The Case for Domestic Sourcing to Establish Reliable Pharmaceutical Supply Chains in the United States

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Global supply chain issues are not exclusive to the pharmaceutical industry. However, this is an industry in which the detrimental effect of supply chain disruptions has not only caused severe chain reactions, but has highlighted the glaring vulnerabilities of the United States when it comes to meeting demand for plant-based drugs and active pharmaceutical ingredients (APIs). As of this moment, 90% of prescriptions written in the United States are being fulfilled by foreign imports, primarily sourced from India, Mexico, and China.

In 2023, China alone was responsible for 23% of pharmaceutical imports by weight and accounted for 95% of imports of ibuprofen, 91% of imports of hydrocortisone, 70% imports of acetaminophen, and 40%-45% of imports of penicillin. The rising costs associated with imports have furthered the supply chain crisis. In 2022, pharmaceutical imports were the second-largest US goods import, with a cost of approximately $196 billion, behind only the automotive industry.

With so much reliance on foreign imports to meet a demand that only grows by the day, disruptions in that supply chain have profoundly impacted the ability of individuals in the United States to get access to the medications they need. Shortages of certain drugs and APIs, such as opium poppy, have had particularly detrimental effects because of their wide range of uses in pharmaceutical formulas.

From delayed shipments to quality control issues, the reliance on international suppliers has magnified uncertainness and bottlenecks in the supply chain, leading to significant obstacles for pharmaceutical manufacturers to keep pace with production.

How Domestic Sourcing Can Alleviate Supply Chain Disruption

In response to these challenges, there is a growing momentum to cultivate controlled substances, such as opium poppies, domestically. This push stems from the recognition of the risks associated with depending solely on foreign suppliers, both in terms of ensuring ingredient quality and expediting fulfillment.

By establishing a domestic source for opium poppies and other critical ingredients, the pharmaceutical industry can bolster supply chain resilience and ensure a reliable, secure, and quality-tested supply of essential raw ingredients. At the same time, the economic effects of onshoring production are too substantial to ignore.

For cases in which we’ve already seen this approach implemented at the local and state level—such as in the state of Florida where the government has established contracts with private pharmaceutical manufacturers based in Canada—annual costs have reportedly been reduced by almost 50%. When considering the overwhelming financial burden imports place on the United States, the cost-benefit analysis of investing in domestic production is heavily skewed toward the benefits.

In addition, the opportunities domestic sourcing provides go well beyond supply chain resilience. By reducing dependence on foreign entities, it mitigates geopolitical risks and trade disruptions, while also promoting job creation and economic growth within the United States. Moreover, domestic sourcing provides greater control over quality assurance and regulatory compliance, bolstering the safety and efficacy of pharmaceutical products.

Build a New Pharmaceutical Supply Chain

In order to build a new pharmaceutical supply chain, the United States needs to prioritize the mission to meet the demand for critical medications among the American people. With this in mind, there needs to be a heavy focus on investing in ingredient research and development, as well as the opportunity to cultivate strategic partnerships with federal organizations to become a reliable onshore supplier of plant-based drugs and APIs, which is a top priority in what I do on a day-to-day basis.

With the state of the current landscape, an overhaul of the pharmaceutical supply chain in the United States is paramount—one that prioritizes resiliency, agility, and sustainability. Embracing a shift to domestic manufacturers and suppliers that are actively adopting automation and clean production practices can quickly foster a more robust and adaptable supply that’s capable of withstanding disruptions and meeting the evolving needs of both pharmaceutical customers and, ultimately, their end users: individuals in the United States.

Prioritizing What is Most Critical Today

While urgent requests from regulatory bodies like what we’ve seen recently from the DEA for controlled substances underscore the need for rapid, proactive measures, they’re not altogether surprising. As we continue to recover from the cascading effects of 2020—in addition to the host of other challenges present with international goods trade—anchoring production of these substances and APIs has never been more critical.

By focusing on increasing the capacity of domestic production, streamlining and expediting regulatory processes, and implementing security protocols are vital steps in meeting supply while maintaining regulatory requirements to prevent diversion and misuse of controlled substances. Through supporting and investing in domestic sourcing initiatives to establish new supply chain dynamics, the United States has the ability to build a more resilient, sustainable, and accessible pharmaceutical ecosystem for the benefit of all.

About the Author

Groovy Singh, CEO, Bright Green Corporation

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