On August 17, Republicans on the House Energy and Commerce (E&C) Committee released the third part in their COVID-19 Second Wave Preparedness study, concerning the health care supply chain. E&C Republicans, particularly Ranking Member Greg Walden (R-OR) and Oversight Subcommittee Ranking Member Brett Guthrie (R-KY), should be applauded for providing alternatives to costly “Buy American” mandates and exploring alternative, pro-growth means to bolstering America’s domestic manufacturing of medical goods.
NTU has warned policymakers for years that “Buy American” requirements - whether attached to annual defense policy bills passed by Congress or applied to prescription drugs in the COVID-19 era - merely increase costs for taxpayers while making the federal government less nimble and efficient. Recently, more than 250 economists sent a letter to the Trump administration and congressional leadership on “Buy American” proposals. They wrote in part:
Current shortages of critical medical goods in the Covid-19 pandemic have revealed to all the desirability of diversifying sources of supply and increasing inventory of storable medical goods. Diversifying supply sources and increasing inventories will be costly, but a broad Buy America regime will be more costly. The variety, supply, and price of goods available to Americans will suffer under a broad Buy America regime. Taxpayers and patients will pay more for drugs and medical supplies. Smart policies such as federal government stockpiling look more promising.
Fortunately, Republicans on the E&C Committee agree with those economists. The Republican staff of the Committee writes in their new report (emphasis ours):
Congress should promote policies to encourage domestic production of critical medical supplies and pharmaceutical products. Increased domestic manufacturing can be achieved by creating additional market-based incentives without imposing sweeping government mandates or controls.
In a recent issue brief, NTU outlined five steps policymakers should take to bolster America’s domestic manufacturing of medical goods without harmful government mandates: 1) suspend tariffs on medical products, 2) enact broad-based changes to the tax code such as full and immediate expensing for structures, 3) correct the Tax Cuts and Jobs Act’s mistreatment of research and development (R&D) costs, 4) relax or repeal outdated regulations that inhibit pharmaceutical R&D and approval in the U.S., and 5) enhance the global supply chain through multilateral agreements.
E&C Republicans, for their part, ask the executive branch to “work with Congress and the private sector to enable and support” domestic manufacturing efforts, which would be a welcome change from the Administration’s recent “Buy American” Executive Order. The Committee correctly notes that burdensome “Buy American” requirements “could disrupt patient access to needed medications and increase drug costs.” Instead, E&C Republicans write, pro-growth policies:
...should promote transparency into the pressure points in supply chains and what countries we are most reliant on for critical supplies, increase information available to Congress and federal agencies, and diversification of supply chains, such as encouraging the use of advanced manufacturing, creating additional markets for private sector businesses, and making regulatory processes more efficient.
NTU could not agree more, and we applaud E&C Republicans for demonstrating leadership on this issue. Policymakers should continue to explore ways to bolster domestic manufacturing of essential medical goods and supplies without shutting down the global supply chains that afford millions of Americans access to safe and affordable care.