At the end of last week, the World Health Organisation (WHO) upgraded the global risk assessment of the novel coronavirus to "very high." This comes shortly after the United Kingdom saw its first fatality as a result of COVID-19, the disease caused by the infection. Given the international nature of many supply chains in the life sciences sector, the coronavirus outbreak has the potential to disrupt international trade and result in shortages of medicines and medical devices.
Anticipating that this might materialize, on 11 February 2020, the UK Department of Health and Social Care (DHSC) wrote to all suppliers of medical goods (including pharmaceuticals, medical devices, and clinical consumable products) to the National Health Service (NHS) in England and Wales requesting that they conduct full risk assessments of the impact of the situation on their supply chains.
The DHSC has advised that this should cover:
- The impact that the new coronavirus and COVID-19 might have on business activities;
- How current and future restrictions within China and other affected markets might impact the production and transportation of finished products, active pharmaceutical ingredients, excipients and other components; and,
- Whether any third party suppliers are reliant upon materials or components sourced from China or other affected markets.
In addition, the UK Secretary of State has asked that suppliers to the NHS continue to hold on to any products that might have been stockpiled in preparation for Brexit. Suppliers should continue to supply the NHS in the normal way, but are requested to monitor orders carefully and consider putting in place demand management plans in the event of unusual ordering patterns.
The DHSC has asked companies to inform it of the results of the risk assessments and asked suppliers with a known supply chain "touchpoint" in China to contact the DHSC proactively.
This guidance does not soften or amend the underlying responsibility of marketing authorization holders (MAH) to ensure appropriate and continued supplies of their medicinal products. In the event that an MAH anticipates or experiences a supply shortage, it should be reported to the DHSC's Medicine Supply Team promptly in accordance with DHSC guidance. The DHSC will then seek to mitigate any detrimental impact that supply disruption may cause to patients.
Given the increasingly global nature of the coronavirus outbreak, all pharmaceutical and medical device companies, regardless of the markets in which they operate and to which they supply, should consider proactively mapping out their supply chains in order to identify potential coronavirus-associated risks and put in place mitigating measures. Many companies that operate in or supply to the UK have already carried out a similar exercise for Brexit-related impacts within the last year or so. Where possible, companies should also liaise with key suppliers to understand those companies' exposure and the steps they are taking to mitigate any impact.
For further information on the impact of the outbreak on employment, international trade and shipping and on force majeure clauses, see Hogan Lovells' "Novel coronavirus impact on different sectors" publication.
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