Mapping Done, So What? 

Maps and other data allowed global health agencies to understand where the vulnerabilities were. Products with low-supply risk such as first-line ARVs—characterized by having abundant supply capacity, multiple suppliers, and lower manufacturing complexity—did not require specific interventions. In many cases, knowing which products had lower supply risk ahead of launching a new regimen assured agencies that supply constraints would not prevent treatment if product uptake accelerates.  

This case applied to when the HIV regimens shifted to dolutegravir, an antiretroviral. In that instance, Global Fund, Unitaid, and USAID used analysis by the Clinton Health Access Initiative [PDF] to ensure that the supply side was ready for a large-scale, but carefully managed, regimen change.  

The Global Fund used similar mapping to conduct internal analysis of the API and KSM markets. That analysis revealed that although capacity for new antiretroviral pills was adequate to meeting the forecasted demand, the availability of finished product suppliers could be constrained by API supply. Many generic manufacturers depend heavily on external sources for their APIs, and some rely entirely on external suppliers. 

In contrast, many large, vertically integrated companies have made significant investments in API production to secure their finished product supply chains, whereas others focused selectively on vertical integration for emerging products. Disruptions in API supply and price increases are often driven by challenges [PDF] in securing KSMs. Products with high supply risk—characterized by limited supply capacity, few suppliers, and high manufacturing complexity—required collaboration between global health agencies to effectively use limited supply and initiate measures to expand supply at the API, KSM, or finished product levels. Some products required nonprice factors such as investments in quality and supply security to be considered in supplier selection. 

One notable example is the ARV Procurement Working Group, established in 2011 with the aim of coordinating procurement of pediatric ARVs, strategically managing demand, reducing fragmentation through streamlined product selection, and supporting transition of countries. The group's actions considered upstream supply barriers [PDF] as well as the actors and relationships at the API and KSM level.  

Another example is the market for artemisinin combination therapies, the recommended first-line treatment for malaria, which relies heavily on agriculturally produced artemisinin, which is primarily grown in China. Fluctuations in farmer growing cycles and demand-side factors have caused significant price volatility for this key starting material, leading to supply-demand mismatches and reduced affordability.  

Understanding supply chain dynamics—such as which finished pharmaceutical product manufacturers source from which API producers and the types of contracts API manufacturers use to secure KSM (such as spot contracts or forward contracts)—enabled the Global Fund to prioritize manufacturers that promote long-term agreements with their KSM suppliers. These long-term contracts help stabilize the fragile KSM market by reducing the impact of market demand fluctuations.  

Given the focus of global health agencies on volatile markets, they have had incentives to systematically collect and use information that can help supply side markets work more efficiently, anticipate and prevent supply chain disruptions, and improve supply chain resilience. 

Unpacking the Differences 

The United States, European Union, and other pharmaceutical supply chains have traditionally operated under the assumption of market stability. Historically, upstream supply chain risks have been obscure and thus efforts to organize information about the risks embedded in sourcing materials and the supply chain have been limited. 

By contrast, global health agencies have assumed market instability when suppliers are not as interested in supporting the geographies they serve and face a number of market shortcomings. Those agencies thus had a more explicit focus on understanding upstream issues. 

The limited number of major buyers in the HIV/AIDS, malaria, and TB drug market has facilitated coordination efforts. For low- or middle-income countries, where the disease burden is highest, the primary buyers of those medicines include the Global Fund, South Africa, and USAID. Given there are only a few key stakeholders, coordination and information exchange are more manageable, enabling a shared focus on identifying and addressing upstream supply chain risks common to all parties. 

Collaboration platforms such as the ARV Procurement Working Group have been instrumental in fostering this exchange because global health agencies prioritize cooperation over competition. The U.S. market, by contrast, presents greater challenges for such efforts. U.S. buyers operate competitively, often viewing data on upstream markets as a strategic asset, which makes it more difficult to pool information and coordinate effectively. 

Understanding Risks in High-Income Countries' Health Supply Chains 

The increasing availability of trade flow data and other valuable data streams has provided new opportunities to enhance understanding of upstream supply-chain challenges. 

Collaboration among purchasers, however, is essential to fully leverage this data. The four main distributors of medicines maintain sourcing relationships with the generic manufacturers supplying these drugs. 

They possess critical insights into finished product suppliers, their capacities, and their API suppliers. Yet these distributors have no incentives to collaborate and share this information. Their individual sourcing and supply data would be far more valuable if combined with data from others, creating a broader understanding of supply chain dynamics. No clear mechanism, however, exists for them to share this information without compromising the commercial interests tied to sourcing and supplier data. 

U.S. Pharmacopeia, an independent, scientific nonprofit organization, has started an effort to collect such data systematically. Resilinc, a U.S.-based private company also provides such upstream supply mapping and associated risk to their clients, including companies in the pharma and life sciences business.  

The Supply Chain Control Tower is a public-private partnership between the U.S. Health and Human Services Department, other federal agencies, and private distributors that was developed during the COVID-19 pandemic to enhance downstream supply chain visibility by aggregating voluntarily shared data from multiple sources. With adequate resourcing and a more systematic approach, such a structure could be used for collecting upstream data on APIs and KSMs and organizing it to proactively understand supply chain vulnerabilities. 

For these efforts to truly thrive, however, the U.S. government would need to facilitate greater collaboration between different companies so that multiple streams of data can be pooled. The pooled data would then enable a better collective understanding of supply concentration and risks of disruption. Such detailed understanding is crucial for making decisions and prioritization related to U.S. manufacturing and industrial base expansion for critical pharmaceuticals, APIs, and KSMs. Valuable lessons can be gleaned from how global health agencies have structured and managed these efforts, both technically and with governance.