RESISTING PROTECTIONISM IN THE PHARMACEUTICAL SUPPLY CHAIN

By Clark Packard and Bill Watson

INTRODUCTION

For about 80 years, the United States has aggressively pursued a policy of expanding overseas markets and lowering domestic tariffs and other non-tariff barriers. This process was achieved through a series of bilateral and regional free trade agreements (FTAs), as well as multilateral agreements through the World Trade Organization (WTO) and its precursor system, the General Agreement on Tariffs and Trade (GATT). Liberalizing international trade in this manner increased the U.S. Gross Domestic Product per capita by about $7,000 and by more than $18,000 (in 2016 dollars) per household.1 Not only that, the poor benefitted disproportionately because they tend to “concentrate spending in more traded sectors.”2 Through these agreements, American firms also were able to establish the certainty they needed to invest abroad, foreign firms invested here and a system of complicated supply chains quickly developed that lowered prices for consumers and enhanced the competitiveness of American firms in globalized markets.

Despite these successes, protectionist opponents on the left and right have long criticized the prevailing consensus for its effect on the domestic manufacturing base.3 “Offshoring,” critics contend, has favored multinational corporations at the expense of the working class.4 Critics also argue that, as a services-heavy economy, the United States is too dependent on imported products from hostile countries and that the U.S. “doesn’t make anything anymore.”5

But, these charges are largely untrue. Today, the United States is the second-largest exporter in the world.6 And, although manufacturing employment (as a percentage of the overall workforce) in the United States has declined, its peak occurred shortly after World War II and began declining in the late 1970s—“long before the North American Free Trade Agreement existed or Chinese imports were more than a rounding error in U.S. GDP.”7 In fact, before the outbreak of COVID-19, manufacturing output was near record highs.8 Instead, it is productivity gains and technological improvements that are the primary drivers of America’s shift away from labor-intensive manufacturing, not import competition or offshoring.9

Despite this reality, American politicians are increasingly interested in reshoring supply chains of various products, especially those deemed “strategic” or required for U.S. national security.10 Hawkish politicians are concerned about U.S. reliance on imports from China and have pushed the United States to embrace a new era of industrial policy.11 Such arguments have intensified since the outbreak of COVID-19, particularly with respect to pharmaceuticals and other products necessary to combat the pandemic. The justification is that non-allies may withhold exports of these critical products, particularly when we need them most. And, accordingly, the administration and Congress are currently considering ways to re-shore some or all of the pharmaceutical supply chain, including a blunt protectionist requirement for the federal government to purchase only pharmaceutical products that are made in the United States.12

Such “Buy American” proposals recently drew a stern rebuke from over 250 leading economists, including Nobel laureates and officials from previous presidential administrations, who warned in a letter organized by the National Taxpayers Union that: “The variety, supply and price of goods available to Americans will suffer under a Buy American regime. Taxpayers and patients will pay more for drugs and medical supplies.”13 And, in fact, any such risk is unnecessary, as there are ways to responsibly increase domestic manufacturing of various pharmaceuticals and active pharmaceutical ingredients (APIs) without resorting to misguided protectionism.

What’s more, to exploit this crisis as a way to radically overhaul pharmaceutical supply chains could be disastrous, especially if done in a haphazard way. For this reason, the present study first explains the costs of re-shoring pharmaceutical supply chains and the benefits of diversity. It then dispels the dubious national security arguments made by politicians, and makes concrete recommendations for the consideration of policymakers who wish to ensure a secure U.S. pharmaceutical supply chain, including steps to responsibly increase domestic production.

DISPELLING MYTHS

In a May 11 op-ed in The New York Times, U.S. Trade Representative Robert Lighthizer criticized the “blind pursuit of efficiency” that resulted in “extended, overseas supply lines.”14 He went on to accuse American businesses of following an offshoring “craze,” as they were “swept up by the herd mentality” and a “lemming-like desire for ‘efficiency’” but without adequately considering the risks that come when “long supply lines flow at the whim of local politics, labor unrest and corruption.” He then claimed that the pandemic “has revealed our over reliance on other countries as sources of critical medicines” and called on policymakers to “remedy this strategic vulnerability […] by shifting production back to the United States.”15

This general antipathy toward globalization has been further energized by concerns that the Chinese government has too much power over the American medical supply. Last December, for example, four U.S. senators warned that “overreliance on Chinese API exports raises the possibility that China could terminate or raise the cost of prescription drugs.”16 They further warned that the Chinese government could choose to “weaponize pharmaceuticals, by restricting exports to the United States” or “incorporating lethal ingredients in final products,” and concluded ominously that this “national security threat cannot be overstated.”17 In fact, such a threat is constantly and dramatically overstated, primarily because of the faulty assumption upon which it is based: namely, that our supply chain is over-reliant on China. Like all products created through complex global supply chains, understanding the country of origin for all components of a finished product can be challenging, and pharmaceuticals are certainly no exception. However, the promotion of false statistics is hardly helpful. For example, in the midst of the current pandemic, irresponsible policymakers and even mainstream media outlets persist in promoting the figure that “80 percent of our drugs come from China.”18 And, while that may sound scary (and is likely designed specifically for that purpose), it is simply false.19

To accurately analyze the source of drug imports is complicated in two important ways. One is the distinction between finished drugs and active pharmaceutical ingredients (APIs), which are the chemicals (like acetaminophen and dextromethorphan) used to make the drugs (like NyQuil) people actually consume. The second is the fact that both finished drugs and APIs are scattered across multiple product codes in national trade databases, and some of those codes include non-pharmaceutical products. It is therefore difficult to accurately estimate the true value and origin of API imports and impossible to know the origin of all APIs that are imported as existing components of finished drugs.

For at least the last 20 years, the FDA has “estimated” that imports from all foreign countries make up “approximately” 40 percent of finished drugs and 80 percent of APIs used by U.S. manufacturers of finished drugs.20 But, in addition to the fact that it is unclear how the agency arrived at this estimate, the number also does not tell us where the APIs in the imported drugs are coming from. And, what’s more, any reasonable attempt to approximate these values does not indicate that anything close to 80 percent of finished drugs—or even 80 percent of the APIs consumed by Americans—are made in China. For example, we know that Chinese manufacturers supply only a small share of the APIs used to make finished drugs in the United States, because the source of those imports is recorded in U.S. trade data. According to analysis by the American Action Forum, a mere “18 percent of total active pharmaceutical ingredient imports, 9 percent of total antibiotic imports, and less than 1 percent of total vaccine imports” come from China.21 In reality, the largest source of imported APIs is Ireland—at about 30 percent.22 And certainly no one would credibly claim that Ireland poses any national security threat to the United States.

Moreover, in recent testimony to Congress, even the director of the FDA’s drug division stated that the agency “cannot determine with any precision the volume of API that China is actually producing, or the volume of APIs manufactured in China that is entering the U.S. market.”23 They do, however, have data on the location of facilities registered with the agency to produce APIs for specific approved drugs. For example, the FDA reports that there are 1,788 facilities in the world that manufacture APIs for drugs consumed in the United States.24 Only 13 percent of these facilities are in China.25 India and the European Union actually produce more of these APIs—at 18 and 26 percent, respectively. Twentyeight percent of the facilities are located here in the United States.26 Of course, even looking at the number of facilities does not tell us the actual volume of APIs from each country, as some facilities may be producing vastly greater quantities than others. But the data we do have does not indicate an excessive reliance on China. On the contrary, it shows that the U.S. pharmaceutical market is served by a diverse array of suppliers from all over the world, including here at home. It also shows that these market-driven supply chains are not, as Ambassador Lighthizer argues, the result of an irrational craze to cut costs at the expense of jobs. In truth, globalization has enabled the U.S. pharmaceutical industry to become a dynamic driver of economic growth in the United States

In a global economy, it is true that the United States is not the best place to invest in large-scale, labor-intensive chemical manufacturing. But America has excelled at inventing new drugs that improve lives and at developing innovative manufacturing techniques that make drug treatments safer, more effective and more affordable. Indeed, the U.S. Dept. of Commerce’s most recent report on the state of the pharmaceutical market certainly does not describe an industry hollowed out by short-sightedness: “Large, diversified and global, the U.S. pharmaceutical industry is one of the most critical and competitive sectors in the economy.”27 The U.S. market for pharmaceuticals is enormous and the United States is indeed the world’s number one importer of finished drugs. But because most drugs made in the world are not consumed in America, the United States is also a major exporter.

While the industry was developing “extended, overseas supply lines,” the value of U.S. pharmaceutical exports tripled to over $50 billion per year.28 The U.S. Bureau of Labor Statistics estimates that approximately 300,000 Americans work in the pharmaceutical industry with a median wage 56 percent higher than the national average.29 This is only made possible by access to the very global network of suppliers that reshoring advocates want to eliminate.

And global supply chains have also not made the market more vulnerable to disruption—intentional or otherwise. Supply chain risk is a well-studied phenomenon, and experts have not found that reliance on domestic production and short supply lines is the best way to avoid risk.30 The robustness of a supply chain (that is, its ability to continue operating when faced with an unforeseen disruption like a natural disaster) can be negatively affected by complexity because it takes more resources and oversight to maintain operations.31 But robustness can also be harmed by geographic concentration because a greater portion of the system is susceptible to a single incident.32 It makes sense, therefore, for companies to seek a diverse network of suppliers and potential suppliers with constant knowledge of their relative capacities. Forcing pharmaceutical companies to rely only on U.S. suppliers would likely expose their operations to greater risk of disruption by prohibiting them from adequately spreading risk.

Rather than reveal dangerous vulnerabilities, the coronavirus pandemic has actually demonstrated that supply lines for the U.S. pharmaceutical market are quite robust compared to other industries. We have seen notable problems in markets for face masks, household goods and food, but the U.S. medicine supply has been almost entirely unaffected. In fact, in its most recent update on the status of drug supplies during the COVID-19 outbreak, the FDA stated that only one drug had been added to the drug shortage list due to a pandemic related factory shutdown in China and that “there are other alternatives that can be used by patients.”33 The agency also identified only 20 drugs (all non-critical) with APIs sourced only from China, and none of those had reported any short-ages.34 Put simply, the evidence to date strongly suggests that the U.S. pharmaceutical supply chain is adequately diverse and robust in the face of unforeseen disruption. Efforts to re-shore all manufacturing of APIs is therefore likely to do more harm than good.

COSTS OF PHARMACEUTICAL AUTARKY

Because of the complex and efficient pharmaceutical supply chains that have developed over the years, prices of prescription drugs are lower than they would be if they were entirely manufactured in the United States. With a growing bipartisan chorus of policymakers in the Trump administration and Congress looking at ways to reduce drug prices, reshoring the entire pharmaceutical supply chain would not only undermine that worthwhile goal, but would raise drug prices.35

In fact, there are a number of reasons why the United States imports finished pharmaceuticals and active pharmaceutical ingredients, which include tax laws, simple comparative advantage and access to raw materials.36 Indeed, a 2011 study from the Food and Drug Administration noted:

Both India and China offer a number of cost advantages, most notably the cost of skilled labor. India in particular trains six times the number of chemists annually than the U.S. produces and companies can access this talent for 10% of the cost of the same talent in America.37

The study also finds that manufacturing in India, for example, can “reduce costs for U.S. and European companies by 30 to 40%.”38 These cheaper production costs mean cheaper drug prices for American consumers. If the United States were to entirely re-shore the pharmaceutical supply chain, it would dramatically increase prescription drug costs for American purchasers, including individuals, federal and state governments, hospitals and insurance companies.

Ironically, forced re-shoring could also bring about the exact result its proponents fear from Chinese interference. That is, by prohibiting American patients, pharmacists and doctors from acquiring safe and effective medicines available on the global market merely because they have a Chinese or other foreign ingredient, the U.S. government may cause the very shortages and price hikes it fears could result from malevolent foreign action. Consider, for example, the recent recall of metformin. Americans managing Type 2 diabetes spend over $3 billion per year filling prescriptions for metformin.39 After the FDA discovered potentially unsafe levels of nitrosamine in some batches of the drug, numerous drug makers pulled their metformin pills off the market.40 But the recall is not expected to affect patients at all because, according to the FDA, “there are additional manufacturers of the metformin ER formulation that supply a significant portion of the U.S. market, and their products are not being recalled.”41 Without access to global supplies, a single instance like this of drug contamination at a manufacturing plant would severely cut the nation’s supply and force patients to go without treatment. Instead, the FDA merely advises anyone currently taking one of the recalled products to “consult with their health care professional who can prescribe a replacement.”42

OVERVIEW OF CURRENT PROPOSALS

Even before the outbreak of COVID-19, policymakers had already begun proposing government interventions in the pharmaceutical chain in order to minimize or eliminate the role of Chinese manufacturing. For example, in October 2019, the House Energy and Commerce Committee held a hearing following a report from the U.S.–China Economic and Security Review Commission, which warned that the Chinese could “use U.S. dependence on China as an economic weapon and cut supplies of critical drugs.”43 That report made a number of recommendations, including additional monitoring and reporting by the FDA, mandatory country-of-origin labels for API and a requirement that all federally funded health systems (including Medicare and Medicaid) “purchase their pharmaceuticals only from U.S. production facilities” subject to some broad exceptions.44 It’s also worth noting that some of the recommendations are directed at all imported drugs and APIs instead of just ones from China, which certainly suggests that protectionism rather than national security is the true motivation behind such measures.

Moreover, a number of bills have been proposed recently in Congress that would enact reforms similar to one or more of the report’s recommendations. The most appropriate, common-sense proposals offered so far in Congress are ones meant to improve our knowledge of the existing supply arrangement through enhanced monitoring and reporting.45 Such knowledge may assuage rising anxiety about Chinese dominance but, even if it does not, a better understanding of the situation is crucial for government planners trying to redesign any major American industry.

In addition to this, a provision of the already enacted CARES Act calls for a report by the National Academies of Sciences, Engineering and Medicine to examine the current state of pharmaceutical and medical device supply chains and to recommend ways to improve resiliency.46 Other bills have called on the FDA to track API production with greater detail so we can know the volume of APIs originating in every country for each approved drug.47 Some proposals seek to promote domestic manufacturing of APIs through targeted tax breaks, grants or regulatory reform. One example of this approach is Senator Marsha Blackburn’s (R-Tenn.) “Securing America’s Medicine Cabinet Act,” which would reform the FDA’s Emerging Technology Program in order to fast-track the approval of new manufacturing methods that could help prevent supply chain disruptions.48

A number of more drastic proposals have been offered that would actively restrict access to drugs with foreign-sourced APIs. One ambitious example is the “Protecting our Pharmaceutical Supply Chain from China Act” proposed by Sen. Tom Cotton (R-Ark.) and Rep. Mike Gallagher (R-Wis.). In addition to having the FDA better track the origin of APIs, requiring country-of-origin information on labels and giving tax breaks to companies expanding domestic manufacturing, the bill would also prohibit U.S. government entities from buying any drugs made from APIs produced in China.49 Such a policy would undoubtedly incentivize pharmaceutical companies to source APIs from elsewhere, but it would also deny patients at VA and other federal hospitals access to drugs. The result would be healthcare decisions driven by industrial policy rather than medical needs. It would also expand the gap between private and public health systems, with the latter burdened by politically motivated inefficiencies that raise costs and reduce the quality of care.

POLICY RECOMMENDATIONS

Sen. Marco Rubio (R-Fla.) has offered a similarly broad bill with four Democratic co-sponsors that also employs a Buy-American strategy but is less targeted at China specifically. Their “Strengthening America’s Supply Chain and National Security Act” would deny any Buy American preferences to U.S.-manufactured drugs made with foreign-sourced APIs.50 Rather than embracing aggressive protectionism through Buy American requirements for federal pharmaceutical purchases, there are better ways to ensure the security of the supply chain and provide proper incentives to re-shore some portions of it to maintain affordable pharmaceuticals and a globally competitive industry. The following sections outline some of the most effective strategies.

Get better data and a clearer picture

As a preliminary matter, better data is needed before policymakers can truly make informed decisions about the future of the pharmaceutical supply chain. Data exists to determine the exact portion of imported APIs used by U.S. drug manufacturers and the countries from which they come. But, there is no data to determine the portion of APIs and their countries of origin used by foreign drug manufacturers exporting to the United States. In order to rectify this, Congress could mandate the disclosure of APIs to the FDA for any drug exported to the United States by foreign drug manufacturers. If such a method is adopted, precautions should be taken to ensure that trade secrets are protected.

Likewise, as mentioned, the CARES Act, passed by Congress in March 2020, requires the National Academies of Science, Engineering and Medicine to perform a study on the security of the pharmaceutical supply chain.51 Rather than exploiting a crisis to make swift and dramatic changes without a clear picture, policymakers should wait for and then use this study to carefully craft an appropriate response.

Lead the charge for liberalization

Since World War II, the United States has been the global leader in the creation and cultivation of the rules-based trading system. The bulwark of this system is the WTO. Every president from Harry Truman to Barack Obama was largely supportive of the WTO and its predecessor, the GATT. Today, that is not the case. The Trump administration has a wellknown antipathy for the Geneva-based forum.52

To be sure, the WTO’s negotiating function has been stuck in neutral for the last several years.53 This is partially understandable, as new rules are necessary to cover various disciplines, such as trade in digital products, that have risen in popularity with the emergence of internet-based commerce but were not accounted for originally. With the outbreak of COVID-19, there is an opportunity for the WTO to reestablish itself as the primary forum for crafting new rules to facilitate predictable rules-based trade in pharmaceutical and other medical products. As the world’s largest economy, the United States should play a leading role in facilitating such trade negotiations.

Additionally, Phil Hogan, the European Union’s Trade Commissioner, recently proposed a global trade negotiation that seeks to “permanently eliminate tariffs on medical goods needed to respond to the COVID-19 health crisis.”54 While lowering tariffs on pharmaceuticals and other medical supplies would be good, it does not go far enough. The larger concern during emergencies is that countries will restrict exports in an attempt to ensure sufficient quantities of certain products are available for domestic consumption. Since the outbreak of COVID-19, about 70 countries have imposed export restrictions on certain medical supplies.55 Unfortunately, WTO rules largely work to restrict only import protectionism, not export protectionism, both of which tend to proliferate during crises and economic downturns.

For these reasons, the United States should be leading the 163 other countries in the WTO to create new rules that prohibit restricting exports of pharmaceuticals and medical supplies during outbreaks.56 Such a move is not unprecedented; in April 2020, the agriculture ministers of the G-20 countries, including the United States, issued a pledge to prohibit food and agricultural export restrictions during the COVID-19 pandemic.57 Likewise, during the financial crisis of 2008, the United States and the other G-20 members issued a pledge that for the next year, they would “refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports.”58

If multilateral WTO negotiations to prohibit export restrictions of medical equipment and pharmaceuticals during emergencies are too difficult, too time consuming or face intractable opposition from, say, China, the United States could pursue plurilateral negotiations with some, but not all, WTO members. The United States would likely find willing partners with close allies like Australia, the European Union, Mexico, Canada, Japan, the United Kingdom, Taiwan, Israel and India. Such a group of close U.S. allies could agree not to impose export restrictions and other protectionist measures on medical supplies and pharmaceuticals during emergencies such as pandemics and natural disasters.

Outside the WTO context, the United States should include similar prohibitions on export restrictions during emergencies in future free-trade agreement (FTA) negotiations and consider narrowly revising existing FTAs to include such language.

Another possibility would be for the United States to rejoin the Trans-Pacific Partnership (TPP), a promising trade pact between Pacific Rim nations that President Trump abandoned.59 A primary goal of the TPP was to establish better and more reliable trading relationships with a number of Asian countries in China’s orbit. Rejoining the TPP would therefore strengthen Asian supply chains and provide an alternative to reliance on China. As part of rejoining the TPP, the United States could insist on a provision that would prohibit export restrictions on pharmaceuticals and other medical supplies. It could also look to expand the trade bloc by negotiating accession with countries like India and Taiwan. All of these options are consistent with existing WTO obligations and are preferable to crude attempts to re-shore the entire pharmaceutical supply chain.

Offer full expensing for manufacturing facilities

However, if the goal is to re-shore some of the pharmaceutical supply chain, there are positive steps policymakers can take. As part of the Tax Cut and Jobs Act (TCJA) passed in late 2017, Congress provided temporary full expensing of short-lived investments through 2022, which will phase out entirely by 2026.60 This means that when a firm makes a short-term investment, it can write off the full value of the investment from its tax liability in the year of the investment, rather than phasing it out as the asset depreciates. In order to qualify for full immediate expensing, the asset must have a cost-recovery period of 20 years or less.61

In order to make the United States a more attractive and competitive country in which to produce pharmaceuticals and APIs, policymakers should consider making full expensing permanent and applying it to long-term investments like non-residential structures or manufacturing facilities. This would provide an incentive for pharmaceutical manufacturers to open production facilities in the United States or to move facilities from overseas. Recent legislation was introduced in the House of Representatives that would provide this type of tax treatment to medical supply companies and pharmaceutical manufacturers for their non-residential real-property investments.62 Such a tax change is vastly superior to protectionist Buy American schemes.

Improve tax treatment of research and development costs

Currently, when an American firm makes investments into research and development (R&D), it can deduct those costs from its tax liability during the year in which they occur. This is the right policy. But under the TCJA, Congress mandated that beginning in 2022, firms making R&D investments must amortize those expenses over a five-year period. As the National Taxpayers Union Foundation has noted:

The policy will raise the cost of investments in research and development, meaning companies will be less likely to do R&D. That means less innovation and new technologies for the U.S. economy, leading to lower levels of productivity, lower wages, and a smaller economy.63

In order to incentivize more domestic production of pharmaceuticals and APIs, Congress should correct the TCJA’s treatment of R&D expenses. Full, immediate expensing is vastly preferable to an amortized approach, given the time-value of money.

Deregulate

The regulatory review process for building a pharmaceutical manufacturing facility can be cumbersome, time consuming and costly. If policymakers decide it is important to re-shore some portion of the pharmaceutical supply chain, the FDA should expedite and streamline the approvals of such facilities in order to eliminate costly delays and duplication.

Stockpile essential medicines

In addition to the measures already suggested, the federal government should identify and stockpile essential medicines in a deliberate and careful manner. A recent study by the Mercatus Center argues that policymakers should be utilizing the Defense Production Act to establish purchase guarantees for certain medical equipment necessary to combat COVID-19—along with targeted deregulation—in order to bolster production.64 A similar approach could be used to secure sufficient quantities of essential drugs.

By providing purchase commitments for the essential pharmaceuticals at above-market prices for a sustained period of time, the federal government can provide the proper marketbased incentives to significantly increase the supply of such drugs. Admittedly, the shelf-life of pharmaceuticals is probably shorter than protective masks, but the drugs could be purchased on a more regular basis than other medical equipment. Alternatively, companies could hold the extra stock and cycle in and out of their supplies. In other words, the government would be paying companies to have a rolling surplus of those pharmaceuticals that are deemed essential.

CONCLUSION

The simple reality is that the United States cannot—and should not—produce all pharmaceuticals domestically. Importing finished pharmaceuticals and APIs helps keep costs down. Existing pharmaceutical supply chains are diverse and produce benefits that accrue to American consumers. Exploiting the COVID-19 pandemic to haphazardly undo these supply chains would be a grave mistake that could result in higher prices or shortages of various drugs.

At the same time, if policymakers are concerned that the United States is too dependent on China for pharmaceuticals and APIs, there are steps they can take to lessen that dependence without resorting to costly pharmaceutical autarky or aggressive protectionism. The United States could go a long way toward ensuring a secure supply of pharmaceuticals by exerting global leadership through trade negotiations with like-minded allies. Likewise, policymakers can bolster

FOOTNOTES

1. Gary Clyde Hufbauer and Zhiyao (Lucy) Lu, “The Payoff to America from Globalization: A Fresh Look with a Focus on Cost to Workers,” The Peterson Institute for International Economics, May 2017. https://piie.com/system/files/documents/pb17-16.pdf.

2. Pablo D. Fajgelbaum and Amit K. Khandelwal, “Measuring the Unequal Gains from Trade,” The Quarterly Journal of Economics 131:3 (August 2016), pp. 1113-80. https://academic.oup.com/qje/article-abstract/131/3/1113/2461162?redirectedFrom=fulltext.

3. See, e.g., Tom Hamburger, Carol D. Leonnig, and Zachary A. Goldfarb, “Obama’s record on outsourcing draws criticism from the left,” The Washington Post, July 9, 2012. https://www.washingtonpost.com/business/economy/obamas-record-on-outsourcing- draws-criticism-from-the-left/2012/07/09/gJQAljJCZW_story.html; Patrick J. Buchanan, “Is Free Trade Falling Out of Fashion,” Buchanan.org, Feb. 18, 2004. https://buchanan.org/blog/pjb-is-free-trade-falling-out-of-fashion-578.

4. Robert E. Lighthizer, “The Era of Offshoring U.S. Jobs is Over,” The New York Times, May 11, 2020. https://www.nytimes.com/2020/05/11/opinion/coronavirus-jobs-offshoring.html.

5. Chris Wallace, “Interview with Donald Trump,” Fox News Sunday, Oct. 18, 2015. https://www.youtube.com/watch?v=aXqEcU0W5JI.

6. Jeff Desjardins, “These are the world’s biggest exporters,” World Economic Forum,June 25, 2018. https://www.weforum.org/agenda/2018/06/these-are-the-worldsbiggest-exporters.

7. Scott Lincicome, “The Truth about Trade,” National Review, April 4, 2016. https://www.nationalreview.com/2016/04/trade-jobs-free-trade-hurting-american-economy.

8. Laura Beth Harris, “Manufacturing Output Hits All-Time High, Signaling Industry’s Strength,” National Association of Manufacturers, July 29, 2019. https://www. nam.org/manufacturing-output-hits-all-time-high-signaling-industrys-strength-5546/?stream=workforce.

9. Michael J. Hicks and Srikant Devaraj, “The Myth and the Reality of Manufacturing in America,” Ball State University, April 2017. https://conexus.cberdata.org/files/Mfg-Reality.pdf.

10. Olivia Beavers, “Momentum grows to change medical supply chain from China,” The Hill, April 5, 2020. https://thehill.com/policy/national-security/491119-momentum-grows-to-change-medical-supply-chain-from-china.

11. Marco Rubio, “We Need a More Resilient American Economy,” The New York Times, April 20, 2020. https://www.nytimes.com/2020/04/20/opinion/marco-rubio-coronavirus-economy.html.

12. Ana Swanson, “Coronavirus Spurs U.S. Efforts to End China’s Chokehold on Drugs,” The New York Times, March 11, 2020. https://www.nytimes.com/2020/03/11/business/economy/coronavirus-china-trump-drugs.html.

13. Economists’ Letter to President Trump, Speaker Pelosi and Leader McConnell, May 2020. https://www.ntu.org/library/doclib/2020/05/economist-letter-2-.pdf.

14. Robert Lighthizer, “The Era of Offshoring U.S. Jobs is Over,” The New York Times, May 11, 2020. https://www.nytimes.com/2020/05/11/opinion/coronavirus-jobs-offshoring. html.

15. Ibid.

16. Sen. Elizabeth Warren et al., Letter to Mark T. Esper, Dec. 5, 2019. https://www.warren.senate.gov/imo/media/doc/2019.12.05%20Letter%20to%20DoD%20re%20pharmaceutical%20product%20supply%20chain.pdf.

17. Ibid.

18. Eric Boehm, “Why You Shouldn’t Trust Anyone Who Claims 80 Percent of America’s Drugs Come From China,” Reason, April 6, 2020. https://reason.com/2020/04/06/why-you-shouldnt-trust-anyone-who-claims-80-percent-of-americas-drugs-come-from-china.

19. Ibid.

20. See, e.g., “Food and Drug Administration: Improvements Needed in the Foreign Drug Inspection Program,” U.S. General Accounting Office, March 17, 1998, p. 1. https://www.gao.gov/assets/230/225564.pdf; “Drug Safety: FDA Has Improved Its Foreign Drug Inspection Program, but Needs to Assess the Effectiveness and Staffing of its Foreign Offices,” U.S. General Accounting Office, Dec. 16, 2016, p. 1. https://www.gao.gov/assets/690/681689.pdf.

21. Jacqueline Varas, “U.S. Dependence on Chinese Pharmaceuticals is Overstated,” American Action Forum, May 20, 2020. https://www.americanactionforum.org/insight/u-s-dependence-on-chinese-pharmaceuticals-overstated.

22. Ibid.

23. Statement of Janet Woodcock, “Safeguarding Pharmaceutical Supply Chains in a Global Economy,” House Committee on Energy and Commerce, Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives, 116th Congress, Oct. 30, 2019. https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/Testimony-Woodcock-API_103019.pdf.

24. Ibid.

25. Ibid.

26. Ibid.

27. International Trade Administration, “2016 Top Market Report: Pharmaceuticals,” U.S. Dept. of Commerce, 2016, p.3. https://legacy.trade.gov/topmarkets/pdf/Pharmaceuticals_Executive_Summary.pdf.

28. “U.S. Biopharmaceutical Goods Export Volume from 2002 to 2018,” Statista, lastaccessed June 8, 2020. https://www.statista.com/statistics/215814/us-biopharmaceutical-export-volume.

29. U.S. Bureau of Labor Statistics, “May 2019 National Industry-Specific Occupational Employment and Wage Estimates: NAICS 325400 – Pharmaceutical and Medicine Manufacturing,” U.S. Dept. of Labor, May 2019. https://www.bls.gov/oes/2019/may/naics4_325400.htm.

30. Sébastien Mirodout, “Resilience Versus Robustness in Global Value Chains: Some Policy Implications,” Richard Baldwin and Simon Evenett eds., COVID-19 and Trade Policy: Why Turning Inward Won’t Work (CEPR Press, 2020), p. 123. https://voxeu.org/content/covid-19-and-trade-policy-why-turning-inward-won-t-work.

31. Christian F. Durach et al., “Antecedents and Dimensions of Supply Chain Robustness:A Systematic Literature Review,” International Journal of Physical Distributionand Logistics Management 45:1 (2015), pp. 125-32.

32. Ibid.

33. U.S. Food and Drug Administration, “Coronavirus (COVID-19) Supply Chain Update,” Press Release, Feb. 27, 2020. https://www.fda.gov/news-

34. Ibid.

35. Yasmeen Abutaleb and Erica Warner, “Trump’s support for bipartisan Senate drug pricing bill may not be enough to push it into law,” The Washington Post, Feb. 18, 2020. https://www.washingtonpost.com/health/2020/02/18/trumps-support-bipartisan-senate-drug-pricing-bill-might-not-be-enough-push-it-into-law.

36. Sally C. Pipes, “Proposed ‘Buy American’ Requirements Would Hurt Patients and the Economy,” Pacific Research Institute, April 2020, p. 6. https://www.pacificresearch. org/wp-content/uploads/2020/04/BuyAmerica_F.pdf.

37. “Pathway to Global Product Safety and Quality,” U.S. Food and Drug Administration, 2011, p. 20.

38. Ibid.

39. Richard Franki, “Top-selling drugs going to patients with diabetes,” MDEdge, March 12, 2018. https://www.mdedge.com/cardiology/article/160612/diabetes/topsellingdrugs-going-patients-diabetes.

40. David J. Neal, “Diabetes medicine recalled for having too much of a carcinogen. More recalls are likely,” Miami Herald, May 29, 2020. https://www.miamiherald.com/news/health-care/article243081016.html.

41. U.S. Food and Drug Administration, “FDA Alerts Patients and Health Care Professionals to Nitrosamine Impurity Findings in Certain Metformin Extended-Release Products,” Press Release, May 28, 2020. https://www.fda.gov/news-events/pressannouncements/fda-alerts-patients-and-health-care-professionals-nitrosamineimpurity-findings-certain-metformin.

42. Ibid.

43. “2019 Annual Report,” U.S.-China Economic and Security Review Commission, Nov. 14, 2019, p. 248. https://www.uscc.gov/annual-report/2019-annual-report.

44. Ibid., p. 249.

45. See, e.g., H.R. 5982, Safe Medicine Act, §3, 116th Congress.

46. CARES ACT, Sec. 3101.

47. See, e.g., H.R. 6049, Medical Supply Chain Security Act, §2(a)(5), 116th Congress.

48. S. 3432, Securing America’s Medicine Cabinet Act of 2020, 116th Congress.

49. Office of Sen. Tom Cotton, “Cotton, Gallagher Introduce Bill to End U.S. Dependence on Chinese-Manufactured Pharmaceuticals,” Press Release, March 18, 2020. https://www.cotton.senate.gov/?p=press_release&id=1342.

50. Office of Sen. Marco Rubio, “Rubio, Colleagues Introduce the Strengthening America’s Supply Chain and National Security Act,” Press Release, March 19, 2020. https://www.rubio.senate.gov/public/index.cfm/2020/3/rubio-colleagues-introducethe-

51. Section 3101 of Public Law 116-136.

52. See, e.g., Lauren L. Rollins and Clark Packard, “Trump is Trying to Dismantle the WTO. That Can’t Happen,” The Bulwark, April 26, 2019. https://thebulwark.com/trump-is-trying-to-dismantle-the-wto-that-cant-happen; Clark Packard, “Trump’s Real Trade War Is Being Waged on the WTO,” Foreign Policy, Jan. 9, 2020. https://foreignpolicy.com/2020/01/09/trumps-real-trade-war-is-being-waged-on-the-wto.

53. See, e.g., Clark Packard, “Crisis and Opportunity: The Multilateral Trading System at a Crossroads,” R Street Policy Study No. 167, March 2019. https://www.rstreet.org/wp-content/uploads/2019/03/Final-167.pdf.

54. Bryce Baschuk, “Europe Seeks to Abolish Tariffs in $597 Billion Medical Trade,” Bloomberg, April 16, 2020. https://www.bloomberg.com/news/articles/2020-04-16/europe-seeks-to-abolish-tariffs-in-597-billion-medical-trade.

55. Jason Douglas, “As Countries Bar Medical Exports, Some Suggest Bans May Backfire,” The Wall Street Journal, April 4, 2020. https://www.wsj.com/articles/ascountries-bar-medical-exports-some-suggest-bans-may-backfire-11585992600.

56. Dr. Mona Pinchis-Paulsen, “Thinking Creatively and Learning from COVID-19—How the WTO can Maintain Open Trade on Critical Supplies,” OpinioJuris, April 2, 2020. https://opiniojuris.org/2020/04/02/covid-19-symposium-thinking-creatively-andlearning-from-covid-19-how-the-wto-can-maintain-open-trade-on-critical-supplies.

57. Agriculture Ministers, “Ministerial Statement on COVID-19,” G-20, April 21,2020.https://g20.org/en/media/Documents/G20_Agriculture%20Ministers%20Meeting_Statement_EN.pdf.

58. Chad P. Bown, “COVID-19 Could Bring Down the Trading System,” Foreign Affairs, April 28, 2020. https://www.foreignaffairs.com/articles/united-states/2020-04-28/covid-19-could-bring-down-trading-system.

59. Note: the TPP moved forward without the United States. It is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

60. Erica York and Alex Muresianu, “The TCJA’s Expensing Provision Alleviates the Tax Code’s Bias Against Certain Investments,” Tax Foundation, Sept. 5, 2018. https://taxfoundation.org/tcja-expensing-provision-benefits.

61. Ibid.

62. H.R. 6690, The Beat China Act, 116th Cong.

63. Nicole Kaeding, “Correcting the TCJA’s Mistreatment of R&D Costs,” National Taxpayers Union Foundation, Oct. 8, 2019. https://www.ntu.org/foundation/detail/correcting-the-tcjas-mistreatment-of-rd-costs.

64. Caleb Watney and Alec Stapp, “Masks for All: Using Purchase Guarantees and Targeted Deregulation to Boost Production of Essential Medical Equipment,” Mercatus Center, April 8, 2020.https://www.mercatus.org/system/files/watney_and_stapp_-_policy_brief_-_covid_series_-_masks_for_all_-_v1.pdf.

Protect Our Free-Market, Consumer-Based Medicare Part-D Plans

Author: Ron Hall

Over the past year, we have all learned the critical importance of maintaining the integrity of our prescription drugs supply chains.

With over 90% of prescription drugs now generic, the need to keep drug prices low has driven manufacturing and raw materials procurement to India and China.

Our experiences during the COVID-19 crisis prove the global supply chain is simply not reliable. It is too vulnerable to population health distortions, political pressure, and volatile market conditions.

The United States has the highest prescription drug costs in the world. Because of this, seniors are burdened. Most seniors like myself, live on fixed incomes and depend on Medicare Part D to control their costs. Almost 20% of Arizona’s population is over 65 and we all share responsibility for ensuring their needs are met.

In 2006, Congress created a prescription drug benefit known as Medicare Part D.  Today, it benefits Arizona seniors when they purchase a stand-alone prescription drug plan or enroll in a Medicare Advantage Plan, similar to an HMO. 

Every year, seniors can choose the Part D or Medicare Advantage Plan that best suits their individual needs. 

To attract seniors, plans must deliver on both price and service. Since low monthly premiums and co-pays appeal to seniors, plans have an incentive to negotiate with drug manufacturers.

Consumer choice and free-market competition, which are the backbone of Part D’s design, have resulted in a government benefit with impressive satisfaction rates above 90%. In addition, the cost to the Medicare Trust Fund and seniors, as measured by the average monthly premium, are substantially less than predicted when Part D became law. A claim few, if any, government benefit programs can make. 

At a time when we are depending on America’s innovative technologies and scientists to develop therapeutics and vaccines that treat or prevent COVID-19, we are reminded that many seniors also depend on lifesaving pharmaceuticals and must be able to afford them.

Congress is considering a few policy changes that don’t undermine the intent of Part D and Medicare Advantage plans – a free-market, consumer choice for all seniors.

These new policy changes include two bills; S. 3129 presented by Senator Mike Crapo and H.R. 19 from Congressman Greg Walden. They include provisions that cap annual out of pocket costs, allow deductible payments over 12 months, and drastically lower the price of insulin. They also make sure the savings, which plans negotiate with drug companies, are passed directly onto enrolled seniors.

Smart solutions to lowering drug costs must provide relief to seniors without throttling research and slowing the introduction of new therapies and cures. 

In the midst of the COVID-19 pandemic, we are proud of the thousands of Arizonans who work and contribute to the thriving biopharmaceutical and biotech industries across the state.

Within weeks of the COVID-19 outbreak, Arizona innovators and university partners began protective equipment while therapeutics and vaccines were fast-tracked into clinical trials.

The eyes of the world are focused on Arizona’s success in urgently deploying collaborative, pragmatic solutions that benefit Americans and protect public health.

Our quick actions have not only accelerated the sustaining economic value of innovation in our local communities but prove that onerous regulations and oppressive government oversight often inhibit access to essential needs and modern technologies.

This pandemic is teaching us a lot about what we must do to prepare for the future, but it is also reminding us of what we should NOT do.

I’m grateful we are focused on building a better Arizona, together.

Ron Hall is a medicare part-d patient and republican living in Congressional District 5.

President Trump worked with drug manufacturers to lower insulin co-pays to $35

Recently, under President Trump’s leadership, the Centers for Medicare & Medicaid Services (CMS) announced that over 1,750 standalone Medicare Part D prescription drug plans and Medicare Advantage plans with prescription drug coverage have applied to offer lower insulin costs through the Part D Senior Savings Model for the 2021 plan year. Across the nation, participating enhanced Part D prescription drug plans will provide Medicare beneficiaries access to a broad set of insulins at a maximum $35 copay for a month’s supply, from the beginning of the year through the Part D coverage gap. The model follows on the Trump Administration’s previously announced 13.5 percent decline in the average monthly basic Part D premium since 2017 to the lowest level in seven years.

Currently, Part D sponsors may offer prescription drug plans that provide lower cost-sharing in the coverage gap; however, when they do, the Part D sponsor accrues costs that pharmaceutical manufacturers would normally pay. These costs are then passed on to beneficiaries in the form of higher premiums. The new insulin model directly addresses this disincentive by doing two things: 1) allowing manufacturers to continue paying their full coverage gap discount for their products, even when a plan offers lower cost-sharing; and 2) requiring participating Part D sponsors’ plans, in part through applying manufacturer rebates, to lowering cost-sharing to no more than $35 for a month’s supply for a broad set of insulins.

Under President Trump’s leadership, for the first time, CMS is enabling and encouraging Part D plans to offer fixed, predictable copays for beneficiaries rather than leaving seniors paying 25 percent of the drug’s cost in the coverage gap. Both manufacturers and Part D sponsors responded to this market-based solution in force and seniors that use insulin will reap the benefits.

Based on CMS’s estimates, beneficiaries who use insulin and join a plan participating in the model could see average out-of-pocket savings of $446, or 66 percent, for their insulins, funded in part by manufacturers paying an estimated additional $250 million of discounts over the five years of the model. With a robust voluntary response from Part D sponsors, CMS anticipates beneficiaries will have Part D plan options in all 50 states, the District of Columbia, and Puerto Rico, through either a standalone prescription drug plan (PDP) or a Medicare Advantage plan with prescription drug coverage. Beneficiaries will be able to enroll during Medicare open enrollment, which is from October 15, 2020 through December 7, 2020, for Part D coverage that begins on January 1, 2021.

“President Trump has forged partnerships with pharmaceutical manufacturers and plans to deliver lower priced insulin to our nation’s seniors,” said CMS Administrator Seema Verma. “This market-based solution, in which insulin manufacturers and Part D sponsors compete to provide lower costs and higher quality for patients, will allow seniors to choose a Part D plan that covers their insulin at an average 66 percent lower out-of-pocket cost throughout the year.”

The Part D Senior Savings Model – which was announced on March 11, 2020 – is a voluntary model that tests the impact on insulin access and care by participating Part D enhanced alternative plans offering lower out-of-pocket costs, at a maximum $35 copay for a month’s supply, for a broad range of insulins.

Part D sponsors that participate in the model will offer beneficiaries Part D prescription drug plans that provide supplemental benefits for a broad range of insulins, including both pen and vial dosage forms for rapid-acting, short-acting, intermediate-acting, and long-acting insulins. Participating pharmaceutical manufacturers will continue to pay their current 70 percent discount in the coverage gap for their insulins that are included in the model, and based on the model’s waiver of current regulations, those manufacturer discount payments will be calculated before the application of supplemental benefits under the model – which will reduce the out-of-pocket cost of insulin for Medicare beneficiaries.

One in every three Medicare beneficiaries has diabetes, and over 3.3 million Medicare beneficiaries use one or more of the common forms of insulin. For some of these beneficiaries, access to insulin is a critical component of their medical management, with gaps in access increasing risk of serious complications, ranging from vision loss to kidney failure to foot ulcers to heart attacks. Unfortunately, the costs of insulin can be a major barrier to appropriate medical management of diabetes.

A beneficiary’s out-of-pocket costs for insulin in Medicare’s Part D prescription drug benefit can fluctuate from one month to the next, in part due to the different rules applying for each phase of the Part D benefit. This can be challenging for beneficiaries when budgeting for their drug costs. These challenges can in turn lead to beneficiaries not being able to afford their medicine or resorting to medication rationing, resulting in worse health outcomes over time. The model aims to address this with stable, predictable costs for insulin that beneficiaries know up front by staying in or choosing a model-participating plan during open enrollment.

Part D sponsors that applied must submit their calendar year 2021 plan benefits to CMS by June 1, 2020 to designate their participation in the model. CMS anticipates releasing the premiums and costs for specific Medicare health and drug plans for the 2021 calendar year in September 2020, including final information on the model.

Beneficiaries will be able to find a Part D plan participating in the Part D Senior Savings Model in the 2021 plan year through the Medicare Plan Finder on Medicare.gov during the annual open enrollment period, which begins on October 15, 2020 and ends December 7, 2020. CMS will enhance the Medicare Plan Finder to include a filter to identify plans that will offer capped out-of-pocket costs for insulin in the model so beneficiaries can easily find those plans during open enrollment in the Fall. The Medicare Plan Finder, which was upgraded for the first time in a decade last year, is the most used tool on Medicare.gov and allows users to shop and compare Medicare Advantage and Part D plans.

The Part D Senior Savings Model builds on steps the Trump Administration has already taken to strengthen Medicare and improve the quality of care for patients with diabetes. CMS has taken the following actions to address the needs of beneficiaries with diabetes:

·        Providing coverage for therapeutic continuous glucose monitors (CGM) for patients who synchronize their insulin devices with their smartphones, when used in conjunction with a durable CGM receiver.

·        Allowing Medicare Advantage plans to offer a broader range of supplemental benefits tailored to a patient’s chronic disease. For an enrollee living with diabetes for example, a plan could provide transportation to a doctor’s appointment, diabetes education programs, or time with a nutritionist.

To respond to the coronavirus disease 2019 (COVID-19) public health emergency, CMS has taken additional actions to ensure that beneficiaries with diabetes have access to treatment and care by:

·        Implementing statutory requirements for Medicare Part D prescription drug sponsors and MA plans with a prescription drug benefit to allow enrollees to obtain prescription fills or refills of covered Part D drugs—including insulin—for up to a three-month supply in most instances.

·        Providing additional flexibility to Part D sponsors to give beneficiaries more options for delivery of their medications – including their diabetes supplies — such as mail or home delivery through retail pharmacies.  

·        Expanding telehealth so that people with diabetes, nationwide, can still maintain access to their doctor.

·        Expanding access to therapeutic continuous glucose monitors for patients with diabetes as determined medically appropriate by practitioners. Previously, patients were required to meet certain clinical criteria to qualify for coverage of a therapeutic continuous glucose monitor under Medicare. During the COVID-19 public health emergency, CMS will not enforce the clinical indications in Local Coverage Determinations for therapeutic continuous glucose monitors in an effort to give practitioners the flexibility to allow more of their diabetic patients to better monitor their glucose and adjust insulin doses from home. 

More information on the Part D Senior Savings Model can be viewed at: https://innovation.cms.gov/initiatives/part-d-savings-model

To read a New England Journal of Medicine perspective on Medicare Part D and insulin affordability, please visit: https://www.nejm.org/doi/full/10.1056/NEJMp2001649

NTU Poll: Arizona Taxpayers Oppose Wasteful Spending on Anti-Tech Battles

Even as some elected officials insist on continuing probes of America’s tech sector, solid majorities of voters think those investigations are a poor use of time as well as tax dollars. That’s just one warning in a new survey released today from National Taxpayers Union (NTU) asking Arizona concerning the economy, technology, and how Arizona’s Attorney General should invest limited taxpayer resources. The survey of 500 likely Arizona voters was conducted by the respected firm Fabrizio, Lee & Associates, which has advised a number of campaigns, over May 12-17.

NTU conducted this survey amid an increased interest by Congress, the Department of Justice, and State Attorneys General in pursuing antitrust investigations and lawsuits against several American tech companies. For more than 25 years, NTU has warned policymakers about the lasting negative impact of antitrust investigations on economic innovation, consumer welfare, and the development of technologies that make government more efficient, effective and responsive to taxpayer needs. The organization has likewise voiced concerns over taxpayer resources being directed toward such often- destructive litigation, whether the issues have been software “tying,” search regulation, or the latest accusations of excessive market power in advertising. Throughout this time, NTU research and analysis has made the case for a light-touch approach toward competition regulation in order to safeguard consumers and taxpayers.

On the most important priority for the state’s top prosecutor, the largest groups of voters suggested a focus on combating human trafficking (22%) and price gouging (18%), while the share focused on investigating companies for antitrust violations (3%) fell below the margin of error. Among GOP voters, the gap between the top answer (human trafficking) and bottom answer (antitrust) was even wider, at 27% and 2%, respectively. The survey also examined fraud, elder abuse, criminal prosecutions, and other issues. “Arizona voters expect officials to be mindful of taxpayer dollars, and the office of Attorney General is no exception,” said Pete Sepp, President of NTU. “Especially in today’s budgetary environment, limited resources need to stay focused on serious threats to consumers’ pocketbooks, but all too many Attorneys General across the country have instead been focused on grabbing headlines with issues that rank low in importance with most Americans.”

Asked where they would least like to see the State Attorney General spend tax dollars, among the most common answers were suing drug manufacturers over addiction to pain killers (20%) and investigating companies for antitrust violations (17%). In general, tech companies were viewed positively by Arizona voters (37% favorable, 9% unfavorable), with individual companies viewed favorably by as much as 75% of respondents.

“States face massive budget shortfalls as the result of COVID-19 shutdowns and those will have to be made up either with service cuts or higher taxes,” Sepp observed. “Both are unpalatable to American voters, particularly if their future is shortchanged so that their Attorney General can tilt at far away windmills which have at best tenuous links to the state.”

The survey also found that respondents were sensitive to the state budget crunch caused by COVID-19. A large majority of Democrats (75%), Independents (68%), and Republicans (64%) all indicated that spending tax dollars to investigate tech companies is a “minor priority” or “not a priority at all” given the financial strain caused by coronavirus.

“At a time when European competition regulators are effectively creating trade barriers to our firms abroad, we can’t afford to squander public resources here at home on politically driven campaigns against American businesses large and small,” Sepp concluded. “The Attorney General is there to defend the public, not attack the businesses that are meeting unique challenges and delivering for Americans during the pandemic.”

Detailed results are available here.

Recall Reality

To those who want to recall Governor Doug Ducey, here’s what you’re up against:

You will need to collect a minimum of 594,111 valid signatures in 120 days.

That’s 4,951 signatures per day. 594,11 signatures. 4,951/day. (ARS 19-201.A.).

That is A LOT of signatures which will require A LOT of people to be in the field collecting signatures.

There will be A LOT of people who want to get paid for this work which means it will require A LOT of money.

To make matters even more daunting, by the time a recall would get to the ballot, it will be 2021. That’s right, any recall effort against Governor Ducey wouldn’t take place until next year.

By 2021, this pandemic will either be over and business will be back to normal OR, we will all be sick and dying and no one will see the point of conducting a recall.

My advice:

  1. Don’t waste your time and money
  2. Be patient and adapt
  3. Start using your critical thinking skills again.

Debunked! Mediocre Republic movie reviewer gets all science-y on Kari Lake

Bill Goodykoontz of the Arizona Republic wishes the world to know that he hates Donald Trump.

A leftist political theorist trapped in the body of a mediocre newspaper movie reviewer, Goodykoontz recently wrote about Queen Elizabeth’s coronavirus speech by whining about how they got elegant, old Ms. Windsor while we got the Bad Orange Man. He “reviews” White House COVID press conferences as a projection of his self-image as a Jim Acosta fellow traveler:

“Keep reporting,” he urges the White House press corps. “Keep telling the truth. Keep grinding out stories that are important and accurate and let the criticism fall where it may.”

So brave. So, so very brave. Mind-numbingly wrong for nearly three years (and, in most instances, still counting) about “Russian collusion” and consumed with getting their daily quota of gotchas, they are nonetheless so very brave. In Goody’s eyes. He is CNN’s Brian Stelter if Brian Stelter also had George Stephanopoulos-ish boyish bangs and performed his daily dance of Trump-hate in the desert.

He is a mediocre movie review who loathes Donald Trump. And he so very much wants you to know that. Not the “mediocre” part, but you know what I mean.

But Goody is not of the WH Press Corps, so he must find local Trumpishness to ferret out. He’s zeroed in recently on Fox 10 news anchor Kari Lake. From time to time, Lake has indicated, usually on Twitter, that she may hold some conservative feelings. This drives Goody (and others in the Republic’s dwindling stable of lefties) into paroxysms of rage. They must make her stopp… er, stop.

Goody discovered that Lake had recommended her Twitter followers read about the two California doctors who created a 50-minute YouTube video that she called “one of the most HONEST COVID-19 briefings I have heard to date.” Dr. Daniel Erickson and Dr. Artin Massihi argued against the strict applications of sheltering in place.

Goody scolded Lake for recommending people hear what the two doctors had to say. “I would also advise against members of the media offering tacit support for debunked theories.”

YouTube now (in)famously banished the video “for violating YouTube’s Community Guidelines,” which apparently forbid using one’s experiences on the frontlines of the fight against the COVID-19 virus to take issue with prevailing government diktats.

The American Academy of Emergency Medicine and the American College of Emergency Physicians jointly “and emphatically” issued a condemnation of arguments presented by the two doctors.

The statement was frankly snarky, suggesting they were in it for the money: “As owners of local urgent care clinics, it appears these two individuals are releasing biased, non-peer reviewed data to advance their personal financial interests…”).

Now, I don’t know if ultimately this economy-wrecking practice of sheltering in place will save us from the virus in the long run. Maybe it will. Maybe the large, inflexible organizations like the AAEM and the ACEP will be proved right. But, then, I can’t help noticing that the Swedes, whose social views leftists usually claim to admire, seem to be siding with the California docs on this one. And they seem to be having some success at it, too. Is Sweden, too, grasping irrationally at “debunked theories?”

Which ever, Goody contends that the AAEM and the ACEP jointly “debunked” the Californians. I don’t think that word means what he thinks it means.

Their statement spoke harshly of the doctors’ views, which they said were “inconsistent with current science and epidemiology regarding COVID-19.” But nowhere did it say how or why. Common usage of “to debunk” is to “expose the sham or falseness” of something. The two doc-orgs didn’t do that.

All we have here are two doctors citing accumulated open-source data to conclude that sheltering in place is counter to good health. They may be wrong in those conclusions, but we don’t know why from the institutional reaction to them. All we have on the other side is large organizations saying little more than “shut up.”

And we have a journalist (no doubt a lot of them) playing Greek chorus and adding that “you shut up, too, Kari Lake!”

That’s the part that really gnaws at me. Goody self-righteously scolds Lake: “Haven’t theories like this cost us enough already? Let’s stick to the facts, please.”

Oh! Facts! Stand back, people. Goody’s got… science on his side!

But what “facts” are they? When do our movie-reviewer fact-mongers think the doors actually should open? Biden adviser and Obamacare designer Zeke Emanuel argues that we “have no choice” but to keep these strict social-distancing measures in place for 18 months. Would it be anti-science-y even to suggest that they end sooner? If so, when, Bill?

And, you know, it’s not like those powerful, institutional voices dictating shelter-in-place policy haven’t already been proved wrong on a point or two.

In maybe the most pompous declaration ever uttered by a mediocre movie reviewer, Goody says of Lake that “I would also advise against members of the media offering tacit support for debunked theories.”

Like, oh… Russian collusion?

Ducey Wants to Flatten the Curve, Not Shutdown the Great Outdoors

By Calamity June

On Monday, March 30th, Governor Doug Ducey issued an Executive Order suggesting Arizonans “stay home, stay healthy and stay connected.”  Governor Ducey went on to state Arizonans should “limit their time away from home and if they do go out, to ensure social distancing.”  Finally, Arizonans are “staying home because it’s the right thing to do.”  Governor Ducey remarked, “when you use words like shelter in place, that’s what happens during a nuclear attack.”

This means our state’s hiking trails and parks can remain open for people to enjoy and get some exercise as long as we all practice physical distancing.  

During his news conference, Ducey listed off “essential services,” and stressed how the grocery store’s shelves would remain stocked and drug stores would remain open.  Restaurants would still be open for takeout and delivery.  Furthermore, he encouraged people to only purchase a week’s worth of groceries. As President Donald Trump and others have noted, the supply chain is operable and there is no reason to hoard anything.  Don’t be greedy. 

This means our state’s hiking trails and parks can remain open for people to enjoy and get some exercise as long as we all practice physical distancing.  

US Senator Kyrsten Sinema had a phone call earlier in the day on Monday 30th with a lot of the liberal mayors in Arizona pushing them to defy Governor Ducey and issue their own “shelter in place” order. After the mayors’ call, the mayor of Phoenix issued her own directive to close all of Phoenix’s hiking trails.  

Fortunately, Phoenix Councilman Sal DiCiccio embodies the duty to present the calm during COVID-19.  God Bless Councilman DiCiccio for pushing back against Mayor Gallego every time she has pushed to shut down anything in Phoenix.  

Listen to Councilman DiCiccio on Seth Leibsohn’s March 31st radio show.  As you will hear, Councilman DiCiccio remarked how the city isn’t sanitizing the light rail or the buses. Why aren’t they closing public transportation? Why does the mayor want to close our parks and hiking trails?  It doesn’t add up.

On April 1st, City Hall is scheduled to vote on closing the city’s parks, including its hiking trails.  Also, according to the City of Phoenix Parks and Recreation’s website, the mayor has decided unilaterally to temporarily close the city’s playgrounds, fitness equipment, basketball and volleyball courts, and sports complexes in its public parks effective Tuesday, March 31st at 5pm until further notice.

Being on a hiking trail in the Phoenix sun is one of the best ways to keep your body healthy.  Practice safe social distancing. Being outdoors is good for one’s health and wellness. It even states as much on Phoenix’s Parks and Recreation Department’s website. Be sure to call City Hall and let them know you want to keep our parks and hiking trails open during COVID-19.

Responding to Coronavirus without limiting freedom

The spread of the coronavirus has been rampant across the globe crippling countries like Italy, Iran, and South Korea where government-run institutions are the ones solely responsible for fighting the outbreak. But, luckily for residents of the United States, our nation operates a bit differently. Because our healthcare system adheres to free market principles, we have the ability to have private industry collaborate with the federal government to help combat the coronavirus which was categorized just last week by the World Health Organization (WHO) as a global pandemic.

Every day in America, researchers from biopharmaceutical companies are working endlessly to solve the world’s most sophisticated medical issues. As the global leader in medical innovation, the world looks to us in times of crisis. The reason being is our free market approach to healthcare has led to massive private investment and unprecedented funding for the research being carried out by the best and brightest scientific minds in the world who are incentivized to work right here in America.

Simply put, thanks to our private healthcare system that has resulted in decades of massive investment from biopharmaceutical companies, the U.S. is uniquely positioned to lead the charge against the coronavirus today and any other epidemic that may threaten our society tomorrow.

The irony of large scale epidemics like coronavirus is the clear realization of why we have the system that we do. Lamentably, several legislators on Capitol Hill have forgotten the importance of our free market approach both domestically and globally.

For example, just last year a bill led by Speaker Nancy Pelosi made its way through the House of Representatives that, if it becomes law, would decimate funding for new biopharmaceutical research and development. HR3, more commonly known as “The Lower Drug Costs Now Act”, would stifle future innovation by implementing socialist style government price controls on biopharmaceutical companies as a way to drive down high drug costs.

The adoption of government price controls in the pharmaceutical space is not only short-sighted but flat-out dangerous to public health. People often ask, “why do we pay more for drugs in the U.S. compared to other countries”, the answer is because we invest more in cures and treatments than any other country, and today, everyone should be very happy about that fact.

It’s terrifying to think what the coronavirus outbreak would look like if HR3 had passed 20 years ago. If we are to survive outbreaks and even outpace them, we must have our research teams working at full capacity at all times. In a world of uncertainty, there is no such thing as over-preparedness.

“Do No Harm” in the effort to lower drug costs

As we enter a new decade, advances in medicine hold the promise for a brighter future in the battle against deadly diseases like cancer.  Advances in immunotherapy and targeted gene therapy, for example, present opportunities not even imagined just few years ago.  The challenge for politicians and policy makers is to keep these life-saving advancements coming, while at the same time keeping them affordable for patients.

Getting this balance right is especially important to the large population of Seniors we have in Arizona.

Just 15 years ago a Republican Congress and President modernized Medicare by creating a prescription drug benefit called Medicare Part D.  Unlike other parts of Medicare, Part D was designed on the free-market principles of plan competition and senior choice.  Recognizing that one size does not fit all, every year Seniors have a choice of a variety of plans who compete vigorously for their business.  In order to keep their premiums low and attract Seniors to sign up, plans have a strong incentive to drive a hard bargain with drug manufacturers to keep prices down.

Affordable Drugs

It comes as no surprise to conservatives, that Part D’s free-market model has worked.  When the legislation was passed, the Congressional Budget Office estimated both the cost of the program to Medicare and the average monthly premium a Senior would pay, for the first 10 years of the program.  The actual results were remarkable. 

Medicare spending was 35-40% less than predicted and average monthly premiums projected to be $55 or more in 2016 are in fact only $32.70 in 2020 and that is a slight decrease from 2019.  In addition to these financial measure of success, Part D maintains a Senior Satisfaction Rate in excess of 90%, unheard of for most government programs.

Despite this success, big government advocates like Nancy Pelosi want undermine Medicare Part D and its sister program Medicare Advantage, by importing government price controls from socialist countries.  What is known as an International Pricing Index (IPI) is included in her signature drug pricing legislation which passed the House of Representatives last December. 

President Trump has correctly pointed out that many advanced economies around the world which have socialist health care systems are not paying their fair share of R&D costs for new drugs.  They are freeloading on American consumers.  But the answer is to stop these unfair trade practices, not import their socialist price fixing to the US!

Socialist health systems hold down cost by rationing drugs.  They either wait a long time to make new drugs available to their people, or they are never available.  Writing in Forbes in February 2020 author Doug Schoen points out that “roughly 96% of new cancer medicines are made available in the United States, while the 16 countries used in the International Pricing Index only have 55% of new cancer medicines.  Further, patients in these 16 countries also receive these medications on average 17 months after release, whereas in the United States, patients have almost immediate access to new cancer medicines following FDA approval”.

These cold statistics translate into patient’s lives.  An HIS Markit study published in 2018 “Comparing Health Outcome Due to Drug Access: A Model in Non-Small Cell Lung Cancer,” concludes that half of the gains in life expectancy we have made in fighting lung cancer, the number one cancer killer worldwide, would have been lost if the rationing policies found in Australia, Canada, France, South Korea and the United Kingdom were replicated in the US.”

Government price controls on drugs are not the answer.  But neither is doing nothing.  Fortunately, Senator Mike Crapo (R-Idaho) and Congressman Greg Walden (R-Oregon 2) have introduced legislation to help. 

Their legislation, S. 3129 and H.R. 19, preserve the free-market competition which has worked so well in both Medicare Part D and Medicare Advantage, but directs that more of the savings from negotiations with drug manufacturers flow directly to the consumer at the pharmacy counter in the form of immediate discounts.  They also cap the annual out-of-pocket spending Seniors must pay for prescription drugs. 

The legislation also takes steps to reduce the freeloading of other developed nations on our R&D and streamlines coordination between the Food and Drug Administration (FDA) and Medicare to insure that new treatment reach Seniors as quickly as possible.

Doctors take an oath, “First, do no harm.”  That’s good advice for politicians and policy makers as well.  Taking steps to lower drug costs to Seniors is important.  But we must do it the right way or we will harm those we are trying to help.

Goldwater Institute: The Arizona Department of Education’s Latest Epic Fail

Matt Beienburg, Director of Education, Goldwater Institute

Last week brought news that the Arizona Department of Education had inadvertently released the personal information of the nearly 7,000 families who make use of Empowerment Savings Accounts (ESA). And it’s not the first time the Department has mishandled the ESA program, a program that helps so many children—many of them with special needs—get the customized education they need to succeed.

On Monday, it was revealed that the Department released a spreadsheet that included the account balances of every ESA account in the state, along with the names, email addresses, and other personal information of the nearly 7,000 parents with ESA accounts. Not only was the spreadsheet containing the sensitive information sent to the Yellow Sheet Report, but it was also shared with Save Our Schools, a group that has been an outspoken opponent of ESAs.

Unfortunately, this latest epic fail on the part of the state Department of Education is part of a pattern of poor management of the ESA program. Earlier in January, the Goldwater Institute filed a lawsuit challenging the Department of Education’s long delays in supplying needed funds to which ESA families are entitled—delays long enough to force parents to pay out of pocket for tutoring and teaching tools that their ESA should cover without the possibility of reimbursement. While requiring families to follow its ESA rules to the letter, the Department of Education’s handling of the ESA program has still resulted in unpredictable and arbitrary outcomes for families—for instance, some families have been rejected for certain ESA expenses while others have been approved for the very same expenses.

“Mistakes do happen, but I don’t think that’s good enough as an excuse. That doesn’t undo the damage, the harm to these families,” Goldwater Institute Director of Education Policy Matt Beienburg said of the privacy breach on KJZZ’s “The Show.” “These are families with deeply personal life circumstances, these are kids with special needs diagnoses, and this information is now essentially made available to be dragged out into the public.

“For the Department to have treated these families this way saying ‘we have zero tolerance for any misstep’ and to then make a massive blunder like this is really revealing.”

Listen to the interview here: https://theshow.kjzz.org/sites/default/files/ade-data-breach-show-sg-mb-20200129.mp3?uuid=5e3b8ffd9e654

Matt Beienburg is Director of Education at the Goldwater Institute. You can read his bio here.