A pharmacy employee looks for medication in New York, on December 23, 2009.

Your medicine cabinet is probably full of pills, most of which take minutes to travel through your bloodstream. But have you considered the journey each of those pills took to get to you?

A GLOBAL PRODUCTION CYCLE

As recently as a few decades ago, medicines consumed in the United States were primarily made in the United States (or in Europe) and were made using ingredients that originated there. This began to change in the 1980s, when deregulation and trade liberalization allowed companies to expand abroad, where ingredients were available at lower prices and subject to fewer restrictions and regulations. In the 1990s, the first finished medications made in India began arriving in the United States, and the trend has only accelerated since: today, the United States is the largest importer of pharmaceuticals worldwide. Nearly half of the drugs Americans consume come from abroad, as do virtually all of their necessary ingredients.

U.S. Pharmaceutical Import Sources

How does this global supply chain work? Depending on the product, the company, and other factors, there are many paths the medicine in your cabinet can travel.

The New Normal: Global Supply Chains for Medicine

RESEARCH AND DEVELOPMENT

Typically, the journey begins in the United States, where scientists and drug companies, sometimes with government financing, work to identify new and improved medications. They conduct experiments to see, for example, how different compounds react and what dosages might work best. Once they have identified something they are happy with, they conduct preclinical research—think test tubes and petri dishes—on microorganisms and animals to determine if the drug is safe to test on humans. 

CLINICAL TRIAL

If all goes well, the next step is a clinical trial—human testing. There are several phases of clinical testing, of increasing complexity and length, and few drugs make it to the finish line. Today, more and more companies opt to conduct this testing outside the United States, mainly for the same reason they source more materials abroad: fewer regulations and lower costs. Depending on the country, overseas clinical trials can cost 60 percent less than they would in the United States.

As recently as 1990, ... a mere 271 trials were being conducted in foreign countries of drugs intended for American use. By 2008, the number had risen to 6,485.

Donald L. Barlett and James B. Steele, “Deadly Medicine,” Vanity Fair, January 2011

In recent years, Turkey has become home to more research activity for a number of reasons, including its unique geographic location bordering Asia and Europe, its emerging economy, its large population with low levels of pharmaceutical use, and its relatively low costs despite meeting European testing standards. Between 2011 and 2016, the number of clinical trials in Turkey more than doubled.

APPROVAL

Data collected at clinical trials then heads to the U.S. Food and Drug Administration (FDA) for approval. The approval process and length vary by drug type, but a standard process takes about one year. Once the drug is approved, production begins.

[China] is the largest global supplier of active pharmaceutical ingredients.

Roger Bate, Adjunct Scholar, American Enterprise Institute (Testimony, U.S.-China Economic and Security Review Commission, April 3, 2013)

SOURCING

The substance that directly attacks the problem a medication aims to solve is called the active pharmaceutical ingredient (API). China produces 40 percent of the world’s APIs, making it likely that one of the medicines in your cabinet has Chinese ingredients.

The next stop is India, which produces a third of the world’s medications and is the second-largest exporter of drugs to the United States. India is a frequent provider of binders and fillers—ingredients that hold a pill together and give it shape. One example is lactose, which binds ingredients tightly and bulks up a pill to make it easier to swallow.

PACKING

After the medication is assembled, packaging occurs in Germany, which is currently the largest source of the United States’ packaged medications imports—constituting nearly 20 percent.

DISTRIBUTION

Last, the supply chain ends where it started, with distribution and consumption in the United States. Through a process involving wholesale distributors that purchase drugs from manufacturers and send them to pharmacies, hospitals, and elsewhere, a medication eventually makes its way to your medicine cabinet.

Back to Top image/svg+xml