Trump Order Requires Feds to Buy Essential Drugs From US Firms

President Donald Trump wears a mask as he gets a tour of the Whirlpool Corporation facility in Clyde, Ohio, on Thursday. (AP Photo/Susan Walsh)

WASHINGTON (CN) — In a long-promised order spurred by concerns over disruptions to global supply chains, President Donald Trump signed an executive order Thursday aimed at boosting domestic production of critical drugs and medical supplies.

Key components of many pharmaceuticals and other medical supplies are produced overseas, particularly in China and India, raising alarms about shortages from experts and politicians who cast the reliance on foreign countries for critical products as a national security threat.

At the core of the executive order is a provision requiring government agencies, in chief the Departments of Defense, Veterans Affairs and Health and Human Services, to buy certain “essential” medicines from U.S. companies.

“As we’ve seen in this pandemic, the United States must produce essential equipment, supplies and pharmaceuticals for ourselves,” Trump said in a speech Thursday at a Whirlpool factory in Ohio. “We cannot rely on China and other nations across the world that could one day deny us products in a time of need.”

Under the order, the Food and Drug Administration will identify a list of medicines and medical supplies that the government must buy from domestic producers. Previewing the order to reporters Thursday morning, White House trade adviser Peter Navarro said the list of essential medicines will differ from a list the World Health Organization maintains because of regional differences in the prevalence of certain diseases and illnesses.

Navarro said the buy-American provision will help create a baseline demand for the drugs that will incentivize companies to ramp up production.  He also said the order will include deregulatory provisions intended to lower the costs for U.S. companies and make them more competitive with foreign producers.

“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,” Navarro said.

David Dobrzykowski, an associate professor in the Department of Supply Chain Management at the University of Arkansas, said the buy-American provision is a significant step, given the federal government’s massive role in health care spending.

But he said the order will not be able to address another key problem in supply chain disruptions: access to the raw materials needed to make critical medical supplies.

“It’s not just finished goods, it’s not like we’re just relying on other countries for masks and gowns and so forth,” Dobrzykowski said in an interview. “We’re actually relying on them for the raw materials.”

That weak point in supply chains will ultimately need to be overcome through innovation. Dobrzykowski particularly pointed to work by companies and universities that have developed methods to disinfect and reuse masks and 3-D print protective equipment.

Nada Sanders, a distinguished professor of supply chain management at Northeastern University, said the order has significant blind spots.

While it is true that the industry has outsourced production in ways that create the potential for significant risk, Sanders said Trump’s order only addresses part of the equation by focusing on demand without sufficiently addressing how to increase U.S.-based supply.

“It doesn’t look at supply and it doesn’t ensure supply, it doesn’t incentivize supply,” Sanders said. “So you have incentivized demand, but you have not incentivized supply. And what you need to do is you need to incentivize supply.”

Sanders said issues like cost, access to raw materials, and the significant infrastructure China and India have built up over the years will remain even with the order and will be difficult for American industry to overcome.

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