August 7, 2020

Trump order seeks to boost America's domestic medical supply chain—but could it lead to higher costs?

Daily Briefing

    President Trump on Thursday signed an executive order directing the federal government to purchase certain prescription drugs and medical supplies exclusively from American factories—a move that's intended to increase domestic manufacturing of the products and ease shortages that have strained health care providers during the country's coronavirus epidemic, but that could have some negative effects.

    US new coronavirus cases near 4.9M, deaths top 159K

    The news comes as U.S. officials on Thursday reported about 57,128 new cases of the novel coronavirus, bringing the total number of coronavirus cases reported in the country since the epidemic began to 4,889,500 as of Friday morning—up from 4,832,400 cases reported as of Thursday morning.

    Data from the New York Times shows that Puerto Rico, the U.S. Virgin Islands, and nine states saw their average daily numbers of newly reported coronavirus cases rise over the past 14 days: Hawaii, Illinois, Massachusetts, Montana, Nebraska, New Jersey, Oklahoma, Rhode Island, and South Dakota.

    According to audio obtained by the Center for Public Integrity, Deborah Birx, coordinator of the White House's coronavirus task force, during a private call with state and local officials on Thursday said California's Central Valley and nine cities—Atlanta, Baltimore, Boston, Chicago, Detroit, Kansas City, Omaha, Portland, and Washington, D.C.—are reporting increasing percentages of positive coronavirus tests, which indicates that coronavirus transmission could be accelerating in those areas. In addition, Birx noted that California's and Nebraska's coronavirus test positivity rates have increased to over 10%.

    According to Axios' "Vitals," states in the Midwest also are seeing higher percentages of positive coronavirus tests. But the increases come as the rate of coronavirus testing nationwide declined by nearly 13% this week when compared with the previous week, which "mudd[ies] the picture of what's going on in some states," "Vitals" reports. For instance, "Vitals" notes that Arkansas has seen its coronavirus test positivity rate increase over the past two weeks, but testing in the states has decreased by 34% over that time. Meanwhile, in Nebraska, the state's coronavirus test positivity rate has increased alongside a 9% increase in testing, "Vitals" reports.

    The Times' data shows that the average daily numbers of newly reported coronavirus cases over the past two weeks remained mostly stable in Guam; Washington, D.C.; and 24 states: Alaska, Arkansas, Colorado, Connecticut, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New York, North Dakota, Oregon, Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

    Seventeen states—Alabama, Arizona, California, Delaware, Florida, Louisiana, Maine, Mississippi, Nevada, New Mexico, North Carolina, Ohio, South Carolina, Utah, Vermont, Washington, and Wyoming—saw their average daily numbers of newly confirmed cases decrease over the past 14 days, according to the Times' data.

    Meanwhile, growth in America's national coronavirus-related death rate has been rising.

    According to the Times' data, Puerto Rico and 21 states saw their average daily numbers of newly reported deaths linked to the coronavirus rise over the past 14 days: Arkansas, California, Florida, Georgia, Idaho, Iowa, Minnesota, Mississippi, Montana, Nebraska, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.

    U.S. officials reported 1,036 new deaths tied to the coronavirus on Thursday, bringing the country's total of reported coronavirus-linked deaths since the epidemic began to 159,588 as of Friday morning—up from 158,552 deaths reported as of Thursday morning.

    Trump signs executive order aimed at boosting domestic medical supply chain

    As the United States and other countries continue to grapple with the global coronavirus pandemic, America has experienced shortages of personal protective equipment and some prescription drugs. According to the Wall Street Journal, the shortages have highlighted America's reliance on other countries—especially China—for pharmaceutical ingredients and medical equipment, as disruptions in those supply chains have occurred and demand for the products has increased throughout the world.

    To address the issue, the Trump administration in recent months has launched some efforts to boost American manufacturing of prescription drugs and medical equipment—and the executive order Trump issued on Thursday is intended to build on those efforts.

    "We cannot rely on China and other nations across the globe that could one day deny us products at a time of need," Trump said during a public appearance in Ohio, where he signed the order. "We can't do it. We have to be smart."

    The executive order directs the federal government to buy certain drugs and medical supplies—such as masks, goggles, and ventilators—from American manufacturers.

    Specifically, the order directs FDA to develop a list of "essential" medicines that the federal government will purchase from American manufacturers. Under the executive order, a drug can be exempted from the list if the treatment is too costly to manufacture in the United States or if the medication is not currently manufactured in the country. In addition, the order allows certain federal officials, such as the head of Veterans Affairs, to choose to purchase drugs that are on the list from foreign manufacturers if the medication is "in sufficient and reasonably available commercial quantities" in America or if buying the treatment in the United States would increase procurement costs by at least 25%.

    The order also directs FDA to work with the Environmental Protection Agency (EPA) to speed up domestic approvals of essential medical products, identify vulnerabilities in the country's medical supply chain, loosen regulations on continuous manufacturing, and target counterfeit drugs and medical products imported to the United States from other countries.

    Peter Navarro, the White House's director of trade and manufacturing policy, said FDA and EPA under the order will address regulations that have disadvantaged domestic manufacturers, including rules that currently allow foreign manufacturers to receive advance notice of U.S. inspections, which U.S. manufacturers do not receive. Navarro added that the agencies also will update regulations to promote advanced and continuous manufacturing and ensure regulatory processes align with new technologies.

    Stakeholders worry about order's implications

    According to STAT News, it's unclear what effect the executive order will have on the prescription drug industry.

    Some experts have estimated that up to 90% of critical generic drugs are at least partially manufactured abroad, but there is no definitive figure on the total of drugs that are manufactured outside of the United States, STAT reports. In October 2019, Janet Woodcock, director of FDA's Center for Drug Evaluation and Research, said roughly 72% of manufacturers supplying pharmaceutical ingredients to the United States were overseas, and she noted that 13% of them were located in China.

    It's also unclear what effect the order may have on prescription drug spending in the United States, because only a small share of the federal government purchases drugs directly from manufacturers.

    According to Inside Health Policy, drug lobbyists said the order likely means drugmakers will have to overhaul their supply chains for some products, which could lead to higher prices.

    Some major business groups and economists also have warned that they executive order could increase domestic prices for prescription drugs and medical supplies, STAT reports (Owens, "Vitals," Axios, 8/7; Moreno, The Hill, 8/6; Lienhard, Inside Health Policy, 8/6 [subscription required]; Florko, STAT, 8/6; Collins, USA Today, 8/6; Wilkerson, Inside Health Policy, 8/6 [subscription required]; New York Times, 8/7; Yap, Wall Street Journal, 8/5).

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.