March 19, 2020

Kaine, Colleagues Introduce the Strengthening America’s Supply Chain and National Security Act

Bipartisan, Bicameral Bill Builds off Rubio’s Plan Unveiled Last Month to Combat America’s Supply Chain Risk & Dependence on China for Pharmaceuticals

Washington, D.C. — U.S. Senator Marco Rubio (R-FL) introduced the Strengthening America’s Supply Chain and National Security Act, bipartisan, bicameral legislation that builds off the plan he released in February to combat America’s supply chain risk and dependence on China for pharmaceuticals. More than a year ago, Rubio issued a report detailing 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.” Last year, Rubio warned in Modern Healthcare that when it comes to the threat China poses to the U.S. healthcare industry, we cannot afford to be complacent.

Senators Elizabeth Warren (D-MA), Kevin Cramer (R-ND), Chris Murphy (D-CT), and Tim Kaine (D-VA) joined Rubio in introducing the bill in the Senate, and U.S. Representative Michael Waltz (R-FL) will lead the companion legislation in the House.

“Over a year ago, I warned about our nation’s critical vulnerabilities and supply chain risk in key sectors of our economy, including the medical supply chain, as a result of decades of lost industrial capacity to China,” Rubio said. “The industrial capacity of a nation still matters, and we are learning a painful lesson as a result of the coronavirus pandemic. Once our nation has recovered from this unprecedented crisis, we must take steps to address the systemic vulnerability and supply chain risk that the coronavirus pandemic revealed. It is unfortunate that it took a global pandemic to make clear the ramifications of offshoring our industrial base to countries like China. This legislation represents a serious, bipartisan effort to prioritize the rebuilding of our nation’s productive capacity.”

“The coronavirus pandemic has made clear what we’ve known for years: that our dependence on drugs and drug components imported from China and other countries is a threat to our national security and our public health,” Warren said. “This bipartisan bill proposes commonsense solutions to start addressing this problem, and I’ll keep fighting to secure our drug supply chain and boost manufacturing here in the United States.” 

“The United States government should never accept the unnecessary and avoidable risk of allowing our medical supply chain to be disrupted. If American lives depend on these drugs, we should not depend on foreign adversaries to get them,” Cramer said. “Our bill rightly reprioritizes the Buy American Act and directs the relevant federal agencies to detail how much we rely on other countries for pharmaceutical ingredients.”

“This pandemic has further underscored the need to look at health care through a national security lens,” Kaine said. “It’s critically important that we gain more knowledge of and control over our medical supply chains to reduce our reliance on other nations and ensure adequate supply in times of crisis. I’m proud of this bipartisan legislation that will allow our federal agencies to determine how the U.S. can strengthen our security and our supply chains.”

“Coronavirus has unfortunately been a wake-up call to the danger of American reliance on a hostile foreign power like China for medical supplies,” Waltz said. “We must identify our supply chain vulnerabilities and build out domestic capacity to eliminate dependence on China and other nations, for the safety and health of all Americans.”

Specifically, the Strengthening America’s Supply Chain and National Security Act would:

  1. Direct the Department of Defense (DoD) to determine the extent of its dependency on foreign entities for drugs, active pharmaceutical ingredients (API), and pharmaceutical components. Additionally, DoD would be required to determine whether this creates a national security issue and to make recommendations to eliminate U.S. dependency on foreign sources.

In 2019, Rubio offered an amendment to the National Defense Authorization Act directing DoD to analyze the extent to which the department 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.

  1. Requires drugmakers to provide the Food and Drug Administration (FDA) with information to determine volume of APIs used in pharmaceuticals.

Currently, the 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. As a result, the FDA cannot determine the extent of dependency or target potential risks for drug shortages.  Rubio’s bill would require drugmakers to provide the FDA information about the volume of APIs derived from each of its sources in the prior year, a critical reform to ensure DoD has the necessary information to assess its dependency and vulnerabilities.

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.

Last month, Rubio 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.

  1. Restores Buy American Act’s intent for DoD and Department of Veterans Affairs (VA) purchases.

On February 10, 2020, the U.S. Court of Federal Claims sided with Acetris, a generic pharmaceutical company, and upended the way the 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 open the door to allowing more pharmaceuticals with APIs primarily based in China to qualify for preference under the Buy American Act. Rubio’s bill aims to revert back to the process that was in place before the ruling on February 10. 

 

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