HHS announces $354M contract with Virginia-based company to make coronavirus drugs in US

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The Department of Health and Human Services on Tuesday announced it has signed a $354 million four-year contract with a Virginia-based company to expand pharmaceutical manufacturing in the United States amid the coronavirus pandemic.

HHS said the contract is with Phlow Corporation of Richmond and will provide “immediate U.S.-based capacity” to produce active pharmaceutical ingredients and chemical compounds for ingredients to make “critical medicines to help alleviate or prevent drug shortages” during the COVID-19 crisis. The drug ingredients are expected to be manufactured at facilities in the U.S., including a new facility that will be built in Virginia.

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According to HHS, the U.S. government and Phlow are developing a “prioritized list” of active pharmaceutical ingredients and finished medicines that are “critically needed” for the response to COVID-19.

“The COVID-19 pandemic has reminded us how health threats or other sources of instability can threaten America’s medical supply chains, potentially endangering Americans’ health,” HHS Secretary Alex Azar said in a statement. “America has the capabilities, resources, and expertise to secure our medical supply chains; now the Trump Administration is providing the leadership to make it happen.”

Azar added that HHS is taking a “significant step to rebuild our domestic ability to protect ourselves from health threats by utilizing American-made ingredients and creating new American jobs in the process.”

The partnership comes amid concerns from Trump administration officials and lawmakers over supply chains spread around the world for critical products, as many of the pharmaceutical ingredients necessary for medications to help treat COVID-19 are now made internationally, specifically in China and India.

HHS acknowledged that “a majority” of active pharmaceutical ingredients for critical medicines are produced and manufactured outside the U.S.

“Shipping the ingredients or finished drugs to the U.S. also adds time that is not available during pandemics or other public health emergencies,” HHS said. “The U.S. national medical supply also is placed at risk during a global health emergency when individual countries can close borders and potentially eliminate access to these critical materials.”

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HHS also announced Tuesday that the team will expand manufacturing capability in the U.S. to provide further capacity for producing finished generic drugs.

Under the $354 million agreement with the Biomedical Advanced Research and Development Authority (BARDA), part of HHS, Phlow will manufacture supplies for medicines for patients hospitalized with COVID-19. The contract, according to HHS, can be extended for up to a total of $812 million over a total of 10 years to maintain the system and supplies.

Phlow will lead a team of private sector companies that includes Civica Rx, a nonprofit created to alleviate drug shortages; Ampax Fine Chemicals, a manufacturer; and the Medicines for All Institute at the Virginia Commonwealth University’s College of Engineering.

The announcement comes after President Trump last week announced a new public-private partnership to develop a vaccine for the novel coronavirus as part of what's being called “Operation Warp Speed," and said he hopes it will be produced "quickly" and possibly be ready by the end of the year.

Fox News' John Roberts contributed to this report.