Opinions Mixed on Whether ‘Buy American’ Policy Would Hurt US Patients, Hinder Development of COVID-19 Vaccine

Implementing new rules in President Donald Trump’s proposed “Buy American” executive order could lead to immediate shortages, increased prices, and could delay the development of a vaccine for the coronavirus disease 2019 (COVID-19), according to new research released from the Pacific Research Institute (PRI).¹ However, supporters of the act argue that it would protect America from future drug shortages in case of another public health emergency.

“The coronavirus shows the importance of bringing all of that manufacturing back to America, and we will have that started,” President Trump said in a meeting at the White House with chiefs of pharmaceutical and biotechnology companies, according to The New York Times. “It’s already started, frankly. It started about a year ago.”²

The draft executive order aims to increase American production of drugs and other medical equipment, and would use several approaches to do so. According to the researchers, the draft requires officials to “take all possible measures” to ensure domestic purchasing of medications and requires government agencies, such as the Department of Health and Human Services, to purchase products solely from American suppliers.¹ Furthermore, the order would reinforce the Defense Production Act invoked by the Trump administration in March, requiring American contractors to manufacture drugs and medical equipment whenever able.¹

“In short, the goal of the new order is to bring the entire pharmaceutical supply chain back to US shores almost immediately,” the authors wrote. “Substantial feasibility barriers exist that would make realizing this goal impossible, even if it were a good idea.”

The Buy American Act was originally signed by President Herbert Hoover in 1933, according to the authors, to compel governmental agencies to choose a US supplier wherever possible, even if a foreign supplier offered the same product at lower prices, up to certain limits. The authors noted, however, that the supply chain for drugs and medical products has become increasingly complex in recent decades, making the original somewhat outdated.¹

The new act has been championed by Peter Navarro, a White House trade advisor, who said in an interview with The New York Times that China’s trade practices have allowed the country to unfairly dominate global markets.²

“As President Trump has said, what we need to do is bring those jobs home so that we can protect the public health and the economic and national security of the country,” Navarro said to the Times.²

Supporters of the act say that bringing production back into the United States would help avoid future shortages in the case of another pandemic or natural disaster.

“If China shut the door on exports of core components to make our medicines, within months our pharmacy shelves would become bare and our health care system would cease to function,” Rosemary Gibson, a senior advisor at The Hastings Center, said to The New York Times.²

Although they noted these critiques of a global supply chain, the study authors also outlined several benefits. The ability to manufacture in various countries offers companies the opportunity to seek out tax incentives, affordable raw materials, low-priced energy, and highly skilled workers, the authors said.¹ They cited a 2011 FDA report, which found that making an active pharmaceutical ingredient in India can be 30%-40% cheaper than doing so in the United States. Those savings could then be passed on to patients, according to the authors.¹

Having a geographically diverse network can also be important during natural disasters and other crises, the authors said. When Hurricane Maria hit Puerto Rico in 2017, for example, nearly 50 pharmaceutical plants were affected. Many drug shortages were avoided, however, by drug companies that worked to source medicines from international plants.¹

Roughly 1300 plants manufacture pharmaceuticals in the United States, but most ingredients come from overseas, the authors noted. With just approximately 28% of key ingredients for those drugs made in the country, the authors pointed out that immediate shortages could be catastrophic.¹ Even medications that were available would experience major price increases, which would be especially dangerous during the current pandemic, according to the authors.¹

“As the US fights the coronavirus, policymakers must ensure that life-saving drugs are readily available to America’s patients,” said Sally Pipes, PRI President and CEO, in a press release.³

Based on these historical bases, the authors suggested that the impact of the new Buy American rules, if implemented, could in fact damage the American economy while limiting patients’ access to needed medications.¹

“Advocates for protectionist measures typically argue that they will strengthen the domestic economy, but a well-documented history demonstrated that they usually do the opposite,” the authors wrote.¹

In addition to short-term shortages and price increases, the authors noted several long-term effects should the rules be implemented, including problems hiring qualified staff for manufacturers. Countries like India and China have large pools of qualified drug manufacturing candidates due to their production of nearly half of the global undergraduate degrees in science and engineering, whereas the US produces only 10% of the global total in comparison, according to the authors.¹

Government officials have said it may be possible to reduce the United States’ dependence on other countries, but that it would be extremely complicated and difficult.

“If we want to reduce that dependence, there is no easy fix to the problem,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, in The New York Times. “Technically I think it’s possible, but unlikely from a cost effectiveness perspective.”²

Instead of implementing these rules immediately, the authors recommended investing in the labor force and embracing advanced manufacturing technologies, which they said could help the United States remain competitive.¹

“Amidst a growing recession, this new mandate would hurt our economy further, increase patient costs, and threaten innovation,” Pipes concluded in the statement. “Rather than shooting ourselves in the foot, we should seek better enforcement of US trade deals and expand our skilled workforce to make our medical supply chain more secure.”³

REFERENCES

• Issue Brief: Proposed “Buy America” Requirements Would Hurt Patients and the Economy. Pacific Research Institute Center for Medical Economics and Innovation; April 2020. https://www.pacificresearch.org/wp-content/uploads/2020/04/BuyAmerica_F.pdf. Accessed April 22, 2020.
• Swanson A. Coronavirus Spurs US Efforts to End China’s Chokehold on Drugs. The New York Times; March 11, 2020. https://www.nytimes.com/2020/03/11/business/economy/coronavirus-china-trump-drugs.html. Accessed April 27, 2020.
• New Brief: Expanding “Buy America” Rules Would Hurt US Patients and Economy, Hinder Development of Coronavirus Vaccine [news release]. Pacific Research Institute; April 21, 2020. https://www.pacificresearch.org/new-brief-expanding-buy-america-rules-would-hurt-u-s-patients-and-economy-hinder-development-of-coronavirus-vaccine/. Accessed April 22, 2020.