Yesterday The Washington Free Beacon posted an article about legislation sponsored by Sen. Tom Cotton (R., Ark.) and Rep. Mike Gallagher (R., Wis.). The legislation would bring back pharmaceutical manufacturing from China to America, aiming to reduce a dependency that could seriously limit the U.S. coronavirus response.
The article reports:
Cotton’s is just the latest proposal to onshore pharmaceutical supply chains, including a similar one from Sen. Marco Rubio (R., Fla.) and rumblings from the White House about a “buy American” executive order. Prompted by the coronavirus pandemic, many are beginning to see the cost-savings from Chinese-made pharmaceuticals as not worth the risk of undersupply during another pandemic, or during a potential conflict with America’s main geostrategic rival.
“China unleashed this plague on the world, and China has to be held accountable,” said Cotton during a Fox News interview Wednesday evening. “It’s too grave a threat to let our health rest on Chinese drugs.”
The Cotton bill would directly target Chinese API producers, requiring the FDA to track the point of origin for APIs and drugs made outside of the United States, as well as requiring drug companies to list the country of origin for APIs on their products. It would also prohibit all federal entities—including the Departments of Health and Human Services, Veterans Affairs, and Defense—from purchasing drugs that use APIs made in China.
The bill also aims to bolster domestic pharmaceutical production capacity. It would allow domestic manufacturers to immediately expense the costs of expanding production capacity, giving such businesses a major write-off on their taxes. If successful, that provision could help U.S.-based manufacturers compete with lower-cost Chinese ones, keeping drug prices low even as production moves back to the United States.
The really positive aspect of this is the tax break–unless drugs manufactured in America have a lower price than those manufactured in China, Americans won’t buy them. Any bill that aims to bring manufacturing back to America needs to consider the cost of making whatever is manufactured. We have cheap energy right now, and our corporate tax policies generally make America a good place to do business. Both of these factors are the result of having a businessman in the White House.
The article concludes:
Perhaps, in part, because of these profits, discussion of repatriating pharmaceutical production appears to have spooked Chinese authorities. In a Tuesday tweet, the country’s ministry of foreign affairs claimed that “trying to move medical supply chains back to the U.S. from China is unrealistic and unhelpful,” adding that it would be “a wrong remedy for #COVID19 pandemic.”