TRANSPARENCY

Awareness across the entire medical product supply chain ecosystem requires actions by regulators, suppliers, producers, distributors, and providers. Issues that lead to risks and supply shortages can be spatially and temporally distributed over the supply chain. Without the ability to analyze the dynamics of the entire system, it is not possible to pinpoint problems and identify remedies. Consequently, efforts are needed to collect, compile, and disseminate medical product supply chain data from the various stakeholders to increase end-to-end awareness that will facilitate identification and mitigation of risks. Toward this end, the committee identifies upstream transparency efforts as a critical first step to increasing the resilience of medical product supply chains.

Several countries have already started taking actions toward greater transparency in pharmaceutical supply chains. For example, in New Zealand, the name and location of active pharmaceutical ingredient (API) and finished dosage form (FDF) manufacturers, as well as the product sponsor and marketer in the country, for prescription drug products are collected and made public via a centralized, public access website (Schondelmeyer et al., 2020). Schondelmeyer and colleagues noted that making these data publicly available has not appeared to have commercially harmed manufacturers or marketers.

Data Types to Increase Upstream Transparency

The following are important types of data identified by the committee and others that could be made transparent because of their role in addressing the gaps in understanding where and how medical products are made:

• complete registration and listing requirements,
• sourcing information,
• manufacturing location,
• drug and medical device manufacturing volume and capacity,
• information on increases in demand and reported disruptions, and
• risk-based Site Selection Model score.

Manufacturers and the U.S. Food and Drug Administration (FDA) already have much of these data in their systems, per FDA requirements. However, these data are not shared with the public or other U.S. government agencies or even regulatory agencies in other countries. Making certain data submitted to the FDA transparent to the public may also warrant certain legislative changes. For instance, it might necessitate a statutory amendment in the form of a change to section 301(j) of the Food, Drug, and Cosmetic (FD&C) Act (21 U.S.C. § 331(j)), which would be required only to the extent that the data that are proposed be disclosed outside the U.S. Department of Health and Human Services (HHS) are deemed as “concerning any method or process which as a trade secret is entitled to protection.” In addition, 18 U.S.C. § 1905 (the Trade Secrets Act) would have to be amended to the extent the disclosed information “concerns or relates to … trade secrets, processes, [or] operations … or to the identity [or] confidential statistical data” of any company, unless disclosure of that information is otherwise “authorized by law.”

Complete Registration and Listing Requirements

Some foreign medical product manufacturers fail to register their facilities because they do not ship their products directly to the United States. Such entities should be required to report complete registration and listing requirements for each of their products, as also recommended by the recent 100-day review of Executive Order 14017 (The White House, 2021).

Sourcing Information

Supply chain security requires robust reporting of sourcing information—including volume information—by both finished product manufacturers and API manufacturers. For example, drug manufacturers should be required to report all sources of APIs and major excipients, and API manufacturers should report sources of raw materials. At a minimum, drug manufacturers should include the facility FDA Establishment Identifier (FEI) of the sites that processed the API and performed the finish-and-fill operation. In this vein, the 100-day review of Executive Order 14017 recommended the requirement that the labeling of APIs and finished product labeling include original manufacturers (The White House, 2021). Also, when the FDF manufacturer receives an API from multiple sources it should report the percentage of the API it uses that comes from each API source. These data would vastly increase the ability of FDA, health systems, and third parties to identify and remediate pharmaceutical supply chain risks.

Analogous data are needed from manufacturers of medical devices to facilitate supply chain resilience measures. Specifically, device producers should be required to report sources of major components, including percentages of supply for multisourced components. Ideally, suppliers of components would also report their suppliers to facilitate tracing of supply chains. However, where medical device supply chains rely on general electronic and other types of components and materials, it will be increasingly difficult to compel sourcing disclosure under medical product regulatory requirements. At a minimum, device manufacturers should be able to provide information about the top layers of their supply chains. Other means may be needed to identify vulnerabilities in lower tiers.

Manufacturing Location

Visibility into the locations where medical products and their constituent components are manufactured is essential to assessing supply risks and formulating policies to address them. Critical information includes the manufacturing locations for FDFs, APIs, and major excipients for drugs and the major locations of primary manufacturing and final assembly steps for medical devices that are intended for sale in the United States.

FDA’s FEI is an existing tool that can be used to more effectively track manufacturing location. FDA assigns FEI numbers to uniquely identify firms associated with FDA-regulated products.¹ Because the FEI number indicates the manufacturing location of each product, researchers can associate location data directly with other key FDA datasets, such as the Inspection Classification Database.² The FEI number is also used in FDA’s Drug Establishments Current Registration Site, which is updated daily to include all currently registered establishments that “manufacture, prepare, propagate, compound, or process drugs that are distributed in the United States or offered for import to the United States” (FDA, 2020). However, although this platform makes information about all the sites for which a given firm may be approved to manufacture any product publicly available, it does not clearly indicate where a specific product is actually made. For instance, searching for Pfizer in this database will yield a list of all of Pfizer’s FDA-approved sites, but will not provide information about which products are manufactured in which locations. To be useful to health systems, pharmacies, providers, and consumers the FEI data described in this section must also be linked to individual National Drug Codes. The product specific detail is necessary to assess product risk factors and to predict and respond to medical product shortages.

Drug and Medical Device Manufacturing Volume and Capacity Information

Drug and medical device manufacturing volume information is another type of data that is essential to risk assessment and can aid in identifying and resolving supply chain bottlenecks. For example, the manufacturer of a FDF of a drug should be required to disclose not only the sources of the API it uses in the FDF, but also (when the FDF manufacturer receives API from multiple sources) the volume of API it receives from each source. Analogously, a device manufacturer should report both sources and volumes from component suppliers.

Information about manufacturing capacity—that is, how much the company is actually capable of making, not merely how much they decided to make—is potentially even more valuable than information about manufacturing volume, because companies may have unused capacity that could be used during shortages. The HHS Assistant Secretary for Planning and Evaluation’s (ASPE’s) economic analysis of shortages identified inadequate capacity as a key driver of shortages after finding that many manufacturers had expanded their number of products without a corresponding expansion of capacity (Haninger et al., 2011).

Information on Increases in Demand and Reported Disruptions

Information from manufacturers about increases in demand and reported disruptions is another category of information that should be transparent (The White House, 2021). A caveat is that manufacturers could experience increased demand for reasons unrelated to shortages, so it is important to coordinate manufacturer-level data about externally driven demand surges. While the reporting of disruptions is already required for lifesaving drugs and devices (see the FD&C Act, sections 506C and 506J),³ it could be expanded to include increases in demand or extended beyond lifesaving products.

Risk-Based Site-Selection Model Score

Relevant information on drug quality that is included on prescription labeling would enable better decision making on the part of health systems and increase consumer awareness. FDA guidance on package-level standardized numerical identifiers is one step toward implementing mitigation measures to secure drug supply chains (FDA, 2020).

In 2005, FDA implemented a risk-based approach to drug facility surveillance to prioritize inspections of the highest-risk facilities, defined as those with the “greatest potential for public health risk should they not comply with established manufacturing quality standards.”⁴ Facilities are prioritized for inspection using the risk-based Site Selection Model, which evaluates risks related to API and FDF quality that can arise from not following current good manufacturing processes (CDER, 2018).⁵ Specific risk factors considered by the Site Selection Model are detailed in Box 6-2.

BOX 6-2

FDA’s Site Selection Model: Risk Factors.

Within FDA’s Office of Pharmaceutical Quality, the Office of Surveillance prioritizes sites for surveillance inspections by entering the names of the facilities selected by the Site Selection Model into the Center for Drug Evaluation and Research’s (CDER’s) Catalog of Manufacturing Sites, which are sites that are subject to routine inspection,⁶ thus producing CDER’s Site Surveillance Inspection List (CDER, 2018). This list ranks subject sites by their Site Selection Model score so the highest-risk sites can be prioritized for surveillance inspection by the Office of Regulatory Affairs. Thus, the Site Selection Model provides FDA with a measured indicator of the level of manufacturing quality or safety risk associated with a given manufacturing facility that is based on data only possessed fully by FDA. This information is not publicly available, and Site Selection Model scores are not divulged to the manufacturers. FDA’s Center for Devices and Radiological Health (CDRH) also uses a site-selection, score-based approach to rank medical device manufacturing facilities for site inspections by priority (Mulero, 2018).

ANALYTICS

Data are not information and can be misleading, so mandating data collection and disclosure is only the first step. To enable stakeholders in medical product supply chains to make better decisions, data must be compiled into useful, meaningful forms—such as risk assessments, quality ratings, summary statistics, and other results from analyses.

By comprehensively understanding the risks and vulnerabilities at multiple levels—and from multiple perspectives—of medical product supply chains, it is possible to identify and prioritize mitigation, preparedness, and response actions. The types of data discussed earlier in this chapter could be used by researchers and others to identify risks and vulnerabilities, improve situational awareness and predict potential shortages, conduct research on supply chain resilience, and monitor the effects of increased transparency.

As with risk assessment, making data public could facilitate third-party rating systems. In 2013, Woodcock and Wosinska published recommendations for transparency regarding manufacturing quality as well as an FDA-provided quality rating system for medication manufacturing (see Chapter 6 for an additional discussion on quality as it relates to mitigation measures). FDA’s report, Drug Shortages: Root Causes and Potential Solutions, provides recommendations for enduring solutions to shortages, including “developing a rating system to incentivize drug manufacturers to invest in quality management maturity for their facilities.” To date, FDA has not taken steps to provide a quality rating system (FDA Drug Shortages Task Force, 2020). Manufacturer participation in FDA’s Quality Metrics Program is voluntary (FDA, 2021b). Increased transparency is required for a third party to provide a rating system because only FDA currently has access to all of the necessary data.

Third parties could develop their own rating scales for risk and quality using the publicly accessible data if manufacturers of medical products were required to disclose their manufacturing locations and FDA shared the risk-based Site Selection Model scores and the Office of Pharmaceutical Quality scores for facilities that manufacture medical products sold in the United States. As called for by other studies, credible ratings of medical product suppliers will help health systems and group purchasing organizations factor supply chain resilience into their purchasing decisions (see Chapter 7). This in turn could help to create a market for reliability, which will reduce the ongoing shortage situations in low-margin products.

Making information about medical products’ sourcing, manufacturing location, quality, and risk publicly available provides opportunities to use academic researchers and technology firms to devise innovative ways to mine these data for insights. For instance, machine learning and other AI techniques may be very useful in highlighting risks no one was even looking for.

COMMUNICATION

Timely and effective communication among stakeholders in medical product supply chains is important to mitigate, prepare, and respond to medical product disruptions or shortages. Early and accurate communication fosters trust, preempts misinformation, and ensures appropriate expectations with the public and stakeholders. A recent report by the International Society for Pharmaceutical Engineering, Engage with Health Authorities to Mitigate and Prevent Drug Shortages, further describes the pathways for a medical product manufacturer to notify and collaborate with health authorities and other stakeholders in medical product supply chains to minimize the effect of medical product disruptions or shortages (Tolomeo et al., 2020).

Meaningful transparency requires shared data to be standardized within interoperable systems if the information is to yield actionable insights (USP, 2020). Establishing a publicly available database to share and summarize critical data for medical products would provide a powerful platform for transforming data into action and will enable health system purchasers to reduce their risk of supply disruptions or enable government officials to determine how and where to spend resources to protect the public health from such disruptions. This publicly available database should be end to end, and could be used to yield meaningful value from the information by a broad range of actors within and beyond FDA, including government, regulators, purchasers, patients, patient advocates, researchers, public health workers, legislators, and international organizations. It could link to external variables, such as weather events and social media, and serve as an “early warning” or “surveillance system” about potential or existing disruptions to medical product supply chains.

The Agricultural Market Information System (AMIS)⁷ provides an instructive example of a platform to enhance transparency and policy response for supply chains. AMIS assesses global food supplies and has helped to increase transparency and coordination in global food markets to prevent unexpected price hikes and to strengthen global food security. The AMIS Secretariat produces monthly updates of the food market situation and regular food market outlooks, carries out independent data validation, strengthens national capacities for food market assessments, and in the event of instability, coordinates appropriate policy measures (AMIS, 2015).

CURRENT EFFORTS TO INCREASE AWARENESS

Recent reports have called for increased awareness of medical product supply chains through an array of recommendations (see Appendix B). In 2021, a set of reviews pursuant to Executive Order 14017, “America’s Supply Chains,” included a recommendation for HHS to better track information on pharmaceutical manufacturing facilities and the sourcing of APIs (The White House, 2021). If implemented, this recommendation aimed to improve supply chain transparency on “the sources of drug manufacturing and the quality of the facilities that make them” for the benefit of distributors and purchasers (The White House, 2021).

In the report National Strategy for a Resilient Public Health Supply Chain from July 2021, HHS and other agencies outline the goals and objectives of supply chain visibility. Critical to this goal are policies that increase the U.S. government’s ability to monitor and manage the supply chain through visibility and engagement. Visibility should be promoted through government-led efforts to maintain the “visibility and analytics needed to anticipate, prevent, mitigate, and respond to supply chain shortages and disruptions.” Engagement requires government coordination with partners in both the private sector and state, local, tribal, and territorial governments (DoD et al., 2021).

In 2019, the U.S. Pharmacopeia’s (USP’s) Global Policy Position, Key Elements to Building a More Resilient Supply Chain highlighted the need to enable more transparency and data sharing (USP, 2019). The report calls for increasing transparency across the supply chain by expanding reporting requirements for health care providers and the industry to include indicators of potential or existing drug shortages, as well as requiring manufacturers and ingredient suppliers to monitor and report their ingredient quality and manufacturing capacity. To improve global cooperation, the report recommends that countries’ regulators should engage in greater information sharing and establish regulatory recognition and reliance agreements.

In a subsequent 2020 report, USP identified multiple opportunities and benefits for manufacturers, regulators, pharmacies, and health systems to increase transparency in the supply chain (USP, 2020). The report recommended that manufacturers should track and share information about (1) the types and volume of medical products they produce, (2) the sources of their raw ingredients and other essential materials, and (3) their distributors and distribution channels. To mobilize resources and leverage combined regulatory capacity across countries, regulators should (1) have access to information about manufacturers’ sites, products, volume, and capacity and (2) share information with other regulatory authorities. To gain greater visibility into the demand for medical products—as well as the supply—pharmacies and health systems should track and share information about (1) electronic health record data about prescriptions, (2) medications dispensed, and (3) drug shortages experienced (USP, 2020).

USP’s 2020 report also explores a range of voluntary and mandatory approaches to increase information sharing across medical product supply chains. One voluntary approach is for procurers to put financial incentives in place for manufacturers and distributors to share information. Another is to use public–private partnerships to help balance the need for more information sharing in the industry with the need to protect commercial interests (USP, 2020). However, unless virtually all of the industry stakeholders were willing to participate in voluntary strategies, then complementary mandatory approaches may be required to address critical information gaps in the supply chain. Mandatory approaches include instituting reporting requirements through statutory or regulatory changes. To help alleviate the burden of increased reporting requirements on manufacturers, USP suggests using a risk-based framework that prioritizes reporting requirements for medicines that are essential, at risk of shortage, or subject to quality concerns (USP, 2020). Regardless of which approach—or a hybrid—is used, it is critical to predetermine which information will be collected and how it will be shared.

RECOMMENDATIONS

Awareness measures to promote transparency, analytics, and communication are the foundation of any serious effort to increase the resilience of medical product supply chains. Although the public and private measures listed above have made progress in collecting and using data to assess the risks of medical product supply chains, gaps still exist, and the potential power of the U.S. federal government to achieve greater transparency through required disclosure of entities already under its jurisdiction is far from fully realized. The committee recognizes that there are multiple approaches to increasing awareness across the medical product supply chain ecosystem and different types of data that may be important to collect, compile, and disseminate on a routine basis (to enable strategic decision making to mitigate risk) or during a public health emergency (to enable effective response). Toward this end, the committee proposes two concrete recommendations that take a first step toward increasing awareness.

Recommendation 1 (Public Transparency) calls for quality transparency (via risk-based Site Selection Model scores becoming public²³) and supply chain transparency (via all FEI location data made public for where products are made). These two dimensions of transparency (quality and supply chain) each have different sources. Quality data are currently kept by regulators, but not made transparent to the public or manufacturers and distributors. Supply chain data are currently kept by manufacturers, but not made transparent to the public or regulators. Recommendation 1 (Public Transparency) also calls for volume and capacity transparency to further assess risks directly related to medical product supply chains and to evaluate strategies for ameliorating these. Transparency is required both from manufacturers and from regulators so the public can be informed about their medical products and are empowered to act upon these data through data analysis and potentially put public pressure on regulators and lawmakers. This initial step toward public transparency of data regarding where and how medical products are made could facilitate the collection and dissemination of additional medical product supply chain data. Furthermore, public transparency could facilitate information sharing among federal agencies and other regulatory authorities around the world. Currently, some data might be available to some agencies and other regulatory authorities—but not to all. If medical product supply chain data were made publicly available, lack of information sharing and situational awareness would be less of a barrier.

These data will enable mapping of medical product supply chains, identifying vulnerabilities such as supply concentrations, and assessing what medical products are most at risk. To facilitate use of this sourcing and quality information, the committee proposes the complementary Recommendation 2 (Public Database). This database will provide a user-friendly site for the raw data and statistical summaries collected under Recommendation 1 (Public Transparency) and other transparency efforts. This database could be used by government agents, researchers, health care systems, third-party rating services, and others engaged in the analysis of the risks inherent in medical product supply chains. Because the results of analysis such as ratings and risk assessments are likely to be more useful to decision makers than the raw data alone, this database should also contain such results.

Recommendation 1 (Public Transparency). The U.S. Food and Drug Administration (FDA) should take steps to make sourcing, quality, volume, and capacity information publicly available for all medical products approved or cleared for sale in the United States. These steps include

a.

The manufacturer for a pharmaceutical drug should be required to publicly disclose the manufacturing location, in particular the FDA Establishment Identifier (FEI), the city, and the country, for the finished dosage form (FDF), active pharmaceutical ingredient (API), major excipients, and major packaging and delivery devices for all pharmaceutical drugs sold in the United States. API manufacturers shall be required to publicly disclose the sources of raw materials. This information should be made available on the labels for all pharmaceutical drugs and in a publicly accessible database. The National Drug Code should be associated with the primary FEI (where a majority of the volume is manufactured) in the database.

b.

FDA should make publicly available their risk-based Site Selection Model scores for all pharmaceutical drug manufacturing facilities that make drugs sold in the United States. FDA should also make public the Office of Pharmaceutical Quality (OPQ) scores. The risk-based Site Selection Model scores for the API and FDF plants (e.g., FEIs) should be made available on the labels for all pharmaceutical drugs and in a publicly accessible database, and the OPQ scores should also be included in this database.

c.

The manufacturer for a medical device should be required to publicly disclose the manufacturing location, in particular the FEI, the city, and the country, for the primary manufacturing and final assembly steps for all medical devices and major components sold in the United States. This information should be made available on the labels for all medical devices and in a publicly accessible database. The part number should be associated with the primary FEI (where a majority of the volume is manufactured) in the database.

d.

The risk-based Site Selection Model score for the primary manufacturing and final assembly plants (e.g., FEIs) should be made available on the labels for all medical devices and in a publicly accessible database.

e.

Sourcing and quality information should be provided as part of the pharmaceutical drug or medical device approval or clearance processes and on an ongoing basis in order to retain a license or clearance to sell in the United States.

f.

Drug volume data reported to FDA, as mandated by the CARES Act, should be made available in a publicly accessible database. This requirement should be expanded to include reporting of capacity, in addition to volume, and should be required for medical devices, in addition to drugs.

g.

To the extent that amendments to the Trade Secrets Act at 18 U.S.C. § 1905 and to the Food, Drug, and Cosmetic Act at 21 U.S.C. § 331(j) are necessary to permit public disclosure of all the sourcing, quality, volume, and capacity information referenced in this recommendation, Congress should make such amendments.

Recommendation 2 (Public Database). The U.S. Food and Drug Administration (FDA), in cooperation with other U.S. government agencies, should establish a publicly accessible database containing the supply chain information acquired for medical products. FDA, in cooperation with other U.S. government agencies, should use the information on medical product supply chains it acquires to

a.

Understand better the vulnerabilities of medical product supply chains as a whole.

b.

Perform risk assessments regarding the risks to the total supply of particular medical products in both normal and emergency scenarios.

c.

Coordinate, conduct, and compile research on the resilience of medical product supply chains, including by funding independent research that uses the established database.

d.

Track the ways in which increased transparency, and the prediction of potential medical product shortages through data tracking, support improved supply chain resilience and functionality.

e.

Incentivize the establishment of third-party rating system(s) for risk and quality.

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