Drugs for the People: Rethinking the global pharmaceutical supply chain

“Hydroxychloroquine changed my life,” Michael McClintock told me. An active sixty-year-old who relocated to Tucker County, West Virginia, after more than twenty years in New York City, McClintock realized in February of this year that the inflammation in his joints, particularly his knees, had become too much to bear. His doctor prescribed the generic drug hydroxychloroquine, which is, McClintock explained, the “go-to drug for people with rheumatoid problems.” HCQ is inexpensive, in large part because it was initially used as an anti-malarial treatment and had to be accessible to low-income populations where malaria is prevalent.

McClintock has health insurance, so he paid only a few dollars a month for his prescription. It took a little time for the drug to do its work, but when it did, around the end of March, McClintock felt like himself again. Yet the peak of New York City’s death toll from Covid-19 was only a few weeks away, and the president’s obsession with HCQ as a preventative—or even curative—for the virus causing the pandemic was making McClintock “ridiculously concerned.”

Shortages of hydroxychloroquine, which is today commonly prescribed for rheumatoid arthritis and Lupus, were being reported this spring across the country—and around the world—despite the fact that no reputable science showed that HCQ would keep Covid-19 at bay. By March 31, the international run on the drug had caused the U.S. Food and Drug Administration to add HCQ to its alarmingly extensive drug shortage list.

“I thought it was ridiculous that the leader of the free world was promulgating an untried, untested, snake oil cure for a new virus,” McClintock told me. His pharmacist saved him from the shortage—and the resulting adverse effects of going off the drug—by stockpiling HCQ.

Rachael Marks wasn’t so lucky. When she tried to fill her prescription for hydroxychloroquine at a CVS in the Boston suburbs, she was told she was only allowed to receive twenty-eight pills—for the entire year. Her insurance company had placed a limit on prescriptions. Marks, a thirty-five-year-old senior editor at a Boston-based publishing company, had to ask her rheumatologist to override the quantity limit. All told, her refill was delayed by two-and-a-half weeks.

It seemed like a joke: our reckless president was so transparently obsessed with spinning a global pandemic in his favor that he placed all his bets on a drug that showed no sign of efficacy against Covid-19, and that he wouldn’t resort to himself when he got the virus in October. Why? Because in our interconnected global economy, a fast-spreading amplified rumor can easily distort markets. It took only a couple of inconclusive studies in China and France to spark interest in HCQ. When right-wing commentators on Fox News started promoting the drug as a “game changer,” it was just a matter of time before Trump echoed the misinformation. And, in a blow to the nation’s collective reverence for its medical practitioners, the explosion of HCQ prescriptions, reported the New York Times in April, was in large part due to doctors writing prescriptions for themselves and their families. All systems—from the media to Congress, from the FDA to HHS—designed to keep presidential quackery (or any other kinds) in check, instead joined forces to create a faith-based run on an unproven cure-all. Around the world, Lupus and arthritis sufferers gasped.

But the HCQ story wasn’t just about false advertising. It also illustrated the ways that international pharmaceutical markets can break down due to the geographic concentration of large overseas manufacturers, which operate under a patchwork of laws based on different national interests—and due to, as well, the kind of “market forces” that are manipulated to ensure huge profits for global Big Pharma brands, when the wide availability of affordable generics would better serve public health.

Seller’s Market

What many people who head out to fill a prescription at their local pharmacy might not realize is how much their treatment depends these days on events in India and China. India, for example, the largest manufacturer of HCQ, briefly stopped exporting the drug this spring for fear that sudden international demand would leave domestic users in the lurch. “But of course, there may be retaliation,” Trump said in response to India’s exporting halt, “Why wouldn’t there be?” India promptly—albeit partially—reversed the ban. China and a handful of other countries immediately launched studies to find proof that HCQ could help Covid-19 patients. In the UK, hoarding or exporting hydroxychloroquine (and several other drugs being tested on Covid-19 patients) were both banned. The shortage was in part the result of the Trump administration’s intervention in the first place. But it was also the result of a global supply engine that is out of the United States’ single-handed control.

What many people who head out to fill a prescription at their local pharmacy might not realize is how much their treatment depends these days on events in India and China.

Stephen Hahn, who was appointed commissioner of the U.S. Food and Drug Administration last December, issued an absolutely unfounded Emergency Use Authorization for HCQ only three days before the FDA put the drug on its shortage list. An EUA, according to the FDA, permits the use of unapproved drugs or the use of approved drugs for unapproved purposes “in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions.” The president himself was taking HCQ in April as a preventative—or at least he said he was. Who can know if his promotion of the drug was also related to his family trusts’ investment in Sanofi, the French manufacturer of Plaquenil, the brand-name version of hydroxychloroquine?

Nevertheless, at least one company attempted to wrest part of the HCQ business from India: in March, Mylan, a global pharmaceutical manufacturer, announced they would resume production at their factory in West Virginia, ninety minutes up the road from where Michael McClintock lives. Mylan announced its intention to “do its part in support of public health needs amidst the evolving Covid-19 pandemic.” On June 15, the FDA finally revoked the emergency use authorization for hydroxychloroquine. But the demand remains high.

Meanwhile, hydroxychloroquine wasn’t the only drug in short supply during the pandemic. Global lockdowns, work disruptions, and the concentration of supplies in a handful of countries set the stage for multiple rolling drug shortages. Because Covid-19 originated in China, the world’s largest supplier of active pharmaceutical ingredients (APIs); and because India, the world’s largest manufacturer of generic drugs, gets nearly 70 percent of its APIs from China, the supply chain was suddenly alarmingly vulnerable. Penicillin, antibiotics, and painkillers like ibuprofen and aspirin all pass through China and India.

The availability of medicines can be shaky even in non-pandemic times. In 2008, the Beijing Olympics caused a spike in drug shortages and prices: in order to clear the famously foul air over Beijing, officials sank $20 billion into cleaning up emissions, in part by shuttering dirty factories. Heavy industry was affected, as were plants that made pharmaceutical ingredients. Global pharma companies were forced to pay higher prices for APIs or put production on hold. South African manufacturers, who operate in a fixed price market, as well as Indian manufacturers, were severely affected. This lesson was learned again in 2013 when Xi Jinping came to power in China. He vowed to bring the country’s corrupt industrial polluters into line with new ethical and environmental regulations. The rolling inspections that resulted have made China’s provision of APIs less reliable and more expensive, a problem compounded by the concentrated reliance on the country for them.

Other disease outbreaks can also cause drug supply shortages. Last summer, the outbreak of a deadly African swine fever in China caused the mass death of as many as 150 million infected pigs. This resulted in a shortage of the blood thinner Herapin, derived from pig intestines, which is used by heart attack patients.

Problems with drug affordability, quality, and access—as the FDA’s extensive list of drug shortages shows—are so common in the United States that last October, California Congresswoman Anna Eshoo, chair of the Energy and Commerce Health Subcommittee, hosted a hearing on the “hidden health care crisis in our country”: the inadequacies of the drug supply chain. It “will affect us all, and we’re not talking about it,” she said in an opening statement. The representative highlighted three causes of the crisis: shortages that cause rationing; “subpar manufacturing” that causes recalls and shortages; and “over reliance on foreign production.” In a statement on her website, the congresswoman characterized the problem as a “public health and national security risk.”

Shortages are often caused by the consolidation of manufacturing in one or two countries (China and India) because manufacturing elsewhere is a two-fold problem: Big Pharma keeps profits high by keeping costs low—and keeping it in countries where environmental standards are compromised, labor costs are below the living wage, and monitoring quality can be farmed out to a pliant regulatory agency. But offshoring the most challenging aspects of drug manufacturing has only ghettoized drug manufacturing countries while boosting Big Pharma’s profits. The savings for manufacturing overseas in India or China, when added up, can be as high as 30 to 40 percent, according to Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER) at the FDA.

During this year’s presidential election season, one could sense that American voters dislike and distrust the big drug companies. Senator Bernie Sanders could count on his audiences to roar when he called for stricter regulation of the “crooks” who run Big Pharma. President Trump, as well, incorporates anti-pharma rhetoric into his standard stump speeches. The current state of the country’s pharmaceutical affairs is largely the result of the industry’s lack of foresight and its profound greed—as well as the federal government’s unwillingness to regulate the renegade industry.

The American political debate about Big Pharma has gone around in circles for many years. Throw a stick at any pharmaceutical executive, and he’ll squeal, “but we lead the world in research and development!” R&D has become the defense for every industry foible, failure, and excess. Drug prices are so high, Big Pharma says, because the cost of research and development is so high. We can’t lower drug prices, they tell Congress, because the reduction in revenue would end America’s drug innovation. And therefore, raising drug prices would end the global dominance of the American pharmaceutical industry. Legislators tremble at the thought of losing this imagined exceptionalism. As a result, nothing is done about regular Americans bleeding to medicate their children, their elders, and themselves. Those with good insurance can feel somewhat insulated from sky-high drug prices. Those without might be shocked by the cost of something as simple as a rabies vaccine, which can run to many thousands of dollars.

A recent STAT study of Pfizer and Johnson & Johnson, two of the largest pharmaceutical companies in the United States, shows that the costs of innovation make up a much smaller percentage of the companies’ budgets than they’ve been letting on. In fact, historically, most of the industry’s innovation is done by the National Institutes of Health or small companies that are subsequently acquired by Big Pharma. Yet the industry uses dramatic language whenever a Senate or House bill threatens to rein in drug prices: the bills are an “innovation killer” or will cause a “nuclear winter for the U.S. biopharmaceutical ecosystem.” It seems the pharmaceutical industry has largely forgotten why it makes drugs in the first place: to save lives.

Patents Not Pending

We’ve become accustomed in the United States to regulators and courts becoming ever more corporate-friendly. For contrast, it’s useful to take a look at how India’s Supreme Court has done its part to remind Big Pharma of who it serves.

On April 1, 2013, the Indian High Court handed down a decision in Novartis v Union of India & Others. The case, which took seven years to wind its way through the Indian judicial system, was brought by the Swiss mega pharmaceutical company Novartis, with the purpose of patenting the drug Gleevec in India, where generic forms were already being sold. Novartis’s successful application could have increased the price of the drug, used to treat patients with chronic myeloid leukemia and gastrointestinal cancer, from about $2,500 a year to as much as $70,000 a year, essentially making a lifesaving drug inaccessible to millions of middle- and low-income people. But India’s Supreme Court said no. The decision rejected Novartis’s claim that their branded drug promised therapeutic improvement over the generics already accessible. As noted by the Intellectual Property Watch website, “The Supreme Court affirmed that India has adopted a standard of pharmaceutical patenting that is stricter than that followed by the United States or the EU.”

The Novartis decision was made possible by a 2005 Indian patent law, passed after sustained pressure from international forces, which for the first time permitted patents on medicines, but narrowly defined what drugs (or drug treatments) qualified. (Previously, only the process of making a particular drug had been patentable.) Section 3(d) of the patent law states that a patent can only be issued if the discovery “results in a new product or employs at least one new reactant.” Simple enhancement of a drug’s efficacy or its application to another disease is not enough. The new law descended from a reexamination of colonial patent law after India’s independence in the late 1940s, with the goal of focusing laws on domestic concerns, and away from those of the empire.

The move prevented the popular Western practice of evergreening: slightly altering a drug formula just before a patent expires in order to receive a new patent and prevent a lower-priced generic drug from being brought to market. Evergreening props up pharmaceutical profits but prevents lower-income populations from ever benefitting from the drugs. It keeps enormous swaths of the global population, without insurance or financial resources, from accessing lifesaving treatments.

It seems the pharmaceutical industry has largely forgotten why it makes drugs in the first place: to save lives.

For India, and by extension the developing world, the decision meant that the country’s $33 billion a year industry of supplying affordable medicine to the low-income patients of the world would continue. But the decision was not merely financial. “The affordability of pharmaceuticals and lack of a comprehensive health insurance system,” William J. Bennett, then a professor at Washington University in St. Louis, wrote in 2014, “have heavily influenced the evolution and development of India’s patent laws.” If only the same could be said of patent laws in the United States. And yet the seemingly radical position of the Indian courts is a reminder that a global drug supply chain could make the needs of the population it serves a priority.

The Novartis case was a watershed moment, but there’s a long history of global pharmaceutical companies trying to use the courts to crack into the Indian drug market, which serves the country’s population of 1.4 billion. In 2014, the Indian Supreme Court ruled that the German pharmaceutical giant Bayer could not block the sale of a generic version of its cancer drug, Nexavar, in India. The existing generics were the result of a decision two years earlier; the Court ruled that if India issued a patent to Bayer, the drug would be unaffordable to a majority of Indians. These cases have established jurisprudence that enshrines the affordability of lifesaving drugs in India—and, as the state of global pharmaceutical supplies would have it—for some low-income Americans as well, such as those who benefited from the low cost of hydroxychloroquine.

Pharma Co. Logic

Tracy Hurley Martin is one of the lucky Americans: she has health insurance. But that didn’t prevent her from spending a dozen hours on the phone trying to fill her prescription for hydroxychloroquine in March. “I was freaking out,” Hurley Martin told me. “It’s not a drug you jump on and off.” She’s been taking HCQ for Lupus since 2014; the alternative is painful flare-ups that can cause irreversible organ damage—or taking steroids, which can have serious side effects like psychosis. She tried pharmacies all over the world, including Israel, but, when she was down to only two or three pills, she found a pharmacy on Long Island that still had a supply of HCQ. She rented a car and drove two hours each way.

The drug insecurity of low-income Americans is at crisis levels. And now even those with health insurance live with the fear that lifesaving medicines will become scarce. While the pandemic has shined a light on the fragility of the United States’ drug supply chain, it will most certainly also exacerbate it. Several months since the first confirmed cases of Covid-19 in the United States, doctors were finding that a certain percentage of these patients were not recovering. And a small percentage of those who did recover sustained permanent damage. One doctor leading a team of researchers estimates that less than 10 percent have intermediate-term lung damage. Others are anticipating that some patients will experience long-term effects from the disease in their heart, immune system, and brain. All of these ailments will increase low- and middle-income Americans’ reliance on a brittle and inaccessible health care system—and a mercurial drug supply chain.

Even worse, it’s beginning to emerge that growing immunity to antibiotics—and vulnerability to antibiotic-resistant superbugs—is being heightened by unnecessary antibiotics use among Covid-19 patients. As Dr. Anthony Fauci noted in an interview more than two years ago with the Pew Charitable Trusts, “Certain characteristics of the antibiotic market, such as short treatment duration, generally low prices, and restricted access to consumers, disincentivize pharmaceutical companies from making investments in creating new drugs.”

So long as Big Pharma chases Big Profit, public health will be jeopardized by a sclerotic and unresponsive global drug supply chain. While countries like India have codified into law ways to protect low-income populations from the industry’s evergreen greed, their ethical model is also fraught with labor and environmental problems. (India’s threadbare public health infrastructure also means that, regardless of low drug prices, many Indians are routinely denied access to care.) What the U.S. government should do—what it has the resources but not the will to do—is develop a new model for protecting public health from the ravages of this pandemic and new diseases to come. There were many people in the health sciences, and in government, who issued early warnings about the kind of global pandemic that finally hit in 2020. A government that put science and health ahead of rumor-mongering TV commentators could make great strides toward preventing subsequent disasters. But in this moment of hucksters and cons, and undue deference to giant pharmaceutical companies, don’t hold your breath.

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