Trump Signs ‘Buy American’ Order for Essential Drugs, Medical Supplies

WASHINGTON — President Trump signed an executive order Thursday mandating that federal agencies increase efforts to ensure that “essential” drugs and medical supplies are manufactured in the United States, triggering many questions about how such an order would work and what its unintended effects might be.

“If we’ve learned anything from the China virus pandemic, it is simply that we’re dangerously over-dependent on foreign nations for our essential medicines; for medical supplies like masks, gloves, goggles, and the like; and medical equipment like ventilators,” Trump’s top trade adviser, Peter Navarro, said Thursday on a phone call with reporters. “The problem is simply that, across the world, we have sweatshop labor, we have pollution havens, we have tax havens, which have pulled our manufacturing offshore, particularly for pharmaceuticals.”

In announcing the executive order, Trump said the U.S. “must produce essential equipment, supplies, and pharmaceuticals for ourselves,” Trump said during an address at the Whirlpool Corp., an appliance manufacturer in Clyde, Ohio. “We cannot rely on China and other nations across the globe that could one day deny us products in a time of need.”

Limiting Competition

The order directs federal agency heads, in consultation with the FDA commissioner, “to conduct the procurement of Essential Medicines, Medical Countermeasures, and Critical Inputs by: using procedures to limit competition to only those Essential Medicines, Medical Countermeasures, and Critical Inputs that are produced in the United States; and dividing procurement requirements among two or more manufacturers located in the United States, as appropriate.” (“Medical Countermeasures” refers to personal protective equipment and other medical products used during a pandemic, while “Critical Inputs” refers to the raw ingredients used in pharmaceuticals.)

In addition, the order requires that once the FDA commissioner has identified what those essential medicines and other items are, within 30 days the U.S. Trade Representative will “take all appropriate action to modify United States federal procurement product coverage” under all relevant trade agreements with other countries, as well as the World Trade Organization Agreement on Government Procurement, so that these agreements exclude essential medicines, medical countermeasures, and critical inputs.

Another part of the executive order mandates that the FDA commissioner “negotiate with countries to increase site inspections and increase the number of unannounced inspections of regulated facilities manufacturing Essential Medicines, Medical Countermeasures, and Critical Inputs; and refuse admission, as appropriate, to imports of Essential Medicines, Medical Countermeasures, and Critical Inputs if the facilities in which they are produced refuse or unreasonably delay an inspection.”

Navarro applauded that provision. Currently, “in terms of inspections that the FDA makes, the FDA can walk in any pharmaceutical manufacturer in the U.S. unannounced and inspect,” he said. “If they try to do that in China or India, these governments will tell them, ‘Come back in 6 months and maybe we’ll let you in.’ And we let them get away with that. So that’s not going to happen any more.”

A Big Loophole

The order also states that the FDA commissioner should “accelerate FDA approval or clearance, as appropriate, for domestic producers of Essential Medicines, Medical Countermeasures, and Critical Inputs, including those needed for infectious disease and CBRN [chemical, biological, radiological, and nuclear] threat preparedness and response; and issue guidance with recommendations regarding the development of Advanced Manufacturing techniques,” both as ways of favoring domestic manufacturers.

With advanced manufacturing techniques, “the concept here is simply that if you have, for example, continuous manufacturing and you’re able to do two or all three stages of the production process in a continuous way on a single site — from, say, key starting materials, the API [active pharmaceutical ingredient], and finished dosage form — what you do is you gain from economies of scale and scope, and you’re also able to reduce significantly the waste stream and minimize environmental issues,” said Navarro. The order also directs agency heads to identify vulnerabilities in the supply chain and to “mitigate” those vulnerabilities within 6 months.

However, the order also has what might be considered a big loophole: the requirements mandating use of only U.S. manufacturers may be ignored in situations “where the head of the agency determines … that their application would be inconsistent with the public interest; the relevant Essential Medicines, Medical Countermeasures, and Critical Inputs are not produced in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality; or their application would cause the cost of the procurement to increase by more than 25%.”

Those, in essence, are the major reasons for the current reliance on overseas suppliers for medical products: U.S. producers no longer have the capacity to meet demand, because they were not cost-competitive.

The executive order also has other issues, according to Marsha Simon, PhD, an independent drug industry analyst. One is that it goes against the economic theory of comparative advantage. “If every country manufactures what it can most efficiently, the total amount of goods and services will be maximized worldwide,” Simon said in an email. “The administration’s position on this issue is not surprising and completely in line with their failed tariff policy.”

Trump noted that the executive order will “sweep away unnecessary regulatory barriers to domestic pharmaceutical production and support advanced manufacturing processes that will keep our drug prices low and allow American companies to compete on the world stage. We’ll be able to compete on the world stage, but we’re now going to have the lowest prices, as opposed to, by far, the highest prices.”

But Simon said that drug prices in the U.S. would almost certainly go up as a result of the order unless administrative action or legislation is enacted to impose penalties on drug companies for undue price inflation; such penalties are in the Medicaid program and that “has been the chief reason that Medicaid drug costs are half of what they would be” otherwise, she said.

Criticism from the Industry

Not surprisingly, the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents pharmaceutical manufacturers, criticized the executive order. “The administration is forcing biopharmaceutical companies to shift their critical attention and resources away from COVID-19 work to focus on making substantial changes to their business models necessary to comply with this and other recent executive orders,” PhRMA president and CEO Stephen Ubl said in a statement. “Increasing U.S. manufacturing of medicines is a laudable goal, but it cannot happen overnight and should not come at the expense of medical innovation or Americans’ access to the medicines they need.”

“The recent executive orders also contradict and undermine each other, creating chaos in an industry that is on the frontlines of fighting COVID-19,” he continued. “With today’s ‘Buy American’ executive order, the administration effectively is taking the unprecedented step of mandating manufacturing of medicines in the United States. Yet at the same time, through the ‘most favored nation’ executive order, the administration is creating a huge disincentive to invest in U.S. biopharmaceutical research and manufacturing. Together, the result is less investment in U.S. innovation and the potential for major long-term supply chain disruptions – the opposite of what America needs right now.”

The Association for Accessible Medicines (AAM), which represents generic drugmakers and biosimilar manufacturers, also expressed concern. “The pharmaceutical supply chain has demonstrated its resilience during the pandemic by responding to unprecedented demand with strategies that ensured uninterrupted access to essential medicines for millions of patients,” AAM interim CEO Jeff Francer said in a statement. “Without addressing the undervaluation of generic and biosimilar medicines in the U.S. with sustainable market supply plans, we simply cannot secure the domestic market and supply chain with scale and sustainability.”