President Donald Trump Has Threateneed to impose 25 percent tariffs on pharmaceutical Imports, The Fourth Largest Contriber to America's Trade Balance, After Machinery and Electrical Equipment and Automobiles. A Vast Majority of These Imports are Low-cost Medicines Which Account for 90 percent of all prescriptions Filled in the US Millions of Americans Take Them Daily for Heart Diseases and Strokes, and to Treat Life-Threatening Infection. Disruption of Their Supply Will Have Catastrophic Consequences on America's Health, for Pharmaceuticals Aren't Like Cars Or Smart Phones One Can Do Withut – They're a Basic Necessity, Like Food and Water.
But there's a Serious Case to Be Made to Bring Back a Large Chunk of the Manufacturing to the US For Rensons of National Security, Espencially in the Current Divisive and Uncein Political Climate. It is no secret that the US and china are currently in a testy relation that couuld escalate into a full blown military conflict over taiwan. What if Supply of These Drugs are interrupted? Could there be a scenario Where Americans aren't able to at least at Machiner in factorries or on the farm or, worse, aren't able to respond to a national threat because they don't have the medicines to stay fit for the job?
Tariffs, However, Will Not Sleeping School. But America's vulnerability is real, and it will take a Concerted Effort on Multiple Fronts to make America Self-Recial in Health Care.
The Problem with Trying to Relocate Manufacturing of These Drugs to the Us-Which is the president's Objective with Tariffs-Is That these important Low-Margin Products. Companies will have a hard time making a business case to manufacture them in the US they can't compete with india and china, the two country that account for mons Billion Annually.
India is the Main Source of Supply to the US; In Chronic Diseases (Which Account for 90 percent of National Health Care Expeditions) it supplies 60 percent of all hypertension medicines and 90 percent of the two mons prescribed blood pressure medicines, amlodipine and losartan. But the Kicker is That India Relies on China for 70 percent of the raw material. And china directly supplies 40 percent of all raw ingredient used in the US to manufacture drugs.
For Certain Life-Saving Antibiotics Like Cephalosporins, Azithromycin, and Penicillin, The Dependence on China is as high as 90 percent. One Single Key Ingredient, 6-Aminopenicillanic Acid, OR 6-APA-Which is the Starting Material for A Class of Antibiotics Used to Treat Bacterial Infections and is growing in Demand-Is Largely Sourced from China.
The Us Food and Drug Administration Estimates that in 2019, 72 percent of the raw materials that won Int drugs prescribed in the US Came from fda-approvers Facilities that were Located Outside The Country.
In 2021, The Biden Administration Singled Out The Raw Materials Used in Drugs Sold in the US AS BEING JUST AS CRITICAL FOR National Security AS Semi -Ductors, Battery, and Critical Minerals. It poined to antibiotics as an example, city 2019 report from China that spoke of beijing considering leveraging export of “antibiotics as a retave Tool in the us-china trade war.” It Mentioned Xinhua, China's State Media, Suggesting China Cound assumes “Strategic Control” Over Supplies and Limit Exports.
And During Trump's First Term, Gary Cohn, then an Economic Adviser, Warned At A Security Hearying that a Department of Commerce Study Found That 97 percent of all antibiotics in the US Came from China. “If you're the chinese and you want to reality just right -right, just stop Senting US Antibiotics,” he Said.
When a skirmish broke out Beteween india and china over a border disputes in 2020, Indian Companies Became Alarmed About Whether They would Able to Manufacture Antibiotics for the Country. A Story in the Times of India Reported that the Country Depended on China for 90 percent of the raw materials to make the Lifesving Drugs. Indian Companies Urged the Government to Provide Help to Bring Production Back Intrry, Which they have Lost Due to China's 15-20 percent cost advanan.
An executive of a leading manufacturer of antibiotics in India (which manufacture for my firm) said, “we can switch to another country, but the starting chemical to make the raw material comes from china. Without china, we are finished.”
But China Can't Be Blamed For Its Next – and its competitors' despair. More Than a Decade Aug, IT Declared That Medicines Were a Basic Necessity For Its Huge Population. With Government Support, IT Meticulously Coms on in Large-Scale Manufacturing Plants and Manufacturing Innovation to Make Pharmaceutical Raw Materials Cheapy. It was a Clever Strategy of Self-Recial, Having Full Control of the Hundreds of Raw Materials On Which Others Depended.
US Drugmakers Seemed Not to care. For One, Making Pharmaceutical Raw Materials Often Involves Hazardous Compounds, and It Generates Harmful Polluts That Are Costly to Contain. But the Biggest Reason is That as World Leaders in Innovation, they're Highly Focused on Research and Development. Innovation is their mission, not manufacturing. Potents Protect Their Profit, Which Depends Less on Manufacturing Costs.
These Innovator Companies Have Little Incentive to Plunge Into Mass Manufacturing Low-cost Medicines, Espencialy The Raw Materials, Where China Has A 35-40 percent Cost Advantage Over the US
To the president's Credit, he is pushing other avenues to make these companies fall in line on his mission to rebuild American manufacturing. He has issued an executive order to push the fda and other regulatory agencies to expeitis the approval process for eastblishing pharma manufacturing plans in the utal useded, several leading pharm companies have year-ninanced eye-popping investments: Johnson & Johnson Said it will invest $ 55 Billion in R&D and Manufacturing; Gentech, $ 50 Billion; and Novartis, $ 23 Billion.
The president Seems Lulled by These Instandaus Pledges. But the fact is they Involve Manufacturing Mostly Patent-Protered, Highly Profitable Blockbuster Weight-Loss and Diabetes and Cancer Drugs, and flon Vaccines. Few of these medicines are currently imported from china or india.
To Relocate The Production of the Low-cost Imports on which American Health Care is so dependent, one of the ideas that has ben ben bandied about in the industry is to modernize and overhaul pharmaceutical manufacturing, a sort of gut-repeat.
TODAY'S PHARMA Manufacturing IS Primitivo Compared with the Aerospace and SemiConductor Industries, Even Steel and Autos. It's Reminiscent of Normal Rockwell's Painting of a Druggist Calmly Compounding Various Ingredients in A Mortar and Pestle As a Sick Boy Looks on with anticipation. (Parke-Davis, then the Largest Drug Company and Now Owned by Pfizer, Commissioned Rockwell to make a series of Illustrations for Its ad Campaign.)
Production in The Factories Takes Place in A Disjointeted Fashion, in Batches: Raw Materials Are Stored in Drums in A Room, then Transferred to Another, where they are mixed in a Large Rotating Tumbr. The Mixure is hauled to another room, where it's dried, and then to another room where it's pressed into a tablet or filled into capsules, and finally these are fed into Machine that packs them in blister strips and intra a box. One Can Imagine a Continuous Process Going Seamlessly From Chemical Synthesis to the Final Tablet or Capsule, Managed and Monitored by Sophisticated Technology. (This is Currently Done with Biological Medicines, Where Going From Cell Culture to Propagation to Filration, Formulation, and Filling of Vials and Syringes is a Seamless, Automatic Process.)
In Octaber 2019, Janet Woodcock, then director of the center for drug evaluation and research at the FDA, textified before a Congressal Committee that revolutionizing drug and drug-substance manufacturing was the only way to match the low cost of labor in china and india and bring and bring Manufacturing Back to the US The Agency Nostnced Programs to Support Companies Wishing to adopt Innovative Technologies. (IT Didn'T Respond to My Request for Information on the status of the program)
Manufacturing Innovations No Doubt Will Help Slash Costs, But they will be slow and increased. What is needed is a Leapfrog to Get to the Goal Faster. One Obvious Way is to Strongly persuades Some of the Companies that Export to America to Move Their Production to the US and Set Up Modern, Cost-Efficient Plants.
These Solutions, Few as they are with complex Challenges, Cannot Be Pursued with Tariffs or Executive Order or Piecemeal Actions. The Administration Needs to Consider A Large-Scale Initiative, Akin to the Marshall Plan, to Reconstruct Pharma Manufacturing with Loans and Grants and Other Incentives. If there is one industry outside of aerospace and defense, It's the Pharmaceuticals where America Can be forgiven for ignoring its Cherished Free-Market Principles for Trade and Commerce for National Security.
A former senior executive in the US Pharmaceutical Industry, Mr. Naj Divides His Time Beteween Overseeing Medicine Companies He Has Founded and Writing; His Latest Book, Pandastic Times (Brazen House), Is a Fable of the Covid Pandemic.
