US Industrial Policy: medical supply chains
America has offshored life or death medical supplies
Key takeaways
Critical Dependency Revealed: The COVID-19 pandemic exposed America's dangerous reliance on foreign nations, notably China, for essential medical supplies and pharmaceuticals, highlighting a critical national security and public health vulnerability
Startling Statistics: Over half of the US's personal protective equipment (PPE) and a significant portion of active pharmaceutical ingredients and generic medications are imported from geopolitical hotspots
Reshoring Medical Supply Chains: There is an urgent need to rebuild and secure America's medical supply chains through government incentives, strategic planning, and domestic innovation to ensure resilience against future health crises
US Industrial Policy Series
1. Overview
2. Metals
3. Defense Base
4. Medical supply chains
5. Critical minerals
6. Execution
Anybody reading this experienced the COVID-19 pandemic and the supply chain disruptions it caused. The scariest by far were the shortages of medical supplies, personal protective equipment (PPE), and disinfectants at the beginning of the pandemic. Nurses used trash bags and reused gloves, masks, and other items due to PPE shortages, no doubt resulting in avoidable American deaths. We learned how difficult it was to make ventilators without manufacturing know-how and infrastructure. And once the immediate crisis was overcome, horrified Americans learned how many life-or-death medical supplies came from a country the US government formally defines as an adversary: China. This paper will define the scope of America’s dependence on foreign countries for critical medical supplies and discuss how to reshore medical supply chains.
Extent of problem
In 2019, China accounted for 53% of US personal protective equipment imports[i]. Approximately 80% of the Active Pharmaceutical Ingredients used to manufacture drugs in the US come from China and other countries like India[ii]. China supplied 39% of the medical device imports to the US, ranking first among countries that export medical devices to the US[iii].
In 2018, China produced 97% of America’s antibiotics[iv], 90% of its ibuprofen[v], 91% of its hydrocortisone[vi], 90% of its Vitamin C[vii], 70% of its acetaminophen[viii], and 40-45% of its heparin[ix], a blood thinning medication. America gets 40% of its generic and over-the-counter medications from India[x]. In 2020, Japan made 47% of the robots[xi] to manufacture these medicines.
Reshoring medical supply chains
Given this unacceptable exposure, a committee of government officials, pharmaceutical industry representatives, and healthcare professionals should be appointed to study how many medical supplies are needed to fight a hypothetical future pandemic, biological attack, or other health emergency. They should simulate how supply chains react, and how much critical medical supply manufacturing capacity needs to be re-built in the US. The report on their findings should be used by Congress to issue tax credits, zero-interest loans, and other incentives to rebuild domestic medical supply chains.
The COVID-19 pandemic starkly highlighted the vulnerabilities of global supply chains, particularly in the medical sector. The United States, like many countries, found itself grappling with severe shortages of essential medical supplies and personal protective equipment (PPE) as the outbreak unfolded. These shortages were not merely inconveniences; they were life-threatening challenges that exposed healthcare workers and patients to increased risk. The reliance on foreign suppliers, especially from countries with which the US has complex political relationships, such as China, has underscored a critical national security and public health issue.
The statistics are sobering. Before the pandemic, China accounted for over half of US PPE imports and was a major supplier of Active Pharmaceutical Ingredients (APIs), medical devices, and various essential medications. This concentration of supply in a few geopolitical hotspots is a glaring Achilles' heel in America's healthcare readiness. The call for reshoring medical supply chains is not just a reaction to past shortages but a proactive measure to ensure national resilience. Establishing a committee to assess and plan for the US's medical supply needs in future crises is a pragmatic approach. This strategy should aim not only to identify vulnerabilities but also to foster innovation, sustainability, and competitiveness in the domestic medical supply industry.
Tax credits, zero-interest loans, and other incentives are vital tools in this effort, enabling the development of a robust, secure, and resilient medical supply chain within the United States. Such measures are essential not only for pandemic preparedness but also for ensuring the uninterrupted provision of healthcare services in any crisis. Through strategic planning, investment, and policy support, the US can build a more secure and resilient medical supply infrastructure. This transformation is imperative not only for safeguarding public health but also for ensuring national security in an increasingly uncertain world.
[i] https://www.statista.com/statistics/1122414/select-us-imports-from-china-medical-supplies-under-tariff-exclusions/#:~:text=Jul%2020%2C%202020%20The%20Chinese,imports%20of%20selected%20medical%20equipment
[ii] https://www.cfr.org/blog/us-dependence-pharmaceutical-products-china
[iii] https://www.fda.gov/news-events/congressional-testimony/exploring-growing-us-reliance-chinas-biotech-and-pharmaceutical-products-07312019#:~:text=China%20provides%2039,is%20imperative%20FDA%20continues%20to
[iv] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[v] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[vi] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[vii] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[viii] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[ix] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[x] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.
[xi] Lind, Michael. Hell to Pay: How the Suppression of Wages Is Destroying America. Portfolio/Penguin, an Imprint of Penguin Random House LLC, 2023.