Drug supply chain alternative from US to China could go through Canada and Latin America


Officials from Canada and three Latin American countries said on Tuesday they welcomed U.S. efforts to reduce its reliance on China for pharmaceuticals by building supply chain alternatives with them. ‘supply.

Canadian authorities are working with their U.S. counterparts on “regulatory cooperation and flexibility, which will limit undue regulatory barriers to pharmaceutical trade,” said John Layton, trade counselor at the U.S. Embassy in Ottawa, during a virtual roundtable organized by the Center for Strategic and International Studies (CSIS).

Carlos De Costa, of the Brazilian Embassy in Washington, noted that Brasilia had set up “special economic zones” to encourage investment in pharmaceutical factories, among other things, “without any kind of economic complexity, without any kind of taxes, to supply the whole world”.

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De Costa, the head of the embassy’s economic division, said US President Joe Biden’s recent economic partnership with Latin America could further strengthen this trade.

“I was…impressed with how President Biden, at the Summit of the Americas, emphasized the importance of our collaboration for shared prosperity and for supply chain resilience,” he said. -he declares.

Largely intended to counter China’s growing influence in Latin America, Biden’s “Partnership of the Americas for Economic Prosperity” is initially to focus on “like-minded partners” who already have trade deals with the United States. United. It also stops short of offering tariff relief and other terms that the administration intends to tighten over time.

Much like Biden’s Indo-Pacific Economic Framework — another initiative that aims to counter China’s economic integration with an entire region — the plan emphasizes better coordination of environmental goals and labor standards instead. trade agreements that pave the way for better market access.

The lack of market access elements of the new partnership is not as detrimental, however, since the United States already has free trade agreements with 11 countries in the Americas.

César Remis, head of the USMCA’s Mexico Implementation Office, also welcomed the initiative — despite its president’s absence from the summit last week where Biden announced it. Biden’s decision to remove Cuba, Venezuela and Nicaragua from the guest list prompted Mexican President Andres Manuel Lopez Obrador to step down.

“It is possible to concentrate the production and consumption of APIs,” he said, referring to active pharmaceutical ingredients, “and this is reflected in the interests of multinational corporations like AstraZeneca,” which have started producing Covid-19 vaccines in Mexico last year.

U.S. optimism to relocate supply chains to Asia is ‘exaggerated’

Maria Rocío Vargas Carrasquilla, senior investment representative at ProColombia USA, her country’s trade promotion authority, also touted Colombia’s free trade zones and efforts to attract investment in its pharmaceutical and pharmaceutical industries. health.

“It will be really, really important to see how the economic partnership with Latin America that President Biden announced last week can really translate into concrete actions,” Carrasquilla said.

Shortages of personal protective equipment and other health items in the United States when the coronavirus pandemic hit in 2020 fueled Washington’s resentment toward Beijing, which had already made the relationship controversial under the administration. former President Donald Trump.

After a review of U.S. supply chain vulnerabilities, the Biden administration reported in June 2021 that more than half of dispensary-ready drug manufacturing facilities registered with the Food and Drug Administration were outside of the United States. United States. Nearly three-quarters of all registered facilities producing APIs were in foreign jurisdictions, he said, mostly in China and India.

Of all FDA-registered generic drug facilities manufacturing dispensary-ready drugs, 63% were outside the United States, and 87% of FDA-registered facilities manufacturing APIs used in generic products were inside the United States. foreigner, according to the report.

And the extent of supply chain vulnerability remains unclear, according to the report, so dependency could be even higher.

Harvard Business School professor Willy Shih told the US-China Economic and Security Review Panel last week that the US drug supply chain was vulnerable to interruptions. , because around 80% of all fine chemicals come from China.

“We have a much broader reliance on China than I think most people realize” for a wide range of products, including medicines, Shih said, which has created a “ potential catastrophic effect if supply lines were cut.

‘No immediate silver bullet’: White House to discuss supply chain review

At another conference on Tuesday, this one on security issues, Rep. Brad Wenstrup, Republican of Ohio, said he had no idea how vulnerable the U.S. pharmaceutical supply chain was until to what Covid-19 hits.

“If you had told me, when I was a surgeon in Iraq, that my protective gear and pharmaceuticals depended on China, I would have told you, how did we get here?” Wenstrup said during a discussion at the Center for a New American Security.

“We probably should never have let our nation, especially our military, find themselves in such a vulnerable position. But that’s where we are. So let’s answer it. »

Wenstrup said he introduced legislation to create more incentives to encourage the expansion of medical manufacturing in the United States.

Additionally, he said, U.S. companies needed to dig deeper into their supply chains, down to the level of active pharmaceutical ingredients, to assess their vulnerability.

Congressman Jim Himes, Democrat of Connecticut, agreed the United States needed to reduce its vulnerability, but warned it was important not to go overboard.

“There’s a reason the supply chain spans the globe. And that reason is that’s how we get the cheapest products, right? ” he said. “This is a time when Americans are struggling with inflation. They should just be aware of that fact.

Rep. Jim Himes, Democrat of Connecticut, said while bringing supply chains closer to the United States is a strategic priority,

Himes also called for a more careful separation between strategic priorities and areas where even adversaries benefit and can cooperate.

“Areas like drug development, hybrid crop areas, there are so many smart people in China,” he said. “Where we don’t have national security contests, we shouldn’t block the progress of innovations that cure disease or improve crop yields.”

Back at the CSIS conference, panelists were excited about US efforts to bring the medical supply chain together — but not without caveats.

De Costa, for example, said the FDA should streamline the process by which it certifies Brazilian producers of APIs.

“We already have an API industry here,” he said. “If we could make sure that we connect our industry to the pharmaceutical industry in the United States, that would require faster regulatory procedures.”

De Costa also urged Biden to seek renewal of his trade promotion authority — also known as the “fast track” authority — which sends proposed trade deals to Congress for a vote up or down without amendments, bypassing the lawmakers who might try to block them. .

The administration has been reluctant to apply for the clearance, which expired nearly a year ago, because it prefers to focus on business standards rather than access.

Additional reporting by Mark Magnier

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