Barring pharmaceutical imports from China would hurt the United States and the world

The US fear of excessive reliance on pharmaceuticals from China began well before the COVID-19 pandemic of 2020–23. At a congressional hearing in 2019, the US Food and Drug Administration (FDA) reported that the United States was "no longer in the forefront of drug manufacturing." Some Congress members found that alarming, and recently former president Donald Trump suggested that a "phase-out" of US dependence on Chinese pharmaceutical imports would be accomplished within four years should he be elected president.

But expanding the trade war while barring medications and other medical products from China would hurt the US consumer and in fact hinder progress in America's world-renowned medical research that is needed to create the pharmaceutical innovations of the future, jeopardizing pharma's capacity to address pandemics in the years ahead.

Are fears of overdependence on China justified?

 The World Health Organization categorizes essential medications according to specific criteria regarding "disease and public health prevalence, evidence of efficacy and safety, and cost-effectiveness." The WHO's list includes analgesics (ordinary painkillers), non-steroid anti-inflammatory drugs (NSAIDs) such as ibuprofen, psychoactive medications such as diazepam, blood thinners, antipyretics such as aspirin, diuretics, medications for cardiovascular conditions, medications to regulate blood pressure, antibiotics, anticonvulsants, and antihistamines, among many others. According to the United States International Trade Commission (USITC), imports of these everyday essential medications from China have been rising since 2005 (figure 1), as US drugmakers found it more cost efficient to switch from manufacturing to investing more in drug research and discovery.

That increase in imports accelerated around 2017 and reached a peak between 2021 and 2022. The trend has since decelerated, but a stark change is observable: While the United States imported only about $30 million of essential medications from China in the early 2000s, it now buys nearly 70 times more, or just over $2 billion. It is this impressive growth in purchases of essential medications from China that is driving fears of dependence, including those due to national security concerns.

These fears are not wholly unfounded, but they seem exaggerated. As the FDA itself observes, the United States could reinstate drug manufacturing by adopting what they define as "advanced manufacturing." Traditional drug production typically requires extensive facilities and less expensive workers to be profitable and competitive. Since China offers both, it is not surprising that it has become a significant drug producer.

Advanced manufacturing, in contrast, employs more technological innovations, such as automation and advanced laboratory techniques, which need less space and fewer workers. The US government launched the Emergency Technology Program (ETP) in 2014 to support the adoption of innovative technology, a step that helped modernize the pharmaceutical manufacturing sector. While the program had some success in incentivizing domestic production of a few drugs previously imported from China and other countries, advanced US laboratory and research infrastructure has made it much more attractive for pharmaceutical and biotech companies to allocate resources to the riskier but more profitable activity of drug discovery, leaving manufacturing—particularly of simple drugs like analgesics and NSAIDs, as well as antibiotics, to other countries where production is cheaper.

As long as international trade is unimpeded by exaggerated concerns, the most efficient arrangement for the United States and the world is one where the United States continues to lead in drug discovery. At the same time, manufacturing well-known compounds should reasonably continue where production is cheaper. Shifting resources into producing relatively simple drugs in the United States would inevitably mean moving them away from research-intensive drug discovery where the country enjoys a clear global comparative advantage. It would be like shifting manufacturing away from microchips and going back to producing t-shirts and sneakers. Such a move would prove costly and inefficient, possibly leaving both the United States and the world more exposed to damage caused by inevitable future pandemics. We would do well to remember that the US global lead in drug discovery yielded the rapid development and deployment not just of groundbreaking COVID-19 vaccines but of novel antivirals against SARS-CoV-2, such as Pfizer's Paxlovid.

China fears exacerbated by the pandemic remain high

Concerns over pharmaceutical dependence on China were exacerbated during the acute phase of the COVID-19 pandemic (2020–22), and those concerns have yet to abate. The need to acquire large quantities of medications, biological reagents, active pharmaceutical ingredients (APIs), and laboratory equipment during the pandemic has inevitably led to increased pharmaceutical imports from China (figure 2).

Because of expected capacity restrictions during the pandemic, the United States had no alternative but to import specific categories of pharmaceuticals, namely antivirals and immunological products. Early in the pandemic, the United States and many other countries used existing antivirals as potential treatments for SARS-CoV-2, buying an increasing share of these medications from China, which had largely contained the spread of the disease by the second half of 2020.

Later in the pandemic, when the United States began developing novel antivirals for SARS-CoV-2 upon realizing that existing medications lacked the ability to reduce disease severity and alleviate symptoms, resources were reallocated to drug discovery. Therefore, the United States bought from China and other countries existing antivirals that it had temporarily stopped producing. As the pandemic situation became less acute, with a large share of the population either inoculated with vaccines or more capable of avoiding severe disease outcomes due to prior exposure to the virus, imports of antivirals declined as the United States began manufacturing them again. A similar story holds for immunological products, such as those used early in the pandemic to treat patients with severe COVID-19. Hence, for antivirals and immunological products, the pandemic led to a temporary sharp increase in imports that is now being reversed. The same cannot be said of essential medications and laboratory reagents and equipment.

Pharmaceutical self-sufficiency is self-defeating

The uncertain, chaotic early phases of the pandemic brought a sense of insecurity to domestic health authorities and policymakers amid increasing fears of higher dependence on China for pharmaceuticals and laboratory equipment. That anxiety is now augmented by rising animosity towards China, which could result in ordinary drugs used by Americans becoming more expensive and the entire industry becoming more inefficient, jeopardizing the potential for further innovation.

Although raising the cost of these drugs from China might sound appealing, pharmaceutical self-sufficiency in the United States is self-defeating because it could significantly harm the industry and US leadership in the research and development of new drugs. At risk is the comparative advantage in pharmaceuticals enjoyed by the United States, a benefit not only to Americans but to the world at a time when future pandemics are inevitable.