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Atmanirbhar USA

With close to 600,000 fatalities and the loss of millions of jobs, the USA is facing an even greater requirement to do something about the fact that most pharmaceuticals and protective personal equipment are manufactured outside the country.

Statesman News Service | New Delhi |

India is not the only major country convulsed by the Covid-19 pandemic that is looking to end one-country dependence for medicines, both generic and specialised critical care drugs.

With close to 600,000 fatalities and the loss of millions of jobs, the USA is facing an even greater requirement to do something about the fact that most pharmaceuticals and protective personal equipment are manufactured outside the country. American drug companies have outsourced manufacturing to foreign locations including China and India with the latter, in turn, heavily dependent on the former for the raw materials required to mass-produce medicines, vaccines and APIs.

A 2019 US Food and Drug Administration (FDA) analysis iterated three factors that have contributed to this state of affairs: Lack of incentives to produce less profitable drugs; the market not rewarding the manufacturer for top-grade quality management systems; and the logistical and regulatory challenges that make it difficult to recover after a disruption. The solution the US establishment is leaning towards seems to have taken a leaf directly out of India’s atmanirbhar (self-reliance) push.

The first of Washington’s policy prescriptions to meet these challenges is to highlight the domestic risks created by single-country dependence in a world of geopolitical uncertainties. Reliance, in particular, on countries such as China with which America has an adversarial relationship complicated by the trade war, national security concerns, and differing foreign policy objectives is increasingly being seen as unviable, especially because America’s differences with China could lead the latter at any point to redirect drug and PPE manufacturing to domestic needs at the cost of foreign ones or, indeed, use its control of drug production to reward allies and punish adversaries.

There is also consensus in the US policy establishment that it makes sense, against this backdrop, to develop domestic drug manufacturing capabilities for essential medicines which would insulate the USA from international disruptions. Legislation designed to encourage American drug manufacturing is pending before Congress.

The government has had a “buy American” policy in place for a while; now, President Joe Biden has signed an executive order that clarifies the definition and puts stronger regulatory protections in place to make sure the policy is implemented, and American-made products include materials with at least 55 per cent domestic content. At the same time, domain specialists are urging the US government to define the market to include friendly nations as it would be too costly to rely solely on US-based manufacturing facilities.

Avoiding guaranteed contracts to a handful of firms is a priority as the production of essential medicines requires a manufacturing policy that is pro-competition.

Experts say federal funds in the USA need to be spread around to incentivise more companies and this financial support could include tax credits, loans, infrastructure investment, and direct support for production facilities. Last but not least, a faster drug approval process without compromising the safety of patients is an overdue policy pivot.