With draft legislation to force end-to-end mapping of the US pharma supply chains to work through Congress in the year ahead, time is running out to embrace supply chain visibility.
We can’t say we weren’t warned. Regulation to force life sciences to take supply chains seriously has been on the cards for a while. Ever since the incoming Biden administration’s 100-day supply chain review in 2021, the writing has been on the wall regarding regulation to bolster supply chain resiliency in the US.
With the publication of the Department of Health and Human Services (HHS) Essential Medicines Supply Chain and Manufacturing Resilience Assessment report the following May, that seemed a certainty. As we noted at the time, “legislation… now looks inevitable”.
As we head towards the end of the year, though, we now have a better idea of what that legislation might look like. It looks like the Mapping America’s Pharmaceutical Supply (MAPS) Act or, as we like to call it, the SCAIR® Act.
Mapping America's Pharmaceutical Supply (MAPS) Act
Introduced in the Senate in July with support from both Republicans and Democrats, the proposed legislation has been a long time coming.
A pet project of Michigan Senator Gary Peters, it builds on his earlier reports from 2019 (on lowering prescription drug costs) and in March 2023 (specifically on drug shortages). According to Peters, those reports identified an “overdependence on foreign sources for critical drug products” and – crucially – “insufficient visibility into US pharmaceutical supply chains”.
This is what the MAPS Act would address.
As Peters explained, “As we saw first-hand during the COVID-19 pandemic, federal agencies did not have enough visibility into our reliance on foreign manufacturers and other chokepoints in the supply chain, limiting their ability to anticipate and respond to drug shortages and related challenges.
“This bipartisan legislation will provide the federal government with a more comprehensive understanding of the weaknesses in our pharmaceutical supply chains so we can take steps to address them and prevent future shortages.”
The Act would require the Secretary of the HHS to establish a federal database mapping the origin of each drug, the location of its manufacturing facilities and associated inspections and risks to supply, such as recalls and import alerts. It could then make “data-driven decisions” on supply chain threats and investments in domestic manufacturing, says Peters.
It supports another bill the Senator announced the previous month, again with bipartisan support: The Pharmaceutical Supply Chain Risk Assessment Act. That would require the HHS, along with the Departments of Defense and Homeland Security and the White House Office of Pandemic Preparedness and Response Policy, to determine how potential drug shortages can impact national security and public health.
Both proposed pieces of legislation have been referred to the Senate Health, Education, Labor, and Pensions Committee.
Gaining Traction: Support for Pharma Supply Chain Action
The legislation is not without faults or challenges.
Key to the proposed laws, for instance, is not just the belief that there needs to be better visibility of supply chains and their vulnerabilities but also an antipathy to reliance on foreign manufacturers, particularly China.
As Peters’ 2019 report identified (and the 2023 report reiterates): “[M]ore than 80% of the active pharmaceutical ingredients for prescription drugs sold in the US come from overseas, primarily China and India.”
This poses a national security risk, he contends, but – as we’ve discussed before – it will not be easy to address and arguably conflicts with Peters’ other priorities such as affordable drugs.
Onshoring production, particularly of APIs and generic drugs, in supply chains that have evolved over decades and pushed manufacturing overseas for good reasons is unlikely to happen overnight.
Many of Peters’ ideas from his reports, such as prohibiting “unjustified price increases” and encouraging competition in (the already exceptionally tight margin world of) generics are, to put it mildly, easier said than done.
Nevertheless, the proposed legislation has gained significant support – and not just from both sides of the Senate, but outside.
The MAPS bill has so far been endorsed by the Michigan Health & Hospital Association, the American Society of Health-System Pharmacists (ASHP), the American Society of Clinical Oncology, the American Hospital Association (AHA), United States Pharmacopeia, and nonprofit generic drug company CivicaRx.
“Addressing drug shortages is complex and costly to hospitals and health systems in terms of staff time and other resources required to manage the shortages,” noted Lisa Kidder Hrobsky, a Senior Vice President of the AHA.
“A critical step in protecting America’s drug supply chain is understanding its vulnerabilities from the beginning of production to the moment a drug is administered to a patient. The MAPS Act creates a plan for the Food and Drug Administration and the Department of Defense to map the US pharmaceutical supply chain. The Act also includes use of data analytics to identify and predict supply chain vulnerabilities and other national security threats.”
The ASHP also stated it strongly supports the Act. “By requiring the Department of Health and Human services to coordinate with other agencies and the private sector to map the pharmaceutical supply chain, threats to the US pharmaceutical supply chain can be identified and addressed before they place patients at risk,” said Tom Kraus, vice president of ASHP government relations.
A New Supply Chain Data Duty
That private sector involvement will be central to the effectively implementing any MAPS-type legislation.
As the draft legislation makes clear, the HHS is to support efforts “including through public-private partnerships, to map the entire United States pharmaceutical supply chain, from inception to distribution”. It can then use data analytics to identify supply chain vulnerabilities, the bill proposes.
Neither the HHS nor any other agency can get that data on its own. It will need to come from the private sector.
Consequently, while the obligations under the Act nominally fall on the HHS, they ultimately impose a duty on the industry. The nation-wide map of the US pharma supply chain cannot be constructed unless pharma businesses are required to supply detailed information about their supply chains to the HSS.
It can then consolidate the information from across the industry to build its national picture.
To be able to supply that information, pharma businesses need to have it – and in a way they can share. In practice, they need to be doing the supply chain mapping themselves.
The benefits of using pharmaceutical supply chain risk management tools such as SCAIR® that are available to do precisely what the proposed Act requires have long been obvious in terms of improved resilience, inventory optimisation, reputation protection, and investor relations.
Visibility of the supply chain provides a clear competitive advantage.
That’s the carrot for early adoption of mapping, and it’s long been available to those willing to grasp it.
The legislative moves in the US, though, mean we’ll discover what the stick looks like sooner rather than later.
