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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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BUILDING RESILIENCE
into the Nation’s
MEDICAL PRODUCT
SUPPLY CHAINS

Wallace J. Hopp, Lisa Brown, and Carolyn Shore, Editors

Committee on Security of America’s Medical Product Supply Chain

Board on Health Sciences Policy

Health and Medicine Division

A Consensus Study Report of

images

THE NATIONAL ACADEMIES PRESS
Washington, DC
www.nap.edu

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001

This activity was supported by a contract between the National Academy of Sciences and the Office of the Assistant Secretary for Preparedness and Response (75A50120C00129). Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.

International Standard Book Number-13: 978-0-309-27469-2
International Standard Book Number-10: 0-309-27469-9
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Suggested citation: National Academies of Sciences, Rngineering, and Medicine. 2022. Building resilience into the nation’s medical product supply chains. Washington, DC: The National Academies Press. https://doi.org/10.17226/26420.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, nongovernmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president.

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Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Consensus Study Reports published by the National Academies of Sciences, Engineering, and Medicine document the evidence-based consensus on the study’s statement of task by an authoring committee of experts. Reports typically include findings, conclusions, and recommendations based on information gathered by the committee and the committee’s deliberations. Each report has been subjected to a rigorous and independent peer-review process and it represents the position of the National Academies on the statement of task.

Proceedings published by the National Academies of Sciences, Engineering, and Medicine chronicle the presentations and discussions at a workshop, symposium, or other event convened by the National Academies. The statements and opinions contained in proceedings are those of the participants and are not endorsed by other participants, the planning committee, or the National Academies.

For information about other products and activities of the National Academies, please visit www.nationalacademies.org/about/whatwedo.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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COMMITTEE ON SECURITY OF AMERICA’S MEDICAL PRODUCT SUPPLY CHAIN1

WALLACE J. HOPP (Chair), Distinguished University Professor of Business and Engineering, Stephen M. Ross School of Business, University of Michigan

MAHSHID ABIR, Associate Professor, Department of Emergency Medicine, University of Michigan

GEORGE BALL, Associate Professor, Operations and Decision Technologies Department, Kelley School of Business, Indiana University Bloomington

RAQUEL C. BONO, Principal, RCB Consulting (resigned from the committee February 2021)

LEE BRANSTETTER, Professor of Economics and Public Policy, Carnegie Mellon University

ROBERT CALIFF, Former Medical Strategy and Senior Advisor at Alphabet Inc., Verily Life Sciences and Google Health (resigned from the committee November 2021)

ASHA DEVEREAUX, Physician, Sharp Healthcare System

OZLEM ERGUN, Professor and Associate Chair for Graduate Affairs, Department of Industrial and Mechanical Engineering, Northeastern University College of Engineering

ERIN R. FOX, Senior Pharmacy Director, Drug Information and Support Services, Department of Pharmacy Services, University of Utah Health

LARRY M. GLASSCOCK, Chief Operating Officer, NFH, Inc.

LEWIS GROSSMAN, Professor of Law, Washington College of Law, American University

W. CRAIG VANDERWAGEN, Partner, East West Protection, LLC

ALASTAIR WOOD, Emeritus Professor of Medicine and Pharmacology, Vanderbilt University

MARTA WOSINSKA, Former Deputy Director, Policy at the DukeMargolis Center for Health Policy (resigned from the committee April 2021)

MATTHEW K. WYNIA, Director, Center for Bioethics and Humanities, University of Colorado

Study Staff

LISA BROWN, Study Co-Director

CAROLYN SHORE, Study Co-Director

LEAH CAIRNS, Program Officer (from June 2021)

___________________

1 NOTE: See Appendix F, Disclosure of Unavoidable Conflict of Interest.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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KELSEY R. BABIK, Associate Program Officer (from August 2021)

BEN KAHN, Associate Program Officer (until June 2021)

EESHAN KHANDEKAR, Associate Program Officer (until October 2020)

ANDREW MARCH, Associate Program Officer

SHALINI SINGARAVELU, Associate Program Officer (from August 2021)

REBECCA CHEVAT, Research Associate (until June 2021)

MARGARET MCCARTHY, Research Associate (from August 2021)

KIMBERLY SUTTON, Senior Program Assistant (from June 2021)

MELVIN JOPPY, Senior Program Assistant (until June 2021)

ANDREW M. POPE, Senior Director, Board on Health Sciences Policy

Science Writers

JOANNA LOCKE, Locke Public Health

ANNA NICHOLSON, Doxastic LLC

EVAN RANDALL, Doxastic LLC

Commissioned Paper Author

PHILIP ELLIS, Ellis Health Policy

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Reviewers

This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.

We thank the following individuals for their review of this report:

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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by DAVID R. CHALLONER, University of Florida, and VINOD K. SAHNEY, Northeastern University. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Preface

Supply chains have never had a higher profile than they do right now. Once the arcane purview of specialists and scholars, the field of supply chain management has been front page news throughout the COVID-19 pandemic. Unfortunately, the reason for this newfound notoriety is that everything, from cars to coffee, seems to be in irritatingly short supply. These shortages have awakened us all to the reality that the products we take for granted are delivered through complex, global supply chains, which can break down.

Not being able to buy toilet paper or a television set is certainly an inconvenience. But not being able to get a chemotherapy drug or mechanical ventilator is life threatening. Of the many supply chains whose fragility was exposed by the pandemic, none are more vital to public health and safety than those for medical products. Recognizing this, Congress, as part of the 2020 CARES Act, called for establishment of an ad hoc committee to examine the security and resilience of U.S. medical product supply chains. This report is the result of a year-long study by that committee.

To focus its work, the committee interpreted “resilience” to refer to the ability of medical product supply chains to match supply with demand under both normal and emergency conditions, so that patients and providers can count on access to medical products when they need them. But matching supply with demand is precisely the role of supply chain management. Why then have we experienced so many shortfalls in normal times, such as chronic shortages of generic injectable drugs for over a decade, and during emergencies, such as inadequate supplies of N95 masks to meet surging demand during the recent pandemic?

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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The kneejerk response in the media and elsewhere has been to blame globalization. And to be sure, long supply chains with many production stages spread over many locations with many transportation links between them have more failure modes than short domestic supply chains. However, there are also reasons supply chains have become increasingly globalized. Locating production of the various steps in places with cost or capability advantages can facilitate lower prices, higher quality, wider variety, and more innovation. On-shoring a global supply chain by moving all production stages to domestic sites would therefore have consequences. Most prominently, on-shoring could increase costs and reduce affordability of medical products. Indeed, affordability concerns are the reason domestic companies that stepped up to produce N95 masks at the beginning of the pandemic found themselves struggling to survive once international supplies resumed and health systems shifted back to them to reduce costs.

Beyond cost concerns, the resilience benefits of on-shoring depend on what stages are domesticated and how. Moving only the final assembly stage to the United States, as is often proposed in glib on-shoring proposals, will have a limited impact on resilience because it leaves the supply chain vulnerable to disruptions of component and raw material supplies. Even if all stages of a medical product supply chain could be on-shored, if this served to concentrate production of a key stage in a single location, it could leave the very supply chains we are trying to protect more vulnerable to disruption by local disasters like earthquakes or hurricanes.

Finally, even if we could overcome the economic obstacles and risks of supply concentration, it would be irresponsible to on-shore medical products if there were more cost-effective ways to achieve medical product supply chain resiliency. For example, if holding a vast stockpile of a critical medical product would provide more protection for less cost than onshoring the product, why wouldn’t we do it? As a country, we have many social priorities. Unnecessary spending on one means less funds will be available for another.

All this quickly led the committee to the realization that our focus could not be limited to assessing risks of globalization and finding ways to on-shore critical medical products. Nor could it be to simply enumerate ways to make medical product supply chains more resilient. To serve the overarching goal of making the American public safer and more secure, we had to create a framework for systematically enumerating, evaluating, and combining measures into a cost-effective medical product supply chain resiliency strategy.

Fortunately, the committee was comprised of experts in supply chain management, economics, and medicine. While this sometimes led to discussions that sounded like those of the five blind men describing an elephant, it allowed us to leverage our different disciplinary lenses to create

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
×

a medical product supply chain resilience framework. We made use of this framework, which contains four tiers that address awareness, mitigation, preparedness, and response, to craft and motivate our recommendations. Under the awareness category, we propose measures to collect, compile, and disseminate information about medical product supply chain risks and vulnerabilities. Under the mitigation category, we advocate steps to reduce the likelihood and magnitude of supply disruptions. Under the preparedness category, we describe a range of options for preventing a supply shortage from impacting patients and medical personnel. Under the response category, we suggest policies for building organizational capabilities that protect health during emergency disruptions.

In the end, as our report makes abundantly clear, there is no single “silver bullet” for the medical product supply chain problem. Instead, we believe it is a case of the quote, “God is in the details.” Slogans won’t make us safer in the next crisis than we were in this one, but a host of coordinated activities by medical product supply chain managers, government agents, and medical providers will.

Lastly, I want to express my deepest gratitude to the committee members and the National Academies staff members who worked on this study. The volunteers on the committee devoted major amounts of time and energy on top of their regular professional responsibilities that were heightened by the added burden of dealing with a pandemic. In the case of the clinical members of the committee, this often meant rotating in and out of meetings to treat patients. It was truly an example of America at its best, with people helping people in every way they could. But the discussions, emails, snippets of text, and comments on drafts from these dedicated committee members could not have become a report without the writing and editing skills of the staff. In particular, Lisa Brown and Carolyn Shore organized both the activities of the committee and the writing of the report with exceptional vision and leadership, while Kelsey Babik, Leah Cairns, Andrew March, Margaret McCarthy, and Shalini Singaravelu skillfully bore the brunt of the writing responsibility. It was an honor and a delight to work with all of these wonderful people.

Wallace (Wally) Hopp, Chair
Committee on Security of America’s
Medical Product Supply Chain

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Abstract

During the coronavirus disease 2019 (COVID-19) pandemic, shortages of medical devices, supplies, and drugs have risked the lives of Americans and have compromised the ability to deliver care. However, medical product shortages are not a new problem, and over the past several decades supply chain disruptions have repeatedly plagued the U.S. health care system, costing health care systems millions of dollars per year, threatening the clinical research enterprise, and most importantly, imperiling the health and lives of patients. In 2020, a committee convened by the National Academies of Sciences, Engineering, and Medicine was charged to address this important issue by examining the root causes of medical product shortages and identifying ways to enhance the resilience and security of America’s medical product supply chains—both in so-called normal times and during public health emergencies.

Because medical product supply chains are complex, multilevel, globally distributed systems that involve people, processes, technologies, and policies, they are vulnerable to many types of risk, as well as amenable to many types of remediation. To identify measures that will have the greatest impact on public health and safety, the committee focused on supply chain critical medical products, which are defined as those that are both medically essential and vulnerable to shortages. Market incentives play a key role in determining the vulnerability of medical product supplies. For example, high margins on patented drugs provide strong incentive for manufacturers to build in supply continuity protections, while low margins on generic drugs do not. Consequently, identifying supply chain critical medical prod-

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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ucts requires both an evaluation of medical need and an assessment of a mismatch between private and public incentives.

To prioritize the myriad ways the supply chains for these critical products can be made more resilient, the committee invoked basic concepts of system reliability and supply chain management to create a framework that categorizes measures into four layers of protection. These layers address the timeline from a disruptive event to impact on human health by considering awareness, mitigation, preparedness, and response (see Chapter 5).

Awareness measures identify, analyze, and share information essential to understanding and reducing medical product supply chain risks (see Chapter 6). As such, awareness is a prerequisite to mitigate, prepare for, or respond to supply chain disruptions. Mitigation measures reduce the likelihood or magnitude of disruptive events that could lead to medical product shortages (see Chapter 7). For example, a quality rating system that avoids a medical product recall is a mitigation measure that prevents a recall-induced shortage before it can happen. Preparedness measures are actions taken prior to a disruptive event that will reduce the negative impacts on health and safety if the event occurs (see Chapter 8). An example is inventory stockpiling, which does not stop a capacity disruption or demand surge event from occurring, but can prevent end users from experiencing a supply shortage. Response measures include steps taken after a shortage has occurred to prevent or reduce public harm (see Chapter 9). For example, crisis standards of care, which alter and prioritize use of scarce medical products, do not avoid or reduce a supply shortage, but when implemented, they can protect health by maximizing the effectiveness of the limited supply, and are therefore an important response measure. This medical product supply chain resilience framework can be used to identify a set of effective and complementary policies for enhancing supply resilience for a specific medical product.

The committee leveraged the framework to identify high-priority, high-impact recommendations within the four protective layers to build an integrated strategy to address the most significant gaps in medical product supply chain resilience.

  • Awareness: To enhance awareness of medical product supply chain risks and remedies, the committee recommends the U.S. Food and Drug Administration (FDA) make sourcing, quality, volume, and capacity information publicly available for all medical products approved or cleared for sale in the United States (Recommendation 1) and establish a public database to share this information and to promote analyses of these data by interested parties (Recommendation 2). Novel approaches to mitigation, preparedness, and response will come from these analyses.
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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  • Mitigation: To reduce the risk and magnitude of disruptive events that cause supply shortages, particularly under nonemergency conditions, the committee recommends that health systems deliberately incorporate quality and reliability, in addition to price, in contracting, purchasing, and inventory decisions (Recommendation 3).
  • Preparedness: To prevent or reduce shortages from disruptive events that do occur, the committee recommends the Office of the Assistant Secretary for Preparedness and Response (ASPR) modernize and optimize inventory stockpiling management as protection against medical product shortages at the national and regional levels (Recommendation 4) and that ASPR and FDA complement stockpiling with capacity buffering policies to enhance cost efficiency and to improve protection in major emergencies (Recommendation 5).
  • Response: To protect health against supply shortages that do reach end users, the committee recommends negotiating an international, plurilateral treaty with other major medical product exporters to make more effective use of limited global supplies by ruling out export bans on key medical products and components (Recommendation 6) and that ASPR and the Centers for Disease Control and Prevention establish a domestic working group to examine ways to improve effectiveness of the final delivery stage within the United States (“last mile”) of medical product supply chains and to engage end users in planning for emergency response to medical product shortages (Recommendation 7).

Collectively, these seven recommendations will improve supply reliability for medical products during normal conditions and will protect public health and safety during emergencies.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Acronyms and Abbreviations

ADI area deprivation index
AEP Analytic Exchange Program
ANDA Abbreviated New Drug Application
API active pharmaceutical ingredient
ASHP American Society of Health-System Pharmacists
ASIAS Aviation Safety Information Analysis and Sharing
ASPE Assistant Secretary for Planning and Evaluation
ASPR Assistant Secretary for Preparedness and Response
BARDA Biomedical Advanced Research and Development Authority
BSE bovine spongiform encephalopathy
CARES Act Coronavirus Aid, Relief, and Economic Security Act
CAGR compound annual growth rate
CBRN chemical, biological, radiological, and nuclear
CDC Centers for Disease Control and Prevention
CDER Center for Drug Evaluation and Research
CDRH Center for Devices and Radiological Health
CI consignment inventory
CIDRAP Center for Infectious Disease Research and Policy
CGMP current good manufacturing practice
CMS Centers for Medicare & Medicaid Services
COI conflict of interest
COVID-19 The disease caused by the virus SARS-CoV-2
CPU central processing unit
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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CSC crisis standards of care
CT computerized tomography
DEA Drug Enforcement Administration
DMAP Data Modernization Action Plan
DoD Department of Defense
DPA Defense Production Act
DRG diagnosis-related group
DSCSA Drug Supply Chain Security Act
EU European Union
FDA U.S. Food and Drug Administration
FDAAA Food and Drug Administration Amendments Act
FDASIA Food and Drug Administration Safety and Innovation Act
FD&C Act Federal Food, Drug and Cosmetic Act
FDI foreign direct investment
FDF finished dosage form
FEI FDA Establishment Identifier
FEMA Federal Emergency Management Agency
FIFO first in, first out
GDUFA Generic Drug User Fee Amendments
GM General Motors
GPO group purchasing organization
GUDID Global Unique Device Identification Database
HCC health care coalition
HHS U.S. Department of Health and Human Services
HIDA Health Industry Distributors Association
IAAE International Academy of Automation Engineering
ICU intensive care unit
ISPE International Society for Pharmaceutical Engineering
IT information technology
IV intravenous
MCM medical countermeasure
MDIC The Medical Device Innovation Consortium
MRA mutual recognition agreement
n.d. no date
NDC National Drug Code
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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NRCC National Response Coordination Center
OPQ Office of Pharmaceutical Quality
ORA Office of Regulatory Affairs
OS Office of Surveillance
OTE The Bureau Industry and Security’s Office of Technology Innovation
PDG Partnership for DSCSA Governance
PPE personal protective equipment
QALY quality adjusted life year
QbD quality by design
RFP request for proposal
SCCT Supply Chain Control Tower
SCRLC Supply Chain Risk Leadership Council
SLEP Shelf-Life Extension Program
SNS Strategic National Stockpile
SOP standard operating procedure
SSIL Site Surveillance Inspection List
SVI Social Vulnerability Index
TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights
UDI unique device identification
UK United Kingdom
USP United States Pharmacopeia
VA U.S. Department of Veterans Affairs
VMI vendor-managed inventory
WHO World Health Organization
WTO World Trade Organization
WWII World War II
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2022. Building Resilience into the Nation's Medical Product Supply Chains. Washington, DC: The National Academies Press. doi: 10.17226/26420.
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Building Resilience into the Nation's Medical Product Supply Chains Get This Book
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Over the past several decades, supply chain disruptions have repeatedly plagued the U.S. health care system, costing health care systems millions of dollars per year, threatening the clinical research enterprise, and most importantly, imperiling the health and lives of patients. The Committee on Security of America's Medical Supply Chain, convened by the National Academies of Sciences, Engineering, and Medicine, was charged with addressing this important issue by examining the root causes of medical product shortages and identifying ways to enhance their resilience - both in so-called normal times and during public health emergencies.

Building Resilience into the Nation's Medical Product Supply Chains outlines the committee's seven recommendations and presents a framework of protection comprising awareness, mitigation, preparedness, and response measures.

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