President Trump signed a long-promised executive order Thursday that compels federal agencies to “Buy American” when it comes to a list of essential medicines and supplies, saying the coronavirus pandemic has underscored the need to bring supply chains home.
The order also streamlines the regulatory process for approving and standing up domestic manufacturing, so U.S. companies are prioritized.
Another component of the order will crack down on counterfeit medicines that flow into the country, mostly from China.
Experts and free-market advocates questioned the order, saying it will take a long time to implement and will disrupt an industry tied up in fighting the pandemic.
Yet the administration said the move is imperative, after COVID-19 revealed an over-reliance on China, and is a pure expression of the type of economic changes that Mr. Trump promised in 2016 and is pushing again before the November elections.
Mr. Trump said he’s ready to weather any pushback, as he issues a series of orders to shake up Big Pharma.
“I have a lot of enemies out there. This may be the last time you’ll see me for a while. A lot of very, very rich enemies, but they are not happy with what I’m doing,” Mr. Trump told Whirlpool factory workers in Ohio.
The new order will require big purchasers such as the Veterans Affairs, Defense and Health and Health and Human Services departments to look to American makers first when procuring essential drugs, according to White House trade adviser Peter Navarro, who dubbed the order “pure Trump.”
He said the order will create a base level of demand and spur investment in domestic manufacturing of drug components and gear, especially in times of trouble.
“It has always been the case that ‘buy American, hire American’ are the two most simple rules of the Trump administration,” Mr. Navarro said.
The vast majority of chemicals for active pharmaceutical ingredients are made overseas.
If the coronavirus pandemic revealed one thing, Mr. Navarro said, “it is simply that we’re dangerously over-dependent on foreign nations for our essential medicines, for medical supplies like masks, gloves, goggles, and the like, and medical equipment like ventilators.”
“The problem is simply that, across the world, we have sweatshop labor, we have pollution havens, we have tax havens, which have pulled our manufacturing offshore, particularly for pharmaceuticals,” he said.
The coronavirus is an unprecedented health crisis that sparked a huge demand for protective equipment and drugs. Global in scale, the crisis also taxed supply chains that often originate in countries such as China, where the virus was discovered.
Mr. Navarro said the problem is that places like China and India undercut Americans with lax environmental and labor standards. Other countries, including Ireland and Switzerland, lure manufacturing away with huge tax advantages.
Another problem, he said, is that regulatory rules put American makers at a disadvantage. He said the order will prioritize U.S. manufacturers and ensure that foreign nations cannot leverage weaker protocols.
“The FDA can walk in any pharmaceutical manufacturer in the U.S. unannounced and inspect. If they try to do that in China or India, these governments will tell them, ‘Come back in six months and maybe we’ll let you in,’” he said. “And we let them get away with that. So that’s not going to happen anymore.”
There will be waiver exceptions to the “buy American” rules if certain drugs can only be found elsewhere, though Mr. Navarro said the administration will maintain a hard line and work in “Trump time” to close the production gap with foreign nations.
“This is the only way America will succeed going forward, President Trump knows this,” Mr. Navarro said.
The order is tailor-made for Mr. Trump’s America-first agenda as he tries to secure support from workers who supported him in 2016. It also speaks to a national security issue — bringing supply chains back to U.S. shores — that has buy-in from both parties.
Yet experts warned that implementation could be difficult.
“This will require an entirely new drug manufacturing infrastructure to be created since suppliers have come to depend upon these foreign markets for the cheap manufacture of generic drugs — with more expensive name-brand drugs still being manufactured in the U.S.,” said Robert Laszewski, a health policy consultant in Alexandria, Virginia. “You really have to wonder whether or not the Trump administration has thought through the logistical challenges here or whether this is aimed more at a domestic political calculation — an imperative to look like they are doing something in an election year?”
Erin Fox, senior director of Drug Information and Support Services at the University of Utah, said there needs to be a plan for increased transparency for the order to be implemented effectively, so that it’s clear what “buy American” means.
“Under current U.S. labeling laws, drug companies have no requirement to disclose where a product was made or the company that made the product,” she said. “It’s actually impossible to obtain a list of products produced in the U.S. as drug companies consider the list of products made in a facility, and even the location of the facility to be a proprietary secret. Indeed, most don’t.”
She said drug shortages can occur even among products made in America, citing recent manufacturing delays because of the refurbishing of factories within the country.
FreedomWorks, a conservative small-government group, said 72% of the drug supply chain is located overseas, so the order could upend the industry at an inopportune time.
“This executive order threatens to disrupt not only a major sector of our economy, but one that is integral to fighting the COVID crisis. This will be an incredibly costly, harmful measure if implemented,” FreedomWorks President Adam Brandon said. “Much of the good this administration has done has stemmed from the instinct to let private industry operate without the heavy hand of government. This order cuts directly against that recipe for success, and we urge the administration to reconsider the consequences of this executive action.”