“Medicine Chest of the World”?

In an op-ed at the Wall Street Journal Arthus Herman urges the United States to become the “medicine chest of the world”, analogous to FDR’s “arsenal of democracy”:

y invoking the Defense Production Act, the administration can clear away bureaucratic impediments to an effective pandemic response. Just as FDR’s administration temporarily set aside antitrust standards so companies could band together to produce everything from aircraft parts to tanks and synthetic fuels, the Trump administration can encourage companies to pool their patents and intellectual property to increase production of key drugs and technologies.

Bringing together companies like Walgreens, Walmart and Google to streamline the Covid-19 testing process was a good first step toward making America safer and more secure against the growing pandemic. But there is much more the U.S. can do to mobilize its health-industrial and manufacturing base. It’s absurd that Italy must rely on China for emergency supplies of ventilators when America is home to major ventilator manufacturers like Vyaire, ResMed and Allied Healthcare Products. The Trump administration should work out a timeline with these medical-device makers to produce all the ventilators the world needs right here in the U.S. The same is true for respirators, swabs and other types of protective gear crucial to preventing a global health-care catastrophe.

Washington should also clear the way for the American pharmaceutical industry to develop and deploy therapies for Covid-19 until antiviral drugs, and ultimately a vaccine, are in place. Regeneron Pharmaceuticals of Tarrytown, N.Y., which developed a drug last year to combat Ebola, announced Tuesday it has made progress in the hunt for a Covid-19 treatment. Swift action by the Food and Drug Administration has already streamlined the approval process so that what might normally take two to three years will now happen in a matter of weeks.

The government’s first missions must be to keep Americans safe and to secure the U.S. economy as the mainspring of the global order. A Washington-led mobilization of the health-industrial and manufacturing base can also boost economic growth, just as the mobilization of the defense-industrial base did during World War II. “We won because we smothered the enemy in an avalanche of production, the like of which he had never seen, nor dreamed possible,” said Lt. Gen. William “Big Bill” Knudsen of the American war effort. Knudsen had been president of General Motors before Roosevelt asked him to direct the War Department’s production and procurement efforts.

I think that’s a much taller order than he may realize and, indeed, he may be trying to close the barn door after the horses have already bolted. In 1940 the U. S. did not import munitions. Indeed, the Congress enacted the Export Control Act to limit U. S. exports to other countries, particularly Japan.

The situation is nearly the opposite with respect to pharmaceuticals. Consider world exports here and world imports here. We import far more than we export and in all likelihood the primary impediment to our importing more are federal law and regulations.

And that only considers exports by dollar value not tonnage. I can’t prove it but I suspect that you will find U. S. exports dominated by relatively few high value pharmaceutical exports. If you’re looking for a “medicine chest of the world” that would probably be India which exports far more pharmaceuticals than it imports.

Could U. S. companies, which include most of the largest biomedical companies in the world, beef up domestic production to encourage exports? Probably but that would take more than relaxing a few regulations. It would require a major overhaul in management attitudes in those countries. And don’t expect German, French, Israeli, Chinese, and Indian pharmaceutical companies to stand still while that’s going on.

This isn’t the 1940s. We have competition from every major economy in the world.