Both the Trump administration and presumptive Democratic nominee Joe Biden in recent days have ramped up rhetoric about onshoring production of medical supplies and certain drugs.
The COVID-19 pandemic has laid bare the American healthcare system's dependence on foreign manufacturing. Many providers are hoping a push to onshore some production could result in a more stable, if more expensive, pipeline of supplies, while others believe that U.S. manufacturing isn't prepared for the transition.
The Trump administration has been preparing an executive order for months that would require some "essential" medicines to be made in the United States, but has slow-walked its release.
HHS Secretary Alex Azar said Tuesday that President Donald Trump may force companies to produce some drugs domestically.
"The coronavirus pandemic brought home that core elements of our medical-supply chain are just as strategic to our national security as, say, nuclear submarines and aircraft carriers are, and have to be treated with that same kind of approach, which is to say that we have core domestic manufacturing capabilities," Azar said on Bloomberg Radio.
Azar specifically mentioned that the Domestic Production Act could be an option to ensure domestic manufacturing capabilities. The Trump administration was loath to use the Domestic Production Act initially, but invoked it in March.
Biden on Thursday released an economic development plan that calls for American workers to manufacture medical equipment, and for the federal government to commit to forward purchases of medical supplies to build up stockpiles.
Biden also called for the federal government to leverage federal buying power and authority including the Defense Production Act to make some products in the United States.
Premier, Inc. Senior Vice President of Public Affairs Blair Childs said that the group purchasing organization likes portions of Biden's plan that promote public-private partnership and would ensure volume from federal purchasers, but emphasized that Premier's goal is not to move all manufacturing to the United States.
"Rather than moving all manufacturing to the U.S., Premier moves for ensuring there is at least one domestic supplier of the final form, ancillary products and raw materials for critical medical supplies and drugs, and at least three global suppliers of these products from geographically diverse regions," Childs said in a written statement.
The American Hospital Association declined to comment on Biden's proposal.
On Capitol Hill, one of the buzziest proposals on incentivizing domestic manufacturing takes a carrot rather than stick approach.
A proposal authored by Sen. Tim Scott (R-S.C.) and Rep. Earl Carter (R-Ga.) would provide tax credits for companies that manufacture drugs, personal protective equipment and diagnostics in opportunity zones across the United States.
"This will work to bring manufacturing back to the United States through incentives aimed at leveling the playing field, rather than through punitive and ultimately counter-productive mandates," Scott's office said in a statement on the legislation.
Childs said Premier also supports using tax incentives to increase domestic manufacturing capacity.
However, some providers with slimmer margins including rural hospitals may not have the luxury of paying higher prices for domestically produced goods if they are more expensive. Research published in February showed that rural hospitals in states that haven't expanded Medicaid operated at a -0.3% operating margin.
Group purchasing organization Premier, Inc. has said it supports transparency in manufacturing pipelines and ensuring diverse manufacturing locations.
