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Reclaim American Drug Supply Chains to Counter Chinese Influence

The opinions expressed by columnists are their own and do not necessarily represent the views of
AP Photo/Patrick Sison

China is threatening to cut off our supply of critical medicines even as we suffer in the midst of a pandemic. A shocking headline from the South China Morning Post on August 26 highlights just how real this threat truly is: “China Could Weaponise drug exports to retaliate against US chip restrictions, Beijing Advisor Says.” As I have highlighted in a previous op-ed, this threat must not be taken lightly.

The South China Morning Post is owned by Alibaba and believed by many to be a mouthpiece for the Chinese Communist Party. Li Daokui, the advisor quoted in the article, is a very influential professor of finance at Tsinghua University in Beijing. And according to Congressional testimony from Rosemary Gibson, author of China Rx, “If China shut the door on exports of medicines and their key ingredients and raw materials, U.S. hospitals and military hospitals and clinics would cease to function within months, if not days.” 

Unfortunately, this is not the only medicine-related issue exposed by the Chinese coronavirus pandemic. According to Senior Trade Advisor Peter Navarro, “We have already witnessed over 80 countries impose some form of export restrictions on medicines or medical supplies, proving that no matter how strong our friendships or alliances may be, they mean nothing in a pandemic. It’s ‘Lord of the Flies.’” Examples of drugs that have been subject to these export restrictions include things as basic as acetaminophen, a common pain killer. 

Fortunately, there is some good news. President Trump has invoked the Defense Production Act (DPA) to help bring pharmaceutical and medical supply chains back to the United States. This is a powerful and important step to protecting our nation’s health and wellbeing. 

After deliberation with his team at the Office of Trade and Manufacturing Policy and Defense Production Act, Peter Navarro identified New York-based company Kodak as best equipped to manufacture key starting materials and active pharmaceutical ingredients (API). Yes, that Kodak. 

Their expertise in chemicals expands beyond traditional photography. The company even already has a smaller unit dedicated to the production of key starting materials, the building blocks for active pharmaceutical ingredients. It’s a match-made in heaven.

This iconic brand has existing expertise and capacity ready to help onshore one of our nation’s most critical industries. As a result, on July 28 there was an announcement that the government would loan Kodak $765 million “to help expedite domestic production of drugs that can treat a variety of medical conditions and loosen the U.S. reliance on foreign sources.” 

Wall Street loved the idea and the price of Kodak shares jumped from around $2 in late-July to $60 in a matter of days. All seemed well until early trading appeared to front-run the official announcement. The huge price gains drew serious scrutiny from the Securities and Exchange Commission as well as Democrat congressional committees, resulting in the DPA loan being placed on hold pending further review. 

To prove everything was above board Kodak initiated an independent investigation into the alleged offenses; this week, that investigation cleared Kodak of all accusations and the company released the full report.   

The investigators asserted, “Kodak, and its officers, directors, and senior management did not violate the securities regulations or other relevant laws, engage in a breach of fiduciary duty, or violate any of Kodak’s internal policies and procedures.”

While the investigations are important, it’s essential that we not miss the bigger issues of our national health and security. Eastman Kodak is an ideal partner for onshoring at least part of our critical medical supply. This innovative company accumulated over 20,000 patents in a century and even invented the digital camera. And, Kodak is ahead of the curve, already manufacturing these key starting materials. 

The Defense Production Act has the funds necessary to help Kodak accelerate the API business. This would result in hundreds of new American jobs and enhanced health security for millions of Americans. We should move forward on this immediately. The risk and threat is too great to wait any longer; we should not deprive Americans of this important progress from the Defense Production Act. 

This loan should be approved so we can start the process of regaining control of America’s drug supply from China. And we should use this partnership as a model to secure other supplies critical to the health and wellbeing of Americans. 

Kevin D. Freeman, CFA, is the host of Economic War Room with Kevin Freeman on BlazeTV. Freeman is a NY Times bestselling author of Secret Weapon; How Economic Terrorism Took Down the U.S. Stock Market and Why It Can Happen Again and Game Plan; How to Protect Yourself from the Coming Cyber-Economic Attack. Freeman has served as a contracted consultant to the Department of Defense on matters involving Economic Warfare and National Security.

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