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A laudable goal is being addressed by unusual means, including taxpayer dollars
An eye-popping $354 million--with the potential to increase to $814 million--is being handed from the Biomedical Advanced Research and Development Authority (Barda) to Phlow Corp., which came into being in January and is run by Dr. Eric Edwards, an experienced pharma entrepreneur. Phlow, according to its own announcement, is being set up as a public benefit corporation (PBC), and is working in an as-yet undefined manner with Ampac Chemical, a longstanding US manufacturer of active pharmaceutical ingredients (APIs), and Civica Rx, the nonprofit set up in 2018 by a consortium of hospitals to address shortages of generic drugs, especially generic injectables.
The immediate-term goal of Phlow is to produce APIs and generic products—on US soil—that are in short supply during the current pandemic. To that end, it says it has already supplied 1.6 million doses of “five essential generic medicines used to treat Covid-19 patients to the US Strategic National Stockpile (SNS), including medicines used for sedation to help patients requiring ventilator support, medicines for pain management, and certain essential antibiotics.”
The Phlow (but not the Barda) announcement also springs into existence the Strategic Active Pharmaceutical Ingredients Reserve (Sapir), a “long-term, national stockpile to secure key ingredients used to manufacture the most essential medicines on US soil, reducing America's dependency on foreign nations to support its drug supply chain.” How this relates to SNS remains to be seen.
The Covid-19 pandemic has glaringly exposed how fragile the US healthcare-products supply chain is, with APIs, finished products (especially generics) and medical devices (think ventilators and personal protective equipment) coming from abroad, especially China. On the other hand, these problems have been no secret inside the pharma and healthcare industry—they are one of the reasons that Civica Rx was launched, to address the nagging shortages that have been occurring for years (however, Civica’s charter is not specifically to produce drugs in the US).
“The COVID-19 pandemic has reminded us how health threats or other sources of instability can threaten America’s medical supply chains, potentially endangering Americans’ health,” said HHS Secretary Alex Azar. “America has the capabilities, resources, and expertise to secure our medical supply chains; now the Trump Administration is providing the leadership to make it happen.”
The “make it happen” part of this project—like the White House goal announced on May 15 to have a safe and effective vaccine for Covid-19 by January—is open to conjecture. Ampac Chemical has manufacturing plants, with a total capacity of over 150,000 gal of reactors and over 400 acres of land, in three states: California, Texas and Virginia. HHS says that some of the funding will be dedicated to a new facility to be built in Virginia. Even with all the money, and all the existing resources, it takes months to years to build a pharmaceutical-grade manufacturing plant—so Phlow’s impact on the pandemic is cloudy in the near term.
Another layer of complexity, which probably doesn’t bear much scrutiny at this early stage, is a stated intention of developing new continuous-processing technology as the project scales up. The Medicines for All Institute at Virginia Commonwealth University’s College of Engineering, a nonprofit organization dedicated to advancing drug manufacturing processes, will lend a hand here; its director, Dr. Frank Gupton, is listed as a cofounder of Phlow as well as a board member. According to HHS, the partner organizations “will also complete a technology transfer of novel continuous manufacturing process[es] to organizations or businesses designated by the US government.”
The “public benefit corporation” character of Phlow is noteworthy; however, PBCs operate more or less as most corporations do, with shareholders and profit dividends, but with the added goal of performing some public good. (What that public good is, and how it is to be demonstrated, is an open question.) Both Civica Rx, which has already lined up generic injectables in use at US hospitals, and Medicines for All, which has licensed production technology for a variety of generic drugs globally, have proven track records for accomplishing what they set out to do. On the other hand—fairly or unfairly—CEO Edwards, a former founder and president of Kaleo Pharma has had controversy follow him as Kaleo commercialized treatments for opioid overdosing and for allergic shock.
Stepping back from the Phlow startup, the wonder is whether responding to the Covid-19 pandemic is the right motivation for recalibrating the US pharma supply chain—and whether one company can make a meaningful difference. At some point, US-manufactured generics will be offered to the market—but will they be at a price that makes them preferred over existing foreign suppliers? Nor is it easy to overlook that this is being set up at a time when pharma pricing policies have undergone aggressive scrutiny.