{"id":957,"date":"2020-03-31T17:02:15","date_gmt":"2020-04-01T00:02:15","guid":{"rendered":"http:\/\/savingusmanufacturing.com\/blog\/?p=957"},"modified":"2020-03-31T17:02:15","modified_gmt":"2020-04-01T00:02:15","slug":"reshoring-critical-pharmaceuticals-and-manufactured-goods-would-create-millions-of-jobs","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/reshoring\/reshoring-critical-pharmaceuticals-and-manufactured-goods-would-create-millions-of-jobs\/","title":{"rendered":"Reshoring Critical Pharmaceuticals and Manufactured Goods Would Create Millions of Jobs"},"content":{"rendered":"\n

It\u2019s\na pity that it took the coronavirus pandemic to wake up Americans to the\ndangers of our dependence on foreign sources for pharmaceuticals and health\ncare products. Perhaps we could have saved lives if our leaders had taken heed to\nthe warning of co-authors Rosemary Gibson and Janardan Prasad Singh in their\nbook China RX<\/em>, published in 2018. The authors exposed how the\npharmaceutical industry has transferred the manufacturing of generic drugs,\nvital medicines and medical devices to China and other countries, which has\nresulted in great risk to the health of Americans as well as a substantial risk\nto our national security. <\/p>\n\n\n\n

In\ntheir book, they quote Dr. Goodman, dean of the Milken Business School of\nPublic Health at George Washington University, saying, \u201cIt is a matter of\nnational security that we have the essential drugs we need\u2026I think it is time\nfor an examination, for some of the most critical drugs, and it\u2019s not just\ndrugs, medical supplies, masks are all made overseas. Do we need to think about\nhaving at least some resilient manufacturing capacity built in this country?\u201d<\/p>\n\n\n\n

Yes,\nwe do need to return the manufacture of pharmaceuticals and medical devices to\nbenefit the health and safety of all Americans. Additionally, there would be economic\nbenefits. On March 17th<\/sup>, the Coalition for a Prosperous America\nreleased a report<\/a> on the results\nof the investigation conducted by Steven L. Byers, PhD and Jeff Ferry of their\nresearch team into the potential economic benefits of reshoring pharmaceutical\nproduction to the U.S.  They \u201cfound that\nan ambitious but realistic reshoring program could create 804,000 US jobs and\nadd $200 billion to annual GDP in the first year.\u201d<\/p>\n\n\n\n

Their\ninvestigation showed that imports of pharmaceuticals had increased \u201cdramatically\nas US-based drug manufacturers moved manufacturing facilities offshore.\u201d By\n2019, \u201cpharmaceuticals ranked third as a US import category [$74 billion],\nbehind automobiles ($180 billion) and crude oil ($132 billion) \u2026\u201d<\/p>\n\n\n\n

The\nreport states\u201d Eighty\npercent of all pharmaceutical imports are accounted for by the top ten\ncountries. Seven of the top ten countries we import from are in Europe\u2026\u201d Ireland\nis number one followed by Germany, Switzerland, Italy, India, Denmark, Belgium,\nCanada, United Kingdom, and Japan of the top ten. \u201cChina is well behind the\nleaders, in 17th<\/sup> place, with just $1.6 billion of pharmaceutical\nimports last year.\u201d<\/p>\n\n\n\n

However,\n\u201cthe Census category of pharmaceutical imports does not include the key\ningredients that go into pharmaceuticals, known as Active Pharmaceutical\nIngredients (API).\u201d In recent testimony to Congress, Rosemary Gibson, author of\nChina RX<\/em>, stated \u201cthat three antibiotics used to treat coronavirus or\nrelated infections, azithromycin, ciprofloxacin, and piperacillin\/tazobactam,\nare all dependent on supplies of APIs from China.\u201d Senate Finance Committee\nchairman Charles Grassley<\/a> commented,\n\u201c80 percent of Active Pharmaceutical Ingredients are produced abroad, the\nmajority in China and India.\u201d<\/p>\n\n\n\n

Byers\nand Ferry \u201cused  the REMI Policy Insight\nModel[1]<\/sup> to estimate the impact on the US\neconomy of restoring our level of pharmaceutical imports to the level of 2010,\nwhen we imported $61.6 billion of pharmaceuticals [and] reduced chemical\nimports by $4.9 billion in [their] simulation, to account for the increased\nimports of chemical ingredients that go into pharmaceuticals.\u201d They ran the \u201cmodel\nover a five-year period, 2020 through 2024.\u201d<\/p>\n\n\n\n

While\nthe creation of jobs was the highest the first year at 804,000, the subsequent\nyears created 614,000 in 2021, 548,000 in 2022, 453,000 in 2023, and 371,000 in\n2024 for a total of 2,382,000 additional jobs.<\/p>\n\n\n\n

Pharmaceutical\nand medicine manufacturing jobs pay a median income of $74,890, which is \u201c47\npercent higher than the median for all private-sector employees.\u201d<\/p>\n\n\n\n

The\nauthors comment that \u201cThe economic benefits of reshoring US pharmaceutical\nproduction are thus substantial. They are also strategic; in that they would\nreduce US dependence on potentially hostile countries like China. In times of\npandemic, there is also a non-zero risk that even friendly nations will\nprioritize their own citizens over exports. At the very least, the US needs a\ncomprehensive audit of its dependence on individual nations and companies for pharmaceuticals,\nAPIs, and any other key inputs.\u201d<\/p>\n\n\n\n

They\nconclude that \u201cThe US has become increasingly dependent on imports of foreign\nproduced pharmaceutical and other health care products as well as the\ningredients that go into their production. As a result, the supply chain is\nhighly susceptible to interruption which would put significant pressure on our\nhealthcare system\u2026The benefits of reshoring pharmaceutical and ingredient\nproduction are large in terms of national security, patient safety, and economic\nwelfare.\u201d<\/p>\n\n\n\n

On\nFriday, March 27th<\/sup>, the Trump Administration announced<\/a> it would use the Defense Production Act, to compel General Motors\nto make more ventilators quicker than the company had planned to produce..<\/p>\n\n\n\n

In\nan article<\/a> in the\nWashington Post on March 28th<\/sup>, Joshua Gotbaum wrote: \u201cUnder the Defense Production Act, the\nfederal government can, like a traffic cop, direct that inventories be\nallocated where they are needed most urgently. That\u2019s what FEMA does during\nfloods and hurricanes\u2026The DPA also allows government to move its orders to the\nfront of the line. The Defense Department does this regularly, but the act can\nbe used for more than defense\u2026The government can also use the act to order, and\nthen pay for, expanded production, with new products or new plant capacity. \u201c  <\/p>\n\n\n\n

He recommended \u201cThe administration needs to act quickly, the\nDPA using all of its authority to procure not just ventilators but also test\nkits, masks and other equipment for health-care workers and covid-19 victims.\u201d Mr.\nGotbaum speaks from experience as he administered some Defense Production Act\nauthorities as assistant secretary of defense in the 1990s and is currently a\nguest scholar in the Brookings Institution\u2019s Economic Studies Program. <\/p>\n\n\n\n

The\nbenefits of reshoring would be even greater if we returned all critical\nmanufactured goods to the U.S. than just returning pharmaceutical and medical\nproducts.  According to recent Reshoring\nInitiative data, Harry Moser, over 3,000 companies have reshored, creating\nabout 740,000 jobs.  He estimates that if\nwe reduce our trade deficit caused by importing more than we export by 20%, it\nwould create one million jobs. Using the free Total Cost of Ownership Analysis\ncalculator available at www.reshorenow.org<\/a>\nwould help more companies return manufacturing to America. <\/p>\n\n\n\n

We need to ensure that we will\nhave the critical products needed to weather future unforeseen events. In my opinion, the policies to\naddress the Coronavirus crisis should be just the beginning of a concentrated effort to reshore all critical manufactured goods to\nAmerica. Let\u2019s use all of the potentially available policies:<\/p>\n\n\n\n