Covid-19 brought home that the loss of manufacturing capability and control of the supply of essential medicines and their key ingredients in America poses a high threat to the future health of the American people and economy. Medicines relied upon are being made in China where regulations are lax or not enforced and as the pandemic demonstrated: a nation’s supply chain is a vital component of national security. America is dependent on foreign supply chains for the three stages of drug production: starting materials for making active ingredients, the active ingredients themselves and the finished product in the form of tablets, pills, and injectables.
China and India are market leaders in these areas because they have an unfair competitive advantage in the production of starting material like acetic acid attained through lax environmental regulations. Low-wage factories in Asia also have an advantage in producing active-ingredient production, which is heavily labor dependent. Final-product manufacturing, too, has areas with favorable tax laws, such as Ireland.
China dominates the active pharmaceutical ingredients market, making key ingredients used for prescription drugs and over the counter medicines sold in America and worldwide. Estimates suggest the U.S. has virtually no manufacturing capacity to make generic antibiotics, and because China makes the key ingredients, the U.S. can’t make generic antibiotics for:
- Anthrax exposure
- Strep throat
- Ear infections
- Urinary tract infections
- Lyme disease
- Tooth infections
The US no longer makes Penicillin and Vitamin C, and Chinese companies are required by their law to fix prices and control supplies to the U.S. The danger is illustrated when there is a global shortage, such as we saw with Covid 19, or when an explosion occurred at a Chinese factory in 2017, which is the sole source of the critically important antibiotic - piperacillin-tazobactam. Further, ingredients like Star anise, the source of the anti-influenza drug Tami-flu, is grown almost solely in China.
Trump Administration Efforts to Bring Back Supply Chains
After the emergence of Covid 19, the Trump administration took action, authorizing federal agency - the US International Development Finance Corp. (DFC), to make loans under the Defense Production Act, mobilizing manufacturing capability in times of crisis.
The Kodak Corp, based in New York and Rochester-based Kodak Corp. was one of the largest beneficiaries when the Trump administration awarded the former photography expert $765 million to make ingredients for a wide range of drugs. Kodak was chosen because it had a large industrial infrastructure comprising 1,200 acres; 16 million square feet of manufacturing, lab, warehouse, and office space; 88 batch-manufacturing reactors; a wastewater-treatment facility that can process 30 million gallons a day; an on-site power plant and steam supply; a long and distinguished history of organic chemical manufacturing; and a proprietary chemical process database with more than 100,000 molecules.
The Trump administration also directed the federal government to procure certain essential medicines from U.S. manufacturers to reduce reliance on foreign supply chains. Yet the engineers, managers, quality controllers, and technicians, and workers needed for these changes cannot just be trained in a few weeks. It takes years to get the right people and machines up and running. President Trump then asked the government to compile a list of essential drugs as part of an effort over the next four years, to bring back pharmaceutical and medical supply chains home ending reliance on China and other foreign countries – but this was stopped in its track with the Biden administration taking over.
Biden Takes Over
Even though President Biden spent most of his initial days in office reversing most of President Trump's key policies, last Monday he signed an executive order very much in kindred spirit will Trump’s “Made in the USA” policies. “'We're going to use taxpayers' money to rebuild America and to buy American products and support American jobs. My Build Back Better recovery plan invests in American workers unions and businesses, up and down the supply chain,” Biden said.
Biden had previously indicated ways he would tackle drug supply chains. He will use the Biomedical Advanced Research and Development Authority (BARDA), which has received billions of dollars to ensure adequate production of vaccines and other medical countermeasures to address COVID-19, to rebuilding U.S. medical production capabilities by providing incentives for the production of vaccines and other medicines in the U.S.
Biden also intends on making changes to the U.S. tax code that will encourage domestic pharmaceutical supply chains. He says Pharmaceutical offshoring has been heavily driven by tax code provisions that have encouraged companies to locate pharmaceutical production in low-tax countries and source raw materials in countries with low labor costs.
The Biden administration says it will then launch a comprehensive review of U.S supply chain vulnerabilities and implement a national strategy to close them. He will sign a comprehensive Executive Order to inventory U.S. supply chain vulnerabilities, directing relevant agencies to identify the specific critical products where the U.S. faces national security supply chain vulnerabilities and to address these weaknesses immediately. He intends to work with Congress to pass a law making this process permanent as part of a quadrennial Critical Supply Chain Review that will include updating the list of critical products that will be the focus of supply chain security planning.
We will have to wait for these to take effect to fully realize if America’s drug supply chains are being revitalized on American soil. At the same time, China is not stopping its drive to reign economically supreme.
Carol King received a first class BA (honors) in History and Politics from Stirling University, along with an exceptional commendation for a study on US public opinion and Foreign Policy. She also completed a year of study at University of London before taking up a Graduate Proctor Fellowship at Princeton University. She further completed a MPhil in American Politics at Dundee University. Aspiring to be a writer/commentator on American politics, she now writes for UncoverDC. Twitter: @CarolKing561