Trump Signs Order Seeking to Return Drug Production to U.S. (2)

President Donald Trump signed an executive order that would encourage the production of certain drugs and medical supplies in the U.S. following shortages during the Covid-19 pandemic.

The order urges purchasers to buy American-made products and loosens federal drug-safety and environmental regulations that the administration says disadvantage domestic producers, among other measures.

“I want to lay out my vision to bring millions and millions more jobs and thousands more factories back to American shores, where they belong,” Trump said at a Whirlpool Corp. plant in Ohio on Thursday. “The duty of a president is to put this nation’s own citizens first.”

The drugs and devices covered by the order are expected to include medicines used to respond to a public-health emergency or biohazard attack, among others. White House trade adviser Peter Navarro said on a call with reporters that the Food and Drug Administration will come up with the list of essential medicines covered by the order, but he didn’t say by when.

“We’re dangerously overdependent on foreign nations for our essential medicines, for medical supplies like masks, gloves, goggles and the like, and medical equipment like ventilators,” Navarro said. “Across the world we have sweatshop labor, we have pollution havens, we have tax havens, which have pulled our manufacturing offshore particularly for pharmaceuticals.”

‘American Independence’

Generics account for 90% of drugs taken by Americans and they don’t often have high profit margins. Building capacity to produce pharmaceuticals in the U.S. is expensive, and it was unclear whether the incentives outlined in the order would be strong enough to overcome the significant economic obstacles likely to be faced by new domestic manufacturers.

“Careful implementation will be key to avoid driving up prices while strengthening supply chain security,” the U.S. Chamber of Commerce said in a statement Thursday. “While shortages of a limited range of products must be addressed, different solutions are needed for different products.”

Health-care providers have struggled to get the drugs or equipment they need during the pandemic because so many are made overseas. Researchers and lawmakers have decried that reliance on foreign suppliers for years, but public outcry over drug and equipment shortages during the Covid-19 pandemic has increased attention on the issue.

“During the the course of the next four years, we will bring our pharmaceutical and medical supply chains home,” Trump said at the Whirlpool plant. “We cannot rely on China and other nations across the globe that could one day deny us products in a time of need.”

The Department of Health and Human Services, Defense Department, and Department of Veterans’ Affairs will be required to buy U.S.-made drugs, Navarro said, although he didn’t specify what that would cover. The exceptions to purchase domestic drugs would be if it isn’t in the public interest, the treatment or device isn’t produced in sufficient quantities in the U.S., or if it raises prices, Navarro said.

‘Base Demand’

The administration recently awarded a $765 million contract to Eastman Kodak Co. to make ingredients used in key generic medicines and a $354 million contract to generic drugmaker Phlow Corp. to make Covid-19 drugs and build new U.S.-based plants for so-called essential medicines and pharmaceutical ingredients.

Navarro said the order “establishes a base level of demand to attract a level of investment sufficient to provide for the needs we have for these things in times of trouble.”

The FDA has said about 80% of the key building blocks for medicine, called active pharmaceutical ingredients, come from outside the U.S. A large portion are made in China and India, countries where the FDA has discovered product-quality issues stemming from poor manufacturing practices.

Millions of blood-pressure drugs with ingredients made in China and India were recalled starting two years ago after it was discovered they contained chemicals that can cause cancer.

Inspection Shift

The Pentagon has also raised concern that relying on China for pharmaceutical ingredients is a national security risk. In addition, the pandemic has revealed how disruption in other countries can leave Americans vulnerable after India temporarily halted the export of some products that could be needed to treat Covid-19 patients.

The FDA can do unannounced inspections of drug plants in the U.S., but not in China or India, Navarro said. “That’s not going to happen anymore,” he said.

The FDA had started doing unannounced inspections in India several years ago, but abruptly stopped without explanation in 2015. During that effort, the agency increased its most serious citations to pharmaceutical companies in the country by 60%, according to Iowa Republican Senator Charles Grassley, who investigated the program’s halt.

The order will have the FDA and Environmental Protection Agency cut back on regulations so drug approvals can be sped up, Navarro said, but they won’t be “cutting any corners, we just want a more rational and streamlined regulatory process.”

(Updates with Trump, Chamber of Commerce remarks from third paragraph)

To contact the reporters on this story:
Shira Stein in Arlington at sstein51@bloomberg.net;
Anna Edney in Washington at aedney@bloomberg.net;
Olivia Raimonde in New York at oraimonde@bloomberg.net

To contact the editors responsible for this story:
Timothy Annett at tannett@bloomberg.net

Heather Smith

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