Overview

The ABPI exists to make the UK the best place in the world to research, develop and access medicines and vaccines to improve patient care. The medicines and vaccines our industry develops are transformative for public health, patients and the NHS.
Our industry strives to be responsible and efficient in the way it handles all issues relating to medicines supply. We regularly engage with the Department for Health & Social Care (DHSC) on this topic.
Events such as the Covid-19 pandemic demonstrated how well the pharmaceutical industry can manage and address global supply chain shocks. However, while the overall proportion of medicines that are in short supply at any time is low, shortages are an inherent risk in complex, global and highly regulated supply chains such as pharmaceuticals.
The branded medicines sector sources the active pharmaceutical ingredients (APIs) needed for production from a variety of geographic locations. Enforced on-shoring, near-shoring, or friend- shoring can have unintended consequences which may lead to increased costs of bringing medicines to the market.
Medicines and Healthcare products Regulatory Agency (MHRA) capacity challenges and backlogs experienced can result in delays to the approval of new medicines and variations to medicines already approved, causing bottlenecks in supply.
The ABPI encourages the Government to advocate for globally resilient supply chains by reducing trade barriers and facilitating the movement of goods.
The industry is working with DHSC to monitor the impact of untested provisions agreed in the new Voluntary Scheme (VPAG) which in particular may impact the supply of older branded products.

Why do shortages occur?

While it is a relatively small proportion of overall available medicines that are in short supply at any time, shortages are an inherent risk for the pharmaceutical supply chain because it’s global, particularly complex, and highly regulated.
Shortages can arise for a variety of different reasons, only some of which are fully in the control of manufacturers. These include: issues arising from the disrupted supply of active pharmaceutical ingredients (APIs) (e.g. crop failures, floods, heatwaves, droughts); component supply issues (e.g. shortages of packaging components); manufacturing issues (e.g. manufacturing facility failure); regulatory intervention (such as requirements to change packaging/labelling); unexpected increases in demand (such as changes in clinical practice or local formulary); distribution issues (e.g. wholesaler staffing issues); media/social media attention on certain therapy areas (e.g. HRT); stockpiling along the supply chain (by wholesalers, pharmacies or indeed patients); trading for financial gain (diversion of products intended for one country to another); and geopolitical events overly restricting the movement of

goods at national borders. The root cause of the issue needs to be identified in each instance, and there is no simple solution that will address all issues.

Global events such as the Covid-19 pandemic have shown that the pharmaceutical industry can manage and address global supply chain shocks very well, especially when working collaboratively with government. During the pandemic, companies were able to ensure the uninterrupted supply of existing medicines as well as the development and scale-up of new treatments and vaccines in an incredibly short period of time. This ensured that medicines continued to reach the patients who needed them, and that 11.5 billion doses of Covid-19 vaccines were delivered in less than two years.

Impact of regulator delays on supply

After leaving the EU, the MHRA is now a stand-alone regulator. Industry is concerned that the MHRA is expected to deliver a broad remit, yet has significant capacity and resourcing challenges. This has inevitably caused backlogs in routine regulatory activities, first in clinical trials approvals last summer and now in authorisations for new and generic medicines, and in medicine license variations.
If MHRA capacity is not addressed, it could impact the availability of certain medicines because they can’t be ‘placed on the market’, and therefore add to the problem of shortages. It is vital that the MHRA is suitably resourced to ensure that it can offer predictable performance.

Impact of the ‘commercial environment’ on supply

Government has tight control on what it spends on branded medicines across the UK through both the 2024 Voluntary Scheme (VPAG - agreed between industry and government), and the alternative Statutory Scheme.
Within the VPAG, government introduced a policy whereby some older branded products pay considerably more than others (a payment range of 10% to 35%). The policy is untested, and so its impact will need to be monitored carefully. The DHSC and the ABPI agreed there would be an exceptions process in the VPAG, where companies can make a case that payment under the scheme makes a product unviable to supply.
This will require DHSC to be flexible and monitor supply resilience, otherwise the VPAG could have the unintended consequence of some branded medicines being withdrawn. Many in industry see a real risk that increasing numbers of medicines will no longer be ‘economically viable’ to supply in the UK. The ABPI is committed to working with DHSC to monitor this part of the VPAG agreement.

Building resilient global supply chains

API sources may vary significantly between generic and non-generic medicines. A survey1 conducted by the European Federation of Pharmaceutical Industries and Associations (EFPIA) showed that 64% of APIs needed to produce branded medicines in the European Union come from the EU, UK and Switzerland. 15% of APIs used come from North America, 6% from India,

1 https://www.efpia.eu/media/lsbbeaze/20230914_efpia-leaflet-compressed.pdf (2021)

5% from China and 10% from across other countries. However, the source of API for generic medicines may be considered overly dependent on India and China.

Given their global nature, for medicines and medical products supply chains to be resilient, safe and sustainable, they must be considered ‘end-to-end’ – from raw materials to manufacture, storage and distribution to patients. This relies on continued effective, dialogue with between UK government and international partners, and industry.
Global supply chains depend on the free flow of raw materials, components and finished goods across borders. The UK should always work to remove trade barriers, ensuring that any export controls are targeted, proportionate and time limited, and promote supply resilience of medicines as a priority area.
As a signatory to the World Trade Organisation (WTO) Pharma Agreement, the UK is already playing its part in bolstering internationally resilient trade in health. Post-pandemic, member states could further eliminate tariffs by expanding this Agreement, eliminate export restrictions and improve trade facilitation measures for health products, and the UK has an opportunity to take a leading role here.
On-shoring, near-shoring, or friend-shoring can have unintended consequences including: a) increased complexity of manufacture and inherently increasing the risk of 'supply shocks'; b) potential sustainability or environmental impacts; and c) increased costs of bringing medicines to the market due to the above.
Ensuring the UK has an internationally competitive offer to manufacturing investors will be key to attracting and scaling domestic capabilities.
Procurement can also support supply resilience and diversification. Through inclusion of health supply chain resilience as a material award criterion in product tenders, the NHS can recognise suppliers for supply resilience measures, such as, for example, maintaining buffer stock in the UK.
Similarly, awarding multiple suppliers can broaden the supplier base, and may provide greater flexibility when demand spikes or individual suppliers fall over.

The UK’s Critical Imports Strategy

The ABPI worked directly with the Government to ensure that the Strategy recognises the importance of medicines supply.
The Strategy puts forward proposals for how the UK can work internationally to build more robust supply chains and strikes the right balance between private sector action and government support through data-based decision making and international cooperation.

Feb 2024