As geopolitics drive interest in reshoring to a fever pitch, the United States Pharmacopeia (USP) warns that it is focusing on drug building blocks known as critical starting materials, increasing the push for domestic drug production.
In a new Supply Chain Vulnerabilities Update (PDF), USP, a nonprofit organization that helps set quality standards for pharmaceuticals, highlighted 100 acute and chronic medicines that are currently at risk of supply gaps and other disruptions, although not all are in short supply. According to USP, this is due to bottlenecks in the production chain, particularly at upstream stages focused on activities such as raw material sourcing.
Overall trends show that approximately 30% of the drugs on USP’s latest list are currently in short supply, according to the U.S. Food and Drug Administration. Many of the treatments in the lineup are considered essential by the World Health Organization (FDA) and include multiple hospital drugs, chemotherapy, steroids, anesthetics, and even medications for chronic conditions such as ADHD, diabetes, and heart disease.
Notably, 63% of the drugs cited for supply chain vulnerabilities were injectables, a dosage form that USP noted had “inherent manufacturing complexities.” According to USP, oral solid medications such as tablets and capsules are the second largest group of vulnerable drugs, accounting for 22% of the list.
In perhaps the biggest banner of the updated list, USP noted that nearly half (48%) of the included drugs have at least one key starting material (KSM) manufactured in only one country, which the organization considers a “potential point of failure.”
The primary starting materials are the basic compounds used in the synthesis of active pharmaceutical ingredients (APIs), which are then used to manufacture drugs.
While much of the focus in manufacturing resiliency focuses on the production of APIs and final dosage forms, from a USP perspective, KSM processes “represent the earliest, and often the most concentrated, layer of the pharmaceutical supply chain.”
“Consider that a drug product may have numerous final dosage form or API manufacturers across multiple countries, all of whom may source the same KSM from a single facility,” USP explained in the report. “In that scenario, any disruption to the supply of KSM, whether due to export restrictions, natural disasters or regulatory measures, would ripple through the entire downstream chain simultaneously.”
USP added that no particular drug class or formulation type is uniquely affected by the reported supply chain vulnerabilities. However, three new cases have been added to the list to take into account “hidden geographic concentration risks despite low measured shortage risks”.
These drugs are Tamiflu (oseltamivir) capsules, famotidine injection to reduce stomach acid, and the blood pressure drug metoprolol tartrate injection, which USP added to the list because “at least one KSM is produced in a single region.”
USP’s latest U.S. Drug Vulnerability Update comes after last year’s report, which evaluated drugs based on “need, demand, and supply chain vulnerabilities in the finished dosage form.” The group said the update aims to demonstrate that even if a pharmaceutical company has multiple API and finished product manufacturers, without more diverse KSM sourcing, “any perceived redundancy is illusory.”
The COVID-19 pandemic has highlighted the fragmented nature of many pharmaceutical supply chains, and recent U.S. trade policies under the second Trump administration have further increased efforts by both pharmaceutical companies and the government to secure greater production autonomy for healthcare products.
Most recently, that push for reshoring has taken the form of President Donald Trump’s threat of import tariffs, and took shape into a more concrete framework earlier this month when the president introduced 100% tariffs on patented medicines under Section 232 of the Trade Expansion Act of 1962, with a number of caveats and carve-outs.
But in a sign of the policy’s overall goal of restoring U.S. manufacturing, 16 major pharmaceutical companies that entered into most-favored-nation (MFN) price agreements with the administration, many of which included manufacturing pledges, will be exempt from tariffs through 2029. Companies can also secure lower tariff rates of 20% by entering into “onshoring” agreements with the White House.
Many of the industry’s biggest companies are investing heavily to ramp up drug manufacturing in the United States, and the administration’s worst tariff penalties are likely to be reversed.
That said, mid-sized pharmaceutical and biotech companies may be more vulnerable to the latest tariff rates because they have more limited resources to make large production expenditures in the United States. The recently formed Midsize Biotechnology Alliance of America (MBAA) suggested in early April that the president’s plan would create an “unfair two-tier system” for drug companies of various sizes.
