production shuts down temporarily in China. The uncertainty will naturally affect future shipments and will increase the cost of available stocks with traders. Our members (which produce both active ingredients and medicines) are continuously monitoring their supply chain to assess stock levels and potential impacts on manufacturing and supplies in Europe,” he said.

In his letter, he pointed out that China is a major producer of starting materials, intermediates, and APIs to the generics industry and that there is the potential for supply disruptions. He notes that several hundred factories located in the regions most affected by the viral outbreak, Hubei and Zhejiang Provinces, host over 100 production sites and that the control over the movement of people from those provinces could also affect production in the other provinces. “An extended shutdown of Chinese production or block on Chinese exports would certainly affect global pharmaceutical production and likely materially affect global production costs,” he said in his letter.

He explained that there are several factors that would impact API supply to the EU. “It is not currently possible to evaluate the specific risks caused by the temporary disruption of supplies from the affected areas in China,” said Medicines for Europe’ van den Hoven in his letter to the EMA. “This will depend on the resumption of production and shipments from factories, including how many workers will return to those sites (as there are many restrictions of person movement in China to control the outbreak). This will also depend on the impact this could have on exports from China to key active ingredient and pharmaceutical production centers in Europe and India.” He added that it is now not believed that the virus can be transmitted via trade in goods but that there could be bottlenecks in the logistics at Chinese ports. He added that travel restrictions (official or corporate) for personnel from Europe to the affected regions could also have an impact on supplies.

He is advising that the European Commission and regulatory agencies consider Medicines for Europe’s recommendations to address potential shortages, notably the possibility for emergency-variation procedures and accelerated regulatory reviews for both active ingredients and finished products. In addition, he said it would be important to ensure pan-European coordination as national measures could have spillover effects on the rest of the European Union.

“If the situation continues, we cannot exclude an important impact on supplies due to the potential market effects of the crisis,” he said in his letter. “The scarcity generated by the interruption of Chinese ingredient production and exports could hypothetically impact the price of those ingredients with a knock-on effect on the cost of goods of pharmaceutical production globally. As most European countries apply some form of regulated pricing policy, often combined with price control policies such as maximum ceiling prices for tenders, there could potentially be an unsustainable market situation in the months ahead. This would affect not only manufacturers but also the distribution chain for medicines.”

He identified potential market problems that could arise from a worsening of the situation, including a sudden increase in supply-chain costs. These include:

  • Manufacturers could experience difficulties in meeting delivery deadlines in procurement contracts due to force majeure.
  • Under certain circumstances, manufacturers cannot legally sell products at a loss (i.e. EU procurement law forbids “abnormally low bids”).
  • Distributors could “hoard” supplies to comply with public-service obligations or due to different incentives in the market, which would lead to a suboptimal distribution to patients.
  • Hospitals and pharmacists are often reimbursed according to a reference price and could struggle to supply patients if the reference price would become negative, below their costs or substantially lower than their past returns.

“Medicines for Europe will continue to monitor this situation with manufacturers. We are also prepared to work with regulators and the Commission [European Commission] on the above-mentioned policy matters that could also impact manufacturing and supply in Europe in a worst-case scenario,” said van den Hoven.

Other industry groups address impact of coronavirus of API supply

The European Fine Chemicals Group, representing API manufacturers in Europe, and the Bulk Pharmaceutical Task Force of the Society of Chemical Manufacturers and Affiliates, representing US-based API manufacturers, are encouraging government authorities to address potential supply issues relating to the novel coronavirus outbreak in China.

“The recent outbreak of the coronavirus in China has seen the Chinese authorities taking appropriate steps to introduce quarantine measures to contain the spread of the virus, said Luis Gomes, Chairman of EFCG’s Pharmaceutical Activities Committee, in a February 10, 2020 statement. “We support this responsible approach. However, the situation also illustrates the risks of becoming overly dependent on supplies from specific geographies. The current restrictions on logistics, transportation and movement of workers imposed have the potential to significantly exacerbate the shortages. The heightened demand can cause further disruptions in the availability of essential medicines such as antibiotics.”

The EFCG and BPTF are calling on government authorities to take precautionary actions, such as setting up a fast-track approval for alternate registered starting materials and APIs and to take measures to ensure continuity in the manufacturing of APIs as a means to mitigate potential drug shortages. For certain generic medicines, they estimate that 80% of registered starting materials may be produced outside of Europe and the US.

They say they are working with the European Union and US authorities and other relevant industry stakeholders to bring a timely solution to this issue.

EU authorities seek business continuity to mitigate drug shortages

Meanwhile, the Council of the European Union, which is composed of the leaders of the European  Union (EU) member states, met last week (February 13, 2020) to address the EU response to the coronavirus and the efforts by EU member states, the European Commission, the European Center for Disease Prevention and Control (ECDC) and the Health Security Committee (HSC), and the international response to the threat of a possible pandemic outbreak and calls for continued and increased co-operation at EU and international levels. This includes implementing planning and response measures and preparedness planning as well as addressing activities concerning business continuity planning. The Council is calling on the European Commission in cooperation with the European Medicines Agency and the national medicines agencies to evaluate the consequences of global health threats, such as COVID-19 for the availability of medicines within the EU and the security of supply chains.

Source: Medicines for Europe, European Fine Chemicals Group, and Council of the European Union

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