Biden Administration Prioritizing Domestic Production of Pharmaceuticals . . . Again?
Tuesday, December 5, 2023

On November 27, the Administration announced another blue-ribbon panel to bolster the domestic manufacturing of pharmaceuticals. This one is called the Supply Chain Resilience Council. Co-chairs of the Council are Lael Brainard, Director of the White House National Economic Council, and Jake Sullivan, the White House National Security Advisor. Among the other 25 Council members are multiple agency Secretaries; the U.S. Trade Representative; the Chair of the White House Council of Economic Advisers; and the Directors of National Intelligence, the Office of Management and Budget, and the Office of Science and Technology Policy. The Council does not include any industry representatives.

A major part of the Council’s plan to bolster domestic manufacturing is providing the Department of Health and Human Services (“HHS”) with expanded authorities under Title III of the Defense Production Act (“DPA”) to invest in domestic manufacturing of essential medicines, medical countermeasures, and other critical inputs deemed crucial for national security. HHS will be granted DPA authority beyond what it was given during the COVID pandemic.

HHS will name a new Supply Chain Resilience and Shortage Coordinator and its efforts under the DPA will be managed by the Administration of Strategic Preparedness and Response (“ASPR”). ASPR intends to use the DPA to promote the onshoring of essential manufacturing capabilities to strengthen the response to public health emergencies. ASPR, working with the Department of Commerce, will highlight potential gaps in the supply chain of raw materials, active pharmaceutical ingredients (“API”), and essential medicines.

HHS has identified $35 million for investments in domestic production of key starting materials for sterile injectable medicines. This will help ensure the United States has all the tools and resources necessary to prepare for, respond to, and recover from future pandemics, biological threats, and other public health emergencies.

The Administration’s plan to increase domestic production comes amid the highest drug shortages in nearly a decade. U.S. drug manufacturers largely depend on overseas suppliers (e.g., China and India) for API. For years, calls from industry and national security experts to move more drug manufacturing to the United States, partly to guard against disruptions from a future pandemic or military conflict, have gone unanswered.

The question remains whether this Administration plan will be more than a media soundbite. You may be reading this and thinking: Haven’t we been down this road before? The answer is “yes.” In August 2020, President Trump issued Executive Order (“EO”) 13944 directing the government to reduce its reliance on other countries when purchasing essential medicines. In June 2021, President Biden issued EO 14017 to create a public-private consortium for increasing domestic production of essential medicines.

To date, except for vaccines, little to no funding has been used to onshore the production of pharmaceuticals or API. No incentives have been made available to manufacturers to move their production facilities to the United States. Finally, no one appears to be considering or understanding that no pharmaceutical manufacturer will move its manufacturing facilities to the United States and produce pharmaceuticals at a higher cost resulting in a higher price without a purchase commitment for the U.S.-made drugs.

 

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