Buy American final rule should strengthen medical supply chain
Beyond the pandemic, "Over the past several decades, supply chain disruptions have repeatedly plagued the U.S. healthcare system," report says.
Photo: Nitat Termmee/Getty Images
A final rule issued on Friday implements an executive order to spur domestic production of supplies, including products in the medical supply chain.
The Department of Defense, the General Services Administration and the National Aeronautics and Space Administration issued the final rule, which goes into effect on October 25. This rule increases the domestic content threshold for products, initially from 55% to 60%, then to 65% in calendar year 2024 and to 75% in calendar year 2029.
A number of respondents to the proposed rule said complying with the content thresholds would be difficult, if not impossible, because of a shortage of available domestic components and subcomponents.
In answer, the final rule stipulates that in the event the government does not receive any offers of domestic end products or if the domestic end products are of unreasonable cost it would treat the end products that have at least 55% domestic content as a domestic end product for evaluation purposes.
A couple of the respondents said they believed the higher domestic content thresholds would not promote U.S. manufacturing and would not accomplish the administration's stated objective, the final rule said.
WHY THIS MATTERS
The Buy American initiative should help expand domestic production of N95 masks, nitrile exam gloves and isolation gowns, items often manufactured overseas that were in short supply during peak surges of the COVID-19 pandemic.
To help prevent medical product shortages and ensure access to essential drugs and devices, the Food and Drug Administration should make information on medical product sourcing, manufacturing capacity and quality publicly available for all medical products for sale in the United States, the American Hospital Association said Thursday, citing a congressionally mandated report from the National Academies of Sciences, Engineering, and Medicine.
The report calls for the Office of the Assistant Secretary for Preparedness and Response to develop ways to better manage the Strategic National Stockpile and convene a stakeholder group to improve medical product allocation and delivery during shortages. It wants health systems to incorporate quality and reliability into their contracting, purchasing and inventory decisions and for countries to negotiate an international treaty that prohibits export bans on critical products, according to the AHA.
The Committee on Security of America's Medical Supply Chain, convened by the National Academies of Sciences, Engineering and Medicine, was charged with addressing the issue by examining the root causes of medical product shortages and identifying ways to enhance their resilience – both in so-called normal times and during public health emergencies.
"Over the past several decades, supply chain disruptions have repeatedly plagued the U.S. healthcare system, costing healthcare systems millions of dollars per year, threatening the clinical research enterprise, and most importantly, imperiling the health and lives of patients," the report said.
THE LARGER TREND
In his first week in office, President Joe Biden signed the executive order, "Ensuring the Future is Made in All of America by All of America's Workers," which launched the initiative to strengthen federal procurement to support American manufacturing.
With over $600 billion in annual procurement spending, the federal government is a major buyer for goods and services and is the single largest purchaser of consumer goods in the world, according to the final rule.
"Leveraging that purchasing power to shape markets and accelerate innovation is a key part of the Administration's industrial strategy to grow the industries of the future to support U.S. workers, communities, and firms," it said.
The proposed rule was published on July 30, 2021. It directed the Federal Acquisition Regulatory Council to strengthen the impact of federal procurement preferences in the Buy American statute for products and construction materials that are domestically manufactured from substantially all domestic content.
ON THE RECORD
Premier applauded the final rule and said it has long promoted domestic production of supplies and pharmaceuticals, but added, "Updates to the Federal Acquisition Regulation are a step in the right direction, but more needs to be done. Congress can advance domestic manufacturing by providing tax incentives to encourage makers of critical medical supplies and drugs to boost production on U.S. soil."
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
