Executive Order on Domestic Manufacturing
Thursday, August 27, 2020
On August 6, 2020, President Donald Trump issued an Executive Order relating to domestic manufacturing of essential medicines, medical countermeasures, and critical inputs deemed necessary to address the pandemic.
The purpose of the Order is meant to reduce dependence on foreign manufacturers, ensure sufficient and reliable long-term domestic production of these products, and minimize potential shortages in light of the current COVID-19 pandemic.
Implementation of the Order would require significant revisions to U.S. law, as well as the renegotiation of U.S. commitments under international trade agreements. But if implemented, the policies reflected in the Order could profoundly change the pharmaceutical and medical device industry supply chain.
The Order establishes ambitious timelines with deadlines for key, significant, and complex actions to occur in early November and early December. It is not clear that these deadlines can be met, given the significant nature of the action to be taken and the potential impact of the November election.
The Order directs agencies to limit procurement to products “produced in the United States” to the “maximum extent permitted.” “Produced in the United States” requires that “the Critical Inputs” that are “used to produce the Essential Medicine or Medical Countermeasures are produced in the United States. Further, the finished product or device is required to be manufactured, prepared, propagated, compounded, or processed in the United States.
It is unclear how this might impact trade agreements but if it stands significant negotiations would be ahead for the U.S. Trade Representative.
A key provision of the Order, from which the timing of potentially the most significant procurement requirement flows, is the development by the Food and Drug Administration (FDA) Commissioner of a list of Essential Medicines, Medical Countermeasures, and Critical Inputs. This list must be developed within 90 days from the Order.
Within 30 days of the FDA Commissioner’s developing the list of Essential Medicines, Medical Countermeasures, and Critical Inputs, the U.S. Trade Representative (USTR) is directed to modify the procurement coverage for these products. It is unlikely that this could be accomplished in accordance with the Order’s timelines. Importantly, though, this key requirement is subject to the broad exceptions described below.
Finally, the Order directs the Department of Defense (DOD), within 60 days, to “restrict” such DOD procurements to domestic sources and to reject otherwise acceptable offers of such products” from countries with which the U.S. has a reciprocal defense procurement agreement.
The Order includes some incremental steps to be taken to encourage greater procurement of such domestically manufactured products and components. These include directing agencies to limit such procurements to the greatest extent possible, dividing procurement opportunities among two or more U.S. manufacturers, and developing strategies for the longer term to encourage domestic production and strengthen the “Public Health Industrial Base.” Consistent with other Administration efforts to reduce regulations, the Order directs the FDA to identify regulations to be streamlined to reduce barriers to the domestic production of such products.
Further, the Order encourages the use of the Defense Production Act to prioritize contracts for the production of Essential Medicines, Medical Countermeasures, and Critical Inputs over other contracts if needed for national defense reasons. In addition, the Order directs the Secretary of Health and Human Services, through the FDA Commissioner, to “issue guidance with recommendations regarding the development of Advanced Manufacturing techniques."
Read the full Executive Order on Domestic Manufacturing here.