Partnership Gets Millions to Supply US-Made Generics for Pandemic

May 19, 2020

The Trump administration has awarded a hefty contract to a new pharmaceutical manufacturing consortium to produce in the U.S. all components of certain critical medicines needed to combat COVID-19.

The Trump administration has awarded a hefty contract to a new pharmaceutical manufacturing consortium to produce in the U.S. all components of certain critical medicines needed to combat COVID-19. The stated aim of an initial $354 million, four-year award to Phlow Corp. by the Biomedical Advanced Research and Development Authority (BARDA) is to reduce the nation’s reliance on foreign producers for both the ingredients and finished dosage forms of certain drugs experiencing supply shortages, in some cases due to international supply chain issues.

In announcing the surprising BARDA award, which can rise to $801 million over 10 years, Peter Navarro, director of the White House Office of Trade and Manufacturing Policy, made clear that a prime objective is to reduce the nation’s reliance on foreign suppliers for vital medicines as envisioned by the administration’s “Buy American” campaign. Navarro lamented the U.S. reliance on foreign manufacturing and supply chains for “our most important medicines and active pharmaceutical ingredients,” which places “Americans’ health, safety and national security at grave risk.” 

A main question about the initiative, though, is whether it can provide high-quality, made-in-the-USA generic drugs at affordable prices without the large subsidy from BARDA. Many industry analysts have documented how production of APIs and generic drugs moved offshore in the 1980s to reduce costs and avoid more stringent environmental regulations. Ongoing shortages of generic drugs, particularly sterile injectables, relate to quality manufacturing issues in all regions, according to reports from FDA and other authorities. Yet U.S. policy makers and drug purchasers show little interest in supporting higher prices to address these issues, even to achieve higher quality production. 

Experienced partners

Richmond, VA-based Phlow will operate through an alliance with the U.S. chemical company Ampac Fine Chemicals (AFC) to provide chemical precursor and active pharmaceutical ingredients (APIs), and with Civica Rx, the non-profit generic drug producer for a network of leading hospitals, which will produce finished medicines. The company is led by Phlow president Eric Edwards and co-founder Frank Gupton, head of the Medicines for All Institute at Virginia Commonwealth University College of Engineering. Edwards was a founder of Kaleo Pharmaceuticals, which gained some infamy several years ago for astronomical price hikes of the drug-overdose rescue treatment naloxone, plus earlier difficulties with an alternative to Epi-Pen.  

The partnership began operations this week with Civica Rx delivering 1.6 million doses of five critical generic medicines, including antibiotics, pain management drugs, and medicines used for sedation to help patients requiring ventilator support. Phlow provided those therapies to the U.S. National Strategic Stockpile (SNS) and also plans to build a Strategic Active Pharmaceutical Ingredients Reserve (SAPIR) to secure domestic supplies of key ingredients for essential medicines. 

Edwards and his partners emphasize that advanced manufacturing technologies will be key to producing more reliable, high-quality and affordable medicines. Gupton will provide strategies for commercializing innovative process technologies, such as “flow” chemistry and continuous advanced manufacturing processes to produce APIs. He predicted that the program will “revolutionize America’s generic drug manufacturing model” by producing affordable ingredients for high-quality, U.S.-made products. 

AFC brings to the partnership experience in producing precursor chemical ingredients and APIs for the pharmaceutical industry through cGMP compliant operations in California, Texas and Virginia. Phlow plans to work with AFC to build an advanced manufacturing capability in Virginia and facilities for producing sterile injectables. California-based AFC is part of SK pharmteco, a unit of Korea-based SK Holdings. 

Civica Rx was formed in 2018 as a non-profit corporation to provide high-quality, low-cost generic drugs to a network that now numbers over 1200 hospitals in 50 health systems. It has supplied 20 sterile injectables in its first year with the aim of producing 100 medications by 2023. Through the partnership, Civica plans to build its own finished dosage form manufacturing facility near AFC’s Virginia operation to gain end-to-end production on the same site.