What You Need to Know about President Trump’s Executive Order to Strengthen the Domestic Supply Chain for Essential Drugs and Medical Devices
On August 6, 2020, President Trump signed an Executive Order (“Order”) to ensure essential medicines, medical countermeasures, and critical inputs are made in the United States. The President recognized that reliable domestic supply chains for Essential Medicines, Medical Countermeasures, and Critical Inputs are necessary for the preparedness and protection of United States citizens. The Order is intended to increase domestic production of essential medicines, medical equipment and protective gear in order to decrease the country’s reliance on foreign drug and medical device manufacturing. The Order also seeks to combat counterfeit products. The federal government will be required to develop a list of essential medicines and shift their procurement to U.S. based manufacturing companies.
Major Provisions of the Executive Order
Procurement Requirements for Products Made in the U.S.
The FDA Commissioner is directed to identify a list of essential medicines, countermeasures and “Critical Inputs.” Medical Countermeasures include personal protective equipment (“PPE”), and Critical Inputs include active pharmaceutical ingredients (“API”) as well as raw or intermediate materials used in the manufacture of an API that is deemed by the FDA Commissioner to be relevant in assessing the safety and effectiveness of a medicine or countermeasure. In addition, “the Finished Drug Product or Finished Device” is required to be “manufactured, prepared, propagated, compounded, or processed … in the United States.” This list of essential medicines, countermeasures and “Critical Inputs is required to be developed within 90 days from the Order.
U.S. trade agreements will be altered to exclude essential medicines, countermeasures and Critical Inputs and the Secretary of Defense shall use his authority to restrict procurement of these products to domestic sources.
The FDA can accelerate approval or clearance of products manufactured in the U.S. and the Agency is required to draft guidance and recommendations related to advanced manufacturing, while also accelerating EPA siting and permitting approvals of advanced manufacturing facilities.
There are exceptions, including where the relevant products are not yet produced in the U.S. “insufficient and reasonably available commercial quantities and of a satisfactory quality” or the product would increase procurement costs by 25% or more.
There are exceptions for the procurement of items “that are necessary to respond to any public health emergency declared,” or any major disaster or emergency declared under the Stafford Disaster Relief and Emergency Assistance Act.
Increased Transparency and Focus on the U.S. Supply Chain
Within 180 days, the HHS Secretary is required to identify vulnerabilities in the supply chain for “essential medicines, medical countermeasures, and critical inputs and to mitigate those…” This will be accomplished through new regulations or guidance to collect information from manufacturers during the regulatory application and review process, including sources of finished products, the use of any scarce or “critical” inputs and the date of the last inspection and subsequent results.
The National Security Council, Departments of State, Defense, and Veterans Affairs is also required to disclose information about the security and vulnerabilities in their supply chains for essential medicines.
The Order requires the review of FDA regulations to determine if they are a barrier to domestic production and determine whether they should be repealed or amended. FDA is also required to negotiate with countries to increase foreign site inspections, and specifically, unannounced inspections. In addition, FDA is directed to “refuse admission … to imports … if the facilities in which they are produced refuse or unreasonably delay an inspection.”
The Office of Management and Budget is directed, in consultation with the heads of different Agency, to review each agencies’ authority to limit procurement of products to e-commerce platforms that have agreed to requirements combating the sale of counterfeit goods.
Impact of the Executive Order
Such changes, if implemented provide for fundamental changes in existing regulatory requirements and require significant revisions to U.S. law and international agreements. Given the significant nature of the actions that are required to be implemented and the relatively short deadlines, it is not clear whether the administration can meet these deadlines. If and when implementation begins (and only after the November presidential election) can we assess the impact of any changes to procurement and the supply chain. It is likely that the sweeping changes under the Order will face significant legal challenges under the Administrative Procedures Act from many impacted parties.