On August 6, 2020, President Donald Trump issued an executive order (EO) aimed at the medical supply chain in America. The EO, Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States, aims to increase our domestic manufacturing and onshoring supply chains for pharmaceutical and medical supplies, to get out in front of any potential shortages. To do that, the EO requires federal agencies to purchase “essential” pharmaceuticals and medical supplies from domestic manufacturers and directs the Food and Drug Administration (FDA) to speed up domestic approvals of essential medical products, as well as identify supply chain vulnerability and target counterfeit drug and medical supply imports. The Environmental Protection Agency (EPA) was also assigned a task, streamlining requirements around the continuous manufacturing and speeding up siting and permitting approvals.
While several government agencies (including the Department of Health and Human Services (HHS), Veterans Affairs, and the Department of Defense) have been directed to purchase “essential drugs and medical supplies” solely from American manufacturers, which drugs and supplies are considered “essential” has not been defined. Instead, the FDA was directed to create a list of drugs and medical supplies subject to the requirement. The EO also includes relatively broad exemptions based on cost, availability, and “public interest.”
The EO is not a substitute for an appropriations bill and the White House will not be making new investments or pushing for tax incentives to encourage the onshoring of the medical supply chain. Instead, the EO is aimed at establishing government demand for domestically made products and encouraging innovative manufacturing technologies that are needed to keep drug prices low.
With respect to maximizing domestic procurement, within 90 days, FDA and heads of other federal agencies will develop and implement procurement strategies, including long-term contracts, to increase domestic manufacturing for these goods. Additionally, no later than 30 days after the FDA establishes a list of essential medicines and medical countermeasures, the U.S. Trade Representative will take all “appropriate action” to modify U.S. procurement product coverage under all relevant free trade agreements and World Trade Organization Agreement on Government Procurement to exclude coverage of essential medicines and medical countermeasures. Then, no later than 60 days after the FDA has established a list of essential medicines and medical countermeasures, the Secretary of Defense will restrict procurement to domestic sources and reject other offers of such products from qualifying countries where necessary for national defense.
When it comes to current vulnerabilities in the supply chain, within 180 days, the HHS secretary, FDA and Office of Management and Budget (OMB) will identify vulnerabilities in the supply chain for essential medicines and medical countermeasures. HHS and FDA have been expected to accelerate approval or clearance for domestic producers of essential medicines and medical countermeasures, issue guidance with recommendations on the development of advanced manufacturing techniques, negotiate with countries to increase site inspections increase the number of unannounced inspections of regulated facilities, and reject imports of essential medicines and medical countermeasures if the facilities in which they are produced refuse or unreasonably delay inspection.
The EO also directs that within 180 days, the Secretary of Defense and OMB will identify vulnerabilities in the supply chain, and provide HHS, FDA, OMB, and the Director of the Office of Trade and Manufacturing Policy a list of defense-specific essential medicines and medical countermeasures that are medically necessary to have available for defense use in adequate amounts and in appropriate dosage forms. The list is to be updated periodically.
The EO also includes a reporting requirement that requires the head of each federal agency to provide a publicly-available report to the president by December 15, 2021 that outlines the following items for the preceding three fiscal years:
(1) the essential medicines, medical countermeasures, and critical inputs procured by the agency;
(2) the agency’s itemized and aggregated expenditures for these products;
(3) the source of the products; and
(4) the agency’s plan to support domestic production of the products in the next fiscal year.
While this EO has been expected for several months, it was held up by legal review. Now that it has been issued, the agencies can begin to work on the tasks assigned to them.