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RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

A dependence on imports has left Australia at risk of dwindling supplies of essential medicines.

Now, as the industry gears up around a potential vaccine, experts are warning that manufacturing capabilities at home need to be boosted.

Today, journalist for The Saturday Paper, Margaret Simons, on Australia’s pharmaceutical vulnerability.

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RUBY:

Margaret, can you start off by telling me about this announcement the Prime Minister made a few weeks ago which gave us some clues as to the state of Australia’s pharmaceutical industry.

MARGARET:

Yes, sure, so the Prime Minister announced funding for rebooting or bolstering the Australian manufacturing industry.

Archival Tape -- Scott Morrison:

“We will be investing an additional $1.5 billion in specific industry measures, over and above what we’ll be doing in tax, energy, infrastructure and the like, to back our plan in next week’s budget.”

MARGARET:

And within that, within six identified key areas were medical products or drugs, medical equipment.

Archival Tape -- Scott Morrison:

“The Government has identified six national manufacturing priorities in areas of established strength and emerging priority.”

MARGARET:

And there was also funding within that for securing Australia's supply chains. And there was an emphasis on medicines there as well, obviously, because of the shortages caused by the Covid epidemic.

Archival Tape -- Scott Morrison:

“Armed with this experience, it is only sensible that Australia consider, as so many other countries are, more options to guard against supply chain vulnerability for critical necessities and to secure us against future shocks.”

MARGARET:

Now, even now, you know, some days after the budget, there's very little detail on exactly what's involved in that. It's $1.5 billion, so it's not a huge amount of money in the current context. And as I say, divided between six priority areas. So we don't really know what it means.

But the background to it is a very long standing problem with drug shortages in Australia.

RUBY:

So can you tell me about that? What is the situation in terms of our stock of medical supplies?

MARGARET:

Well, it's hard to find out, in fact, but Australia imports about 90 per cent of the drugs that we use. So we're heavily dependent on imports. On paper, we import most of those drugs from the USA and Europe. But in fact, even in America, they are unclear about the supply chains for many of those medicines. Often the active pharmaceutical ingredient is actually manufactured in China.

And in the case of generic drugs, that is those that are out of patent, sometimes the world's entire supply of an active pharmaceutical ingredient might come from a single factory. Oddly enough, many of them around Wuhan in China. So the whole world is heavily dependent on that very complicated supply chain in which the active ingredient might be made in a factory in China, the pills and tablets will be manufactured in another factory, perhaps in India. And just the final packaging takes place in either America or Europe.

RUBY:

And can you tell me what kind of impact this complex chain is having on our pharmaceutical supply in Australia?

MARGARET:

Well, since January last year, manufacturers have been obliged to report supply issues to the Therapeutic Goods Administration, which is the regulator of drugs and therapeutic goods in Australia. So they have to declare that there's a shortage. They have to say when they think the shortage is going to come to an end or be cured and they have to give a reason. But the reason is often very frustrating. Sometimes it's just a single word like “other”.

And there was a review of the first year of the operation of that legislation, which found that in one year, 1,797 medicine shortages were reported to the TGA.

So it's a huge amount, and nine per cent of those had a critical impact on patients. And that means that either there were no substitute medicines available, and the shortage was life threatening or serious to a patient's health.

And all that is before the pandemic.

Archival Tape -- Unidentified Man #1:

“New research warns that supplies of essential medicines could reach crisis levels unless there’s an overhaul of the system.”

Archival Tape -- Unidentified Man #2:

“Medical experts are warning that Australia faces increasing shortages of essential hospital drugs…”

RUBY:

Which pharmaceuticals are we seeing an actual shortage of in Australia, then? And how serious are those shortages?

MARGARET:

The medicines that are currently in short supply include adrenaline ampoules for adrenaline injections, which you might use in the case of severe allergic reaction or cardiac arrest.

Archival Tape -- Unidentified Man #3:

“Doctors say Australia is too reliant on big overseas manufacturers for drugs such as cancer treatments and anesthetics.”

MARGARET:

An antidepressant called Nardil has been discontinued. You actually can't get it at all through regular means.

Archival Tape -- Unidentified Woman #1:

“It’s the latest in a string of shortages…”

MARGARET:

And that's got devastating effects for some people because it's one of those antidepressants that you tend to use when everything else has failed. And so, and then it's also very dangerous to withdraw from. So that's been a devastating impact on some people.

Archival Tape -- Unidentified Man #4:

“If drugs aren’t available you make do. But that often means you may be making do with something that’s not as good and may particularly be not as good for an individual patient…”

MARGARET:

Hormone replacement therapy has been in continual short supply. Another one is Sinemet, which is a drug used to treat Parkinson's disease. So it's right across the spectrum, really, from medicines that are key to people's lives, to ones that there might be a substitute for, but it involves people having to find them.

RUBY:

And so when you look at this from this broad perspective, our ongoing problems with a lack of supply or shortages, can you distill why that is and why specifically Australia has struggled with this?

MARGARET:

Yes, sure. Well, we're not alone in this problem.

The US just recently had a Senate inquiry into these issues

Archival Tape -- Unidentified Woman #2:

“Senate Republicans and Democrats agree that the US medical supply chain has become too reliant on China…”

MARGARET:

And concluded that they didn't really understand medical supply chains and were very vulnerable, particularly if China, for example decided to stop supplying pharmaceutical ingredients.

Archival Tape -- Unidentified Woman #2:

“Now lawmakers and the Department of Defence are trying to bring the supply chain back home.”

Archival Tape -- Unidentified Man #5:

“The health of our industrial base and its ability to support national security needs as under many severe challenges under normal times, but now the challenges are escalating.”

MARGARET:

But Australia is particularly vulnerable because we're a relatively small market and we're a long way away from anywhere.

So, a problem in a factory in China can sort of whiplash through the system, causing problems all the way through the world. And we're right at the end of that.

RUBY:

We’ll be back in a moment.

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RUBY:

Margaret, Australia imports the vast majority of its drugs, rather than manufacturing them here. We’re now facing critical shortages, so should we be rethinking that strategy?

MARGARET:

So Australia grows almost half of the world's supply of opium that's used in various opiate medicines, painkillers, OxyContin and those sorts of things. We actually grow that here in Australia, mostly in Tasmania, a bit in South Australia. And the vast majority of it is exported in its raw state and manufactured into those medicines elsewhere, largely in China. And at the moment, some of those opioids are in short supply on the Australian market. So that would be a natural starting point for an Australian manufacturing industry, obviously, to at least do some of that processing. Maybe not all of it, but some of that processing and value adding onshore.

I mean, nobody believes that we could manufacture all we need. But the fact is that we do have a pharmaceutical manufacturing industry and it's been shrinking very rapidly over some decades.

Increasingly, manufacturers, usually it's multinational companies, will shift their investment offshore, which means that our capacity to manufacture drugs has been eroded.

And this, of course, has been in news just recently because of the government signing a deal with CSL to manufacture a vaccine for Covid.

RUBY:

And so, given that, will CSL boost their production?

MARGARET:

Well, they are, of course, because they've signed this contract with the government to produce the vaccine, if and when one becomes available.

Archival Tape -- Unidentified Man #1:

“Melbourne biotech company CSL is set to manufacture 80 million doses…”

Archival Tape -- Unidentified Woman #1:

“81 million doses of two potential coronavirus vaccines after signing deals with the government and an Oxford pharmaceuticals firm…”

MARGARET:

They are retooling their Melbourne factory, largely at government expense, right now in preparation for being able to do that.

Archival Tape -- Unidentified Man #2:

“We’re investing $300 million in the research capabilities and the development capabilities of CSL…”

MARGARET:

But it's interesting because even if we assume everything goes swimmingly and we have a vaccine and they are manufacturing it, there's a whole load of supplies like glass vials and special stoppers and the things that you will need to actually get the vaccine out of the factory and into people's arms. And they're all imported. We manufacture very little glass in Australia and virtually no medical glass.

RUBY:

Right, and so what is the industry itself saying about what it needs?

MARGARET:

Well, we're competing again with big multinationals who will move their capital investment to wherever they can do best. Many countries have various tax breaks and incentives to draw those companies. We don't have any of those. And, of course, our labor costs tend to be high. So, too, our energy costs and our infrastructure costs. So the people I spoke to in the Australian industry were saying that there really needs to be a strategic approach. We do have some natural advantages, including growing all that opium. We also have advantages in that we tend to have quite a high skilled workforce. We've got some world class research institutes as well.

But typically, even if a drug is developed with Australian research, it will then be exploited offshore. The multinational will take the actual manufacture and the exploitation of that intellectual property offshore. So Australia misses out.

RUBY:

So Margaret, given all of this and I suppose this uniquely crucial time in a pandemic, is the sector likely to get what it wants? Did the Prime Minister's announcement, did it allude to fixing any of these problems?

MARGARET:

No. Well, in the budget papers and in everything I've seen since, while this money is announced and there are forms of words around it, exactly what it means other than a system of probably fairly modest grants, given the numbers of industries that are meant to be covered by it. It really isn't detailed very much. And exactly what is meant by spending money on bolstering supply chains? There's just no detail.

So it may be great, but it's, you know, nothing in public yet, which would give us a firm idea of whether this is likely to cure the problem.

RUBY:

So we could be facing shortages for a while yet.

MARGARET:

No sign of it stopping, I'm afraid.

RUBY:

Margaret, thank you so much for talking to me about this today.

MARGARET:

It's a pleasure.

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RUBY:

Also in the news today -

NSW Premier Gladys Berejiklian has faced another day of pressure over her relationship with disgraced former MP Daryl Maguire.

Archival Tape -- Gladys Berejiklian:

“And my message, excuse me, let me finish, okay? I’ve given you your turn for the last three days, let me finish.”

RUBY:

As that press conference was under way, Daryl Maguire was giving evidence to the Independent Commission Against Corruption.

He admitted he used his position to make money for himself and his associates.

Archival Tape -- Unidentified Man #1:

“To which you had access, by reason of having those offices - parliamentary office, parliamentary staff - access to consular officials through NSW parliament, Asia Pacific group, those kinds of things, with a view to making money for yourself and making money for your associates.”

Archival Tape -- Daryl Maguire:

“Yes.”

RUBY:

Meanwhile, there have been 12 new locally acquired cases of Covid-19 in NSW, prompting the state to hold off on a further easing of restrictions.

Victoria has recorded seven new cases, with regional areas bracing for a possible cluster.

I’m Ruby Jones, this is 7am, see you tomorrow.

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