Coauthored with Jeffrey Wright, research associate in the International Institutions and Global Governance program.
Two decades ago, the vast majority of legal drugs consumed in the United States were produced domestically. Today, 80 percent of the active ingredients in medicines used by Americans are fabricated abroad. Home-grown medicines industries have exploded in developing countries like Brazil, India and China. As a result, medicines are compounded many times and cross multiple borders before they reach U.S. pharmacy shelves. Domestic oversight agencies, including the U.S. Food and Drug Administration (FDA), are therefore unable to supervise medicines’ production from start to finish, and many foreign counterpart authorities struggle to monitor and enforce adequate standards.
One alarming if predictable result has been the proliferation of substandard and counterfeit medicines around the world. This illicit trade is most acute in developing countries. Indeed, counterfeit medicines may comprise as much as 30 percent of drug markets in underdeveloped parts of Africa and Asia. But rich nations are hardly immune. More than one-third of reported counterfeit cases globally occur in developed countries. Just last year, the FDA’s Office of Criminal Investigations uncovered an obscure company called Medical Device King distributing counterfeit cancer medications in the United States.
To help devise strategies and examine best options for medicines regulators to coordinate multilateral cooperation in this sphere, CFR’s International Institutions and Global Governance (IIGG) program convened a workshop in September called, “Ensuring the Safety and Quality of the Global Supply Chain for Medicines: Regulatory Challenges and Lessons From Other Sectors.”
Held in Washington, DC, on September 17-18, 2013, the event convened heads of medicines agencies from ten countries and the EU to glean insight from transnational regulation in twelve other international spheres, ranging from global finance and customs security to conflict minerals and sustainable forestry. Despite differences in the multilateral frameworks for these issues, they share many international regulatory challenges facing the drug industry, including the harmonization of standards, implementation in jurisdictions with weak capacity, and monitoring and enforcement of commitments.
In particular, the workshop sought to assist regulators as they weigh options for updating the global architecture. Current multilateral institutions are neither designed nor equipped to tackle these challenges. The leading international health authority, the World Health Organization, has been ineffectual in implementing and enforcing its own measures. Various regional institutions, such as the framework for African Medicines Regulatory Harmonization, have attempted to fill the regulatory void, but proven inadequate. The Pharmaceutical Inspection Convention and Pharmaceutical Cooperation Scheme, known as PIC/S, has made some progress toward harmonizing of drug manufacturing and inspection but its remit excludes vital functions like tracing medicines in the supply chain and setting global standards.
In the absence of an effective global regulator, national authorities have experimented with new forms of transnational cooperation. The United States has been at the forefront of these efforts. Dr. Margaret Hamburg, Commissioner of the FDA, has spearheaded the creation of an International Coalition of Medicines Regulatory Agencies (ICMRA), an informal multilateral network committed to sharing information and best practices, establishing common regulatory standards for pharmaceuticals, cooperating in the surveillance of supply chains, and enlisting the private sector to ensure product safety. To date, its membership has been restricted to likeminded governments (largely from the OECD world) that share common regulatory approaches. But the ultimate aspiration is clearly to expand its membership to encompass emerging players—to create, in other words, a truly “global” coalition of regulators.
Creating such a global coalition, of course, raises fundamental questions of the purpose and design of any such institution. To name a few, member nations would need to agree on its scope, membership expansion, and appropriate levels of formalization. A full summary of the workshop’s discussion can be found here, but here are a few highlights:
- Institutional flexibility will allow medicines regulators to adapt to shifting issues, challenges, and politics over time. Most institutions are notoriously resistant to change, particularly once bureaucratic norms have been established. To ensure that their coalition remains nimble, relevant, and effective, regulators should build flexibility into their design choices. To retain flexibility, the ICMRA coalition should: start with a narrow scope of issues and small membership (at least initially); make decisions through majoritarian voting; establish an autonomous working group to foster innovation and self-reflection; and establish a mechanism for regular interaction with nonstate actors.
- The coalition of regulators should leverage the capacities of nonstate actors through strong multi-stakeholder engagement. When it comes to global governance, states are increasingly abandoning traditional, “hard law” approaches to achieving their regulatory objectives in favor of reliance on decentralized, “soft law” institutions. Softer approaches are easier to negotiate, more flexible, and allow for adjustment to local conditions. In addition, regulatory institutions now routinely integrate nonstate actors—namely firms and NGOs—as direct participants. This reflects a simple reality: no single actor (whether state, NGO, or corporation) can guarantee the safety of medicines alone. Accordingly, medicines regulators could enhance their transgovernmental network by promoting a parallel standard-setting scheme for private actors—and facilitating interactions between that group and their own coalition.
- Regulation yields better results when standards are aligned with market incentives. The implementation of and compliance with standards will be easier to achieve if regulators incentivize good behavior. For instance, industry actors (e.g., manufacturers, importers, and distributors) that meet rigorous supply chain security criteria—that is, above and beyond domestic standards—could receive special treatment from medicines authorities. Beyond enabling regulatory agencies to focus their limited resources on hard cases, such a voluntary approach could also foster brand differentiation, by supporting the use of labels or certificate programs to acknowledge good performers. In this scenario, the regulatory focus would shift to global supply chains of custody.