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Via Teleconference ON MEDICINES AND MANUFACTURING FOR TRADE AND MANUFACTURING POLICY PETER NAVARRO BY ASSISTANT TO THE PRESIDENT ON-THE-RECORD PRESS CALL 9:07 A.M. EDT MR. FIELDS: Good morning, everyone, and thank you for joining today’s briefing on essential medicines and manufacturing. And there will be an announcement to follow up later today in Ohio. Today we are here with Dr. Peter Navarro, Assistant to the President for Trade and Manufacturing Policy. And he will be starting off this call with opening remarks and then a question-and-answer period, which will all be on the record. All information on this call will be embargoed until the conclusion of this call. And with that being said, I’m happy to introduce Assistant to the President for Trade and Manufacturing Policy, Dr. Peter Navarro. DR. NAVARRO: Thank you, sir. Good to be with you all today. It’s a great day for America. The President has promised that he would bring home the supply chains in production for our essential medicines, and today we're taking a very big step towards fulfillment of that promise. Later today, the President will be signing an executive order called “Combating Public Health Emergencies and Strengthening National Security by Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States.” So this is a broad order that covers not just medicines, but also medical supplies and equipment. The backstory here: If we've learned anything from the China virus pandemic, it is simply that we're dangerously over-dependent on foreign nations for our essential medicines; for medical supplies like masks, gloves, goggles, and the like; and medical equipment like ventilators. The problem is simply that, across the world, we have sweatshop labor, we have pollution havens, we have tax havens, which have pulled our manufacturing offshore, particularly for pharmaceuticals. The process itself of production includes three key steps. You start with the key starting materials; these are more like the heavy chemicals that are involved in production. Those are transformed into active pharmaceutical ingredients. And from the API, the finished dosage form tablets, capsules, and injectables are produced. If you look at key starting materials, countries like China and India tend to have an unfair competitive advantage because of their lax regulatory environment there. If you look at API, it's very labor intensive, so you get the sweatshop, cheap labor problem. And then the tax haven problem is significant. Ireland, Singapore, Switzerland, India, China -- all of these countries have incentives which are designed to pull pharmaceutical manufacturing offshore and into -- within their borders. And so you see a country like Ireland punching very, very high above its weight simply because of its tax advantages. You see China and India, Russia, Brazil, Turkey, others dominating other parts of the chain. So again, the critical element here, which is part of the broader Trump strategy, is to onshore our production. And the executive order is, in my judgment, pure -- pure Trump because it has three separate components that work together. One is, there's a “Buy American” component, which requires government agencies, particularly the Veterans Affairs, HHS, and DOD, which are the largest procurers of medicines and medical countermeasures. So there's “Buy American.” The second is, again, pure Trump. It's deregulation. We have a situation where both the FDA and the EPA have a set of rules which are more skewed towards traditional manufacturing and actually disadvantage domestic producers over foreign producers. For example, in terms of inspections that the FDA makes, the FDA can walk in any pharmaceutical manufacturer in the U.S. unannounced and inspect. If they try to do that in China or India, these governments will tell them, “Come back in six months and maybe we'll let you in.” And we let them get away with that. So that's not going to happen anymore. And then the third part, which is critical to keep our drug prices down -- which is a very top priority of President Trump -- is to catalyze advanced manufacturing and continuous manufacturing techniques. The concept here is simply that if you have, for example, continuous manufacturing and you're able to do two or all three stages of the production process in a continuous way on a single site -- from, say, key starting materials, the API, or API and finished dosage form -- what you do is you use gain from economies of scale and scope, and you're also able to reduce significantly the waste stream and minimize environmental issues. So that's the -- that's the whole strategy behind this. We are dangerously dependent, at this point in time, for essential medicines. I also want to alert you to the concept of medical countermeasures because that's the key part of this executive order, besides essential medicines. Medical countermeasures are what we need in terms of supplies, equipment, and pharmaceuticals to fight CBRN threats -- chemical, biological radiation, and nuclear -- plus pandemic threats. So those five threats are recognized in our national security documents as significant threats. And medical countermeasures are used to deal with that. So let me now walk you through the structure of the EO and then I’ll take some questions. It starts with Section 1, with the policy: “The United States must protect our citizens, critical infrastructure, military forces, and economy against outbreaks of emerging infectious diseases and CBRN.” And then it goes on to elaborate on the policy where we seek to accelerate the development of cost-effective and efficient domestic production of our essential medicines and medical countermeasures. Ensure the long-term demand for these things because if we don't do that, then we will revert back to buying offshore and not having what we need in a pandemic. Create, maintain, and maximize domestic production capabilities for critical inputs and its drug products. There's also a -- an element to combat the trafficking of counterfeit medicines coming in. One of the top priorities of President Trump has been to stop all those counterfeiting on e-commerce platforms that basically are the great enablers primarily, but not exclusively, of counterfeits from Communist China. Section 2 is the “Buy American” section. It basically sets forth the rules that thou shalt buy American at the agencies. It has the usual provisions in all Buy American orders for waivers in cases where need be. But it's also true this administration has taken a very hard line on waivers, and that's been shown in an increase in procurement of domestic sources. A key part of this process will be for the FDA to actually identify the list of essential medicines and countermeasures and critical inputs covered. The World Health Organization, aka the “colony of China,” by the way, has a list of essential medicines that numbers more than 400, but some of these medicines we don't really need here in the U.S. because of where we’re located, so we don’t deem malaria drugs, for example, as essential. Let’s see -- let’s go to the next Section 3. This is designed to identify vulnerabilities in our supply chains. This is consistent with all the previous EOs we've done of trying to bring our manufacturing onshore. This essentially also is the section for deregulation where, for example, in Section 3(b) we direct the Secretary of Health and Human Services through the FDA Commissioner to take action to accelerate FDA approval or clearance. To be clear here, we're not cutting any corners; we simply want a more rational and streamlined regulatory process that’s consistent with rapid response to pandemics and CBRN threats. Section 4 likewise directs the Administrator of the EPA to streamline regulation, particularly for the development of advanced manufacturing facilities. And there is a number of reporting requirements to make all of this go. But we're -- we're hitting the ground running. Once this comes out, you may want to read the Section 7 carefully. It's kind of a clinic on how medicines are made. It’s just a definition section which talks about what API is, what advanced manufacturing is, what starting materials is, and so on. So, with that, why don't I take questions? Please limit these questions to the matter at hand. And let's go. MR. FIELDS: Thank you. Operator, we’re -- if you can open up a line up for some questions, as you were about to do. Thank you. Q Hey, Dr. Navarro, this is Andrea Shalal. Thanks for doing this. This executive order has been such a long time in coming. It's been -- you've been talking about it for a very, very long time. Can you talk a little bit about what got changed along the way and why it took so long to put out? And then I also wanted to ask two quick things. One is for -- I missed the very, very top because I was being COVID tested. Can you just remind me of what the terms are of the call? And then, Dr. Navarro, on a separate question, DR. NAVARRO: Hang on. Hang on. Hang on. Let’s stop right there. Let me -- let me go first here on what you got and then -- Q Okay. DR. NAVARRO: The terms are -- when is this embargoed to? MR. FIELDS: Embargoed until the end of the call. And everything is on the record. Q Okay, great. Thanks. DR. NAVARRO: So in terms of this -- we were simply trying to build suspense with this EO by dragging it out for months; that's a joke. (Laughter.) No, this -- this was a very -- you know, I’ve been part of probably 15 executive orders on behalf of the President, working with the team. This is, I think, one of the most comprehensive and effective executive orders that I've seen, and it really is going to get the mission done. So it simply took -- took a while to get through the process. And one of the ways the process works, just so you understand, is the last stop is always at the Office of Legal Counsel, and it tends to be the long tent in the pole because there's just a lot of -- a lot of things that have to go through there. So I couldn't be happier that the President is going to be signing this today, but, you know, good things take time and this is a good thing for America. Next question. Q Yeah, then just to quickly ask on a separate issue, which is Kodak. So one of the things that’s happened -- DR. NAVARRO: So -- so, hang on here. We’re violating the rules here. And you got 66 people on. Let's go to the next question and let's stay on point on the executive order, if we may. Thanks. Q Hi, thanks for holding this. Can you talk exactly about what the requirements are for the Buy American section for the agencies, for FDA and DOD, and what exceptions there are for purchasing American-made drugs? DR. NAVARRO: Sure. So, what Section 2 does is it direct these agencies to use procedures to limit competition to only those essential medicines, medical countermeasures, and critical inputs produced in the United States. And then, in order to ensure appropriate competition and low prices, we also have a section about dividing procurement requirements among two or more manufacturing -- -facturers located in the U.S., as appropriate. The waivers are the standard waivers that you have in all Buy American orders: cost, public interest, and availability. Next question. Q Hey, thanks for having the call, y'all. Just a little point of clarification on Section 4. Does the order, you know, allocate a specific amount of funds devoted to opening up these advanced manufacturing facilities and then the continuing manufacturing capabilities? And then on section, I want to say, three, are there specific tax incentives that the administration is putting in there to sort of lure some of these companies back to onshore their manufacturing capabilities? Thanks, y’all. DR. NAVARRO: What was the first part of that? Q Just if you have a figure in mind for how much we should be spending to build up our advanced manufacturing capabilities. DR. NAVARRO: Okay, both -- so this executive order is not an appropriations bill. What drives this order is the Buy American feature of it. The idea here is that, in the absence of things like Buy American for a government procurement, we’re going to continue to see our supply chains go offshore because of these pollution havens, tax havens, and sweatshops. And so in order to attract sufficient investment in domestic manufacturing, what you want to do is establish a base level of demand by demand from the federal government. And this is a practice -- Buy American is one of the oldest rules we have in the American government, and it basically allows us -- for example, with iron and steel and other manufactured goods purchased by the government, it allows us to maintain a certain level of the manufacturing and defense industrial base. So this doesn't -- it's not an appropriations bill. What the advanced manufacturing aspect of this does is it makes sure that our regulatory process at the FDA and EPA are harmonized with new technology. A lot of the existing rules don't really fit well with the new kinds of ways we produce things. So if we are able to harmonize that, we’ll be able to get the advanced manufacturing up and running and drugs to market -- drugs to production, that is -- faster than we otherwise would. All right, let's take the next question. Q Hi, Dr. Navarro. Thank you for walking us through this. Just a quick question on -- DR. NAVARRO: A big spread in your paper today about pharmaceuticals, by the way, I hear. Q Oh, well, thank you. I had a quick question on, sort of, the “why” around this executive order. You know, there’s other measures that the administration is taking. You know, I know a little bit more about the DFC side of things and the executive order around that. But if you could speak to why was this executive order needed and, sort of, give us a little more color on that, that would be helpful. DR. NAVARRO: Sure. Again, if you understand, going back to the President's 2016 campaign -- and I really urge everyone to listen to and read the speech he's going to give today because it's going to weave the history of the promises made back then to what we’re doing moving forward. It has always been the case that “Buy American” and “Hire American” are the two most simple rules of the Trump administration. And we’ve had upwards of seven or eight Buy American executive orders that have been signed by the President during the three and a half years. And the strategy here, Rachel, is very simple: What Buy American, in the context of pharmaceuticals and medical countermeasures and critical inputs, does is it establishes a base level of demand to attract a level of investment sufficient to provide for the needs we have for these things in times of trouble. So that's the philosophy. You're absolutely right: We're attacking this problem, because it's a huge problem, in a multi-vector way, trying to stand up of facilities through the DFC, through BARDA, and through the Defense Department. But the scope of the problem is breathtaking, in some sense, and so we have to attack it from multiple vectors of -- multiple vectors. Next question. Q Thank you, Dr. Navarro. I would like to know -- you just said that “sufficient level” of supplies. At the end of this plan, what percentage of medical supplies are you planning to bring onshore? DR. NAVARRO: I don't think we can quite think of it that way, but at a minimum, we need to have enough production to deal with pandemics or CBRN threats. And we're a long ways from that, but we can move in Trump time, which is to say as quickly as possible, towards closing that gap. And today is a big step towards that, so let's get it in place and keep moving. Next question. Q Yes. How do you expect to avoid more expensive drugs just by telling FDA and EPA to speed approvals? That seems like an insufficient measure to counter just how much cheaper drugs are to make abroad. DR. NAVARRO: Repeat the question, and try to do it in a less cynical way, if you can. OPERATOR: One moment, sir. Q To counter the effects of rising drug prices -- OPERATOR: Your line is open -- DR. NAVARRO: Yeah, start over. Q Yeah, so it's a lot cheaper to make drugs overseas. And you say that Section 3 is supposed to, you know, keep drug prices from going up. And, so far, all I've heard is that you're going to tell FDA and EPA to work together to speed approvals of these manufacturing facilities. How is that (inaudible) abroad? DR. NAVARRO: You just cut off there, and your cell phone is in and out. Look, let me take the question to be: So there's a large cost differential, which you assert, and how is it that the FDA and EPA can help in that? You start -- look -- and this is the only way America will succeed going forward. And President Trump knows this and thinks like a chess master about this. We must continually innovate, and through innovation, we're able to reduce costs and out-compete. In the pharmaceutical sphere, you have a current production process, which is Dickensian. It’s a three-stage process, where the first stage is heavily polluting, and it goes to countries that don't mind dumping whatever pollutants there are into their rivers and streams and air. You have a second stage in the API, which is conducive to labor intensity in sweatshops. And you have a third stage in the finished dosage form, which has been perverted and subverted by tax havens. And so all of it -- you have to attack that on all three fronts. The first two -- the key starting materials and the API -- clearly both the FDA and the EPA can make a very significant difference in terms of reducing the time to production and therefore the cost of production. And to the extent that we are going to be able to leapfrog the traditional manufacturing model -- the only way that we are going to onshore successfully, on a long-term basis, our production of pharmaceuticals is through innovation. And the key to that is advanced and continuous manufacturing. So that's where we're at. Unfortunately, that phone call you just heard -- I got to run now, but I gave you a good half hour on this. Write a good story, and we’ll look forward to your coverage. And it's a great day for America. Thank you. MR. FIELDS: Thank you, everyone. This concludes the call. And just as a reminder, opening remarks and the question-and-answer portion were on the record. And, as always, direct further questions to the White House Press Office. Thank you and have a great day. END 9:34 A.M. EDT |
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