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Gareth Carpenter
19 May 2020

US government signs $354 million generics and API manufacturing contract with Phlow

Pharma start-up will use continuous manufacturing to shore up supply chain of essential medicines

The US government has signed a USD 354 million contract with pharma start-up Phlow Corporation to manufacture generics and active pharmaceutical ingredients (APIs) needed for drugs in short supply, including COVID-19 treatments, in a move to create the nation’s first strategic stockpile of key ingredients and reduce its dependence on overseas supply.

The four-year contract, awarded by the Biomedical Advanced Research and Development Authority, could be extended up to USD 812 million over ten years, making it one of the largest awards in BARDA’s history. Under the terms of the agreement, Phlow will lead a team of private sector entities that includes API and intermediates manufacturer Ampac Fine Chemicals, Civica Rx and the Medicines for All Institute.

Phlow said it has started manufacturing chemical precursor ingredients, APIs and finished dosage forms for over a dozen medicines to treat hospitalized patients with COVID-19-related illnesses.

“Many of these medicines are in shortage and have previously been imported from foreign nations,” the company said in a statement.

Phlow said it had also delivered over 1.6 million doses of five generic drugs used to treat COVID-19 to the US Strategic National Stockpile, including medicines to sedate patients requiring ventilator support, painkillers and antibiotics.

The company said it is also building the US’ first Strategic API Reserve (SAPIR), a long-term stockpile to secure key ingredients.

The decision to award the contract to a new company rather than an established manufacturer has raised eyebrows.

On its website, Virginia-based Phlow markets itself as a solution to a “broken” US pharmaceutical supply chain “dangerously dependent on foreign suppliers.” It says traditional batch manufacturing, which it describes as a multi-step, lengthy process that involves the use of large-scale, labour-intensive equipment, has led to API production being mainly centred in China and India, where labour costs are low.

The company says all its pharmaceutical products will be manufactured in the US by continuous manufacturing, which it describes as a modern process “that maximizes throughput, increases productivity, and lowers labour requirements.”

Phlow’s business model chimes with the Trump administration’s desire to refocus API manufacturing in the US, particularly as the current coronavirus pandemic has placed greater emphasis on security of drug supply.

“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, commenting on the deal.

In April, Phlow signed a USD 6 million contract from the US Department of Health and Human Services to secure a supply of medications and APIs at risk of shortage due to the COVID-19 pandemic.

Non-profit pharma firm Civica Rx will manufacture the finished dosage product on the same site as Phlow's precursor and API production and distribute via a network of more than 1,200 hospitals.

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