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Puerto Rico as Part of the Medical Supply Chain

The Subcommittee on Health of the Committee on Energy and Commerce held a hearing last week called, “Road to Recovery: Ramping Up COVID-19 Vaccines, Testing, and Medical Supply Chain.”

The opening statement from Rep. Frank Pallone (D-NJ) pointed out the problems in the U.S. medical supply chain that have come to light during the pandemic. “We…need a more robust and reliable medical supply chain. While states are administering more COVID-19 vaccines, they are running up against supply shortages of vaccine doses, but also the ancillary medical supplies such as syringes that are used to extract every available dose.”

Inadequate supplies

Dr. Luciana Borio, Vice-President of nonprofit venture capital firm IN-Q-TEL, said, “To ensure the U.S. has sufficient supplies for this and future pandemics, HHS should expand the industrial base for critical supplies required for medical countermeasures manufacturing and administration.”

Members of Congress expressed concerns about the fact that personal protective equipment (PPE) and other medical supplies were not available as needed.

The Strategic National Stockpile was not intended to handle a global pandemic. Underfunding and lack of awareness meant that the SNS had not replenished its supply of masks in more than a decade, and had many expired masks on hand. Its backup supply of PPE and ventilators ran out in February 2020.

One reason for the problem was an inability to keep up with inventory. The SNS doesn’t use RFID technology or indeed any modern system for tracking inventory. Grocery stores across the United States have cutting edge technology for inventory, but the SNS uses photos of pallets to try to estimate what they have on hand.

Supply chain

The medical supply chain in the United States relies heavily on offshore producers.

Two thirds of the active ingredients used to make generic drugs for the United States come from China. India is another major player. Many generic drugs are made in India from active ingredients made in China, both countries whose production was curtailed by the pandemic. Indeed, 40% of all drugs used in the United States and 80% of active ingredients are made overseas.

The FDA has been warning the United States about the possible consequences of over-reliance on foreign sources of drugs and medical supplies for years, but market forces have pushed the U.S. further into that over-reliance.

Congressman Morgan Griffith (R-VA) asked, “I do think on these important matters we need to have production in the United States. Knowing that we probably could have done better before, what could we do better going forward and what percentage is necessary to be on our home territory–whether it be one of our territories like Puerto Rico or Micronesia or wherever it is that we need to have–where we can get our hands on it when we need it?”

The new COVID-19 relief bill, the American Rescue Plan, includes $10 billion to expand medical supply manufacturing capacity in the United States, which includes Puerto Rico.

Puerto Rico’s part

Puerto Rico has 49 FDA-approved pharmaceutical plants in operation. As several speakers mentioned in the hearing, it is difficult for private sector companies to take the risks necessary to bring production back to U.S. manufacturing plants when offshore manufacturing facilities dominate the field.

The hearing also emphasized the importance of spreading risk throughout the U.S. and avoiding over-reliance on any geographic area – including Puerto Rico.

Rep. Griffith, in his exchange with Congressional witness Greg Burel, former Director of United States Strategic National Stockpile, picked up on Burel’s comments about the saline shortage that followed Hurricane Maria by emphasizing that, “We had that problem when Puerto Rico got hit by the storms and what percentage of that needs to be split up so that we’re not being hit by various storms. I mean, different parts of the country have different issues, but it would seem to me we need to make sure that we have a diversity of geographic locations.”

Including Puerto Rico, currently the largest pharmaceutical exporter in the United States, in plans to expand manufacturing of medical supplies, can help ensure that diversity.

Government contracts and other federal support of manufacturing could allow Puerto Rico, which is in a strong position to provide competitive products, to be included as an important part of strengthening the U.S. medical supply chain.

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