A 'Buy American' mandate is simply unfeasible, and its costs would far exceed any hypothetical benefits.

Tweet

Well, that didn’t take long. 

Just three months into the coronavirus lockdown, multiple vaccines are already set to enter final testing on an accelerated schedule next month, well ahead of the autumn timetable originally forecast. 

Moderna Inc.’s vaccine will be tested first, followed by Johnson & Johnson’s in the latter half of July, well ahead of its initial September expectation.  Pfizer Inc. could also initiate final-stage testing in July, according to sources. 

It’s little surprise that American pharmaceutical innovators, which account for an incredible two-thirds of all new drugs introduced worldwide, would lead the way in this manner.  Few people, however, expected this degree of success so quickly. 

It all reconfirms the way in which America’s system of strong intellectual property protections and free market incentives continue to sustain the world’s leading pharmaceutical industry and the lifesaving drugs we continue to produce. 

A misguided new “Buy American” pharmaceutical proposal under consideration by the Trump Administration and certain Members of Congress, however, threatens to upend that leadership position. 

Under the contemplated legislation and executive order, all components of pharmaceuticals purchased with federal funds must originate in America.  The problem is that such a rule would disrupt longstanding pharmaceutical supply chains, instantly trigger a chain reaction of retaliation from friendly U.S. trading partners and suddenly jeopardize American consumers’ access to necessary medicines, as detailed by a coalition of conservative organizations led by Americans for Tax Reform (ATR) and joined by CFIF: 

The proposal risks upending the complex medical supply chain.  This supply chain incorporates numerous inputs from across the world, including raw materials, active pharmaceutical ingredients (APIs), and high-precision analytical tools.  These supply chains frequently contend with a number of challenges, including transportation and logistical obstacles, ensuring supply and demand are met, and alleviate stress caused to the chain due to region-specific disruptions in manufacturing shortages. 

The ability of private industry to utilize a diverse global supplier base is essential to creating a healthy competitive advantage and mitigating risk.  Forcibly localizing this supply chain would be a substantial undertaking, which would require finding new sourcing in the U.S.  If there is no existing alternative, it would be a long process to set up an alternative.  Rather than restoring U.S. jobs, the proposal would likely lead to higher prices and reduced access. 

A “Buy American” mandate is simply unfeasible, and its costs would far exceed any hypothetical benefits. 

Some may respond that a “Buy American” rule is nevertheless necessary to counteract the dominant role played by China, whose malfeasance has been exposed to the world throughout the coronavirus pandemic. 

The problem with that response is that China actually plays a decidedly minor role in American pharmaceutical manufacturing.  

According to the Food and Drug Administration’s (FDA’s) own Janet Woodcock, M.D., for instance, 28% of domestic pharmaceutical ingredients are already produced here in the U.S., with the European Union accounting for 26%, followed by India with 18%, and China accounting for only 13%.  In terms of overall drug sourcing of all types, China trails such longstanding U.S. allies as Ireland, Switzerland, Germany, Italy, India, Belgium, Denmark, Canada, the United Kingdom, Japan, the Netherlands, Singapore, France, Israel, South Korea and Austria. 

Accordingly, any “stick it to China” rationale rests upon faulty assumptions. 

Fortunately, better alternatives to the contemplated “Buy American” regulation exist to promote future domestic manufacturing and sourcing. 

In the U.S. Senate side, Marsha Blackburn (R – Tennessee) has introduced the SAM-C Act, and in the House of Representatives, Congressman Chip Roy (R – Texas) has introduced the BEAT China Act.  Both bills would offer tax credits to incentivize manufacturers to return to U.S. shores, while avoiding catastrophic disruption of current supply chains in this moment of existing urgency.  Other proposals include lowering existing tariffs with China’s rival nations, which would simultaneously encourage new allies to the U.S., boost international pressure on China and open alternative venues to sourcing currently in China. 

Amid the urgency created by the coronavirus pandemic, we simply cannot needlessly disrupt U.S. pharmaceutical innovators’ existing global supply chains with such illusory potential benefit.  Instead, we must maintain the attributes that continue to place America atop the world in terms of lifesaving drug creation:  market incentives and strong patent rights. 

That system is already paying dividends in fighting coronavirus, and we can’t allow well-meaning but counterproductive “Buy American” mandates to upend that.