Over the course of the pandemic, the Trump administration has shelled out billions of dollars to boost manufacturing for COVID-19 therapies and vaccines—sometimes to eyebrow-raising effect. One deal, in particular—with an unknown company for generic COVID-19 drugs—came as quite the surprise.
In May, the Department of Health and Human Services' Biomedical Advanced Research and Development Authority (BARDA) unveiled a $354 million contract with Virginia-based Phlow Corporation to build a generic medicine and active pharmaceutical ingredients (API) plant in Richmond, Virginia and supply COVID-19 treatments produced there.
Phlow, unknown prior to the administration's interest, teamed up with CivicaRx, a generics maker started by hospitals fed up with rising drug prices, and API supplier AMPAC, among others. CivicaRx and its partners will manufacture the finished dosage forms of essential medications, including vials and syringes.
The contract can be expanded up to 10 years and a total of $812 million, making it among the largest in BARDA's history. The partnership "immediately enabled" Phlow to deliver 1.6 million doses of five generic drugs used to treat hospitalized COVID-19 patients to the U.S. Strategic National Stockpile, the company said, including sedatives for patients on ventilators.
What was most surprising about Phlow's sales pitch was its explicitly nationalist marketing. In an online mission statement, for instance, Phlow said it intends its work to "help our nation secure its own strategic drug reserve ... and to reduce the U.S.’s dependency on foreign supply chains."
In his retelling of how Phlow secured its landmark contract, CivicaRx CEO Martin Van Trieste said Phlow's CEO Eric Edwards struck up a conversation with him more than a year earlier to discuss producing generic medicines.
Edwards “wanted to know if I would teach him the Civica model,” Van Trieste said soon after the deal was announced. “So we brought him in to shadow us, and he started learning about the over-reliance in the pharmaceutical supply chain on foreign suppliers.” The two companies started discussing the possibility of creating a national stockpile of APIs, Van Trieste said.
Before Phlow, Edwards was best known as CEO at Kaléo, notorious for launching an EpiPen competitor and later raising its price 700%. Price increases on its naloxone injector Evzio made the company a target of U.S. legislators and pharmacy benefits manager Express Scripts.
Phlow, it turns out, was one of a growing group of manufacturers targeted by the Trump administration as part of an "onshoring" effort to drive U.S. drug production amid COVID-19 lockdowns and growing geopolitical tensions with overseas providers.
The government's investment arm, the U.S. International Development Finance Corporation (DFC), announced a $765 million loan in May to camera maker Kodak to fuel its entry into generic pharmaceuticals. A series of questionable stock moves around that loan spurred an investigation by House Democrats and the Securities and Exchange Commission, but Kodak cleared itself of allegations in September.
The DFC halted the loan after the investigations were announced and has not indicated whether it is still pursuing the deal.