COVID-19 and pharmaceutical manufacturing: estimating effects on API markets for essential medicines and in-demand, speculatively repurposed medicines Seminar
Seminar
This event has now finished.
Event details
Speaker: Melissa Barber (Harvard)
Host: James Lomas (York)
Background: The COVID-19 pandemic sent a shockwave across global pharmaceutical supply chains. Production capacity was affected by factory closures, raw material shortages, and a reduced workforce. Pharmaceutical production is highly globalized, with raw material production largely centered in India and China. Despite widespread concerns about medicine shortages due to disruptions in manufacturing and supply chains, there is no systematic monitoring of raw material markets nor global coordination to manage risk and ensure equitable supply continuity. This study evaluates the effect of COVID-19 on markets for active pharmaceutical ingredients (API).
Methods: Sector-wide effects were measured using a basket of key essential medicines, as defined by inclusion on WHO’s ‘core essential medicines’ list. Separate analyses evaluated effects on medicines speculatively repurposed for COVID-19, which we hypothesize were subject to more severe market shocks. A novel panel dataset of API price and volume was constructed by analyzing shipment-level customs declarations from India and China, the leading API exporters globally. To measure the effects of COVID-19 across the sector, we used a linear mixed-effects model with interruption and random intercepts to measure changes in price and volumes on key essential medicines. In this model, market trends for each drug after the WHO pandemic declaration (11 March 2020) are compared to their pre-trends. To measure effects on repurposed medicines, we used synthetic difference-in-differences (SDID), using sector trends as controls. Pharmaceutical markets are highly segmented by country income group, so data were stratified by importing market category, e.g. high-income countries (HICs) and low- and middle-income countries (LMICs).
Results: 18,832 shipments representing 76 million kg of API were included in the analysis. Following the WHO pandemic declaration, API prices for key essential medicines increased by 210% (95% CI: 5%, 813%) on average compared to pre-trends across exports, controlling for covariates. Volume effects were positive with high variance (5484%, 95% CI: 3%, 302,321%). Observed effects were much larger for medicines speculatively repurposed for COVID-19: price increases beyond overall sector-wide effects were observed for hydroxychloroquine exported from China (576%, 95% CI: 420%, 781%) and India (90%, 95% CI: 49%, 142%); ivermectin prices increased by 163% (95% CI: 104%, 240%) for Indian exports; no data were available for China. Comparing exports to HIC versus LMIC markets, price changes were not significantly (textit{p} <0.05) different between exports destined for LMIC compared to HIC markets, but the volume of exports to LMICs decreased by 10% (95% CI: 2%, 18%) compared to exports to HICs, adjusting for all other model covariates.
Conclusions: Analysis of API supply chains and pricing is critical for targeting policy responses within the supply chain. In this study, we found that the COVID-19 pandemic led to price increases for both key essential medicines and medicines speculatively repurposed for COVID-19. Another key finding is the pandemic’s disproportionate negative effect on the volume of API exports to LMICs compared to HICs, suggesting either higher price sensitivity among LMIC buyers or prioritization by suppliers to fulfill HIC orders. A global system for monitoring API supply is urgently needed, and future pandemic planning should also consider a global mechanism or strategy to mitigate price shocks and shortages of essential medicines.
Methods: Sector-wide effects were measured using a basket of key essential medicines, as defined by inclusion on WHO’s ‘core essential medicines’ list. Separate analyses evaluated effects on medicines speculatively repurposed for COVID-19, which we hypothesize were subject to more severe market shocks. A novel panel dataset of API price and volume was constructed by analyzing shipment-level customs declarations from India and China, the leading API exporters globally. To measure the effects of COVID-19 across the sector, we used a linear mixed-effects model with interruption and random intercepts to measure changes in price and volumes on key essential medicines. In this model, market trends for each drug after the WHO pandemic declaration (11 March 2020) are compared to their pre-trends. To measure effects on repurposed medicines, we used synthetic difference-in-differences (SDID), using sector trends as controls. Pharmaceutical markets are highly segmented by country income group, so data were stratified by importing market category, e.g. high-income countries (HICs) and low- and middle-income countries (LMICs).
Results: 18,832 shipments representing 76 million kg of API were included in the analysis. Following the WHO pandemic declaration, API prices for key essential medicines increased by 210% (95% CI: 5%, 813%) on average compared to pre-trends across exports, controlling for covariates. Volume effects were positive with high variance (5484%, 95% CI: 3%, 302,321%). Observed effects were much larger for medicines speculatively repurposed for COVID-19: price increases beyond overall sector-wide effects were observed for hydroxychloroquine exported from China (576%, 95% CI: 420%, 781%) and India (90%, 95% CI: 49%, 142%); ivermectin prices increased by 163% (95% CI: 104%, 240%) for Indian exports; no data were available for China. Comparing exports to HIC versus LMIC markets, price changes were not significantly (textit{p} <0.05) different between exports destined for LMIC compared to HIC markets, but the volume of exports to LMICs decreased by 10% (95% CI: 2%, 18%) compared to exports to HICs, adjusting for all other model covariates.
Conclusions: Analysis of API supply chains and pricing is critical for targeting policy responses within the supply chain. In this study, we found that the COVID-19 pandemic led to price increases for both key essential medicines and medicines speculatively repurposed for COVID-19. Another key finding is the pandemic’s disproportionate negative effect on the volume of API exports to LMICs compared to HICs, suggesting either higher price sensitivity among LMIC buyers or prioritization by suppliers to fulfill HIC orders. A global system for monitoring API supply is urgently needed, and future pandemic planning should also consider a global mechanism or strategy to mitigate price shocks and shortages of essential medicines.