My Coronavirus Plan:
Combating America’s supply chain risk and dependence on China for pharmaceuticals
Across the world, news of the coronavirus outbreak is dominating headlines, and with good reason — the pandemic’s apparently high transmissibility rates and lethal danger it poses make it an exceptionally grave threat. The fact that China, ground zero for the virus and home to an overwhelming majority of ongoing cases, refuses to be transparent with its data adds to the seriousness of the situation.
As I wrote recently in an op-ed, the Chinese Communist Party is not a responsible global power, and the party’s blatant mishandling of the coronavirus has clearly revealed that.
Unfortunately, this was predictable.
Last year, I noted in Modern Healthcare that when it comes to the threat China poses to the U.S. healthcare industry, we cannot afford to be complacent.
And a report I released last February detailed critical vulnerabilities in America’s medical supply chain, warning, “the U.S. runs the risk of losing important components of its medical supply chain to China’s government-backed industry.”
At the time, those seemed like abstract concerns, but we now know they are real. Americans unable to buy medical masks and who see headlines about potential shortages of critical, irreplaceable drugs will be familiar.
The coronavirus outbreak makes clear how dependent our nation is on China for industrial capacity, especially in critical areas of our economy.
Health and Human Services Secretary Azar publicly acknowledged this on Tuesday when he confirmed to me that the coronavirus outbreak is “a wake-up call that perhaps we are overly dependent on a supply chain so heavily concentrated in one place in the world.”
That’s why I am planning to introduce legislation to curb America’s dependence on China that will:
API Dependence
In 2019, I offered an amendment to the National Defense Authorization Act directing the Department of Defense (DoD) to analyze the extent to which the DoD is dependent on China for APIs. However, DoD is currently unable to conduct this study because they do not know the volume of APIs sourced from China.
The Food and Drug Administration (FDA) requires drugmakers to include the sources of the drug’s API, but it doesn’t require them to provide the volume of API deriving from each of its sources. For instance, a drugmaker could have two API sources — one in China and one in India — but the FDA doesn’t know that China accounts for 90 percent of all the API in a specific drug.
My bill will require drugmakers to provide the FDA information about the volume of APIs derived from each of its sources in the prior year.
This reporting would be included in the drugmaker’s annual postmarket report, which they are already required to submit to the FDA. As a result, the FDA and DoD would be able to ascertain the extent of U.S. dependence on China for APIs and provide the FDA the resources needed to pinpoint “hot spots” more vulnerable to drug shortages.
Earlier this month, I urged FDA Commissioner Hahn to ensure the FDA has the necessary tools to guarantee the safety and supply of pharmaceuticals, food, and medical supplies being imported from China in light of the growing epidemic of the novel coronavirus.
“In 2018, the U.S. imported more than $12.7 billion worth of pharmaceuticals and antibiotics, medical devices, and food products from China, and these numbers do not even include certain organic chemicals used to create pharmaceutical products. Experts also estimate that roughly 80 percent of the active pharmaceutical ingredients used to make medications come from China.”
Buy American Act Preferences
On February 10, the U.S. Court of Federal Claims sided with Acetris, a generic pharmaceutical company, and upended the way the Veterans Affairs Department (VA) implements the Buy American Act. The court determined that, since Acetris sourced the API and other components from other countries but manufactured the final product in the United States, the country of origin would be the United States and would not be based on where the API is from.
In effect, this could allow more pharmaceuticals with APIs primarily based in China to qualify for preference under the Buy American Act.
My bill will enable the VA to determine a drug’s country of origin based on where the API was sourced.
Combating U.S. Dependence on China
As Secretary Azar confirmed to me, the coronavirus outbreak has revealed a serious vulnerability in the American supply chain. My legislation will include the following reforms to address this:
What’s next: As the Senate works through a supplemental spending bill to respond to the coronavirus outbreak, I will use my position on the Appropriations Committee to advance this legislation.
