U.S.-Backed Researchers Use AI to Probe for Weaknesses in Drug Supply Chains

Any overreliance on foreign inputs in drug supply chains could leave the U.S. open to dire shortages in the event of conflict or natural catastrophe. The White House has flagged the potential disruption of the pharmaceutical supply chain as a national-security issue, saying these drugs are essential to the health and prosperity of the country.

“The ever-changing threat environment, both natural and man-made, gives rise to numerous unforeseen challenges, such as to the pharmaceutical supply chain,” said Jennifer Foley, a deputy director in DHS’s science and technology directorate.

Quantifind Inc., a company that normally does risk screening for financial institutions, will do the work, looking into supply chains for the Cross-Border Threat Screening and Supply Chain Defense Center of Excellence, a government-backed research center connected with Texas A&M University.

The DHS-backed dive into drug supply chains will examine to what extent the supply of drugs might be susceptible to disruption. 

Ari Tuchman, Quantifind’s chief executive, said the team intends to look at whether the U.S. might be leaning too much on China and other countries as suppliers.

“There’s a lot of Chinese influence even in the companies that we don’t think are Chinese. What we’re doing for DHS is first mapping out what is really the extent of the risk,” he said

The country of origin of a finished drug can be readily determined, but the materials that went into it—including so-called active pharmaceutical ingredients, or APIs—can be harder to trace. The new DHS-backed study will try to map out supply chains several layers deep, and potentially uncover previously hidden issues, Mr. Tuchman said.

Work on the study has already begun. One example inquiry showed that a Swiss painkiller maker had an Indonesian subsidiary and that subsidiary had a board member with links to a host of Chinese shell companies, Mr. Tuchman said. The use of AI can help map those links at scale, and look for other potential risks, a first step in understanding U.S. vulnerabilities.

The researchers have been tasked with investigating environmental, social and governance risks to supply-chains, in addition to looking at their geographies. Mr. Tuchman said that AI can, for example, scan media reports to look at a supplier’s potential involvement in human rights abuses.

Experts have for years debated the prudence of looking abroad for the critical medicines Americans need, with some arguing U.S. reliance on Chinese drugs poses a grave threat. 

Beyond APIs, China is the source of many key starting materials used to make drugs, said Rosemary Gibson, a senior adviser at the Hastings Center bioethics think-tank and author of the book “China Rx.”

“The centralization of the global supply chain in a single country, whatever country it is, is a system perfectly designed for catastrophic failure,” she said.

Ms. Gibson in 2019 testified before the U.S.-China Economic and Security Review Commission that dependence on China rises to the level of national security risk.

Food and Drug Administration figures presented to Congress in 2019 showed the number of Chinese facilities making APIs doubled from 2010 to 2019, though the FDA said then that the U.S. hosted the largest number of facilities.

The pharmaceutical industry has pushed back against claims that the U.S. relies too much on China. PhRMA, an industry group, pointed to research that showed the majority of APIs made for drugs consumed domestically, as tracked by dollar value, are made stateside. Only 6% of APIs, measured by dollar value, are made in China, PhRMA’s figures showed.

The Association for Accessible Medicines, a trade group that represents generic drugmakers, declined to comment on the newly funded DHS study but pointed to recently published work by a researcher at Washington University in St. Louis that showed the U.S. already has idle drug manufacturing capacity that could be used to strengthen supply chains.

Steven Lynn, a former compliance head at

Novartis AG

who now works as a consultant, said that the pandemic has opened people’s eyes to issues inherent in far-flung pharmaceutical supply chains. 

“It’s a national security issue,” he said. 

Fixing the issue isn’t easy—labor costs can be several times lower in China than in Europe or the U.S.—but companies are trying to determine how to diversify their supply chains, Mr. Lynn said.

The Quantifind research isn’t aimed at producing policy prescriptions to solve these issues, but instead at giving the government the information it needs to be better prepared, said Greg Pompelli, the director of the research center working on the project. 

“We all saw from the pandemic that there was that second-, third-tier of supplier where everybody thought, ‘I don’t worry about them, because they’ve just always been there to deliver,’” he said. “Now we have to pay attention.”

Write to Richard Vanderford at [email protected]