The story: Policymakers are enthusiastic about supporting domestic manufacturing of drugs and medical devices, and health care companies want to make sure they get their share of that support. 

Distributors, manufacturers, group purchasing organizations and industry trade groups have all included domestic production of medical goods in their recent lobbying efforts.

In June, a group of companies from across the health care supply chain formed a new trade group called Securing America’s Medicines and Supply. It is pushing for policies that support domestic manufacturing.

“It became obvious to me by last summer that we needed … permanent tweaks to the law to boost American production,” David Sanders, a lobbyist for the pharmaceutical company Coherus and executive director of the new trade group, told FreightWaves.

Background: The U.S. sources many of its drugs and medical supplies from overseas. Some of those supply chains buckled under the pressure of the COVID-19 pandemic.

About 50% of  facilities producing finished drugs and nearly 75% of facilities producing active pharmaceutical ingredients for the U.S. are overseas, according to the Food and Drug Administration. The Department of Health and Human Services estimates that U.S. manufacturers can only satisfy 10% of the domestic demand for medical gowns and 25% of the demand for medical gloves. 

Legislators, health care providers, researchers and manufacturers have all proposed that increasing domestic manufacturing could help resolve those problems. Some private companies are already increasing production of medical products within the U.S. Rhino Health, Showa Group and Honeywell all recently committed to increasing medical glove production in the U.S.

The numbers: For many companies in the health care supply chain, lobbying expenditures weren’t much higher than normal during the second quarter of 2021, but the issue of domestic manufacturing showed up much more often than usual.

3M, which produces N95 masks and medical devices, as well as many other products unrelated to health care, spent $810,000 on lobbying last quarter, according to OpenSecrets. That’s a fairly modest number for 3M.

The company consistently talked with members of Congress about personal protective equipment production generally in 2020, according to lobbying reports. But in 2021 the magic word “domestic” started popping up much more frequently.

Only three or four 3M lobbyists specifically listed domestic manufacturing as a lobbying issue last year. In the most recent quarter, 12 lobbyists included that term.  

Cardinal Health spent $1.4 million on lobbying efforts during the first half of the year, according to OpenSecrets. The company hasn’t spent that much on lobbying in the first two quarters since 2004.

Cardinal’s lobbying reports repeatedly mention “buy America and domestic manufacturing” as issues the company would like to address.

The trade groups Association for Accessible Medicines, Advanced Medical Technology Association (AdvaMed) and The Pharmaceutical Research and Manufacturers of America all included domestic production of medical products in their recent lobbying efforts.

Only halfway through the year, the Health Industry Distributors Association (HIDA) has already spent more money on lobbying than ever before. Domestic manufacturing makes up an important part of that effort.

The new guy: Even though individual companies are already spending millions of dollars to influence lawmakers, several health care companies recently formed the Securing America’s Medicines and Supply (SAMS) coalition to tackle the issue collectively. 

“In terms of advocacy, I didn’t hear a lot of noise around this space,” said Sanders, SAMS’ executive director. “I thought we needed a more public unified consensus voice to enact change.”

The coalition currently includes Coherus BioSciences, iRemedy, Teva Pharmaceuticals, US Biologic and Zymergen. The group hopes to recruit more members.

On the other hand: Health care companies still rely heavily on global supply chains and they aren’t ready to abandon factories in China or other parts of the world.

HIDA and AdvaMed recently sent a letter to the White House asking the federal government to help speed up shipments of medical supplies across the Pacific Ocean. (However, it’s not clear how this would work.)

An infographic from HIDA notes that the lack of containers is slowing shipments of medical supplies from Asia while clogged ports are slowing shipments when they arrive in the U.S.

While health care companies are trying to make sure they benefit from U.S. policies promoting domestic production, they’re simultaneously working to maintain global supply chains.  

What’s next? Policymakers appear to be receptive to this lobbying campaign. Dozens of lawmakers have already introduced legislation to support domestic manufacturing for drugs and medical devices.

Last week, the White House announced a new proposal that would strengthen the federal government’s commitment to buying American-made products.

The proposal doesn’t specifically mention medical supplies, but it aims to support domestic manufacturing of “critical products.”

The White House estimated that the U.S. government has spent more than $1 billion this year to expand production capacity for American-made products needed to slow the pandemic.

In addition, the Department of Health and Human Services is investigating ways to further boost domestic production of nitrile gloves and medical gowns.

Emergent plant will restart manufacturing for J&J vaccine

A vaccine administration site in Johnson City, Tennessee. (Photo: HHS)

The story: A Maryland manufacturing plant operated by Emergent Biosolutions that makes Johnson & Johnson’s COVID-19 vaccine will restart production after the facility temporarily shut down due to quality issues.

The FDA still hasn’t added the facility to the vaccine’s emergency use authorization, but Emergent executives claim it’s a step in the right direction.

Background: In late 2020 and early 2021, poor manufacturing practices at Emergent’s Maryland plant led to the contamination of several batches of the Johnson & Johnson vaccine, according to an FDA report.  

The contamination likely came from waste associated with the production of AstraZeneca’s COVID-19 vaccine, which was made in the same facility.

In February, Johnson & Johnson detected the contamination and reported it to the FDA. In April, the FDA told Emergent to stop making vaccines. The agency issued a critical report detailing inadequate conditions at the Emergent facility.

Now, the FDA is carefully reviewing batches of vaccines produced at the plant to ensure they’re safe. The agency has already cleared several batches. The agency had cleared about 25 million doses for use by mid-June, according to The Wall Street Journal.

The comeback: After FDA ordered Emergent to stop production, the company put together a “quality enhancement plan” to fix the issues identified by regulators.

On a conference call last month, Emergent executives claimed that getting the green light to restart production was a sign that the plan is working.

“We didn’t always live up to expectations, including those that we set for ourselves,” CEO Bob Kramer said on a conference call. “However, we have learned some important lessons which are allowing us to improve our operations.”

Emergent spent $12.4 million to improve the facility, according to recent financial filings. The company also had to discard raw materials and unfinished vaccine worth $42 million.

While the company’s press releases were celebratory, an FDA spokesperson struck a different tone.

“The FDA informed Emergent BioSolutions that the agency would not object to the facility resuming production of COVID-19 vaccine drug substance,” a spokesperson wrote in an email. 

The FDA conducted a limited investigation of the plant in July to verify that Emergent was taking action to fix the problems identified earlier this year. 

The company had made enough progress to restart production, but because the facility hasn’t been added to the emergency use authorization, any doses the plant produces won’t be distributed until the facility receives full approval.

What’s next? FDA will continue to inspect the plant and make sure it meets standards for safety, effectiveness and manufacturing quality.

However, Kramer claimed in a July conference call that Emergent will be OK whether or not FDA approves the facility.

“Going forward with new … production, there are a number of variables that kind of go into that mix,” Kramer said on the call. “But just to be clear, the nature of our contract with J&J is that we get paid when we successfully manufacture drug substance. It really doesn’t hinge on FDA approval of doses to be released to the public.”

Emergent’s share price is down about 5% since its earnings call on July 29, when it announced plans to restart production. Emergent’s net income declined substantially year over year, largely because operating expenses increased.

On the earnings call, CFO Rich Lindahl said the improvements at the Maryland facility, the loss of product due to quality issues and the battle to defend the company’s reputation clearly had a financial impact.