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1. Will the Biden Administration Support Global US Leadership in the Innovative Medicines Industry?

Author:
Thomas J. Duesterberg
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Given the historically unprecedented speed with which the US pharmaceutical industry has developed COVID-19 vaccines—3 of the 4 first products likely to be approved for marketing are almost certainly from US firms—it would seem appropriate for a renewed sense of confidence, support and even acclaim for the economic model that lies behind this success. Instead, the sector remains under pressure to lower prices and protections for its patented products, both in the United States and globally. It is worth noting that the entire world benefits from the new medical advances in treating the worst pandemic in at least 50 years. Instead, President Trump has continued to criticize the industry for its pricing model for newly developed drugs, while countries such as India, Pakistan, and Brazil call for breaching of the patent shield for the new vaccines (and recent treatments such as those for HIV and Hepatitis C), and developed countries in Europe, East Asia, as well as Canada, persist in questioning the medical value of the new medicines to their citizens.1 To add to the current uncertainty about US leadership, there is ever-increasing competition from China in terms of basic science and pharmaceutical products. The Chinese national goal of self-sufficiency in these two fields has resulted in a huge increase in research and development funding and purchases of leading biotechnology firms in the United States and Europe. At the same time, China’s global market share in generic drugs and active pharmaceutical ingredients (APIs) is steadily growing. Chinese government funding for research in these fields has grown by 20 percent annually since 2008. The incoming Biden administration is calling for new pricing models and the use of compulsory licensing for some new products, especially those related to the new virus pandemics. Compulsory licensing allows a government to license entities other than the patent holder to produce and sell patented products without the patent holder’s permission. If the economic and scientific model which promotes constant advances in medicines and new treatments is to survive, the current domestic ecosystem for research and development ought to be strengthened, instead of being undermined by reducing private sector incentives and weakening the protection of intellectual property (IP). Additionally, ways to address the problem with other countries enjoying a “free ride” at the expense of US consumers and public health systems, need to be considered.
Topic:
Health Care Policy, Manufacturing, Innovation, Vaccine, COVID-19, Medicine, and Pharmaceuticals
Political Geography:
North America and United States of America

2. The Impact of COVID-19 on Vulnerable Mineral Supply Chains

Author:
Thomas J. Duesterberg
Publication Date:
07-2020
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
This report will concentrate on select examples of the growing US vulnerability to global competitors due to shortages of key mineral resources in our domestic supply base. Dependence on China for raw materials and competition with its manufacturing firms is also a key focus. Shortages do not always indicate a problem because our close allies in mineral-rich countries like Australia and Canada can mitigate gaps in domestic supply. However, China’s growing control over many basic materials, and its history of using that control as leverage for its own economic and political goals, makes this a cause of concern for the continued strength of the US manufacturing economy.
Topic:
Natural Resources, Economy, COVID-19, and Minerals
Political Geography:
China, Canada, Australia, North America, and United States of America

3. Next Steps for US Trade, Manufacturing, and Supply Chains After COVID-19

Author:
Thomas J. Duesterberg
Publication Date:
07-2020
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
The imperative to return supply chains to the United States for products important to national defense, medical security, and competitiveness in key industrial and technology sectors is not new. The explosive growth of the Chinese manufacturing sector, its mercantilist challenge to the world trading system, and its impact on jobs and industrial leadership in the United States is well known and well documented. This challenge has prompted new research and policies to help reverse the erosion of US supply chains. US technology leadership has been undermined by China’s forced technology transfer, theft of intellectual property, and subsidization of traditional and new higher technology sectors. In turn, the loss of global markets and US manufacturing jobs have resulted in social problems of increasing devastation to communities in industrial areas. China’s economic growth depends, in a historically unprecedented way, on its export model and the suppression of domestic consumption. This results in a cycle of overproduction, expansion of external spheres of economic influence, and dumping of products abroad. In recent years, the United States has begun to challenge the Chinese model. However, much work remains to be done to accomplish the goal of ending mercantilist practices, establishing a level playing field for US producers, and reinvigorating domestic production. Critical supply chains for US national defense and high technology leadership have become overly dependent on China and other foreign sources. The vulnerability of supply chains has been demonstrated by interruptions in supply of key materials by both natural disasters and political decisions such as Beijing’s cutoff of rare earth metals a decade ago. More recently, in July 2020, the production of critical personal protective equipment was interrupted by massive flooding in the interior of China. Beyond Beijing’s unfair practices, China is a continental economy with the ambition to displace the United States as the leader in the global economy of the 21st century and has the economies of scale to represent a serious, long term threat to US leadership and markets. The COVID-19 pandemic has accelerated these preexisting trends and underscores the importance of bringing industrial supply chains, including medical products, back to the United States. First, the cut-off of medical supplies, not just from China but from Europe and other allies, brought the vulnerabilities of relying on outside sourcing into clearer and more immediate focus. Ninety countries blocked the exports of medical products during the early months of the pandemic. Second, border closures around the world, even within the European Union (EU), added to the worries about supply chain interruptions, including for workers and logistics. Seventy percent of the world’s points of entry restricted foreign travelers at some point as the pandemic grew. Third, border closures and supply chain interruptions increased tensions between nations, especially between the United States and China, which was criticized for its suppression of information at the start of the pandemic. Beijing’s brazen imposition of a new security law in Hong Kong while the world was preoccupied by the pandemic further eroded its global standing, especially in Europe. Fourth, the economic collapse due to the pandemic response again focused attention on the need to create more domestic jobs, including those in the hard-hit industrial sector. Finally, all these developments led allies such as the United Kingdom, Japan, and the EU to advance new policies meant to bring production back to home territories. These trends support initiatives to increase the resiliency of domestic production, even beyond the parameters of defense and medical security.
Topic:
Economics, Science and Technology, Manufacturing, Trade, COVID-19, and Supply Chains
Political Geography:
China, Asia, North America, and United States of America