Premier launched a program that aims to bolster the supply of protective gear through domestic production, the group purchasing and consulting organization said Wednesday.
Premier plans to partner with U.S. manufacturers that can supply products in shortage, subsidize the development of affordable products that address specific market needs and establish sourcing contracts to ensure a continuous supply, the company said. Initially, Premier will invest in domestic suppliers of personal protective equipment—about 80% of which is sourced from Southeast Asia—as well as other medical commodities that are in short supply resulting from the COVID-19 pandemic.
"While we clearly understand that we need global diversity and domestic sources for supplies, the United States has historically been a high-cost region for manufacturing," Michael Alkire, Premier president, said in prepared remarks. "This program aims to alleviate some of this tension, supporting domestic or other manufacturers with capital and long-term contracts that will allow them to offer competitive price points."
COVID-19 has further exposed the cracks in the healthcare supply chain. Healthcare providers have been grappling with pharmaceutical and supply shortages for years, but the pandemic highlighted how reliant the U.S. is on the relatively cheaper goods produced by foreign manufacturers. That reliance has translated to a lack of visibility across the supply chain, leaving healthcare companies more vulnerable to disruptions.
"The last 20-year shift toward sourcing in Asia, specifically China, is clearly at its end because of the underappreciation of supply chain risk management when you have a single-source point of failure," Paul Bingham, director of transportation consulting at IHS Markit, said in a webinar last month hosted by the National Academies of Sciences, Engineering and Medicine. "This is not a new trend that is going to come out of this crisis, but this crisis is going to accelerate enormously a trend that was already there toward having manufacturing supply chains seeing distributed production around the world."
The Trump administration tapped drug manufacturer Phlow Corp. to lead a $354 million program to boost U.S.-based production of the active pharmaceutical ingredients to make critical medicines. The goal is to help alleviate or prevent drug shortages related to COVID-19 as well as chronically short generic sterile injectables.