Americans Favor Domestic Pharma Manufacturing Due To National Security Concerns

Americans Favor Domestic Pharma Manufacturing Due To National Security Concerns

The COVID-19 pandemic caught the U.S. on the back foot, scrambling to procure necessities like medicines, ventilators, and masks. It exposed the country's lopsided reliance on third-party vendors, foreign manufacturers, and other nations.

Anjali Krishnan

The COVID-19 pandemic caught the U.S. on the back foot, scrambling to procure necessities like medicines, ventilators, and masks. It exposed the country's lopsided reliance on third-party vendors, foreign manufacturers, and other nations.

The Investor's Business Daily/TIPP Poll conducted in late June/early July asked 1,424 American adults how important a strong manufacturing base for medical drugs was to the United States' national security. The response:

  • 82% Important
  • 7% Not important
  • 11% Unsure
Importance of a strong drugs manufacturing base for national security

Enhanced self-reliance when it comes to life-saving drugs and medical tools has garnered support from Americans across the spectrum. Backing for the idea goes into the 90s among a few demographic groups:

  • 94% Seniors
  • 92% $75K above income
  • 92% College educated
Importance of a strong drugs manufacturing base for national security

Though outsourcing of production has significantly brought down the price of prescription drugs and medical equipment like PPE in the U.S., the move has placed America at a severe disadvantage.

Generic drugs account for 90% of prescription medications in the United States and account for 22% of total prescription medication spending in the country. Over the years, China and India have cornered a substantial share of the generic drug manufacturing sector.

Active Pharmaceutical Ingredients

The main concern and current focus are APIs, or active pharmaceutical ingredients, the primary ingredients for drugs.

The FDA estimates that 72% of API facilities for all regulated drugs and 79% for essential medicines are overseas.

“All regulated drugs” include prescription (brand and generic), OTC, and compounded drugs.  

Manufacturing Sites of APIs for the U.S. Market by Country or Region, August 2019
Manufacturing Sites of APIs for the U.S. Market by Country or Region, August 2019, Source: FDA
Manufacturing Sites of APIs for the U.S. Market by Country or Region, August 2019,
Number and Percentage of API Manufacturing Facilities for All Drugs by Region, August 2019, Source: FDA

2019 WHO Essential Medicines List comprises 461 drugs that have been selected by the WHO Expert Committee to meet the most important needs in a health system.  FDA matched 370 of the drugs on the WHO Essential Medicines List with products listed for the U.S. market and determined the location of the facilities used to make their APIs.

Manufacturing Sites of APIs for the U.S. Market by Country or Region, August 2019,
Number and Percentage of API Facilities for the 370 U.S. Marketed Drugs on 2019 WHO Essential Medicines List, Source: FDA

The COVID-19 curbs have brought into focus supply chain complexities, shortages, and vulnerabilities in critical areas like semiconductors, large capacity batteries, critical minerals, and pharmaceuticals.

Having faced severe shortages at the beginning of the pandemic, the U.S. is now gearing up to scale up its production and supply chain capabilities regarding semiconductors, pharmaceutical drugs, and critical medical equipment.

Biden Administration Plans

Along with the FDA and the U.S. Department of Health and Human Services, the Biden administration has put forth a comprehensive series of policy recommendations that will address the key weaknesses in the drug manufacturing sector. The government plans to set aside funds and provide incentives in four critical domains:

  • To boost local production
  • Promote R&D that will result in innovative production technologies
  • Put in systems to ensure consistency and reliability
  • Leverage data to improve supply chain resilience

The steps mentioned above will, in the long run, reduce the country's dependence on others by insulating it, to a large degree, from market turbulence and variables. Though absolute self-reliance and 100% domestic production of medical drugs and equipment may not be feasible, the U.S. can take steps to reduce supply chain vulnerabilities and problematic shortages in the future. Instead of placing all eggs in one basket, the U.S. will likely shop around for medical equipment and pharmaceutical drugs with a larger number of countries spread across various geopolitical zones. This would help reduce the bargaining power of any one country and ensure fewer supply chain disruptions caused by political or regional tensions.

The pharmaceutical industry and the health sector stand to benefit significantly from private-public partnerships. Such collaborations will also achieve the goal of a resilient pharma sector faster. Improved transparency and broader powers for the Department of Health and Human Services will allow the state to stay on top of meeting unexpected demands and plan for contingencies.

Swifter drug approval processes, financial support like tax credits, and a well-defined "made in America" policy are on the pharmaceutical industry's wish list. Fostering a competitive domestic market and incentivizing the production of less profitable drugs in the country promises a secure future for all Americans in the long run.

Raghavan Mayur edited the story.



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