America’s Dangerous Reliance on China for Medicine

Thu, Mar 19, 2020 - 11:58am

Rosemary Gibson, author of China Rx: Exposing the Risks of America’s dependence on China for Medicine spoke to Cris Sheridan on FS Insider about the precarious situation the U.S. finds itself in. She explained America’s dangerous reliance on China to produce necessary drugs and what we can do about it. Read below for excerpts from her fascinating interview on FS Insider. If you’re not already a subscriber, click here.

See What Happens When We Run Out of Drugs? for audio.

How dependent is the U.S. on China for the drugs we use today?

Well, in the best of times, before coronavirus, if China shut the door on exports or products within a few months our pharmacy shelves would be pretty empty. That's how dependent we are. That's how dependent the rest of the world is. The world has concentrated production of essential medicines in a single country. We wouldn't do that for oil. You wouldn't have 80% of the world's oil supply in a single country, or 80% of the world's oil refining capacity and we shouldn't have that for our medicine.

I hope one thing to come out of the coronavirus situation is that it motivates us to bring manufacturing back home. So we can make a basic level of critical medicines that are necessary for the functioning of our healthcare system, even in the best of times, let alone in situations like we're in now.

If you think about it, whole world is competing for the same pot of medicines. We really have a triple whammy here. A production shutdown, huge demand surge in China and global demand surge. We have to fix it. We have to diversify our manufacturing base. And some of that should be coming back to the United States for our health, security and national security.

Which type of drugs are really at risk of seeing shortages based on our dependence on China?

We've lost most of our ability to make basic antibiotics, the generic ones that you give your children for ear infections, for pneumonia, for bronchitis, etc. We depend on China for last resort antibiotics and we depend on China for the basic antibiotics. We have to bring the manufacturing of those antibiotics, to some level, back home so that we have them when we need them.

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China's already making nearly 10% of our generic drugs. They're making birth control pills, medicines for HIV, AIDS, for blood pressure, antibiotics, medicines for Alzheimer's, epilepsy, diabetes etc. And we'll be in a situation where we'll have no leverage and China will sell us what they want because we have no alternative and we'll take it and quality will diminish further. I was talking to a physician in a prominent hospital and they said to me, ‘we're becoming like a developing country with our medicines.'

It's a matter of our health, security and national security. And we have that capability here. It's just smart. There are also thousands of other medicines that we depend on China for the core ingredients to make them. What I'm worried about is our manufacturing basis collapsing to make the generic drugs, because companies can't compete with China because the Chinese government subsidizes its own firms. So American companies are competing with the Chinese government.

Is the U.S. government starting to take this seriously?

There are members of Congress on both sides of the aisle who are fully aware of this. They've been reading China Rx. We have to act now. We know there's a problem and we have to agree on solutions. The White House is coming out shortly with an executive order that would focus on buying American made medicines and other medical supplies for the Department of Defense, for veterans and for Health and Human Services which would be a great step forward.

We also need to invest in innovation in how we make our medicines. We've been making medicines the same way for 100 hundred years, whereas technology is available to improve how we do it and have real time quality control.

Another issue is the quality of the medicines we're getting from China. We are seeing a diminishment in the quality of our generic drugs. When I talk to people and physicians, they share their experience of generic drugs that don't seem to be working. We need to have a every single generic drug and every batch tested, and ideally in a Consumer Reports type model with independent testing and public reporting of the results. We all have to ensure that that we have quality medicines that are going to do what they’re supposed to do.

How quickly can we shift our supply chain away from China?

It’s not going to happen overnight. But we are starting some medical supply production here in the U.S., like mask production, that's already happening. We need to do the same with medicines and that can start within weeks. If there's funding for it to be done here, with full transparency on country of origin and a guarantee that we're paying manufacturers a fair price, not a race to the bottom price, so we can have quality manufacturing, we can begin that within weeks. I'm hoping that in any future spending package approved by Congress and signed by the White House that that's what's included.

This is about our survivability. There is not another option for us as a country because there'll be another coronavirus someday or something else. We have to be prepared. We owe it to ourselves to future to be prepared that we have what we need, whether it's masks gloves, large Q-tips for swabbing, for testing the chemical reagents. We owe to ourselves to be prepared now. We prepare better for hurricanes than we do for events like the coronavirus.

We haven't been told the truth and it took someone like me, a private citizen, to write China Rx, exposing the risks of our dependence on China for medicine. Now that it's out there, people have been very eager to understand the topic and to act on it. But we need real action that results in manufacturing, starting here in our country.

Over the past 20 to 30 years there has been a dramatic shift in where we source our drugs, what happened?

That's right. In the 1990s, the U.S., Europe and Japan manufactured 90% of the global supply of key ingredients for the world's medicines and vitamins. Now, China is the largest global supplier. There was country of origin legislation introduced in Congress about 12 years ago, because the public should have a right to know where their medicines come from, but it was killed right away. A special interest did not want the public to know.

We have to turn it around and I hope that the coronavirus situation is enough motivation for us to do it—it’s is now or never. This is about our survivability as a country and we need to start treating our medicines as a strategic asset not like a cheap commodity. Right now, our drugs are being treated like T-shirts. They're being made and they're being sold like t shirts. We need to get back to the standards that Americans have come to expect. I'm hopeful that what's been taking place with coronavirus and understanding supply chains and where our essential medical supplies and medicines come from will wake us up and spur us to act.

Click here to listen to the full interview with Rosemary Gibson. If you're not already a subscriber to our FS Insider podcast where we interview book authors, strategists and industry experts from across the globe on all things economics, finance and markets...

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