India, China Pharmaceutical Companies Face Increasing Scrutiny In Washington

The pandemic revealed gaping holes in U.S. supply chains. Everyone knows it. Anything medical-related was front and center when it came to critical items missing in action. The country’s over-reliance on China and India, especially for medical supplies, namely key generic drugs, is getting Washington’s attention. Little has been done to counter it so far. That is likely to change.

A poll by Morning Consult conducted on behalf of the newly formed advocacy group Americans for Safe Drugs showed that 85% of respondents said they were concerned about the drug industry’s reliance on India and China. Another 70% said that the U.S. should not be reliant on foreign sources for key generic drugs.

That reliance is stark. The U.S. imports around two-thirds of its generic medicine needs, and nearly 90% of generic APIs came from labs overseas.

Main Street understands the anecdotal evidence of the supply chain mess.

Remember when we all had to wear masks and no one could buy them, so they made semi-useless ones out of fabrics instead because China was the go-to manufacturer of N95s and the kind of masks you might see your dental hygienist wearing. Generic drugs are a more serious issue.

India stopped exporting key drugs during the pandemic. The main one was anti-malarial drug hydroxychloroquine and all of the active ingredients that go into making it (or APIs as they are known). Hydroxychloroquine was being distributed in India as a way to fight Covid. All told, some 26 APIs were banned from being shipped overseas.

China threatened to stop selling key starting materials for APIs, and APIs as well – which go into the final drug either in tablet or liquid form. It was revenge for the travel ban and for the Trump administration blaming them for the outbreak in Wuhan in 2020.

China never delivered on this threat. But it was enough to give local drug manufacturers a window of opportunity to show how India and China, more often competitors than partners, can hurt the U.S. essential medicine supply chain.

The government is paying attention but is slow moving.

Two years ago, in the fall of 2020, the Food and Drug Administration, at the request of the Trump White House, came up with a list of hundreds of drugs it deemed essential that were either produced solely abroad – namely in Indian and European labs – or were in short supply in national stockpiles.

Numerous members of Congress have put fourth bills to help produce those medicines in the U.S., but none of them have been voted on yet.

In March, Senator Tina Smith’s (D-MN) Onshoring Essential Antibiotics Act and Senator Jacky Rosen’s (D-NV) Strategic Planning for Emergency Medical Manufacturing Act were unanimously approved by a Senate committee to be part of the PREVENT Pandemics Act. No date has been set for a floor vote on this bill.

The Smith amendment would give $500 million in grants for domestic drug manufacturers.

“We ought to be able to produce essential antibiotics that Americans need here on U.S. soil. This is an issue of public health and national security,” Smith said in a statement. “By strengthening our country’s capacity to manufacture and store critical drugs, we’ll have more certainty and resources to promote public health during the pandemic and beyond.”

Bad Drugs

Drug makers overseas are rarely inspected by the FDA. When an inspector finds a problem with the lab, or the processing of drugs, the company is given a so-called Warning Letter. India API manufacturers –such as Aurobindo Pharmaceuticals — are mostly on the receiving ends of these letters. China facilities for key starting materials are not inspected at all.

Companies that are on the receiving end of Warning Letters are still allowed to sell pharmaceuticals into the U.S. This, too, has prompted local generic pharma companies to push back against this, leading to the creation of the American for Safe Drugs group. Their Morning Consult poll showed that over 80% of those surveyed either wanted those drugs banned or wanted them inspected upon arrival in a U.S. port before being given to patients.

Some 86% of those surveys said they felt it was important to have the U.S. government support domestic producers of generic drugs.

Still, companies often get these letters and remain operational in the U.S.

On March 30, 2022, a website called Premium Light Supplier, with a San Francisco telephone number, was sent a Warning Letter from the FDA for selling illicit, uninspected drugs.

Although the FDA site did not specify where this company was based, it is highly likely that this is a U.S. consumer-direct-to-China e-commerce operation selling $6 per pill Adderall and $4 per pill anti-depressant Celexa.

The FDA Warning Letter stated:

“The easy availability of these stimulants via the Internet poses additional significant risks to U.S. consumers. Additionally, the sale of misbranded drugs, including misbranded stimulants, poses an inherent risk to consumers who purchase those products. Drugs that have circumvented regulatory safeguards may be contaminated, counterfeit, contain varying amounts of active ingredients, or contain different ingredients altogether.”

Nevertheless, it looked pretty easy to buy some Percocets for $400.

The U.S. is no longer a generic antibiotics manufacturer, relying on imports instead. That includes medicines for children’s ear infections, strep throat, pneumonia, urinary tract infections, sexually-transmitted diseases, Lyme disease medication like doxycycline and other infections.

“People should know who is making their generic drugs; it’s overseas manufacturers in China and India, and too many of these companies are violating the FDA’s safety regulations,” said Rosemary Gibson, author of the book China Rx. “The answer to solving this problem is to reshore the generic pharmaceutical manufacturing industry.”

China’s pharmaceutical exports are now in decline, though this is due to a shift in the nature of the SARS2 pandemic.

China has also tried clamping down on private companies giving it a bad name, either in pharmaceuticals – an industry where China sees itself as becoming world class – or in medical equipment.