The Daily Signal - Solutions to Medical Supply Shortages That Put Americans First

Starting point is 00:00:02 Get you and your crew to the big shows with Go Transit. Go connects to all the main concert venues like TD Coliseum in Hamilton and Scotia Bank Arena in Toronto. And Go makes it affordable with special e-ticket fares. A one-day weekend pass offers unlimited travel across the network on any weekend day or holiday for just $10. And a weekday group pass offers the same weekday travel flexibility from $30 for two people and up to $60 for five. Buy yours at gotransit.com slash tickets. This is the Daily Signal podcast for Thursday, April 23rd. I'm Rachel Dahl Judas. And I'm Virginia Allen. Today we are talking with Tori Smith, a trade economist at the Heritage Foundation.

Starting point is 00:00:46 Tori and I discuss her recent report addressing solutions to medical supply shortages, entitled The U.S. should focus on targeted and temporary tools to ensure access to medical supply chains. Don't forget, if you're enjoying this podcast, please be sure. to leave a review or a five-star rating on Apple Podcasts and encourage others to subscribe. Now on to our top news. Senate Majority Leader Mitch McConnell says that the Senate is going to hold off on giving bailouts to states for the time being. We're going to push the pause button here because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated. McConnell said during an interview on the Hugh Hewitt radio show.

Starting point is 00:01:32 Democrats, however, say they want to pass another 2.2 trillion. aid package like the package Trump signed on March 28th. Speaker of the House, Nancy Pelosi, is no longer pushing for implementation of proxy voting. In light of COVID-19, Pelosi and other Democratic Congress members were advocating for the House to conduct proxy voting, meaning a member could vote on behalf of another member in their absence. Republicans strongly opposed the plan, and after an hour-long phone conversation Wednesday morning between Pelosi and House minority leader, Kevin McCarthy, as reported per-political, Pelosi relented. The House Speaker has instead announced the creation of a bipartisan task force to look into the congressional voting issue. President Trump says that national parts can start reopening again as states begin to loosen quarantine restraints.

Starting point is 00:02:26 During an Earth Day tree planting ceremony Wednesday at the White House, Trump said, Thanks to our significant progress against the invisible enemy, I am pleased to announce that in line with my administration's guidelines for opening up America again, we will begin to reopen our national parks and public lands for the American people to enjoy. President Trump sent a clear message to Iran on Wednesday, tweeting, I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea. Trump's tweet comes only a week after 11 Iranian ships came dangerously close to American vessels in international waters in the northern Persian Gulf. Joint Chief's vice chairman, General John Heighton, told reporters per Politico that the president's words should serve as a warning to Iran, saying, if you come across and you are at a safe distance and you are waving, that's one thing. If you have a gun and you point it at me, that's another thing. We know what that line is and we will respond. Autopsies from at least two people that passed away in California on February 6th and February 17th

Starting point is 00:03:40 found that the individuals had coronavirus and suggests that people were dying from the disease earlier than February 26th when the first COVID-19 death in the United States was believed to have occurred. Initially, the nation's earliest coronavirus fatality was thought to have occurred on February 29th, in Kirkland, Washington, a suburb of Seattle that rapidly became a hotspot. The Washington Post reported, in March, health officials there are linked to February 26 deaths to COVID-19, the disease caused by the new virus. President Trump said on Tuesday that he's going to ask Harvard University to return the money they have received as part of the coronavirus relief package. The president told reporters at the White House that Harvard is going to pay back the money.

Starting point is 00:04:26 They shouldn't be taking it. Harvard spokesman Jonathan Swain responded to the president's remarks, saying, like most colleges and universities, Harvard has been allocated funds as part of the CARES Act Higher Education Emergency Relief Fund. Harvard has committed that 100% of these emergency higher education funds will be used to provide direct assistance. to students facing urgent financial needs due to the COVID-19 pandemic. Now stay tuned for my conversation with Tori Smith, an economist at the Heritage Foundation about American supply chains. It's our priority at the Daily Signal to keep you informed during the coronavirus pandemic. Here's an important message from the White House Coronavirus Task Force.

Starting point is 00:05:16 Taking care of your mental health is critically important as we stay indoors more often. It's important that people get enough sleep because we know sleep promotes mental health. It's important that you get exercise when you can while still engaging in proper social distancing. And most importantly, seek help if you need it. Telehealth services are available and call a friend if you just need someone to talk to. Now more than ever, we want you to pay attention to your mental health. I am joined by Tori Smith, a trade economist at the Heritage Foundation. Tori, thanks so much for being here.

Starting point is 00:05:53 It's so great to be with you, Virginia. It's like a little bit of community during this time when we just don't get to see people too much. I know. Any chance to connect is awesome. Well, and I am really excited to talk with you today because you have a new report out that discusses solutions to medical supply shortages. And obviously right now that's something that we're all very interested in. We want to know more about. Your report is entitled, The U.S. should focus on targeted and temporary tools to ensure out. access to medical supply chains. And all during the coronavirus, there have been fears about running out of medical supplies, specifically that we would not have enough ventilators for sick patients, and even that we wouldn't have enough personal protective equipment, such as gloves and masks. President Trump has taken measures such as the Defense Protection Act to allow for increased supplies.

Starting point is 00:06:47 Could you just explain what the Defense Production Act is and how it's making a difference? difference during the coronavirus. Yes, absolutely. So the president has taken a lot of different actions using the Defense Production Act. But essentially, it's a law that dates back quite a ways that gives the president the authority to influence domestic industry in the interest of national defense. So for example, the president did this in March and invoked this order in March. And he actually empowered the Secretary of Health and Human Services and the Secretary of Homeland Security to incentivize and even provide funding to or encourage different companies to move their production over to the items that we were seeing either shortages or potential shortages for. So an example of that is

Starting point is 00:07:46 compelling General Motors to produce ventilators, 3M to produce more masks, and also different actions to increase the availability of components for ventilators. It's a really important mechanism, but it's a mechanism that has to be used in a targeted way, because we don't want the government to be too involved in private business, right? Absolutely. Yeah, everything in proportion, proportion and correct timing. Well, and one of the other things that the administration has done is that they've opened up access to the strategic national stockpile. Can you explain what this is, why we have it, has it been used in the past? Yeah, so the strategic national stockpile was created in 1999 and really it's there to ensure that we as a country are ready in an event of

Starting point is 00:08:37 any sort of bioterrorism or public health crisis. So anything from hurricanes to flu outbreaks. Now, what's really important to know about the strategic national stockpile though is it's not necessarily meant to be the place where everyone goes for everything that they need in an emergency. It's only, the government can only stockpile so much. So it's important that the strategic national stockpile is used in conjunction with other methods to increase supply in a time of great crisis like we're seeing, you know, with this pandemic. So really those two things in combination, the Defense Protection Act and the strategic. National Stockpile, that's really a great combination in order to get done what needs to be done.

Starting point is 00:09:26 Absolutely. And again, like I said before, and even though the title of the paper says that they should be used in a targeted manner and a temporary manner. So these are mechanisms that we should only use when it's absolutely necessary. And once the shortage is mitigated, these things should pull back and we should be using them less and getting the government back out of the market and letting the market work for itself. But it's really difficult sometimes for different industries to scale up production really quickly because it costs money. And if they don't have the infrastructure in place, they don't have the capacity in place

Starting point is 00:10:02 to, you know, say make an extra 2 million face masks in a week, then it's helpful for these sorts of mechanisms to come in and bridge that gap. Well, and that supply and demand concern has been so prevalent during COVID-19. Where does much of America's medical supplies and pharmaceutical drugs traditionally come from? I mean, are most of these things domestically made, or do we import a lot of this? So what's really wonderful about the expansion of trade and globalization is that we're able to source our products from all around the world. And the medical, equipment and pharmaceutical supply chains are no different. So it's, and that is really a big benefit to

Starting point is 00:10:50 us. If you think about it, practically speaking, no matter where the sourcing is coming from, in a time of crisis, or there's just as much of a time of crisis, say in the United States, as we're learning during this pandemic, as there is in another country. So we want to make sure that we have diverse supply chains, diverse suppliers, so we can get things from many different countries and different companies so that we can better mitigate any sort of risk associated with solely relying on one thing. So we get our, we get pharmaceuticals from China, from Canada, from the EU, from India. About 28% of our what we call active pharmaceutical ingredients are from right here in the United States. But again, it's very, very diverse.

Starting point is 00:11:39 and there are facilities all around the world that are monitored by our FDA and regulated by the FDA to make sure that they're safe for all of us to consume. You wrote in your report that the White House is considering an executive order that would require all federal agencies to purchase only American-made pharmaceuticals and medical equipment. Now, Tori, I love buying products with that Made in America sticker on them, But what is really the situation that we're looking at here as far as when we have this increased demand for medical supplies? Don't we need to be purchasing medical equipment from other countries to meet the needs of patients and medical personnel?

Starting point is 00:12:23 Yeah, so I think there's really two big questions here. The first one is more kind of philosophical. If we believe in a free country and individuals being able to make choices for themselves, then it's wonderful that we live in a place where if you want to buy things, that say made in the USA on them, that you have the freedom to do that. And then if I want to buy things that, say, made in India or I don't necessarily care where they're made, then I have the freedom to do that too. And with the growing nature of globalization and the growing nature of trade, it's actually becoming more and more difficult for things to actually be labeled that they were made in one

Starting point is 00:12:58 country because we have diverse supply chains. There are components that come from all around the world to get you that final good. Now, in terms of policy change in the middle of a pandemic, in my opinion, anything right now that would decrease our ability to get what we need when we need it is not great policy. And the reason for that is that when you are cutting off a supply or a supply source, you're going to create a shortage or you're going to create too much demand and not enough supplies. will be an imbalance there. So we want to make sure that any policies that we're putting forward, especially right now, are not affecting our supply. If anything, they're only increasing our supply. Senator Tom Cotton and Representative Mike Gallagher have introduced legislation that really aims to end U.S. dependence on China from pharmaceutical manufacturing. And the plan would be implemented

Starting point is 00:13:58 over the course of two years. What do you think about this? I mean, is this a problem that we get so many of our drugs from China? Well, two things here as well. The first one is that I think that there are good intentions here. There are good intentions with any policy like this, that that's the idea that we want to make more things here in America. And I completely understand that. The problem is that this sort of proposal really puts government intervening more in our markets, and that's not what we want. And really, it kind of makes us a little bit more like China, because that's what China does. They manage their markets, and we don't want to do that.

Starting point is 00:14:36 We want to promote free markets. The second part is I think there's actually a lot of misinformation about exactly how much pharmaceutical goods we import from China. There's been a ton of numbers going around and a lot of misinformation. So some statistics that I'd love to share with you that actually aren't in the report are, for example, only about 30% of our antibiotic imports come from China. So that means that we have a really diverse sourcing for these types of goods. So even if there were issues with the supply in China, there is still, you know, 70% that comes from either the U.S. or elsewhere.

Starting point is 00:15:17 Now, within that, there are some goods that are higher, have a higher percentage. So say, for example, ibuprofen. There's a significant amount, almost all of the ibuprofen that is consumed by Americans is sourced from China. but there are also many other countries who make ibuprofen. So if we needed to make the shift, we could do that. So if we did make that shift, and let's say, you know, we kind of stop relying so much on China or other countries for these pharmaceutical drugs, how would that affect the price of, you know, average prescriptions that Americans rely on? That's a really good question. And I think first and foremost, if a shift like this is going to happen, it shouldn't be coming from overarching government

Starting point is 00:16:05 policies that tell private business how they have to set up their supply chains. We want this to be market driven, and the market driving it will help to make sure that prices stay affordable. But naturally speaking, if you're going to be cutting off a supply for a particular type of drug, you're going to have increased prices. And it's especially common for this to happen in the generic drug space. And the reason for that is because generic drug producers have such low margins that if they have to make a sourcing change, it could either make it unprofitable to make that good anymore,

Starting point is 00:16:51 so they wouldn't make it anymore. Or they would have to increase the price substantially in order to even be able to sell the drug and bring it to market. And even, you know, going beyond price, you know, some people are worried that, okay, if we have a shift in who's manufacturing these drugs, will we all of a sudden lose access? What would you say to those concerns? Yeah. So, I mean, I think the two additional concerns other than price are choice, right?

Starting point is 00:17:25 we as consumers want to be able to have the choice for what we buy. It's great that we can buy Tylenol and Advil and leave, and we have so many different brands and ingredients to choose from, all to do the same thing of curing a headache, right? So we want to make sure that that choice remains possible. And if we're cutting off or the government is saying, well, you can no longer buy this product from a particular country, you're going to be decreasing that choice.

Starting point is 00:17:54 The second problem is that change takes time, and it takes a long time. And the reason for that is because there are regulatory approvals that go along with new production being created or production being moved from one place to another. And that's important for us as Americans, because we want to make sure that the drugs that we are consuming are safe. And that's why the FDA does these regulatory production checks. But it takes a long time and it's very capital intensive. So it takes a lot of money for a pharmaceutical manufacturer to one build a new factory to make new drugs and to find new suppliers. It all just takes time and money. And that makes it so that we have less choice and potentially higher prices. Oh, that makes sense. Thank you for explaining that. So Tori, let's talk about solutions to medical shortages. how should the government really be positioning itself and America to be better prepared for future national medical emergencies, whether that's a pandemic or bioterrorism?

Starting point is 00:19:00 Yes, absolutely. So in terms of the broader question of drug sourcing and quality control through the FDA, Congress has actually already been working on some of this to make sure that not only is FDA doing production quality, quality checks and learning more information about where different components of drugs come from. But they're trying to make sure that all these things are happening in an efficient and productive way. So what we have been recommending, and what we recommend in this paper is first and foremost that a crisis is not the time to make big policy change. We want to make sure that policy change is done through a deliberative process after the crisis has passed,

Starting point is 00:19:47 because this is obviously not the norm, but our markets need to be able to operate in the norm. So that's why these emergency procedures like Defense Production Act and National Stoppile are very useful for dealing with the right now. So then we can get back to normal. So really, we're kind of talking about two different situations. We have the COVID-19 crisis and obviously addressing the needs that are at hand. But then when it comes to thinking about, you know, policy changes, those needs. to be implemented with long-term future in mind? That's absolutely correct.

Starting point is 00:20:24 And we want to make sure that, like I said, any of the policy changes are being made with all the facts at hand. So one thing that the government did do in the CARES Act is that they required the National Academies of Sciences Engineering and Medicine to examine in a manner that doesn't compromise national security more information about our medical product support. chain. So this would be really helpful for us as researchers and for Americans to have more information should they think that that is an important information to have to understand where supply chains are coming from. And this will also be helpful in any sort of future problems with

Starting point is 00:21:06 supply chains or shortages because the FDA will be able to look at these numbers and understand kind of how the landscape is shifting within the pharmaceutical space. Tori, we really really appreciate your time today. We'll be sure to leave a link to your report in the show notes so our audience can read it. But thank you so much for your inside and just so clearly explaining how unique the situation is that we're in and what the steps forward should be for our nation. Yes, thank you so much for having me. And that'll do it for today's episode. Thank you for listening to the Daily Signal podcast. We do appreciate your patience as we record remotely during these weeks. Please be sure to subscribe on Apple Podcasts, Google,

Starting point is 00:21:49 Play or Spotify. And please leave us a review or rating on Apple Podcast and give us your feedback. Stay healthy and we will be back with you all tomorrow. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. It is executive produced by Kate Shrinco and Rachel Del Judas. Sound design by Lauren Evans, Fulia Rampersad, Mark Geinie, and John Pop. For more information, visitdailySignal.com.

The Daily Signal - Solutions to Medical Supply Shortages That Put Americans First

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