Thanks to resilient global supply chains, Americans have access to an array of life-saving medical devices and medications. Terrible ailments from smallpox to the measles now can be preempted with inexpensive vaccines while chronic conditions such as high cholesterol can be managed via statin medications. And with the right public policies, the novel Coronavirus will likely be the latest disease to be vanquished from the history books. But, unfortunately, onerous “Buy American” policies being considered by the Trump administration would make it harder to access life-saving cures at affordable prices. Americans with health plans sponsored by the Departments of Defense (DOD), Health and Human Services (HHS), and Veterans Affairs (VA) would face far more difficulty getting the medications they need to live a healthy, comfortable life. President Trump must reject these “Buy American” policies and embrace free trade in critical healthcare supplies.
According to Politico, President Trump is considering making “Buy American” laws already on the books stricter for pharmaceuticals and critical healthcare supplies. Currently, products to be purchased by the federal government for public use need to have at least 55 percent of the cost of their components produced in the U.S. Of course, products produced overseas are often cheaper, and current law allows federal agencies some leeway in accounting for often-large cost differences.
For example, the contracting officer “may determine that the cost of a domestic end product would be unreasonable.” If this is the case, or if, say, the product in question is simply not produced in the U.S., the government can skirt “Buy American” provisions. But these reasonable cost and availability caveats could go by the wayside if President Trump is successful. Reports suggest that the Trump administration is considering paring back at least some exceptions under existing “Buy American” rules for healthcare supplies procured by HHS, VA, and DOD.
While COVID-19 related supplies likely wouldn’t be subject to these requirements, millions of families would face interrupted access to critical medications. According to a 2016 Government Accountability Office report, the “FDA [Food and Drug Administration] reports that more than 40 percent of finished drugs and 80 percent of active pharmaceutical ingredients (APIs) are produced overseas.” Somehow, this claim about 80 percent of APIs being produced overseas has morphed into a claim that China is producing 80 percent of drugs used in the U.S.
But as FDA Center for Drug Evaluation and Research Director Janet Woodcock, M.D. noted in 2019 testimony to Congress, the vast majority of API manufacturing for the U.S. drug market takes place outside of China. The U.S. produces 28 percent of pharmaceutical ingredients consumed in-country, followed by the European Union at 26 percent, and India at 18 percent. China supplies just 13 percent of the U.S. market, with the remainder of production divvied up among various other countries. Pacific Research Institute scholar Wayne Winegarden points out that, “out of a total of 370 drugs listed as an essential medicine by the World Health Organization (WHO), only three are sourced solely in China.”
As a result, allies and trading partners such as India, France, and Germany would bear the brunt of onerous new “Buy American” restrictions. Weakening those countries’ economies would also weaken our own, since their citizens in turn buy U.S. products. Consumers have dealt with more than enough collateral damage already from tariffs and trade wars, and further provocations would only increase prices further. American taxpayers would also be worse off since countries such as India can produce APIs at least 30 to 40 percent more cheaply than domestic manufacturers can.
But by far, the biggest losers of this new, protectionist scheme would be military families, veterans, and Native American households that rely on government healthcare plans. These already-struggling populations would have to make do with new, pared back plans with fewer options and more restrictive drug regimens. Even if Coronavirus patients get a reprieve from these restrictions, they’ll have little luck finding medications to treat conditions (e.g. lung and heart problems) that arise from COVID-19.
During the worst public health crisis of our lifetimes, the Trump administration should strive to provide Americans with affordable, high-quality healthcare options. Onerous “Buy American” provisions would spell disaster for millions of patients at the worst possible time.
Ross Marchand is the Vice President of Policy for the Taxpayers Protection Alliance.