scorecardresearch
Follow Us:
Tuesday, January 19, 2021

Trump order boosts US drug industry, no hit on India exports in short term: Experts

Several experts said the move appeared to be either posturing by Trump before the presidential election in November, or to be targeted essentially at China which, unlike India, is a larger exporter of key drug ingredients.

Written by Prabha Raghavan | New Delhi | Updated: August 10, 2020 9:18:37 am
Trump encourages mail voting in key battleground Florida US President Donald Trump, in his August 6 order, directed executive departments and agencies involved in medicine procurement to identify vulnerabilities in America’s supply chains for essential drugs. (AP Photo/Alex Brandon)

US President Donald Trump late on Thursday signed an order that aims to boost domestic production of “essential medicines” and “critical” drug inputs in the United States.

While India’s pharmaceutical industry has a major stake in the American drugs market and is among the biggest overseas suppliers to that market, experts said on Friday that the Trump administration’s attempt to localise the supply chain for drugs is unlikely to have a significant impact on supplies from India to the US in the short term.

The experts, who cautioned it was still early to make a definitive prediction on the impact, however, said broader ramifications could follow if the US Centers for Medicare & Medicaid Services were mandated to buy local.

Trump, in his August 6 order, directed executive departments and agencies involved in medicine procurement to identify vulnerabilities in America’s supply chains for essential drugs. Among the measures included in the order are mandates to the US Food and Drug Administration (US FDA) commissioner Stephen Hahn to draft within three months a list of essential medical products that are “necessary to have available at all times” in adequate quantities.

A month after that, the US Trade Representative will be expected to take “all appropriate action” to exclude essential medicines, critical inputs like drug ingredients, and medical products used during public health emergencies (medical countermeasures) from the country’s federal procurement product coverage. This would apply to “all relevant” Free Trade Agreements and the World Trade Organisation Agreement on Government Procurement. Directions and timelines for other agencies and bodies to limit foreign procurement of such products have also been outlined in the order.

These agencies are to consider a “variety” of actions to increase their procurement of such products and their critical ingredients from domestic sources while protecting the country’s service members, veterans and their families from increases in drug prices. They also have to ensure that the measures they implement do not interfere with America’s ability to respond to the Covid-19 outbreak in that country.

“It is critical that we reduce our dependence on foreign manufacturers for Essential Medicines, Medical Countermeasures, and Critical Inputs to ensure sufficient and reliable long-term domestic production of these products, to minimize potential shortages, and to mobilize our Nation’s Public Health Industrial Base to respond to these threats,” the order said.

Several experts tracking India’s pharmaceuticals industry, however, said the move appeared to be either posturing by Trump before the presidential election in November, or to be targeted essentially at China which, unlike India, is a larger exporter of key drug ingredients. India, on the other hand, is known for exports of its generic finished formulations, for which the US is the largest market.

Pharmaceutical Export Promotion Council of India (PHARMEXCIL) chairman Dinesh Dua said Indian drugs are “largely” not involved in US public procurement processes, though the industry has been keen on participating. “As the USA is a member of the WTO procurement agreement, they don’t encourage Indian companies to participate in public procurement processes and mainly involve the US, EU and other members,” he said.

India’s pharmaceuticals exports to the US are valued ex factory at $6 billion, according to PHARMEXCIL.

Another industry executive who declined to be identified said he did not see “any immediate impact” of the executive order. “But we will have to look at the essential medicines list they draft, and whether they have the capacity to produce the products in it without raising the procurement costs over the threshold. This would determine any potential impact,” the executive said.

According to this executive, a breather for the industry in India lies in the exemptions that the order gives. For instance, the order will not apply in cases where procuring domestic essential medicines will bring costs for the agency up over 25 per cent. It also doesn’t apply in cases where there are no sufficient domestic alternatives.

“Even in Europe, active pharmaceutical ingredient costs are higher than in India by around 30-35 per cent. The same can be construed for the US as well, which automatically increases the prices of their domestically manufactured products,” the executive said.

Some other experts, however said the move could have larger implications going forward for countries exporting medicines to the US, even if the exports are limited to the retail segment.

“This won’t be limited to federal procurement. There are other bills being worked on which will mandate CMS (the Centers for Medicare & Medicaid Services) to buy local. That is a very large segment. This order is just a sense of what is to come,” public health activist Dinesh Thakur, who studies the US and Indian pharma markets and their regulations closely, said.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

Advertisement
Advertisement
Advertisement
Advertisement