A researcher in the Medicines for All Institute, at Virginia Commonwealth University, works to scale up a chemical-reaction process.
Photo: VCU College of EngineeringA new generic drugmaker said it was awarded $354 million in federal funding to make prescription drugs and their raw ingredients in the U.S., including some medicines used to treat patients infected with Covid-19.
Privately held Phlow Corp., a Richmond, Va.-based company incorporated earlier this year, said the funding will support manufacture that began recently of more than a dozen generic prescription drugs in short supply that are used to treat Covid-19 patients.
The company said Tuesday that it will also use the funding to make the building blocks of drugs, known as active pharmaceutical ingredients, as well as other chemicals.
The Biomedical Advanced Research and Development Authority, a part of the U.S. Department of Health and Human Services, will provide the funding over four years. Under the terms, the contract could reach as high as $812 million over 10 years, according to Phlow.
Phlow said it would begin making medicines and ingredients at plants in Virginia operated by partners, and by working with Civica Rx, a nonprofit venture started by hospitals to distribute drugs through contracts with pharmaceutical manufacturers. Phlow said it plans to open its own facility in Virginia next year.
The company declined to identify the drugs and ingredients it planned to make, saying doing so could harm national security. Chief Executive Eric Edwards said many of the medicines were in short supply before the pandemic and have been imported from other countries.
“This is an effort to re-secure supply domestically, end to end,” Dr. Edwards said in an interview, in order to ensure that drugs that public-health officials deem essential remain available even during global disruptions like trade disputes or natural disasters.
“Collaborating with Phlow and its partners is an important step in expanding our manufacturing of strategic APIs and critical medicines at risk of shortage,” BARDA Acting Director Dr. Gary Disbrow said.
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Much drug manufacturing had moved outside of the U.S. in recent decades partly because of more favorable tax rates, cheaper labor and friendlier environmental regulations, industry officials say. Sourcing ingredients in India can lower costs for U.S. and European companies by as much 40%, according to the U.S. Food and Drug Administration.
Today China is a leading supplier of drug ingredients, including the chemicals and raw materials for popular blood-pressure medicines and several older antibiotics that are no longer manufactured in the U.S., industry officials say.
Senior Trump administration officials have for weeks been exploring ways to promote the manufacturing of key supplies needed to combat the pandemic in the U.S. in order to limit reliance on other countries, such as China.
White House trade adviser Peter Navarro has championed that initiative, while some of the president’s economic advisers and business groups have expressed concerns about limiting or discouraging imports of key medical supplies, saying that could lead to further shortages.
Mr. Navarro said in an interview Tuesday evening that he first spoke with Dr. Edwards in November after they were introduced by Rosemary Gibson, an acquaintance of Mr. Navarro’s and a Phlow board member.
Ms. Gibson had reached out to Mr. Navarro after reading his book “Death by China,” in which he describes the risks of relying on Chinese pharmaceuticals, he said. When she visited the White House to introduce herself, she brought copies of her own book on the dangers of relying on China for medicine to share inside the West Wing, he said.
Phlow had been focused on making medicines for children, and then pivoted to generic drugs in short supply as Covid-19 began spreading, according to Dr. Edwards, who had previously co-founded privately held opioid-antidote maker Kaleo Inc.
On. Feb 5, Mr. Navarro dispatched a team to assess a Petersburg, Va., plant run by one of Phlow’s partners, he said. The team was impressed by the facility. That month, Phlow began talking with federal officials about making generic drugs in the U.S., Dr. Edwards said.
On March 9, Phlow submitted its proposal to Barda, an HHS spokeswoman said.
In late March, the company hired two lobbying firms with experience representing pharmaceutical and biomedical firms, according to lobbying records, paying them $30,000 in the first quarter.
The company’s pitch to the administration, a person familiar with the matter said, focused on an America-centric message that appealed to officials like Mr. Navarro, who has pushed for the U.S. to become less reliant on countries including China. Mr. Navarro said he wasn’t involved in the procurement process.
“That project is just so congruent with the Trump strategy and policy…that it’s about the easiest lift imaginable,” he said.
Phlow hadn’t manufactured or shipped any prescription drugs, Dr. Edwards said, before receiving a $6 million contract in April to ship to the U.S. Strategic National Stockpile more than 1.6 million doses of five generic drugs used to treat Covid-19 patients.
The shipments included antibiotics, painkillers and medicines used to sedate patients hooked to ventilators, Dr. Edwards said.
To make active pharmaceutical ingredients, Phlow said it is partnering with California-based AMPAC Fine Chemicals, a subsidiary of South Korea’s SK Holdings Co. Ltd., and the Medicines for All Institute, based at the Virginia Commonwealth University College of Engineering.
Write to Jared S. Hopkins at jared.hopkins@wsj.com and Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com
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