By Kenneth Rapoza, CPA Industry Analyst
Score one for the local pharmaceutical industry. FDA's essential medicine and critical inputs list gives domestic producers a a sense of exactly what government procurement contracts will place under Buy America provisions.
The Food & Drug Administration released a massive list of essential medicines and critical inputs on Friday in response to an Executive Order from August that ensures essential medicines, medical countermeasures, and critical inputs are made in the Untied States. This sets the table for the private sector to know what drugs, and ingredients used in making those drugs, should become a bigger part of the local supply chain.
Heparin, a key input sourced from pigs primarily from China, is now listed as an essential ingredient. We wrote about a move away from China pig heparin this week. See here.
The list will underpin procurement decisions by the Department of Defense (DoD), Veterans Administration (VA) and the Strategic National Stockpile.
The five-page long list came out about a week sooner than many in the industry had expected. Trump’s Executive Order is considered to be the first wave for manufacturing more of these products domestically. The EO also requires that government procurement contracts are offered to domestic pharmaceutical companies to make these drugs for places like the Veterans Administration hospital chains.
For the FDA list to have any real impact on the local pharma industry, the VA and DoD has to implement it. With an election right around the corner, a change in Executive Branch leadership could ultimately jettison the order in a worse case scenario. We don’t think that will happen though, as there is sufficient bipartisan support for this effort to reshore manufacturing.
Trump’s Executive Order also directs the FDA to coordinate with federal agencies on a number of additional issues, including accelerating domestic manufacturing and identifying and addressing supply chain vulnerabilities. The FDA is the lead on this.
The FDA said in its statement today that it believes advanced manufacturing techniques could “enable U.S.-based pharmaceutical manufacturing to bolster its competitiveness with foreign countries and help ensure a stable supply of drugs critical to the health of US patients.”
FDA is encouraging local companies to consider adopting advanced manufacturing technologies, perhaps in an effort to keep costs down.
The US is heavily reliant on China and India for about 80 percent of basic components used in US drugs.
The FDA is collaborating with the Department of Health and Human Services and other federal partners on this issue to follow through on the EO. Now that local producers have the list, they can ramp up manufacturing of their own.
Some key highlights from the EO:
- Removes any barriers at the Environmental Protection Agency regarding site construction/permitting as it relates to advanced manufacturing and domestic production of critical inputs.
- Addresses the issue of World Trade Organization blocking Buy American rules and allows the United States Trade Representative to exclude essential medicines, medical countermeasures, and critical inputs from WTO jurisdiction.
Today’s list also includes a two-pager that deems personal protection equipment such as hospital gowns of different types that have become infamously popular during the pandemic shortfalls faced at some hospitals.
Some 96 device medical countermeasures are included on the list. These devices include diagnostic testing kits and supplies for rapid test development and processing of those tests.