White House Issues Executive Order Impacting Drug Supply Chain

The White House issued an executive order “Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs are Made in the United States” on August 6, 2020 (the Executive Order). This action comes after the release of three additional executive orders addressing drug pricing in general, which were summarized by Arent Fox in a prior blog post.

Given the gravity of the COVID-19 pandemic, the Executive Order states that it is the policy of the United States to:

• accelerate the development of cost-effective and efficient domestic production of Essential Medicines and Medical Countermeasures and have adequate redundancy built into the domestic supply chain for Essential Medicines, Medical Countermeasures, and Critical Inputs;
• ensure long-term demand for Essential Medicines, Medical Countermeasures, and Critical Inputs that are produced in the United States;
• create, maintain, and maximize domestic production capabilities for Critical Inputs, Finished Drug Products, and Finished Devices that are essential to protect public safety and human health and to provide for the national defense; and
• combat the trafficking of counterfeit Essential Medicines, Medical Countermeasures, and Critical Inputs over e-commerce platforms and from third-party online sellers involved in the government procurement process.

Of course, the Executive Order delegates implementation of these stated policies to several regulatory agencies and does not delve too far into the specifics of how exactly implementation should take shape.

For example, the Executive Order does not specifically define the term “Essential Medicines,” and instead delegates the task of identifying those products that are “medically necessary to have available at all times in an amount adequate to serve patient needs and in the appropriate dosage forms” to the FDA Commissioner, in consultation with the Director of OMB, the Assistant Secretary for Preparedness and Response in the Department of Health and Human Services (HHS), the Assistant to the President for Economic Policy, and the Director of the Office of Trade and Manufacturing Policy.

Particular provisions of note in the Executive Order relating to the supply and procurement of Essential Medicines include:

• Instructions for agencies to limit competition and procurement to Essential Medicines produced in the United States, and to modify procurement requirements among two or more manufacturers located in the United States;
• Instruction for the United States Trade Representative “to modify United States Federal procurement product coverage under all relevant Free Trade Agreements and the World Trade Organization Agreement on Government Procurement to exclude coverage of Essential Medicines, Medical Countermeasures, and Critical Inputs;”
• Instruction for the Secretary of HHS to identify “vulnerabilities” in the supply chain for Essential Medicines which may also involve “recommending to the President any changes in applicable law that may be necessary to accomplish [such] objectives;” and
• Instruction for the Secretary of HHS to accelerate FDA approval or clearance for domestic producers of Essential Medicines; issue guidance with recommendations regarding the development of Advanced Manufacturing techniques; increase the number of unannounced inspections of regulated facilities manufacturing Essential Medicines, Medical Countermeasures, and Critical Inputs; and refuse admission to imports of Essential Medicines, Medical Countermeasures, and Critical Inputs if the facilities in which they are produced refuse or unreasonably delay an inspection.

Additionally, the Executive Order imposes reporting requirements on the agencies impacted by the Order, which may have the impact of new reporting requirements trickling down to drug manufacturers and other participants in the supply chain.

Finally, the Executive Order empowers the Secretary of HHS to “prioritize the performance of Federal Government contracts or orders for Essential Medicines, Medical Countermeasures, or Critical Inputs over performance of any other contracts or orders, and to allocate such materials, services, and facilities as the Secretary deems necessary or appropriate to promote the national defense.”

As with the other executive orders recently released from the White House, the immediate impact of the Executive Order remains to be seen, particularly because the Order requires extensive action by and coordination with a number of agencies, with such actions to include notice and comment rulemaking. Members of the industry should be on the lookout for proposed rules related to this Order and take advantage of all public comment periods.