With several efforts to resurrect American drug manufacturing already underway, Congressional members on both sides of the aisle are setting their sights on one of the nation’s chief economic rivals.
The Senate has signed off on innovation and competition legislation designed to boost American competitiveness, restore the country’s manufacturing base and curb its reliance on China for critical supplies—especially drugs and medical devices.
The bill comes as war in Ukraine further complicates a supply chain already famously strained by the COVID-19 pandemic. And it follows other, more tangible efforts to beef up U.S. manufacturing of drugs and medical equipment.
Specifically, the Senate on Monday voted to substitute the text of the America COMPETES Act, which passed muster in the House earlier this year, with that of the Senate’s U.S. Innovation and Competition Act of 2021. The Senate then voted 68-28 to approve the amended bill, shooting it back to the House.
The move sets the stage for a conference where Senate and House negotiators will attempt to agree on a final bill, The U.S. Senate Committee on Commerce, Science and Transportation said in a release.
“I believe we can see a Conference Committee [with the House] initiated by the end of this work period,” Senate Majority Leader Chuck Schumer (D-NY) said in remarks ahead of Monday’s vote.
The bill encourages the U.S., European Union and other European countries to work together on “joint strategies to diversify reliance on supply chains away from the People’s Republic of China,” and “especially” so in the medical and pharmaceutical fields.
Moreover, the U.S. and Europe ought to appraise their “overreliance on goods originating in the People’s Republic of China, including in the medical and pharmaceutical sectors, and develop joint strategies to diversify supply chains,” the text continues.
It's not clear just how these joint strategies and diversified supply chains would come to be, or whether the government would offer any incentives to companies to follow its advice.
Manufacturing aside, the bill aims to snuff out marketing malfeasance by establishing a joint interagency task force comprising the Department of Justice, the Federal Trade Commission, the Department of the Treasury and other federal agencies tapped by the President to “investigate allegations of systemic market manipulation and other potential violations of antitrust and competition laws in the United States by companies established in the People’s Republic of China.”
Such transgressions might include attempts to illegally capture market share, fix or manipulate prices or control the supply of goods in critical U.S. industries, the bipartisan legislation explains. The pharmaceutical and medical device trade gets first mention in the bill, though the provisions would also extend to the steel and aluminum industries, the renewable energy field and whichever others the task force deems appropriate.
Earlier this year, President Joe Biden voiced support for the American Competes Act, suggesting it would help “outcompete China” and “bring manufacturing jobs back to the United States.”
“This bill, for all its provisions, is really about two big things: creating more American jobs and lowering costs for American families,” Schumer added in his remarks.
Further, the bill would seek to cut costs by simplifying production of critical technologies in the States and boost employment by “bringing manufacturing back from overseas,” the Senator said.
In recent years, the COVID-19 pandemic has put the U.S.’ overreliance on foreign drugs and pharmaceutical ingredients into sharp relief, ushering in a wave of “onshore” manufacturing efforts that started under the Trump Administration.
The problem long predates the pandemic, however. Back in 2019, current deputy commissioner at the FDA Janet Woodcock said an estimated 28% of the active pharmaceutical ingredients (API) in U.S. drugs were produced domestically.
"While there are many reasons for this shift, underlying factors that are often cited include the fact that most traditional drug production processes require a large factory site, often have environmental liabilities, and can utilize a low-cost labor force," Woodcock said.
Chinese exports accounted for roughly 13% of API used in U.S. drugs versus 18% produced in India, the FDA said at the time.
Last summer, meanwhile, following a review of America’s supply chains, President Joe Biden unveiled a sweeping strategy to boost domestic drug production.
The Department of Health and Human Services was tasked with setting up a public-private partnership to select 50 to 100 essential medicines “to be the focus of an enhanced onshoring effort,” the White House said in a June 2021 press release.
At the same time, the government said it would shell out roughly $60 million to research new technologies to bolster domestic API production, too.
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