As geopolitics bring reshoring interest to a fever pitch, the United States Pharmacopeia (USP) is adding to the impetus for local drug production with a warning that homes in on the pharmaceutical building blocks known as key starting materials.
In its new supply chain vulnerabilities update (PDF), USP, a nonprofit that helps set quality standards for medicines, highlighted 100 acute and chronic medications that, while not necessarily all in current shortage, are at risk of supply gaps and other disruptions. This is due to bottlenecks in their production chains, especially in the upstream phase focused on activities like sourcing raw materials, according to USP.
Looking at the broad trends, some 30% of the drugs on USP’s updated list are currently in shortage, per the U.S. FDA. Many of the therapeutics that have made it into the lineup are deemed essential by the World Health Organization or FDA, including multiple hospital drugs, chemotherapies, steroids and anesthetics, as well as drugs for chronic conditions like ADHD, diabetes and cardiac diseases, among many others.
Notably, 63% of the medicines identified for their supply chain vulnerabilities are injectables, which USP chalked up to the “inherent manufacturing complexity” of that dosage form. Oral solid meds like tablets and capsules represented the second-biggest group of vulnerable drugs, making up 22% of the list, according to USP.
In perhaps the biggest flag from the updated list, USP noted that nearly half (48%) of the drugs included have at least one of their key starting materials (KSMs) solely manufactured in one country, which the organization deemed a “potential point of failure.”
Key starting materials are foundational chemical compounds used to synthesize active pharmaceutical ingredients (APIs), which are then used to manufacture pharmaceuticals.
Although much of the focus on manufacturing resilience focuses on API and finished-dosage-form production, the KSM process “represents the earliest and often the most concentrated tier of the pharmaceutical supply chain,” from USP’s perspective.
“Consider that although a drug may have numerous finished-dosage or API manufacturers across several countries, every one of those manufacturers may source the same KSM from a single facility,” USP explained in its report. “In that scenario, any disruption to KSM supply, whether from export restrictions, natural disasters, or regulatory action, cascades through the entire downstream chain simultaneously.”
USP added that no one drug class or formulation type was uniquely affected by the flagged supply chain vulnerabilities. That said, three new additions to the list were made, given “hidden geographic concentration risks despite low measured shortage risk.”
Those drugs are Tamiflu (oseltamivir) capsules, famotidine injection to reduce stomach acid and the blood pressure medication metoprolol tartrate injection, which USP has added to its list because “at least one of their KSMs is produced in a single region.”
USP’s latest U.S. medicines vulnerability update comes after a prior incarnation of the report last year, which assessed drugs based on their “essentiality, demand, and supply chain vulnerabilities at the finished dose form.” The organization noted that with the update, it aims to show that even if drugmakers have multiple API and finished-dosage manufacturers, that “perceived redundancy is an illusion” without more varied KSM sourcing.
The COVID-19 pandemic highlighted the dispersed nature of many medicine supply chains, and recent U.S. trade policy under the second Trump administration has further amplified efforts by drugmakers and governments alike to ensure better production autonomy for their healthcare products.
Most recently, that reshoring push has played out in the form of President Donald Trump’s import tariff threats, which materialized into a more concrete framework earlier this month when the President rolled out a 100% duty on patented pharmaceuticals—with plenty of caveats and carveouts—under Section 232 of the Trade Expansion Act of 1962.
But in a sign of the policy’s overall goal of restoring U.S. manufacturing, the 16 large drugmakers that have struck Most Favored Nation (MFN) pricing deals with the administration—many of which included manufacturing pledges—have tariff exemption out to 2029. And companies can also secure a lower, 20% tariff rate by committing to an “onshoring” arrangement with the White House.
Many of the industry’s biggest companies have committed significant investments to bolster U.S. manufacturing of their medicines, likely negating the worst of the administration’s tariff penalties.
That said, midsize drugmakers and biotechs may be more vulnerable to the latest tariff rate, given their more limited resources to make major U.S. production outlays. The recently formed Midsized Biotech Alliance of America (MBAA) suggested in early April that the President’s plan creates an “unfair two-tiered system” for drugmakers of different sizes.
