President Trump’s executive order on essential medicines aims to encourage pharmaceutical companies to bring their manufacturing back to the U.S. But it may also have unintended consequences for both domestic and foreign companies.

Legitimate concerns exist about U.S. dependency on drugs, medical devices, and supplies manufactured abroad, and the Covid-19 pandemic has brought them into sharp focus. The executive order aims to address these concerns by extending advantages in U.S. government purchasing to essential drugs, critical countermeasures (such as certain devices and personal protective equipment), and critical inputs (such as raw materials and components) that are made in the U.S.

The order directs government agencies, when possible, to procure domestically manufactured active pharmaceutical ingredients, finished drugs, and medical devices. Recognizing the practical reality that a substantial portion of drugs and devices are currently manufactured overseas, the executive order also recognizes that some — if not most — procurements will need to be open to non-U.S. products. This would cause what are often referred to as preferences, which favor U.S. products vis-à-vis competing nondomestic products, to be applied….

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