A new report from the Institute for Integrated Economics Research has highlighted the strategic vulnerability of Australia’s supply of medicines.
Australia imports 90 per cent of its medicines, with around one-third of Australians reliant on daily prescriptions. However, the country is at the tail end of lengthy global supply chains with what the report calls ‘single points of failure’.
An infamous example was the nationwide shortage of EpiPen Jrs, used to treat anaphylactic reactions in children. Manufacturing issues and quality failures in the supply chain caused Australian supplies to run out in December 2019, prompting the Therapeutic Goods Administration (TGA) to advise Australians to use out-of-date or contaminated EpiPens. Supplies will only resume ‘before the end of the year’.
The problem is not unique to Australia: a public hearing held by the US government heard witnesses warn of a critical dependence on China for medicine supplies. Almost 90 per cent of American pharmaceuticals are generic medicines largely imported from China and India, with China responsible for ‘deliberate market manipulation’ that has reduced America’s indigenous drug manufacturing capability.
The report makes clear that medical supply chains are opaque and difficult to analyse in both the US and Australia.
“Significant issue is the apparent lack of an entity in the US Federal Government that is accountable for knowing who controls the US medicine supply,” the report argues. “According to Michael Wessel, a Commissioner on the US Government’s US-China Economic and Security Review Commission, the US simply does not know enough about China’s pharmaceutical sector, yet most APIs are imported from China or India, with India, in turn, actually sourcing a large number of inputs from China.
“This is particularly of concern given that US imports 95 per cent of ibuprofen and between 40 and 45 per cent of penicillin supplies from China.”
The report notes Australia’s similarly weak indigenous medicines manufacturing capability.
“Australia has extremely limited and diminishing manufacturing capacity across all sectors of products apart from vaccine manufacture,” the report argues. “There are some smaller industries with capacity for niche markets; however, government price regulation around the Pharmaceutical Benefits Scheme has forced the large majority of off-patent product manufacturing, where the vast majority of life-saving medicines sit, off-shore.
“Australia has almost no capacity to manufacture any active pharmaceutical product for most of the products listed on World Health Organisation's list of Essential Medicines.”
Although Australian self-sufficiency in drug manufacture is not wholly practical, the report argues that the current bipartisan political drive for a sovereign defence industrial capability could serve as a model for similarly sovereign medicines capability: “We need to have a robust analysis of our medicine supply chains and the Government needs to address any shortfalls in our national resilience before a crisis occurs.”