The need to reshore American products has been recognized on a federal level for many decades, with legislation such as the original Buy American Act, dated to 1933.
The urgency has grown in recent years, with the burgeoning dependence of the United States on foreign medicines and medical equipment now constituting a huge strategic burden. The issue has recently come to forefront because of renewed distrust in supply chain stability thanks to Covid-19, however, and current legislation is upping the ante by including Big Pharma among the list of key players that need to be reformed.
The imperative to return American products home is primarily being addressed through legislation offering incentives aimed at making American businesses more competitive, imposing tariffs on foreign goods and offering tax benefits for American manufacturers. Although 28% of registered worldwide pharmaceutical API manufacturing sites are located within the US, according to government statistics when we consider the sourcing of raw materials, various estimates suggest that the true foreign dependence is even higher. Indeed, it is surprisingly difficult for consumers to determine the origin of their drugs and medicines, and many pharmaceutical companies are reticent about their suppliers given the proprietary nature of the information.
President Trump’s proposed “Buy America” Executive Order, spearheaded by White House trade adviser Peter Navarro, was sidelined by the National Security Council before it could be signed last Friday. Although the exact details of the order are under negotiation, it is clear that the future of the pharmaceutical industry is at a major crossroads: what happens when the order is signed will shape the manufacturing of pharmaceuticals worldwide.
While this situation underscores the necessity for re-shoring American manufacturing of pharmaceuticals, the biggest opposition to the movement is coming from pharmaceutical lobbyists on Capitol Hill. Perhaps this is unsurprising, given the enormous disruptions that changing the system would cause, and the fact that many of the losers would be large, powerful corporations with pronounced sourcing from overseas. Nevertheless, the Pharmaceutical Research and Manufacturers of America (PhRMA), which is the largest pharma lobbying group present, has proffered an argument that re-shoring proposals will “… not only overestimate the potential feasibility and underestimate the time and effort it would take to make such changes, but also misunderstand that a diverse pharmaceutical supply chain is precisely what enables the industry to respond quickly and make adjustments in its supply chain sourcing during natural emergencies and global public health crises.”
Some of this rhetoric is true: the process will definitely be expensive and difficult. Some of this is false: parallel supply chains increases the robustness of the worldwide supply. In fact, redundancy is a key element to airplane safety, and by analogy, it’s plain to see that parallel sources are far more secure than relying on a potentially distant source in an emergency. This resistance is troubling, since the truth is staring us in the face: global supply chains are not always reliable. Imports from China for critical medicines and pharmaceuticals are being cut off entirely due to Covid-19. This dependence has placed lives at risk since 90 percent of the generic medications that Americans use daily are imported.
The reluctance of Big Pharma to reduce an unhealthy and greedy dependence on cheap labor and materials will have serious consequences for American healthcare as well as national security. China’s dominance of the pharma supply chain is highly dangerous to the United States. Pharmaceutical production must be reshored and even expanded in order to develop secure and safe supply chains for medications, vaccines and medical devices. This crossroads brings us to a critical question: will the United States commit its financial might to developing American pharmaceutical manufacturing capabilities, or will pharma itself stand in the way?