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What’s the Key to Reinvigorating the Pharmaceutical Supply Chain?

Program promotes pharmaceutical shipments of export cargo and import cargo in international trade by ocean.

What’s the Key to Reinvigorating the Pharmaceutical Supply Chain?

While supply chains everywhere face mounting obstacles, issues in the pharmaceutical industry are particularly severe. After the COVID-19 pandemic, the sector’s shortcomings are painfully clear, so calls for change across public and private entities are growing. Pharmaceutical supply chain management will have to evolve as this pressure rises.

The U.S. was once a leader in the pharmaceutical supply chain and could become one again. As any experienced logistics professional knows, that process is easier said than done. However, while the road ahead will be challenging, that doesn’t mean it’s impossible.

The State of the Pharmaceutical Supply Chain Today

It’s important to understand where pharmaceutical supply chain management is today to learn where it can go from here. Among the biggest current issues are a reliance on foreign sources of active pharmaceutical ingredients (APIs) and a severe shortage of critical products.

Roughly 83% of the most-consumed generic drugs have no U.S. sources for their APIs. Even if U.S. manufacturers produce them domestically, that production relies on international sources — mostly in China and India — for critical supplies. COVID-19 revealed why those dependencies are risky. Over 40 Chinese pharma companies ceased production, and India stopped exporting 26 medicines during the pandemic.

These supply chain disruptions have exacerbated existing product shortages. Many of the most critical drugs face significant backlogs and availability issues. These shortages often follow a vicious cycle. As a drug’s demand surges, generic competition increases, leading to offshoring to lower production costs, making the most essential medicines the most susceptible to supply chain disruption.

What’s Next for Pharmaceutical Supply Chain Management

Pharmaceutical supply chain management must change to break this cycle and prevent future shortages and backlogs. That shift will require several significant changes across the pharma industry and its strategic partners.

Reshoring Efforts

Reshoring API production is the biggest piece of the puzzle. As long as manufacturers rely on international sources for these drug building blocks, critical medicines will be at risk of severe supply chain disruption.

U.S. drug manufacturers may already have the capacity to expand domestic production. Domestic operations account for 28% of all API manufacturing facilities, more than any other region. However, generic drugs — which account for the vast majority of consumption — rely more heavily on foreign-made APIs, and many U.S. facilities are operating under capacity.

Reinvigorating the pharmaceutical supply chain starts with domestic manufacturers capitalizing on their unused capacity. Existing facilities can begin producing some APIs companies currently outsource to foreign nations until new factories can emerge to take over the rest. That effort should focus on reshoring the most critical APIs first before expanding.

Addressing Costs

As reshoring initiatives increase, the pharmaceutical industry will face financial obstacles. The biggest reason companies offshore the most in-demand APIs in the first place is to lower their production costs. Supply chain management must also focus on minimizing costs elsewhere to offset resulting price hikes from reshoring to keep generic medication affordable.

Pharma companies can emphasize supply chain efficiency to mitigate these costs. Automated picking solutions will make warehouse operations more cost-efficient, and IoT tracking solutions can prevent product loss in transit to minimize expenses. As more companies emphasize reshoring, transportation costs can fall, too.

Medical manufacturers can also offset higher API production costs by transitioning to lower-cost alternatives for other SKUs. Single-use biopharmaceutical equipment carries lower manufacturing costs than reusable options and has faster lead times, which helps account for higher expenses elsewhere.

Public-Private Partnerships

Reshoring API manufacturing while keeping costs low will be challenging for some companies, especially in the near term. An industry-wide shift will likely require government support to balance expenses and incentivize domestic production, so public-private partnerships will play a key role in the transition.

Government incentive programs already promote the reshoring of semiconductor and electric vehicle manufacturing. The pharmaceutical industry and its supporters should push for similar legislation to incentivize API reshoring, especially given the growing U.S. demand for critical medicines. Potential rewards include tax breaks, cash rewards to cover some production costs or higher taxes on foreign-derived APIs.

The federal government has a stockpiling program to keep inventories of critical medicines to prevent damaging shortages. The problem is that this stockpile focuses on finished medication, which has a shorter shelf life, limiting the reserve’s size. Transitioning to stockpiling longer-lasting APIs to kickstart domestic drug production when necessary may be more effective.

Boosting Transparency

Pharmaceutical supply chain management must also emphasize transparency amid this shift. Today’s supply chains are too opaque to reliably track demand, supply and product quality or locations in transit. That oversight leads to spoilage, shortages and inventory distortion.

More transparency would minimize losses and enable pharma companies to predict and respond to incoming shifts to prevent stock-outs or surpluses. IoT technology is the key to this visibility. Companies using these sensors in inventories and vehicle fleets can better estimate demand and shipping times thanks to real-time data.

AI can take these benefits further by analyzing IoT data to predict future shifts. When more key players in the pharma industry have that capability, they can respond to incoming demand changes sooner, preventing shortages of critical medicines.

Moving Away from Lean Principles

All of these changes represent a shift towards resilience for pharmaceutical supply chains. Embracing resilience means organizations must let go of some of the lean principles they’ve focused on in years prior.

Lean practices like just-in-time production and eliminating inventories lower operational costs, but they leave supply chains more vulnerable to disruption. That disruption is too risky in the pharmaceutical sector to justify. Businesses must instead prepare for the unexpected, keeping larger safety stocks and using multiple distributed suppliers to mitigate any unforeseen changes.

Reshoring is an important first step in this transition from lean to resilient, but it can’t be the end. Pharmaceutical supply chain management must remove single dependencies and increase reserves everywhere to become more disruption-proof.

Pharmaceutical Supply Chain Management Has a Long Road Ahead

Reinvigorating the pharmaceutical supply chain is a challenging but necessary goal. It will take time, money and cooperation between many parties, both private and public, to work. If the industry can embrace these changes, though, they can pave the way for a safer future.

There’s no one key to better pharmaceutical supply chain management but rather a collection of several interconnected steps. Understanding that is the first step in preventing future disruption to U.S. pharmaceutical supplies.

cold chain

The Future is Cold Chain Solutions: Don’t Risk an Unmanaged Supply Chain

As medication therapies continue to innovate and rely on cold chain delivery, including the COVID-19 vaccine, health systems need to evaluate their programs, leverage technology and ensure their systems are fully managed to best help patients, reduce costs and streamline efficiency. Patient-centered cold chain supply chains focused on last-mile prescription delivery have evolved significantly over the last 15 years. This advancement might be due to the relative novelty of cold chain, which did not play a key role in patient interactions in the past.

Overcoming Initial Growing Pains

Because there has been no template for how to incorporate cold chain solutions into health systems’ and hospitals’ supply chains, they have had to rely on their staff, pharmacists, and partners to create what could be said is an ad hoc program. One of the greatest challenges they faced is determining how to verify a shipment — which product is best? How can a transaction be monitored? Thanks to advancements in technology, we can now use low-energy Bluetooth monitors to track micron-level environmental readings and use systems to verify a shipment’s progress.

Packaging is another area that has made significant strides in the past few decades. The industry has transitioned from status quo styrofoam packaging to making environmentally friendly packaging a priority. These advancements provide us with the resources, systems, and information we need to provide safe, consistent, and timely medication to patients everywhere.

Anticipating Future Innovation

The evolution of medicine forces insurance companies to redefine reimbursement to health systems, which in turn redefines priority around cold chain and accreditation. As researchers continue to advance medicine and cure diseases earlier, the health system supply chain must quickly catch up in support.

The industry will rely even more on mail medication and virtual healthcare in the future, and we can likely anticipate additional innovation soon. From packaging infused with chemicals to help products stay within temperature range during transport to incorporating technology within every shipping container so we have a live monitor to verify the conditions via an app every step of the way, cold supply chains will become even more accessible and reliable.

Investing in a Managed Cold Chain

To streamline current operations and prepare for future innovations, health systems should prioritize a managed cold supply chain, or create a process and leverage technology that delivers full transparency and awareness of inbound and outbound products. A managed system has processes in place to know if and when a shipment gets delivered, is opened in a timely manner and is properly stored. It also utilizes technology controls to track audits, losses and complaints, and fix potential issues before they materialize. Managed chains can be spearheaded within an organization or through a partnership that fills the gaps more easily than a custom process, such as TRIOSE’s Pharmacy IQ, which allows pharmacies to seamlessly incorporate delivery services into their existing structure.

On the other hand, an unmanaged system can be incredibly scary because it leaves systems vulnerable to the unknown. From a patient safety standpoint, when products can’t be verified, medicine to a patient’s home might arrive expired, useless or even dangerous. Unmanaged supply chains are also dangerous from a cost perspective. Consider the cost of specialty medication, which can have values of over $60,000 and be rendered useless because it circled via UPS or FedEx for five days without anyone knowing about it. There is a spectrum of significant risks to an unmanaged cold supply chain — safety, finances, lawsuits, etc.

Cold chain solutions might still be a relatively new frontier for healthcare providers, but there are a number of industry best practices that can be leveraged to maximize success. Prioritizing an assigned accountability person to manage inbound and outbound processes and investing in technology that boosts transparency at every turn aids in avoiding risks, increasing patient safety and improving health systems’ bottom lines.


Envirotainer’s CryoSure® Transforms Low-Temperature Shipping

The future of cryogenic shipping is now met with a sustainable and revolutionized option thanks to Envirotainer – a leader in secure cold chain solutions for intercontinental shipments of pharmaceuticals bringing more than 30 years of expertise to the industry.

“For many years, the strategy of Envirotainer has been to extend our offering through new innovative products and services and to expand into new segments. This technology fits perfectly into our circular business model and is going to be an important part of our offering going forward. The unique, premium quality, and completely reusable technology matches perfectly into Envirotainer’s global footprint”, says Fredrik Linnér, Chief Business Development Officer at Envirotainer.

The company announced the release of four models representing its latest solution for pharma-related shipping known as the CryoSure® platform (X1, X2, X5 and X11). This platform offers multiple competitive capabilities and elements including  -70oC performance. Particularly beneficial for longer shipments, the CryoSure® technology addresses risks resulting from delays and human errors, ultimately providing safer, sustainable, and more reliable pharmaceutical shipping to benefit patients.

“This new CryoSure® technology takes pharma transportation to the next level by mitigating most if not all risks currently faced when shipping pharma products below -70°C. It is a game-changer and is going to revolutionize this part of the market”, says Mattias Almgren, CryoSure® Platform Executive at Envirotainer.

“Envirotainer has been leading the way ever since the beginning of the temperature-controlled shipments and it is with great pride that we today announce the launch of CryoSure®. We believe CryoSure® fills a substantial gap in the cryogenic -70°C shipment market and significantly improves patient safety”, says Peter Gisel-Ekdahl, CEO at Envirotainer.

Added benefits provided by CryoSure® include duration of three weeks, heat resistance, ease of use, and is known as the most sustainable solution currently on the market.

To learn more about CryoSure®, please visit:

quality control

Understanding the Importance of Quality Control in Manufacturing

For manufacturers, there is a direct link between number of units sold and quality control. It may not be super clear and obvious that there is a link but nevertheless, the link exists, and it is solid: Consistent, well-made products boost revenues and customer retainment, while product defects drive existing customers and prospects into the eager arms of the competition.

The word “quality control” is often used loosely and can have different definitions for different people. The infographic below goes to the trouble of defining QC and disorientating itself from quality assurance, another necessary discipline in the world of manufacturing. The main point of quality control is its focus on preventing defective products from getting out in the world and reaching the consumer. Once you understand this simple (but sometimes elusive) definition of quality control, its connection to sales and the number of units sold becomes crystal clear.

The true cost of product defects is high on a number of fronts. If the end-user receives a defective product, a lot of bad and costly things can happen. If the product causes injury or death, just the cost of litigation can be enough to put even a large manufacturing organization out of business. And that’s ignoring the emotional toll of having one of your products hurt a person. If the manufacturer is lucky, the defects will be identified on the receiving dock, in which case the costs may be “limited” to a rejection, return and replacement.

On the flip side, high-quality standards help build a company’s reputation for quality. These high-quality standards can help attract prospects, generate referrals, earn reorders and allow the company to set higher prices. That is why QC is so important and should be emphasized early and often. For more on this, continue reaching below on how to improve your QC today.



John Vogel brings over 38 years of experience in the Aerospace and Defense sector and leads the Quality function at Marotta Controls, Inc. As the VP of Quality, John is responsible for Quality Control, Quality Engineering, Quality Systems, Supplier Quality, Continuous Improvement and Calibration & Metrology.

pharma pharmaceutical

Resilience of Pharma Supply Chains and the Impact of Covid-19 Pandemic

How is the COVID-19 crisis influencing pharma supply chains for the future? Is the global pharma supply chain under sustained threat? And what about Asia and its dominance in the supply chain? These are all valid questions considering recent and current events.

It is generally agreed that COVID-19 marks a point in the understanding of medicine supply risks, but will it fuel efforts to establish local supplies of chemicals and APIs as a “matter of national security”? In the last 12 months, Pharma companies have become acutely aware of their dependency on complex supply chains. As the result, the pandemic has finally convinced all stakeholders to build more resilience into their supply chains going forward.

In the last 10 years or so, lower costs have been a key decider in relocating a significant share of manufacturing capabilities to China and India. We have, therefore, seen a large increase in production volumes in these countries where we know that almost 40% of registered sites for APIs were located in India or China, according to FDA data published in 2019.

The relocation of manufacturing to Asia has a direct impact on supply chain reliability and has led to drug shortages.

Believe it or not, drug shortages are not rare events and don’t just happen when there are worldwide pandemics. The average drug shortage in the US lasts 14 months…some last for years.

Before COVID-19, the FDA had already placed 145 pharmaceutical products on its drug shortages list. In April 2021, there were 175 drugs on the FDA drug shortages list.

Covid-19 didn’t have the foreseen catastrophic effect. There are several reasons for this:

-The pharma industry had a sufficient inventory buffer (average inventory is about 180 days for the entire industry)

-Drug manufacturing has long lead times, so the effect of 1-2 weeks manufacturing cessation in China would take some time to cycle through the supply chain.

-Supply disruptions of APIs or finished products made in China were not hugely prolonged, otherwise, the effects would have been more severe.

-Regulatory challenges for medicines were largely overcome, where required, by flexibilities introduced by regulators to fast-track regulatory processes. For example,

-Fast-tracking approvals to alternative sources of supply of reagents

-Ensuring availability of GMP certification to manufacture and import

-Remote auditing options

-Labelling and Packaging flexibility

Switching sources of supply (which is not straightforward in the pharmaceutical industry) was not extensively required…

-There was a relatively short period of logistical and distribution challenge. Demand spikes for transportation capacity was placed under enormous strain compounded by (i) surge in international demand for PPE, sanitiser, critical care medicine and medical devices (ii) Disruptions at ports (iii) Decreased capacity on Air Freight (iv) Re-routing of transportation (v) Personnel availability constraints due to lockdowns/quarantine (vi) Increased prices. Routes have already opened, and lockdowns are slowly being phased out.

However, despite all of this, local, regional, shorter supply routes are preferred in the current crisis and the environmental agenda is driving this theme globally.

Even if the manufacture of APIs or fine chemicals was more regionally dispersed or locally based, the raw materials for these manufacturers may not be available in these locations anyway.

It appears that we will have to manage the reality that raw material availability and cost are critical factors in where pharmaceutical manufacturing resides. As a result, increased resilience will need to be factored into our supply chains which will include sourcing, at some level, from Asia and the ROW. Moving production closer to home markets would be costly and would take years to accomplish. The smarter approach is to build resilience into the supply chain. How is this achieved?

The key is to ensure there is a risk management plan in place that focuses on the evaluation of potential issues arising from the loss of a supply chain partner or a region. This requires

-Alternate supply arrangements

-Inventory levels to provide a potential buffer

-Agile Manufacturing

This is infinitely more challenging than it seems. It means that organizations need to precisely know the quantity of each raw material or medicinal product in the supply chain and where it is at any given moment. This leads to hyper-complexity where advanced algorithms (and data analytics/AI) will be required to help design supply chains with greater resilience and risk monitoring capability.

Designing resiliency into the supply chain should incorporate placing inventory at the right points of the supply chain network (i.e., the right inventory commensurate to the risk at that point in the supply chain).

Investment in real-time production monitoring systems and integrated planning and scheduling tools (LEAN tools) could increase the agility of existing manufacturing sites to speed up supply and reduce requirements for additional expensive production equipment.

The pharmaceutical industry will continue to build resilience and secure itself against volatility in supply from Asia…perhaps at a faster pace than before.

Next time… could it be another virus, a mosquito, or a resistant bacterium?

However, we should not lose focus on the immediate supply chain challenge.

Supply chains need to plan now for resilience to navigate the current turbulent market.



The majority of companies that lack end-to-end visibility into their supply chains instead rely on a picture of supply and demand that is based only on internal data from the company itself, according to the new research report from The Economist Intelligence Unit (EIU) research report. 

Lacking proper visibility leaves many of these companies vulnerable to unexpected risks, the EIU concludes in the report titled “The Resilient Supply Chain Benchmark: Ready for Anything? Turbulence and the Resilience Imperative,” which was commissioned by the Association for Supply Chain Management.

Packed into the report are findings on how 308 publicly listed retail, pharmaceutical and consumer electronics companies have adopted resilience-building capabilities to manage real-time and longer-term risks, and how they have performed over the past year.  

“While each industry faces unique supply chain dynamics, in a time of increased turbulence it has become critical to reconsider the balance between efficiency and resilience,” said ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE. “The Resilient Supply Chain Benchmark provides both data and analysis to better understand the critical capabilities driving resilience, where the most common vulnerabilities lie, and how to strengthen operations for the future.” 

Find the report here:


The DNA of A Science Startup: Betting on the Right Horse

There is no doubt we are living through atypical times. A confluence of factors have introduced, in an unprecedented way, the one thing that businesses and investors abhor: uncertainty. Now more than ever, the investor community needs to evaluate, which startups and newly launched businesses are likely to weather the storm, particularly businesses commercializing a science-based idea.

We’ve identified three kinds of science-based startups that are likely to weather the storm, and three that may succumb, beginning with three that will succeed:

1. Startups that add value (beware of “complete reinvention”): Many startups, given their energy and momentum, may seek to “completely reinvent” the ecosystem. These startups underestimate the inertia of not only consumers but also established players, supply chains and practices within the industry. One good example is the diagnostics sector; a startup that aims to improve efficiency for large players (E.g. such as Quest Diagnostics) by offering, say, a new kit that greatly reduces testing expenses, is more likely to thrive, even if it does not have unicorn potential. Conversely, a startup that offers new technology that will require a large player to completely replace or revamp an existing pipeline will not be easily adopted.

2. Startups in evergreen sectors within biotech/pharma: Science-based startups are almost immediately equated with biotech. This is understandable, as the biotech sector attracts the most attention and most capital. While all of medicine is always up for improvement, within biotech/pharma, certain disease areas such as Oncology and Neurobiology remain evergreen. This is not to say that a strategy similar to Gilead’s in developing some antivirals (best-in-class) will not succeed, it is just that such strategies need to be executed very carefully. In contrast, the drastic unmet need in some sectors means a less than perfect drug stands a good chance of gaining market share. In fact, over the next 10-15 years, Neurobiology appears poised to experience leaps similar to Oncology when biologics took the stage by storm. As the population ages, neurodegenerative diseases are likely to increase, creating potential for a large market. The same demographic trend also hints at one as yet untapped area, that of aging biology. Although there are big players, for instance, Calico, the path forward remains unclear given the complicated science.

3.  Startups that address fundamental needs: Startups that address fundamental needs and deficiencies in any sector are most likely to survive and thrive. This is not by any means a new thought or message, but one that needs to be highlighted and should remain a guiding principle. While they may not be apparent, deficiencies exist in all sectors, be they automation, manufacturing, or even something as distinct as textiles and apparel. One straightforward example here is biotech/pharma: economic downturn or not, new medicines are always needed. Another example is food-tech, nobody is going to stop eating; in fact, disruption of supply chains is expected to create new opportunities. It is not surprising that a number of startups are developing plant-based substitutes for animal products, and demand for these is expected to remain strong. From a high-level perspective, startups emerging from materials science, nanotechnology, and of course computer science, especially AI, are particularly attractive, as they appear poised to provide solutions to long-standing environmental problems. On the other hand, areas such as biofuels, which attracted considerable attention a decade ago, no longer appear viable given the shift toward electric and hybrid vehicles.

Conversely, there are three types of ventures that may not weather the storm:

1. Startups that pivot without having a core strategy: A pivot by itself is not bad, and many businesses do indeed change directions to take advantage of an opportunity or rebuild their revenue streams. But there is an important distinction: businesses that lack a core strategy will rarely survive even with a pivot, especially in a fickle investment environment. Many companies and even well-funded startups may venture into new areas such as infectious diseases, but this does not change their original business model. A COVID-specific solution will melt away the minute a good drug/vaccine is announced. The diagnostics sector here provides good case studies. A newly developed scientific method or protocol may be able to detect the SARS-Cov2 virus within minutes or seconds, which is a great achievement, but will this solution supplant existing medical pipelines and setups? If a startup’s pivot is purely opportunistic, rather than being part of a larger strategy, it may indicate inability to survive over the long term.

2. Startups that address trends: This overlaps with the previous point, but it is important in its own right. Ideas are dime-a-dozen, and many startups are born during times of distress and social upheaval when deficiencies in our societies and industry come to fore. It is important to distinguish if the startup is addressing a need-of-the-hour or a trend that has the potential to stick.  With regard to science-based startups, there is less of a trend following, although it is quite common for startups to mushroom every time new technology is developed. One example of this is AI, which represents a trend that is cyclically in vogue. Established computer scientists can attest to multiple periods when AI was supposed to solve all of the world’s problems, only for scientists and entrepreneurs to realize that the real world was too complex and you could never really leave decision making to machines for many crucial tasks.

3. Startups that fall prey to shifting regulation and circumstance. This is unfortunately beyond a startup team’s control, but investors should be careful when funding startups in such sectors. Two interesting examples here are businesses that provided services to the oil and natural gas industry, and the development of biotechs around CRISPR-Cas9 genome editing technology. In case of oil, it would have been very difficult to predict that petrochemicals and related sectors would plunge overnight, wiping billions of dollars’ worth of value from some of the biggest companies in the world. A strange confluence of geopolitical contests, coupled with uncertainty due to a pandemic and shifting consumer habits, probably a once-in-a-lifetime event, may spell doom for many players. Any startups connected to this sector may likely suffer significantly in the coming months, and their long-term survival is uncertain. In the case of CRISPR, the potential for rogue actors to misuse the technology means that many governments in the world will proceed extremely cautiously, and indeed, initial miss-steps may lead to stringent regulation. While there is plenty of potential, CRISPR-based startups should be evaluated carefully.

This brings us to the big question: where are the real returns? Can we break out of COVID play? Real returns are where startups and ideas address fundamental questions and needs that are apparent but overlooked. Overall, even though investor interest these turbulent times still appears to be strong, with many new startups being funded, the next few quarters will be the ones to watch, as the downturn reduces both investor appetite and revenue. Investors must continue to be discerning with their dollars, especially when it comes to science-based startups.


Dr. Shailesh Date is the founder and CEO of LRC Systems, which uniquely combines advances in natural and quantitative sciences with cutting-edge technology to help solve fundamental health, economic and social problems for public and private organizations. LRC serves as an ideas hub for high-level transdisciplinary research that is bigger, faster and more impactful, to propel innovations that can change the world.  Dr. Date obtained his Ph.D. in Molecular Biology (computational focus) and completed his postdoctoral research at the University of Pennsylvania’s School of Medicine, focusing on apicomplexan parasites, including Plasmodium falciparum, the causal agent of malaria. His current research covers topics in both public health and complexity science). He also serves as Associate Adjunct Professor in the Dept. of Epidemiology & Biostatistics at UCSF and Adjunct Professor of Biology at SF State.  



Making matters worse

As the coronavirus pandemic continues to alter lives around the world, predators have seen opportunities to exploit the global health crisis by marketing and shipping counterfeit medical equipment, devices, and pharmaceuticals. In the few months since the beginning of the pandemic, illicit trade in counterfeit medical goods is both widespread and global in nature.

Authorities in the UAE shut down two factories, finding 40,000 fake sanitizers that were actually body sprays. In Cambodia, authorities seized three tons of fake sanitizer and nearly 17,000 gallons of fake alcohol. Australia’s Border Force intercepted shipments of counterfeit and otherwise faulty personal protective equipment.

Playing whack-a-mole with counterfeit goods

EUROPOL has cautioned that fake blood-screening tests, sanitizers, and pharmaceutical products are increasing in volume in the EU as criminals take advantage of shortages of genuine medical products. EUROPOL is monitoring the trade in counterfeit and substandard products by “listening” to social media platforms, following conversations that mention fake products. The agency reports many new online platforms have cropped up in response to coronavirus to profit illegally from illicit trade in fake medical goods.

Enforcement activity has also ramped up in the United States in response to the significant increase in criminals attempting to capitalize on the pandemic. In mid-April, Immigration and Customs Enforcement (ICE) announced Operation Stolen Promise, a joint effort by experts in global trade, financial fraud and cyber investigations to combat smuggling of counterfeit safety equipment and test kits. The operation quickly shut down over 11,000 COVID-19 domain names for illicit websites. After seizing test kits at an Indianapolis express consignment facility, Customs and Border Protection (CBP) announced it is “targeting imports and exports — mainly in the international mail and express consignment cargo environments — that may contain counterfeit or illicit goods”.

More data, better enforcement?

In early May, ICE’s Homeland Security Investigations announced an unprecedented partnership with private sector companies including Amazon and Alibaba to combat price gougers and scammers online. But will the effort be sufficient? The pandemic has exposed how vulnerable consumers are and how difficult the challenges are for law enforcement, prompting new discussion of potential changes to data collection practices that will better safeguard consumers while aiding law enforcement. Policymakers are also considering ways to shift more burden to the private sector engaged in online sales and trade.

The Country of Origin Labeling (COOL) Online Act was introduced in the U.S. Senate on May 13. The sponsors noted that with the pandemic causing Americans to stay home, online commercial activity has increased, but that products sold online are not sufficiently transparent. The COOL Online Act would require that buyers of products sold online be told the country where the product was manufactured and where the seller is located.

CBP is currently conducting the 321 E-Commerce Data Pilot which requires private sector participants in the pilot program to transmit a significant amount of data to CBP regarding products shipped to the United States. What is yet unclear is whether companies in the supply chain and e-commerce ecosystems will be required to verify that the information submitted to CBP is accurate and whether they will be required to take the step of rejecting products or packages before facilitating shipment to the United States.

Such a requirement obligates private sector entities to take some measure to screen and prevent the export of non-compliant or suspect goods before they leave the country of export. Absent such an obligation, most, if not all, of the burden will remain on CBP – and its counterparts around the world – to protect public safety.

Countering the counterfeiters

Medical communities around the world are still grappling with a virus that has no known cure while law enforcement agencies work to combat the growing volume of counterfeit and substandard medical equipment and pharmaceutical goods marketed by criminals. Meanwhile, international crime watchdog INTERPOL has ominously issued a warning that it expects global markets to be flooded with fake pharmaceuticals as soon as a vaccine does become available.

The policy landscape continues to shift in various ways in the wake of this health crisis. Governments are actively engaging with the private sector regarding potential changes to the collection and sharing of data — and, how both should act on that data — to more effectively prevent counterfeit and illicit goods from even leaving the country of origin in the first place.


Tim Trainer

Tim Trainer was an attorney-advisor at the U.S. Customs Service and U.S. Patent & Trademark Office. He is a past president of the International AntiCounterfeiting Coalition. Tim is now the principal at Global Intellectual Property Strategy Center, P.C., and Galaxy Systems, Inc.

This article originally appeared on Republished with permission.


A COVID-19 vaccine will follow flu footsteps

The global coronavirus outbreak has upended the lives of billions around the world. As anxiety levels remain high and the economy is in free-fall, it remains unclear how we will return to “normal life” in the short term.

In the long term, vaccine development is our best bet for a future free of COVID-19. Several companies around the world have already launched vaccine discovery with unprecedented speed. Some were able to begin small clinical trials as soon as mid-March, though expectations should be calibrated as the clinical trials process to test safety and immune response is a lengthy one.

The race to a coronavirus vaccine is emblematic of the balance between competition and collaboration, both routine and natural for the global health community. After all, experts around the world collaborate each year to develop, produce and deliver the influenza vaccine, also known as the flu vaccine, to billions of people. They have been working together this way for decades.

The first flu vaccine

According to an article published in the Journal of Preventive Medicine and Hygiene, the earliest confirmed flu pandemic on record first appeared in 1580 in Asia and Russia. It spread from there to Europe and northwest Africa.

Yet it wasn’t until the 1940s when the University of Michigan researchers developed the first inactivated flu vaccine using fertilized chicken eggs, still the primary method for making commercial vaccines today.

Phases in Drug Development TradeVistas

Tracking global strains for drug development

The flu virus changes annually, making it unpredictable. Developing an annual vaccine is the product of a globally-educated guess.

Members of the World Health Organization (WHO) established a surveillance system in 1952 to monitor the emergence of different strains of influenza that have the potential to become a pandemic. The Global Influenza Surveillance and Response System (GISRS) comprises an international network of national laboratories in more than 100 countries. These labs conduct surveillance and share information (including representative viruses) with five WHO centers located in the United States, UK, Australia, Japan and China.

Twice a year, in preparation for the flu season in the northern and southern hemispheres, the GISRS centers convene with representatives from public health bodies, leading research institutions and private sector experts to evaluate and recommend strains to include in the seasonal vaccine. Ultimately, each country decides for itself which viruses will be included in the flu vaccine they license that year.

A network for pandemic preparedness

The WHO also maintains a Pandemic Influenza Preparedness Framework, known as PIP, which includes member governments, vaccine manufacturers, and other stakeholders.

The PIP Framework governs the sharing of virus strains and PIP-related biological materials across organizations and borders, which is critical for determining which virus strains manufacturers should target in the seasonal vaccine. The Framework also coordinates access by the world’s most vulnerable populations to vaccines and treatments and manages agreements on intellectual property and licensing of the vaccine.

PIP’s industry partners receive access to the virus strains they need to make the vaccine. In exchange, they agree to provide benefits to the WHO and to developing countries in the form of vaccine donations, royalty-free licensing to manufacturers in low-income markets to make the vaccine, or a guarantee of a specified quantity of vaccine supply at lower prices, among other arrangements.

Flu Surveillance System

Vaccine production and distribution

Once the most dangerous virus strains for the upcoming seasonal flu have been selected, manufacturers turn to producing the vaccine. According to Sanofi Pasteur, the top global producer of the seasonal influenza shot, it takes between 6 and 36 months to manufacture, package and deliver high-quality vaccines to those who need them.

The viruses are first grown in a lab setting, after which the antigens are extracted from the viruses and purified to eliminate any raw material traces. Next, the virus goes through an in-activation process that retains the properties that will elicit an immune response in the body. Next, the active substances are combined into a single chemical component. These chemical components can be combined with others to form a single shot, like the MMR vaccine that includes compounds inoculating against measles, mumps and rubella. The vaccines are then filled into a vial or syringe, packaged and shipped all around the world.

Vaccine makers have to produce several different vaccines to meet the strain selection of each country. For example: CSL, another leading influenza vaccine maker, produced seven different influenza vaccines for the last flu season.

Moon shot against any flu virus

The laborious process of monitoring, surveilling, selecting, and then inoculating against specific flu virus strains, still leaves the possibility that an unexpected strain will emerge and result in a pandemic. Some seasonal flu vaccines are not an effective match against the strain that emerges. These lingering uncertainties have motivated the public health community to work towards making a universal flu vaccine – one that could provide long-lasting protection for multiple strains of influenza in one shot.

The potential for such a shot has captured the imagination of world leaders and influencers, including Bill Gates who committed millions in grants to this research. President Trump signed an Executive Order on September 19, 2019 that directs the U.S. Department of Health and Human Services to promote new vaccine manufacturing technologies and advance the development of vaccines that provide longer-lasting coverage against a broad range of flu viruses.

Researchers have seen some success. One example: early trials focused on proteins in the flu virus that remain stable and activate an immune response to stop and destroy the infection. While we are still years away from having access to such a vaccine, there is some momentum building behind this approach.

The here and now vaccine

We don’t know how soon we could have a vaccine against COVID-19. But we do know that COVID-19 vaccine development is benefiting from years of global collaboration on seasonal flu vaccine pandemic preparedness. This includes sharing biological resources, disseminating data and research, and coordinating manufacturing rights and distribution.

Is it a perfect system? No – but doctors, scientists, labs, drug companies and national health institutions have experience in what it takes to bring the world’s knowledge to bear in a well-coordinated framework, which could speed up the discovery of a COVID-19 vaccine.


Ayelet Haran is a contributor to TradeVistas. She is a government affairs and policy executive in the life sciences industry. She holds a Master’s of Public Administration degree in International Economic Policy from Columbia University.

This article originally appeared on Republished with permission.



What Does Trade Have to Do with the Pandemic?

pandemic is a type of epidemic, wherein an outbreak of a disease not only affects a high proportion of the population at the same time, but also spreads quickly over a wide geographic area.

As the novel coronavirus jumped continents, governments in countries yet unaffected or with low incidence rates moved to prevent “importing” the virus through individual travel. Simultaneously, governments acted to create diagnostic kits and treatments for those with the virus – all praise our frontline healthcare workers.

Unfortunately, what could worsen the situation is a policy practice that seems to be infectious. More than 20 governments are banning the export of needed supplies, a prescription for shortages and higher prices. What the crisis also lays bare is that key countries and many important healthcare products remain outside a WTO agreement that would otherwise enable duty-free trade in the medicines and supplies we need on a regular basis.

Pandemic Proportions

In the history of pandemics, there has been none more deadly than the infamous Bubonic Plague which took 200 million lives in the mid-14th century, wiping out half the population on the European Continent. The pathogen spread through infected fleas carried by rodents, frequent travelers on trading ships. The practice of quarantine began in the seaport of Venice, which required any ships arriving from infected ports to sit at anchor for 40 days — quaranta giorni — before landing. Two centuries later, Small Pox took 56 million lives. In the modern era, some 40 to 50 million succumbed to the Spanish Flu of 1918 and HIV/AIDS has claimed 25-35 million lives since 1981.

For perspective, and not to minimize its severe toll, the number of fatalities from novel coronavirus will likely exceed 10,000 by the time of this writing. COVID-19, as it is currently known, is a reminder that we live with the ongoing threat from many types of both known infectious diseases like cholera, Zika and Avian flu, as well as diseases yet unknown to us. Although we can more rapidly detect, contain and treat epidemics, diseases now travel at the speed of a person on board an international flight. Our cities are bigger and denser, further enabling rapid transmission.

Pandemic Prepping Includes Trade

Because we are interconnected, we share the health risks, but we can also problem-solve as a global community. Scientists in international labs share insights to identify viruses, swap guidance on how to conduct confirmatory tests, and quickly communicate best practices for containment.

Outside times of crisis, global trade in health-related products and services has laid the foundation for faster medical breakthroughs through international research and development projects, and by diversifying the capability to produce medical supplies, devices, diagnostics and pharmaceuticals.

Innovation thrives in the United States like nowhere else. Yet, no single country, not even the United States, can discover, produce and distribute diagnostics, vaccines and cures for everything that ails us — or invent every medical intervention that improves the productivity and quality of our lives.

One Quarter of medicines have tariffs

A Dose of Foresight

As the Uruguay Round of multilateral trade negotiations were drawing to a close in 1994, a group of countries representing (at the time) 90 percent of total pharmaceutical production came to an agreement. Each government would eliminate customs duties on pharmaceutical products and avoid trade-restrictive or trade-distorting measures that would otherwise frustrate the objective of duty-free trade in medicines.

The WTO’s Pharmaceutical Tariff Elimination Agreement, which entered into force on January 1, 1995, is known as a “zero-for-zero initiative” to eliminate duties reciprocally in a particular industrial sector. Signed onto over subsequent years by the United States, Europe’s 28 member states, Japan, Canada, Norway, Switzerland, Australia and handful of others, the agreement initially covered approximately 7,000 items that included formulated or dosed medicines, medicines traded in bulk, active pharmaceutical ingredients (APIs) and other chemical intermediaries in finished pharmaceuticals.

Signatories agreed to expand the list in 1996, 1998, 2006 and 2010 so it now covers more than 10,000 products. Tariffs were eliminated on a most-favored-nation basis, meaning it was extended to imports from all WTO members, not just parties to the agreement.

Maintenance Drugs

Though an important start, the agreement has not been updated in a decade. Trade in products covered by the WTO agreement has risen from $1.3 trillion in 2009 to $1.9 trillion in 2018. Yet, some 1,000 finished products and 700 ingredients are not covered under the agreement, leaving pharmaceutical trade subject to hundreds of millions in customs duties. With China and India increasing manufacturing over the last decade, the value of global trade included in duty-free treatment decreased from 90 percent in 1995 to 81 percent in 2009 to 78 percent in 2018.

It is challenging to chart trade statistics and tariffs on health-related products, particularly since many chemical ingredients have both medical and non-medical uses. Here we have attempted to reproduce tables developed by the WTO in 2010, but we do not include a large number of chemicals that have general use whose tariff lines were not enumerated in the WTO’s analysis.

Health Product Import Shares

In 2010, the European Union and the United States together accounted for almost half of all world imports of health-related products. Europe has become a much larger importer while U.S. imports have decreased slightly as a percentage of global imports. Imports by many big emerging markets including Brazil, Mexico, China, India and Turkey, have increased along with their purchasing power. These countries benefit from zero duties when importing from countries that signed on to the WTO Pharmaceutical Trade Agreement.

Health Product Export Shares

On the export side, Europe dramatically increased its share of global exports while the United States dropped across the board compared to 2010, particularly in medical products and supplies. China shows significant growth in exports of inputs specific to the pharmaceutical industry – including antibiotics, hormones and vitamins – as well as medical equipment including diagnostic reagents, gloves, syringes and medical devices. India also increased its exports of all types of pharmaceuticals, particularly ingredients, but did not drive up its share across all types of exported health-related products. China and India would benefit from zero duties without having to reciprocate for exports from countries that signed on to the WTO agreement.

That said, according to the trade data, China and India still only account for 5.4 percent of global exports in health-related products covered by the agreement. Therefore, simply expanding membership to include these countries is not sufficient to enlarge duty-free trade – the number of tariff lines covered by the agreement would also need to expand to capture a significant portion of traded healthcare products.

Emerging Market Pharm Trade

Tariffs as a Symptom

The final price of a pharmaceutical is determined by many factors that differ by country. Costs and markups occur along the distribution chain from port charges to warehousing, to local government taxes, distribution charges, and hospital or retailer markups. Tariffs may seem a relatively small component of the final price, but the effect is compounded as all of these “internal” costs accumulate and they are symptomatic of complex regulatory systems.

A 2017 study by the European Centre for International Political Economy determined that tariffs on final prices add an annual burden of up to $6.2 billion in China. In Brazil and India, tariffs on medicines may increase the final price by up to 80 percent of the ex-factory sales price. Imported pharmaceuticals are at a clear disadvantage and patients bear the burden in cost and diminished availability.

Side Effects

According to the U.S. International Trade Commission, the U.S. pharmaceutical industry historically shipped bulk APIs from foreign production sites to the United States before formulating into dosed products. After the WTO agreement, it became viable to import more finished products duty-free. Over the years, a failure to add more APIs to the duty-free list reinforced this trend. The U.S. Food and Drug Administration also allows firms to import formulated products prior to receiving marketing approval to prepare for a new product launch but does not allow bulk API importation before market approval.

The urgency to accrue adequate supplies and treatments for COVID-19 has reignited a debate on U.S. over-reliance on China and India for antibiotics, among other medicines. What if factories must close? What if China and India withhold supplies? If raw materials and ingredients are derived in those countries, would the United States be able to ramp up domestic production? The White House is considering incentives and Buy America government procurement requirements to stimulate demand for U.S. production and in the meanwhile has temporarily reduced tariffs on medical supplies such as disposable gloves, face masks and other common hospital items from China.

20 Countries Ban Medical Exports

A Cure Worse Than the Disease

Removing barriers to trade in essential products is a healthier approach than imposing restrictions that could exacerbate potential shortages.

Nonetheless, some 20 countries have announced a ban on the export of medical gear – masks, gloves, and protective suits worn by medical professionals. They include Germany, France, Turkey, Russia, South Korea, India, Taiwan, Thailand and Kazakhstan.

Governments generally do maintain national stocks of critical items to enable manufacturers to ramp up production in cases of health emergencies or address unexpected gaps in their supply chains. But when major producers withhold global supply, importing countries face shortages and higher prices. Dangerously, India’s trade restrictions go beyond medical gear to restrict export of 26 pharmaceutical ingredients. India, however, relies heavily on APIs imported from China for their medicines, much of it originating from factories in Hubei province where the outbreak emerged.

Bans tend to beget more bans, potentially wreaking havoc on pharmaceutical and medical product supply chains, making it more difficult for healthcare workers to stem spread of the virus. Poorer countries with already fragile and underfunded healthcare systems are left in an even more vulnerable position.

A Test for Public-Private Collaboration

Instead of export restrictions, governments can expedite purchase orders and otherwise support industry efforts to ramp up production for domestic and global use. Most global manufacturers are operating at several times their usual capacity since the initial outbreak in China. Private labs are utilizing high-throughput platforms to conduct more tests faster but require trade in the chemical reagents needed to start up and run the tests.

Biopharmaceutical firms are applying their scientific expertise to accelerate the development of a vaccine and treatments for COVID-19. They are reviewing their research portfolios, investigating previously approved medicines that have potential to treat the virus, and donating approved investigational medicines to the global research effort. Internationally, scientists are collaborating through a Norway-based nonprofit called the Coalition for Epidemic Preparedness Innovations on COVID-19 vaccine development. They know that the more options, the better – most drug candidates will not get through all three phases of clinical trials.


Epidemic diseases evolve and they do not respect borders. Treating them, as well as the myriad chronic diseases and other ailments that affect us more routinely, requires new and adapted medical technologies arising from innovation made widely available through trade.

While there’s nothing inherently wrong with providing incentives to encourage domestic production, it should not come at the expense of free trade in health-related products. Tariffs should be eliminated on life-saving medicines and their ingredients. Governments must impose restrictions on exports temporarily and only when absolutely necessary. In this way, openness in trade will help promote the recovery of both our health and our economies.

Many thanks to economist and contributor Alice Calder for running all the trade numbers in this article. Full data tables may be accessed here.


Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

Alice Calder

Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

This article originally appeared on Republished with permission.