Coronavirus Report: The Hill's Steve Clemons interviews Brendan O'Grady

The Hill's Steve Clemons interviews Brendan O'Grady, president and CEO of Teva Pharmaceuticals USA.

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Read excerpts from the interview below.

Clemons: How do you look at the issue of supply chains right now?

O’Grady: I think before this started nobody really cared about supply chains. Nobody even really thought much about it. But Teva is the largest generic producer of medications for the world. We serve almost 200 million patients on a daily basis. We have the largest, most complex supply chain in the world. But to some degree, that's an asset force. You know, we have 60 manufacturing sites scattered, really, throughout the world. The vast majority of our supply chain for the U.S. relies on Europe. We have quite a significant presence here in the United States — about a third of the medicines we supply from the United States are actually manufactured here. And then we rely on a third — a mix between India, Israel and just a small portion from China. No finished goods from manufacturing in China, at all, just some API. So, we're much more diverse than other manufacturers, and as a result, we've been able to keep the supply chain going and we haven't had any shortages, we continue to provide needed medications, but it is a concern as to where our medicines come from and how we continue to supply the US market, not just Teva, but the industry as a whole.

 

Clemons: How do you get a system to better prepare for something that it doesn't know is coming?

O’Grady: We forecast demand months out ahead of time for different seasonal events, whether it be flu, whether it be allergy season — even asthma exacerbates during allergy season. So all of these things go into our regular forecasting process, and we've actually ramped up production of products like azithromycin, albuterol — products that are in high demand — propofol, other things that are in high demand as a result of COVID, and are now trying to build a strategic stockpile our ourselves. But I think one of the things that government could also do is build their own strategic stockpile of critical medicines, not only that are needed for COVID, but other things that get impacted, such as insulin and heart medications and other things. So I think there's things that manufacturers are doing. I know there's things that we’re certainly doing, and certainly talking to the government about how we can help again as the largest manufacturer of generic medicines in the world — and, you know, a 10 percent share here in the United States, one out of every 10 medications distributed or received by a patient here in the U.S. is a Teva medication. So, we feel a huge responsibility to make sure that our supply chain keeps going.

 

Clemons: What do you think the United States can do that it's not doing now to strengthen the supply chain?

O’Grady: Well, I think to some degree, having a diversified global supply chain like we have is a benefit. I mean, if you think about things like geopolitical events, natural disasters, regional or local labor disruptions, having a supply chain located in different parts of the world can actually be a strategic advantage. It was odd about several weeks ago, we had an earthquake in Salt Lake City [Utah] and we had an earthquake in in Croatia, both big plants for the United States. Fortunately, neither one of those plants had disruptions. But having a supply system or supply chain that’s located around the world allows you to kind of minimize the impact of those type of events. But, if I were a politician and not the head of Teva North America, I think I would be thinking about the most critical medicines that we need, and I don't know if it's a list of 100 or 150, but whatever that list of critical medicines is, I would look at working with manufacturers to make sure that we had stability in supply. So it could be strategic agreements or treaties like we have with other nations as far as defense or other critical materials and products. It could be building a strategic stockpile. We keep a strategic reserve of oil. There's no reason why we shouldn't keep a strategic reserve of medication. So long term, if the goal is to repatriate some manufacturing back to the United States, I think there's ways to do that with current manufacturers with incentives and so forth, because at the end of the day you have to be competitive. You have to be market competitive with products that you're making. And part of that is long term price stability, which we don't have here in the United States. As you know, generic medications — the price tends to erode between the high single digits, 6 percent in a good year. And it could be upward in the high teens. So pricing stability, long term manufacturing commitments are all things that could be done to stabilize the supply and assure of the security supply here in the United States.

 

Clemons: Teva does not produce vaccines, but when you look at the manufacturing capacity that will be needed, what role do you see Teva playing when we come to either antivirals or vaccines?

O’Grady: Again, as the largest generic manufacturer, one of the things that we’re proud of and one of things that we really focus on is making medicines affordable and accessible in the United States and across the world. So you're right, we’re not a vaccine producer, and, we're not sure how long the vaccine will take. I'm sure and confident that a vaccine will come, but it could take months. It could take years before we get one. So I think the important thing is finding what other treatments may alleviate symptoms or even help knock the virus out. And, of course, you mentioned hydroxychloroquine — that’s one. Azithromycin has been used and is being studied in a trial that we that we supported with the NIH in a combination, if that helps. Remdesivir is another product. So there's multiple products that are that are out there. So we're supporting the clinical research of the existing products that are there. And of course, we have numerous manufacturing capabilities. So if we need to partner with somebody to help manufacture a treatment to make it broadly available we’re certainly open to that as well.

 

Clemons: What sorts of elements would you like to see on the back end of this of this crisis that we could improve the way we think about both how drugs are provisioned and think about health costs in America?

O’Grady: I have a personal example. So, the first thing I'll say is that I think the U.S. health care system is extremely complex. It is very difficult to understand and there are times — and I've been in the pharmaceutical industry, in the health care industry for nearly 30 years — and there's times when even I have challenges understanding it. So it's extremely complex, but it's also a very high quality system. And if you look at it, people from other parts of the world, they actually come to the United States many times to seek treatment because they know the quality that we have here. And I had an opportunity to live in Europe for part of my career and participated in the European health care systems which are much more government run than ours. And I'm not going to say that they're low quality, but there is certainly a difference in the access to the treatments that that you have, and the access to the drugs that you have and when you have those. So I think those are tenets that we want to preserve in the U.S. health care system. But I do think, and we largely don't have a problem with drug pricing in this country, and I know that the narrative has been prices are too expensive. I think part of the problem is people don't have visibility to what they're paying and we have benefit designs that have been created, whether they're high deductible or Medicare doughnut hole, where people pay $25 in December and then January they go to get their medication and it's $200 or $300, and they don't understand why. So I think we have benefit design reform. I think we have an opportunity to really simplify the system as it works today, and I think we need to find a way that health care, including medicines, is accessible to all. I don't believe that a government run system, a single-payer system, is the answer. I think private industry is the answer. And I think that we can tweak the system to make it more transparent, simplified, and not as complex for for people to access.

 

Clemons: How do you look at how you're investing in restoring trust in this time?

O’Grady: I think you know one of the things that I find personally frustrating is that there's probably not an industry, in the history of humans on the planet, that has had a greater impact to the longevity and human health than the pharmaceutical industry. And so it always perplexes me as to why it has such a low perception out there with the public. And I think some of that, the industry has done to itself, but I think that one of the things that I hope in this pandemic — one of the outcomes of this pandemic — is that people will realize that the pharmaceutical industry is essential to national security. It's essential to our public health, and that we need to work together to make sure it's sustainable. But we also have to build trust. And I think one of the things that we're focused on at Teva is really building trust with the public is making sure that we continue our supply chain. And we've done a great job of making sure that people can come to work, in our manufacturing and our R&D sites, making sure that it's a safe environment to deliver medications at an affordable price and do it in a very responsible way. And I think if we do that long term and continue to do that, then we'll build trust with the public. And hopefully, we’ll be seen as an asset as we go forward in the future and really something essential to the health of the American public.