February 26, 2020

Medical Supply Chain Dominated by China

Beijing strategically manipulated the market, and that puts U.S. national security at risk.

Yesterday, we noted the economic trouble brought about by the deadly coronavirus, and that upheaval continued Tuesday. MarketWatch reports, “The Dow finished Tuesday down nearly 880 points to mark its sharpest-ever two-session slide in point terms, losing about 1,910 points.” The Dow is down 8.4% in just two weeks.

That coincides not just with the coronavirus epidemic and economic interruptions in China but with the rise of Bolshevik Bernie Sanders as the new Democrat front-runner. That’s not a coincidence, but it is another story.

As for the U.S. and the coronavirus, the Centers for Disease Control issued a “strong warning” about it spreading here — a matter, it said, not of “if” but “when.” Naturally, Democrats in last night’s debate used the CDC warning to slam President Donald Trump, or, in Joe Biden’s case, go off on a bizarre rant bragging about his own work on ebola.

With all that in mind, this episode has brought to the forefront another problem with China’s dominance in world markets: the manufacture of pharmaceuticals and supply chains for their ingredients.

According to his recent Senate testimony, Scott Gottlieb, a physician who is also a former Trump administration Food and Drug Administration commissioner, detailed some of our strategic reliance on China for pharmaceuticals: “About 40 percent of generic drugs sold in the U.S. have only a single manufacturer. A significant supply chain disruption could cause shortages for some of many of these products. [In 2019], manufacturing of intermediate or finished goods in China, as well as pharmaceutical source material, accounted for 95 percent of U.S. imports of ibuprofen, 91 percent of U.S. imports of hydrocortisone, 70 percent of U.S. imports of acetaminophen, 40 to 45 percent of U.S. imports of penicillin, and 40 percent of U.S. imports of heparin, according to the Commerce Department. In total, 80 percent of the U.S. supply of antibiotics are made in China.”

Oh, and by the way, Gottlieb notes, “When it comes to starting material for the manufacture of pharmaceutical ingredients, a lot of this production is centered in China’s Hubei Provence, the epicenter of coronavirus.”

This isn’t the free market at work. It’s the result of Beijing’s typical and strategic market manipulation, including underselling global competitors to put them out of business and enable China’s market domination. The U.S. must be equally strategic in thinking through market issues that have national-security implications.

Growing American energy production has moved us toward independence in that sector, providing a buffer particularly for instability in the Middle East. Similarly, we must think through the production and distribution of medicines and medical supplies that are needed to protect our population. Given not just coronavirus itself but questions about its origins and previous experience with contaminated Chinese medicine, it should be painfully obvious that Americans shouldn’t rely on our Red Chinese adversaries to keep us healthy.

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