Jeremy Friedler then reviewed various government interventions that impacted biopharmaceutical supply chains prior to the pandemic. He highlighted that government intervention with respect to biopharmaceutical supply chain and manufacturing risk management is not a new concept.
- Obama EO of 2011: In response to shortages of about 200 critical or essential medicines, EO 13588 was issued by the Obama administration. It requested early notification from pharmaceutical manufacturers about possible shortages or discontinuance of life supporting or life sustaining drugs.
- FDA Safety and Innovation Act (FDASAI) of 2012: FDASAI effectively codified EO 13588 into law, and gave the FDA additional authority to prevent future drug shortages.
- Drug Quality & Security Act of 2013: This act established requirements for commercial drug product tracing throughout the supply chain. It implemented a tracking system to monitor distribution and trade of prescription drugs while preventing counterfeits from entering supply chains.
- FDA Drug Shortage Tracker Implementation of 2014: Aligned to EO 13588, this established a data system to track shortages, conduct periodic analyses, and proactively identify risk factors.
CARES Act of 2020: This act includes multiple provisions intended to prevent future drug shortages. It builds on and enhances previous legislation, including new requirements related to:
- Reporting to the FDA about current or potential shortages of products that are critical to the public health during health emergencies.
- Notifying the FDA about current or potential discontinuance or interruption in API manufacturing, including reasons, estimated shortage duration, current source, and alternate suppliers.
- Providing an annual production output report on specific volumes of API and drug product manufactured at validated and registered CMOs and manufacturing facilities.
- Developing, implementing, and maintaining a supply chain Redundancy Risk Management Plan that identifies and evaluates risks to the drug supply at each step.
Biden 100-Day Supply Chain Review Report (released in June 2021): The findings provided a wide spectrum of risk management recommendations to enhance Pharmaceutical and API supply chain resilience. These include:
- Promoting onshore production capabilities, capacity, and redundancy to reduce overreliance on specific regions for biopharmaceutical manufacturing.
- Providing investment in advanced manufacturing capabilities to develop new manufacturing and platform technologies that reduce cost, increase capacity, and enhance the sector’s agility.
- Building emergency capacity and stockpile strategies for 50-100 of the most critical KSM and API.
Chris Silva, Akebia Therapeutics’ Vice President of Procurement & Strategic Sourcing, and Matt Coughlin, Omega Therapeutics’ Director of Supply Chain, addressed how emerging biopharmaceutical companies are incorporating these new requirements to build enhanced resilience and supplier risk management capabilities.
How do biopharmaceutical companies of various sizes and development stages think differently about supply chain and manufacturing supplier risk management strategies?
Both panelists explained that “scale of operations” is an important component to a company’s risk profile. Scale influences risk tolerance levels and risk assessment criteria. Larger companies account for factors such as geopolitical tensions to develop and implement risk mitigation strategies. Emerging or mid-sized companies on the other hand, prior to CARES Act, considered risk management a strategic decision based on a cost-benefit analysis or to address key stakeholders’ specific concerns. However, going forward, holistic risk assessments are now mandatory to ensure mitigation strategies are implemented accordingly and early on.
How does balancing supplier “production share” across multiple manufacturing suppliers or CMOs mitigate supplier risk?
To avoid the inherent disruption risk of heavy reliance on a single supplier, both panelists suggested building a balanced, flexible, and agile supply chain across qualified and validated CMOs. This would enable cGMP “production share.” This strategy may include setting an upper limit on the quantities and volumes ordered from each supplier. Furthermore, companies should also perform assessments to evaluate suppliers’ negotiable and feasible operational capacity prior to implementing a “production share” strategy across CMOs. Most importantly, they should select alternate suppliers with comparable capacities as part of an overall supplier redundancy strategy. This avoids major capability and capacity gaps in the event of supplier changes or disruptions. This enables the appropriate levels of required manufacturing network flexibility, even for an emerging company.
What are the key criteria in a supplier’s Business Continuity and Disaster Recovery (BCDR) Plans that small and mid-sized biopharma companies should evaluate when selecting or working with supply chain and manufacturing suppliers?
It is critical to consider BCDR detail granularity, thoughtfulness behind analyzing risk, and the overall impact on day-to-day operations. Furthermore, there needs to be Senior and Executive level sponsorship of the supplier’s established Business Continuity and Disaster Recovery plans. Also, it is important to understand how a supplier’s internal and external communication and governance channels are designed to enable rapid responses to disruption or adversity.
How has the current supplier risk management concept changed the way companies think about procurement and sourcing strategies, specifically as it relates to selecting new supply chain and manufacturing suppliers?
Our panelists shared that supplier risk assessments for emerging companies are gradually becoming broader and more detailed. This is particularly true for new supply chain and manufacturing suppliers as part of the overall sourcing and selection process. For example, supplier sourcing and selection process elements that were heavily discounted in the past for emerging companies (e.g. geopolitical risk) have now become viable and serve as primary supplier selection criteria.
Furthermore, there is also an increased focus on internal alignment of supplier risk profiles with Senior Leadership. This is part of broader Enterprise Risk Management and Supplier Relationship Management (SRM) governance and policies. As a result, supplier risk management process documentation and formal disclosure of risk mitigation strategies now requires Senior Leadership signoff. This means understanding supply chain risk ramifications prior to selection and initiation of a contractual agreement with a supplier. It can also serve as a mitigation lever to potentially prevent any future supplier-related force majeure circumstances.
The event highlighted that both emerging and established biopharmaceutical companies should develop, or reassess, their internal and external supply chain and supplier risks due to CARES Act provisions and the 100-Day Supply Chain Review findings. It is also time to create or revisit business continuity, disaster recovery, and risk mitigation plans (both external and internal). The panel agreed that developing and implementing supply chain and manufacturing redundancy risk mitigation plans is no longer a choice. It’s clearly now a mandate, as supply chain risks once thought to be theoretical are becoming exponentially more common.
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