What You Need to Know about President Trump’s Executive Order to Strengthen the Domestic Supply Chain for Essential Drugs and Medical Devices

08 September 2020 Coronavirus Resource Center:Back to Business Blog
Authors: David L. Rosen Jennifer F. Walsh

On August 6, 2020, President Trump signed an Executive Order (“Order”) to ensure essential medicines, medical countermeasures, and critical inputs are made in the United States.  The President recognized that reliable domestic supply chains for Essential Medicines, Medical Countermeasures, and Critical Inputs are necessary for the preparedness and protection of United States citizens.  The Order is intended to increase domestic production of essential medicines, medical equipment and protective gear in order to decrease the country’s reliance on foreign drug and medical device manufacturing.  The Order also seeks to combat counterfeit products.  The federal government will be required to develop a list of essential medicines and shift their procurement to U.S. based manufacturing companies.

Major Provisions of the Executive Order

Procurement Requirements for Products Made in the U.S.

  • The FDA Commissioner is directed to identify a list of essential medicines, countermeasures and “Critical Inputs.”  Medical Countermeasures include personal protective equipment (“PPE”), and Critical Inputs include active pharmaceutical ingredients (“API”) as well as raw or intermediate materials used in the manufacture of an API that is deemed by the FDA Commissioner to be relevant in assessing the safety and effectiveness of a medicine or countermeasure.   In addition, “the Finished Drug Product or Finished Device[]” is required to be “manufactured, prepared, propagated, compounded, or processed … in the United States.”  This list of essential medicines, countermeasures and “Critical Inputs is required to be developed within 90 days from the Order.

  • U.S. trade agreements will be altered to exclude essential medicines, countermeasures and Critical Inputs and the Secretary of Defense shall use his authority to restrict procurement of these products to domestic sources.

  • The FDA can accelerate approval or clearance of products manufactured in the U.S. and the Agency is required to draft guidance and recommendations related to advanced manufacturing, while also accelerating EPA siting and permitting approvals of advanced manufacturing facilities.

  • There are exceptions, including where the relevant products are not yet produced in the U.S. “insufficient and reasonably available commercial quantities and of a satisfactory quality” or the product would increase procurement costs by 25% or more.

  • There are exceptions for the procurement of items “that are necessary to respond to any public health emergency declared,” or any major disaster or emergency declared under the Stafford Disaster Relief and Emergency Assistance Act.

Increased Transparency and Focus on the U.S. Supply Chain

  • Within 180 days, the HHS Secretary is required to identify vulnerabilities in the supply chain for “essential medicines, medical countermeasures, and critical inputs and to mitigate those…”  This will be accomplished through new regulations or guidance to collect information from manufacturers during the regulatory application and review process, including sources of finished products, the use of any scarce or “critical” inputs and the date of the last inspection and subsequent results.  

  • The National Security Council, Departments of State, Defense, and Veterans Affairs is also required to disclose information about the security and vulnerabilities in their supply chains for essential medicines.

  • The Order requires the review of FDA regulations to determine if they are a barrier to domestic production and determine whether they should be repealed or amended.  FDA is also required to negotiate with countries to increase foreign site inspections, and specifically, unannounced inspections.  In addition, FDA is directed to “refuse admission … to imports … if the facilities in which they are produced refuse or unreasonably delay an inspection.”

Counterfeit Products

The Office of Management and Budget is directed, in consultation with the heads of different Agency, to review each agencies’ authority to limit procurement of products to e-commerce platforms that have agreed to requirements combating the sale of counterfeit goods. 

Impact of the Executive Order

Such changes, if implemented provide for fundamental changes in existing regulatory requirements and require significant revisions to U.S. law and international agreements.   Given the significant nature of the actions that are required to be implemented and the relatively short deadlines, it is not clear whether the administration can meet these deadlines.  If and when implementation begins (and only after the November presidential election) can we assess the impact of any changes to procurement and the supply chain.  It is likely that the sweeping changes under the Order will face significant legal challenges under the Administrative Procedures Act from many impacted parties.     

Companies in all sectors of the economy continue to be impacted by COVID-19. Foley is here to help our clients effectively address the short- and long-term impacts on their business interests, operations, and objectives. Foley provides insights and strategies across multiple industries and disciplines to deliver timely perspectives on the wide range of legal and business challenges that companies face conducting business while dealing with the impact of the coronavirus. Click here to stay up to date and ahead of the curve with our key publications addressing today’s challenges and tomorrow’s opportunities. To receive this content directly in your inbox, click here and submit the form.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services