Roughly one-in-four generic drugs taken by Americans rely on key ingredients from China, according to a report released Tuesday by the US-China Economic and Security Review Commission. The often low-cost staples account for 90% of the medicines used by Americans. Some of the ingredients — found in blood thinners, antibiotics and cancer treatments — are produced only in China.
With China’s recent restrictions on rare earth minerals top of mind, the commission said that similar moves involving drug ingredients “could have drastic consequences for the US healthcare system, causing supply shocks that would result in loss of lives and force hospitals to make tough choices in allocating insufficient supply.”
Congress formed the commission in 2000 to track the national security implications of the relationship between the US and China. As the group’s staff researched the pharmaceutical supply chain, one of the most alarming findings was that the full extent of China’s role in making American medicine was unclear, said commission member Leland Miller. He’s also the founder and chief executive officer of China Beige Book, a data company that tracks the Chinese economy.
“Forget establishing smart policies; we have not figured out how big the vulnerability is,” Miller said. “And we have not figured out how big the vulnerability is because we are unable to secure the data. The government doesn’t have the authority to collect the data.”
Much of the government’s understanding of China’s reach is an estimate because the Food and Drug Administration doesn’t collect data on where the basic building blocks of medicine are made. The group is recommending Congress prepare legislation that would require companies to disclose that information to the FDA. “We’re really, really far away from figuring this out,” Miller said. Even as its control over generic drugs draws criticism, China is working to replicate that success in the production of more innovative treatments, according to the report. Economic incentives and a more lax regulatory landscape have made China an important development partner for brand-name pharmaceutical companies around the world, particularly for conducting “cheap, fast early-stage exploration,” the report said.
A survey last year by the Biotechnology Innovation Organization, an industry trade group, found 79% of 124 biopharmaceutical companies had China-based development and manufacturing partners. Most biotech companies don’t have the money needed to make drugs in the US, a key priority for President Donald Trump.
FDA Commissioner Martin Makary floated the idea last month of lowering the multimillion-dollar fees companies are charged for reviewing new medications if early-stage studies are done in the US, rather than in China. Makary told a gathering of pharmaceutical supply chain experts in Washington that the agency is eyeing upcoming user fee negotiations with the industry that occur every five years to negotiate the potentially lower prices.
China Rising
The Senate report comes as US biotech companies are facing more competition from China.
They’re losing out as drugmakers increasingly license experimental medicines from China, particularly new cancer treatments, though the Trump administration is considering a draft executive order to crack down on such deals. Meanwhile, the US Senate passed a measure as part of a military spending bill last month to restrict the US government from using certain Chinese companies involved in the drug supply chain. A final version negotiated with the House is expected later this month.
China isn’t done yet. According to the report, it is leading in so-called “synthetic biology,” or the artificial creation of biological organisms.
Dominance in that scientific field puts China in an indispensable position on a number of medical fronts, from making amino acids crucial to insulin and antibiotics to developing mRNA technologies and genetically engineered cells. Importantly, it also entrenches the country in every aspect of pharmaceutical production.
“The Chinese synthetic biology industry, for the foreseeable future, will have access to the innovations and know how of global competitors,” the report said.
China isn’t the only country the US relies on for its drug supply. India also plays a large role, producing the bulk of the country’s generic drugs in finished form. While India makes many of the key pharmaceutical ingredients itself, a large share of the necessary materials come from China, according to the report. Also affected are brand-name drugs from Europe, where companies get more than half of their key ingredients from China, the report said.
Quality Standards
Many manufacturing plants in China and India have struggled to meet US standards. They are often cited by FDA inspectors for not adhering to manufacturing practices meant to ensure the safety and quality of medications.
In the end, fixing supply chain vulnerabilities will require a wholesale approach, take years and be difficult to pull off, the authors of the report said. It will require “significant modifications to US and global economic statecraft, tools, and approaches,” including efforts to bolster domestic manufacturing, they said.
While the Trump administration has secured commitments from some large drugmakers to open manufacturing plants in the US, they don’t include generic companies that can’t afford it. Recently imposed restrictions and reductions in research funding at US universities and other institutions also could limit America’s chances at extracting itself from China’s grasp.