US government to grant up to $812M to newcomer Phlow Corporation for Covid-19 manufacturing: Bringing pharma home or ‘profiteering off pandemic’?

GlobalData Healthcare 16 July 2020 (Last Updated July 16th, 2020 11:22)

US government to grant up to $812M to newcomer Phlow Corporation for Covid-19 manufacturing: Bringing pharma home or ‘profiteering off pandemic’?

The US Federal Government will award up to $812M to new company Phlow Corporation (Richmond, VA, US) to manufacture Covid-19 medicines and other therapies that are at risk of shortage. The Department of Health and Human Services (HHS) (Washington DC, US) says it is bringing pharmaceutical manufacturing back to the US, but other groups have questioned why the grant was awarded seemingly without competition to a new company that will need time to build facilities rather than to an established CMO.

The Biomedical Advanced Research and Development Authority (BARDA), which is a part of the HHS, is providing the funds via an initial four-year award of $354M, with the potential to be followed by an additional $458M, Phlow announced in May.

Phlow will lead a collaboration with Civica Rx (Salt Lake, UT, US), a non-profit pharma company, AMPAC Fine Chemicals (Rancho Cordova, CA, US), and Virginia Commonwealth University’s Medicines for All Institute to manufacture more than 12 different medicines.

Phlow and AMPAC will produce pharmaceutical precursors and APIs. At first, Civica Rx will manufacture finished dose forms including vials and syringes via its pre-existing network of Civica manufacturing partners, and later by building its first production facility, the company said.

Phlow was founded as recently as January 2020, and it will need to build “an advanced manufacturing capability in Virginia and sterile injectables manufacturing facilities,” next to AMPAC’s site in Virginia, the company said in a statement. Civica will also build its own finished dose sterile injectable facility nearby to manufacture drugs approved via its own ANDAs, CEO Martin VanTrieste told this publication. Civica Rx was formed in 2018 to combat drug shortages and price spikes by using partner CMOs to produce Civica-labeled generic drugs (B/POR, September 2018).

Robby Demeria, Phlow Corporation Chief of Staff, told this publication that the facility will take 12–18 months to build. This has raised questions about whether Phlow’s and Civica’s sites will be ready to manufacture a Covid-19 therapy in the required timeframe. Gil Roth, President of the Pharma & Biopharma Outsourcing Association (PBOA), commented, “With a contract like this, the devil is in the details. PBOA member companies and I are certainly interested in learning more about the parameters of this agreement, and why it was conducted in a no-compete manner.”

The contract received just one bid, according to the government website USAspending.gov. However, Demeria denied that Phlow made the only bid for the grant. “Phlow submitted a proposal under BARDA’s Board Agency Announcement for advanced manufacturing technologies…along with other companies (unknown exact number),” he wrote in an email statement.

While Phlow is building its API facilities, “AMPAC Fine Chemicals will manufacture these essential API through traditional batch manufacturing processes and store the API in reserve,” Demeria said, adding “If there is a second wave of Covid-19 this fall, Phlow will send the stored API to fill/finish partners for final dosage and then to the SNS [US Strategic National Stockpile] for distribution.”

When asked whether Civica’s facility will be operational in time to address the Covid-19 crisis, VanTrieste told this publication that while building manufacturing sites is a long-term goal, the short-term aim is to build medicine stockpiles through other means. Civica is currently working with five CMOs and is in negotiations with more to outsource the manufacture of generic drugs “to re-enter the market or increase existing capacity.” Civica is also pursuing Abbreviated New Drug Applications (ANDAs) for generic drugs that will be manufactured by CMOs. Its first ANDA drugs will be manufactured by Patheon (owned by Thermo Fisher; Waltham, MA, US) in early 2021, he said. When Civica’s own sterile injectable facility is built, it will manufacture its own ANDA drugs, he said.

Phlow Corporation: Shunning Foreign Supply Chains

Phlow Corporation stated that it is contributing to a Strategic Active Pharmaceutical Ingredients Reserve (SAPIR), a stockpile that it claims will reduce US dependence on foreign manufacturing. The Trump administration has touted the collaboration as bringing pharmaceutical manufacturing back to the US. Ampac, although based in California, is owned by South Korean holding company SK Holdings (Seoul, South Korea).

“For far too long, we’ve relied on foreign manufacturing and supply chains for our most important medicines and active pharmaceutical ingredients, while placing America’s health, safety, and national security at grave risk,” said Peter Navarro, director of the White House Office of Trade and Manufacturing Policy. Navarro is a controversial advisor to President Trump, having been accused by others in the administration of lying to the President about the feasibility of proposed trade policies, according to a Washington Post profile.

Others have criticised attempts to limit the use of foreign supply chains. “It’s a good thing pharmaceutical manufacturing supply chains are spread out around the world,” said Pharmaceutical Research and Manufacturers of America (PhRMA)’s (Washington DC, US) director of public affairs, Nicole Longo, in an editorial on the organisation’s website. “While often overlooked, geographic diversification of the supply chain is beneficial, especially in the time of pandemics, because of the flexibility it gives companies when they need it most.”

Margarida Jorge, campaign director, Lower Drug Prices Now, was more forthright. “This White House seems to have an open spigot of taxpayer dollars going to drug corporations that profiteer off of pandemics,” she commented. “They’re gearing up to give the largest award in history to a corporate executive who quintupled the price of naloxone in the middle of the opioid epidemic. Yet again, the administration is handing over taxpayer dollars away to a drug corporation with no strings attached and no guarantee that we’ll get affordable access to the medicines developed with our money.”

Phlow describes itself as a “public benefit pharmaceutical manufacturing company dedicated to providing high-quality, low-cost pharmaceuticals.” Its CEO, Eric Edwards, is the co-founder of Kaleo (Richmond, VA, US), which was criticised by a US Senate subcommittee in 2018 for raising the price of its opioid overdose antidote naloxone.

In response to Jorge’s “profiteering” accusation, VanTrieste noted that the drugs Civica produces are identified by healthcare priorities and do not have a high return on investment.

The drugs to be manufactured via the collaboration include neuromuscular blocking agents, sedation agents, and pain medications. For more on Covid-19 drug shortages, see GlobalData’s PharmSource Bio/Pharmaceutical Outsourcing Report, June 2020.