Packaging, supply and logistics
Calls to onshore the production of certain medical supplies have been a result of the pandemic, but it would come at the cost of higher prices.
For the report, Ball and his colleagues interacted with both pharma companies and medical device manufacturers, and on average he says the medical device companies had no concerns about new laws requiring disclosure of where things are made. “Pharma companies were very different in their approach,” he explains. “Generally, they want cost and location to remain secret. In my opinion, the FDA is making a big push to cut the cost of drugs and it is not in their interest to do what we are recommending, as people might look more at quality, which could push up the cost of healthcare.”
“[The] FDA is making a big push to cut the cost of drugs and it is not in their interest to do what we are recommending, as people might look more at quality, which could push up the cost of healthcare.”
Globalisation is a ghost story When supply chains break down, there is frequently a knee-jerk response that blames globalisation, suggesting that long supply chains with many production stages and complex transportation links are more prone to failure than short domestic supply chains. So why do supply chains span the globe? In short, cost or capability advantages of overseas locations can result in lower prices, higher quality, more variety and more innovation. Onshoring – moving all production stages to domestic sites – would see costs rise dramatically,
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and the affordability of medical products could become a serious problem. Indeed, NASEM’s report points out that many shortfalls have been experienced in normal, non-crisis times, highlighting chronic shortages of generic injectable drugs in the last decade.
While onshoring might improve resilience, it would be at the expense of lower prices, better quality, more variety and innovation. “It is a hard balance to get right,” says Ball. “When I was in the industry, we would make sure we were approved to manufacture in a closer location, but make the majority in a low- cost location. Distance is a factor in risk, anecdotally, and it is tax incentives that push supply chains to be more global,” he adds. “A White House task force now exists to push domestic manufacturing, but it needs the tax policy to back that up or it is just words. Profitability is key, so domestic manufacturing must be financially appealing.” Rather than rushing to onshore, Ball and the authors of the NASEM report support bringing more visibility into the global supply chain, whether pharma companies like it or not. “Recommendation 1 is the most important, though it may be the least likely to be adopted,” Ball explains. “If that is done, then many of the other problems might be addressed and the market will drive resilience. Transparency would solve a lot of problems, in my opinion. It is not straightforward, and it needs public policy change, but there is a lot of lobbying in Congress by pharma companies, so there will be pushback.” It is hard to create consensus, but transparency is surely better than crisis measures. ●
Medical Device Developments /
www.nsmedicaldevices.com
melitas/
Shutterstock.com
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