The Coronavirus has helped expose China’s monopoly on drugs, and medical supplies that are essential for healthcare systems such as worker’s compensation claims.
In testimony this month before the Senate Committee on Homeland Security and Governmental Affairs, Scott Gottlieb, a physician and the former Food and Drug Administration commissioner in the Trump administration, explained in detail the extent of the U.S. pharmaceutical industry’s dependence on China:
About 40 percent of generic drugs sold in the U.S. have only a single manufacturer. A significant supply chain disruption could cause shortages for some of many of these products.
Last year, manufacturing of intermediate or finished goods in China, as well as pharmaceutical source material, accounted for 95 percent of U.S. imports of ibuprofen, 91 percent of U.S. imports of hydrocortisone, 70 percent of U.S. imports of acetaminophen, 40 to 45 percent of U.S. imports of penicillin, and 40 percent of U.S. imports of heparin, according to the Commerce Department. In total, 80 percent of the U.S. supply of antibiotics are made in China.
While much of the fill finishing work (the actual formulation of finished drug capsules and tablets) is done outside China (and often in India) the starting and intermediate chemicals are often sourced in China. Moreover, the U.S. generic drug industry can no longer produce certain critical medicines such as penicillin and doxycycline without these chemical components.
According to a report from the US-China Economic and Security Review Commission, China’s chemical industry, which accounts for 40 percent of global chemical industry revenue, provides a large number of ingredients for drug products. It’s these source materials – where in many cases China is the exclusive source of the chemical ingredients used for the manufacture of a drug product – that create choke points in the global supply chain for critical medicines.
Moreover, when it comes to starting material for the manufacture of pharmaceutical ingredients, a lot of this production is centered in China’s Hubei Provence, the epicenter of coronavirus. Most drug makers have a one to three-months of inventory of drug ingredients on hand. But these supplies are already being drawn down. Among big [active pharmaceutical ingredient] makers in Wuhan are Wuhan Shiji Pharmaceutical, Chemwerth, Hubei Biocause, Wuhan Calmland Pharmaceuticals.
Gottlieb notes that “80 percent of the U.S. supply of antibiotics are made in China.” The sourcing of this estimate is explained in greater detail in section three of the U.S.-China Economic and Security Review Commission’s 2019 report to Congress, titled – Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products.”
The report notes that China is “the world’s largest producer of active pharmaceutical ingredients (APIs). The United States is heavily dependent on drugs that are either sourced from China or include APIs sourced from China.” The report further explains that although India is the world’s leading supplier of generic drugs, India gets 80 percent of its active pharmaceutical ingredients directly from China. The United States also imports 80 percent of its APIs from overseas (primarily from India and China) and “a substantial portion” of its generic drugs “either directly from China or from third countries like India that use APIs sourced from China.”
In other words, almost all pharmaceutical roads lead to China.
Furthermore, the report notes that China’s dominance of the chemical industry and global manufacturing of active pharmaceutical ingredients means that “the world is becoming increasingly dependent on China as the single source for life-saving drugs.”
“The U.S. generic drug industry can no longer produce certain critical medicines such as penicillin and doxycycline, and the APIs needed to make these antibiotics are sourced from China,” the report states.