Industry players have expressed concerns that reorganizing international supply chains amid a global pandemic could do more harm than good.
Garamendi's bill, introduced in the House of Representatives in October with his Republican colleague, Congresswoman Vicky Hartzler, would cut off a substantial pipeline of pharmaceuticals manufactured in whole or in part by China.
It would require the Department of Defense, which has the largest discretionary budget in the country, to purchase drugs, vaccines and other medical supplies only from U.S. suppliers. If private industry is unable to meet the department's needs, the bill would authorize the Secretary of Defense to invoke the Defense Production Act to reset industry priorities. Other legislation in the Senate, introduced several days ago by Arkansas Senator Tom Cotton, would go significantly further, banning the use of any federal funds for Chinese-manufactured drugs. In addition to national security reasons for pushing the legislation, Garamendi said,"there is ongoing concern that the quality of the ingredients manufactured in China are suspect from time to time," noting the adulteration in 2008 of the worldwide supply of heparin, a critical blood thinner, was due to lax manufacturing practices at a Chinese facility. In July 2019, more than 10 years after the initial heparin panic, six lawmakers wrote a letter to the acting commissioner of the Food and Drug Administration sounding the alarm about an outbreak of African swine fever in China, which posed a"potential threat to the U.S. heparin supply."Months later, Garamendi and Hutzler, who were not signatories to the July letter, introduced their bill. And only two months after that, a novel coronavirus began to spread in China before becoming a global pandemic. The primary objective of their bill, Garamendi said, would be to use to fiscal muscle of the Department of Defense to reinvigorate U.S. pharmaceutical manufacturing. And the department wields enormous sway over market dynamics in the United States. Its health care program for uniformed service members and retirees—Tricare—serves about 9.4 million beneficiaries and is one of the country's largest health care providers. In fiscal year 2017, the Defense Health Program's Operation and Maintenance program, which includes costs associated with Tricare, had a budget of $3.6 billion for pharmaceutical drugs alone. In its 2019 annual report, the U.S.-China Economic and Security Review Commission, a congressionally chartered body, reported that 25 percent of pharmaceutical ingredients used in military hospitals originate from China. "This number may be significantly higher since China is the only source of some drugs and produces 80 percent of the active pharmaceutical ingredients in generic drugs, which comprise 90 percent of the medicines in our country," Hartzler said, adding that this represents"a stranglehold on our pharmaceutical industry." Research by economist Chad Brown of the Peterson Institute for International Economics illustrates the challenges that may accompany a vast restructuring of the pharmaceutical supply chain, an endeavor that is especially fraught when a crisis hits. President Donald Trump's trade war with China threatens"to cripple the US fight against the COVID-19 pandemic," he wrote in an early March report, because the tariffs imposed on Chinese goods"may contribute to shortages and higher costs of vital equipment at a time of nationwide health crisis." Brown found that U.S. imports from China of tariffed medical supplies now needed to fight the disease declined sharply between 2017 and 2019, while imports of the supplies from the rest of the world grew by 23 percent. In some cases, Americans were forced to buy supplies they couldn't get elsewhere from China at a higher cost, creating a"hardship" on the healthcare industry, Brown said in his report. The US Department of Defense seal is seen on the lectern in the media briefing room at the Pentagon December 12, 2013, in Washington, DC. In fiscal year 2017, the Defense Health Program’s Operation and Maintenance program, which includes costs associated with Tricare, had a budget of $3.6 billion for pharmaceutical drugs alone.So reconfiguring the production of critical supplies, such as drugs and other medical products, cannot be a strategy to cope with COVID-19, for the most part because of the immediacy of the current crisis, experts said. "It would take some time," Thomas Bollyky, the director of the global health program at the Council on Foreign Relations, told."There is a heavy reliance on Chinese and Indian products. That's not something that ships overnight." Concerns about outages of China-supplied medicines, especially during times of crisis,"seem to have dissipated to some degree," Bollyky said, casting doubt on arguments that China would halt the medical supply chain. Garamendi acknowledged that it would"undoubtedly" be more expensive initially to require U.S. manufacturers to supply the Department of Defense. But he hopes that, over time, the department's unrivaled budget can help fortify the U.S. market to the point where it develops comparable cost efficiencies.No hearings have yet been scheduled for the bills, and it's not yet clear when the House will return to Washington D.C. to take up regular business amid the national coronavirus outbreak.
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