Coronavirus Outbreak Will Send Drug Prices Soaring, Health Care Experts Warn

America’s major drug makers source 40 percent of their active components from China.

The coronavirus outbreak will likely drain America’s emergency drug reserve. GERARD JULIEN/AFP via Getty Images

The medical community is bracing for the next big victim of coronavirus Covid-19: the global drug market.

America’s major drug manufacturers source 40 percent of their active components (API) from China. The Strategic National Stockpile (SNS), a repository providing medical supplies for emergency uses, sources 85 percent of its APIs from China. “With such a heavy reliance on China’s market for APIs, there is no question that drug supply chains will experience disruption,” Rita Numerof, president and co-founder of the global healthcare consulting firm Numerof & Associates, told Observer.

“As manufacturers look to alternative sources, I suspect that drug prices will see an impact until the market levels off,” she added.

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As of Thursday morning, the coronavirus has infected more than 81,000 people globally, most of whom are in China, and claimed almost 2,800 lives. The situation has forced all 37 Chinese plants that manufacture active components for U.S. drug companies to either temporarily shutter or reduce operations.

The Chinese government has asked pharmaceutical companies to resume production from the Lunar New Year holiday. But officials have requested that, even after operation returns, sales representatives avoid physical contact with customers. Both AstraZeneca and Merck & Co. have facilities in hard-hit regions across China.

In October, Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER) at the U.S. Food and Drug Administration (FDA), warned congressional leaders that dependence of foreign sources for drugs and APIs could have detrimental effects—a concern echoing the coronavirus’ disruption to the global pharmaceutical supply chain.

Three of the essential medications identified by the World Health Organization—capreomycin streptomycin and sulfadiazine—source APIs from China. Capreomycin and streptomycin are used in treating tuberculosis; and sulfadiazine is used to treating chancroid, a bacterial infection affecting the groin, and trachoma, a bacterial infection affecting eyes.

Even before the coronavirus outbreak, federal regulators had warned about the danger of American drug companies relying on China for active components in life-saving drugs.

“This should be a wake-up call to manufacturers that haven’t diversified their sourcing for ingredients,” Numerof said. “According to figures provided by the FDA, ‘as of August 2019, only 28 percent of the manufacturing facilities making APIs to supply the U.S. market were in our country.'”

Even minor disruptions to the drug market could cause a massive impact. In January, GlaxoSmithKline temporarily halted production of the popular migraine medication, Excedrin, citing “inconsistencies in how the ingredients are weighed” as the reason.

According to FiercePharma, a pharmaceutical trade publication, drug companies including Pfizer, Johnson & Johnson, Bayer, Merck and Roche “have stock policies in place to minimize the impact.” But American drug companies only have so much stockpiled, so prices will likely soar as the coronavirus continues to spread.

Coronavirus Outbreak Will Send Drug Prices Soaring, Health Care Experts Warn