Scope of Essential Medicines, Medical Countermeasures and Critical Inputs

Promulgation of list. The determination of the list of Essential Medicines, Medical Countermeasures and Critical Inputs is to be made within 90 days of the date of the EO (i.e., November 4, 2020 – the day after the presidential election) by FDA, in consultation with OMB, the HHS Assistant Secretary for Preparedness and Response (ASPR), Larry Kudlow and Peter Navarro.

While there is no specific requirement in the EO for FDA to publish the foregoing list, presumably that would be necessary in order for other departments/agencies to implement the requirements of the EO applicable to the products on such lists². The EO provides that FDA shall periodically update the list as appropriate. There is no provision for public notice or comment on development of the list.

Essential Medicines. The definition of “Essential Medicines” is very vague. Specifically, section 3(c) provides that FDA “shall identify the list of Essential Medicines, Medical Countermeasures, and their Critical Inputs that are medically necessary to have available at all times in an amount necessary to serve patient needs and in the appropriate dosage forms” (emphasis added). There is a separate definition of “Essential Medicines” in section 7(e), but it does not add anything – it defines them as “those Essential Medicines deemed necessary for the United States pursuant to section 3(c) of this order.”

The EO’s definition of “Essential Medicines” potentially could encompass thousands of drugs, as most drugs are medically necessary for patient needs in at least some circumstances. Peter Navarro has made reference in interviews to a World Health Organization (WHO) list of essential medicines, and also stated that some of those would not be needed for the U.S. list³. The WHO list includes approximately 460 medicines, divided into a “core list” of “minimum medicine needs for a basic health-care system, listing the most efficacious, safe and cost-effective medicines for priority conditions,” and a “complementary list” that “presents essential medicines for priority diseases, for which specialized [facilities, training or care] are needed [or that have] higher costs or less attractive cost-effectiveness⁴.” A U.S. list might relate to additional conditions (or not relate to some of the WHO conditions) or include a number of alternative drugs for which the WHO list contains only one. Overall, it is unclear how many drugs the list will include, exactly what types of drugs it will contain, and, of course, which specific drugs will be on the list.

Medical Countermeasures. The EO defines “Medical Countermeasures” as items that meet the definition of “qualified countermeasure,” “qualified epidemic or pandemic product” or “security countermeasure” under specified provisions of the U.S. Code, all relating to procurements by the Strategic National Stockpile (SNS), or are personal protective equipment (PPE) described in 29 C.F.R. Part 1910⁵. In general, these definitions include drugs, biologicals, medical devices and PPE which have been or could be procured by HHS/ASPR for the SNS – which is also quite broad in scope – although the referenced definition of “PPE” is not limited to that which could be acquired by the SNS.

Critical Inputs. The EO defines “Critical Inputs” as “API, API Starting Material, and other ingredients of drugs and components of medical devices that the FDA Commissioner determines to be critical in assessing the safety and effectiveness of Essential Medicines and Medical Countermeasures.” “Active Pharmaceutical Ingredient (API)” is defined as having the meaning set forth in FDA regulations at 21 C.F.R. §207.1. “API Starting Material” is defined as “a raw or intermediate material that is used in the manufacturing of an API, that is incorporated as a significant structural fragment into the structure of the API, and that is determined by the FDA Commissioner to be relevant in assessing the safety and effectiveness of Essential Medicines and Medical Countermeasures.”

Separate list for DoD? Notably, the EO separately includes a requirement for DoD to come up with its own list, providing in relevant part:

“The Secretary of Defense shall provide to the Secretary of Health and Human Services, the FDA Commissioner, the Director of OMB, and the Director of the Office of Trade and Manufacturing Policy a list of defense-specific Essential Medicines, Medical Countermeasures, and Critical Inputs that are medically necessary to have available for defense use in adequate amounts and in appropriate dosage forms. The Secretary of Defense shall, as appropriate, periodically update this list.”

While this suggests that DoD might use its own list to determine the products to which the EO applies, section 2(d) of the EO, which is a DoD-specific obligation to procure Essential Medicines, Medical Countermeasures and Critical Inputs from “domestic sources,” applies beginning 60 days after FDA establishes its lists, implicitly indicating that such obligation applies to products on the FDA list, not the DoD list. Moreover, the above-quoted sentence follows a sentence requiring DoD to evaluate supply chain vulnerabilities, so this list could only relate to that evaluation, and not to procurement. Overall, the source of the relevant list for DoD procurement purposes is not clear.

Procurement mandates

Requirements for all agencies. Section 2(a) of the EO directs agencies, “as appropriate, to the maximum extent permitted by applicable law…to conduct the procurement of Essential Medicines, Medical Countermeasures, and Critical Inputs by:

(i) using procedures to limit competition to only those Essential Medicines, Medical Countermeasures, and Critical Inputs that are produced in the United States; and

(ii) dividing procurement requirements among two or more manufacturers located in the United States, as appropriate.” (Emphasis added.)

This section is drafted to be immediately applicable, although, of course, it is impossible to implement until the list of Critical Medicines, Medical Countermeasures and Critical Inputs is determined.

The term “produced in the United States” is defined in section 7(i) as follows:

“An Essential Medicine or Medical Countermeasure is “produced in the United States” if the Critical Inputs used to produce the Essential Medicine or Medical Countermeasures are produced in the United States and if the Finished Drug Product or Finished Device, are manufactured, prepared, propagated, compounded, or processed, as those terms are defined in section 360(a)(1) of title 21, United States Code, in the United States.” (Emphasis added.)

Given that a limited number of drugs sold in the U.S. are both manufactured in the U.S. and use U.S.-manufactured API and API Starting Materials, agencies may have limited opportunities to comply with the procurement mandate, as drafted, for the vast majority of drugs, and consequently the unavailability exception (described below) may limit the immediate impact of the EO. However, the EO could have an impact on promoting domestic production of drugs listed as Essential Medicines or Medical Countermeasures, and their Critical Inputs, since the EO would require procurement of such products, when permitted by law and an exception to the procurement mandate does not apply, from two or more sources of such products when available.

Section 2(c) of the EO further requires as follows:

“Within 90 days of the date of this order, the head of each agency shall, in consultation with the FDA Commissioner, develop and implement procurement strategies, including long-term contracts, consistent with law, to strengthen and mobilize the Public Health Industrial Base in order to increase the manufacture of Essential Medicines,  Medical Countermeasures, and Critical Inputs in the United States.”

Notably, this is a federal government procurement requirement, but for the purpose of promoting domestic manufacturing, and the strategies must be developed by each agency. It appears that an added element here is that contracts may be “long-term,” in consultation with FDA. These procurement strategies are to be “implemented” by November 4, 2020 – the same day that FDA determines the products to which the strategies relate.

Additionally, each agency must submit an annual report (beginning December 15, 2021) to the President, through OMB and the Assistant to the President for Trade and Manufacturing Policy (currently Peter Navarro), detailing “the agency’s plan to support domestic production” of these products in the next fiscal year.

DoD-Specific requirements. There is also a separate requirement in section 2(e) specific to procurements by DoD, requiring the Secretary of Defense, to the maximum extent permitted by applicable law, to use authority under section 225.872-1(c) of the Defense Federal Acquisition Regulation Supplement to restrict the procurement of the foregoing to “domestic sources and to reject otherwise acceptable offers of such products from sources in Qualifying Countries in instances where considered necessary for national defense reasons⁶.” The term “produced in the United States” is not used in that section of the EO. The DoD requirements are not subject to the public interest exception under section 2(f) (described below), and apply 60 days after FDA has identified the lists of Essential Medicines, Medical Countermeasures and Critical Inputs.

Products reimbursed under Medicare and Medicaid not affected. It is important to note that while a very large share of drugs, medical devices and PPE sold in the U.S. are paid for by the federal Medicare and Medicaid programs, that funding is provided in the form of “reimbursement” for products dispensed by pharmacies or provided or used by medical providers, which is not considered a “procurement” of products that would be subject to the EO. Consequently, sales of products to wholesalers, pharmacies, hospitals, physician practices and similar private entities, for which reimbursement is subsequently provided under the Medicare or Medicaid programs, should not be affected by the EO.

Federal Government procurement mandate exceptions

General provisions of the EO. The general and DoD-specific federal government procurement requirements are subject to the following exceptions, under section 2(f):

“(f) Subsections (a), (d), and (e) of this section shall not apply:

(i) where the head of the agency determines in writing, with respect to a specific contract or order, that (1) their application would be inconsistent with the public interest (2) the relevant Essential Medicines, Medical Countermeasures, and Critical Inputs are not produced in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality; or (3) their application would cause the cost of the procurement to increase by more than 25 percent, unless applicable law requires a  higher percentage, in which case such higher percentage shall apply;

(ii) with respect to the procurement of items that are necessary to respond to any public health emergency declared under section 319 of the Public Health Service Act (42 U.S.C. 247d), any major disaster or emergency declared under the Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), or any national emergency declared under the National Emergencies Act (50 U.S.C. 1601 et seq.).”

Accordingly, the major exceptions are (1) public interest, (2) unavailability of domestic product of satisfactory quality in sufficient quantities, (3) increase in cost of 25 percent of more (or any higher percentage specified under applicable law), and (4) need to respond to a public health emergency or other declared emergency. Section 2(g) provides that, to the maximum extent permitted by law, any public interest determination shall be construed to maximize procurement of Essential Medicines and Medical Countermeasures produced in the United States. Additionally, since all of the requirements are qualified by “to the extent permitted by law”, any limitations under existing law on the authority of agencies to comply with the EO implicitly limit the requirements of the EO.

The EO requires each agency head who determines an exception applies due to public interest, lack of domestic availability or increased cost to submit an annual report to OMB, on behalf of the President, describing the justification for such determination.

Savings clause for COVID-19 response and Veteran’s Administration (VA). Section 8 of the EO provides that nothing in it shall be construed to impair or otherwise affect the ability or authority of any agency to respond to the spread of COVID-19, the ability of state, local, tribal or territorial governments to respond to declared federal emergencies, or the authority of the VA “to take all necessary steps ... to ensure that service members, veterans, and their families continue to have full access to Essential Medicines at reasonable and affordable prices.” This appears to constitute a blanket exception from the requirements of the EO for any of these issues. Notably, the VA, like DoD, is one of the largest purchasers of drugs and medical devices among federal agencies.

What is permitted by applicable federal government contracting law? The federal government’s ability to procure domestic and foreign manufactured products is limited by the Buy America Act (BAA)⁷. With respect to DoD, the Berry Amendment⁸ prohibits the acquisition of delineated products and/or components that have not been grown, reprocessed, reused, or produced in the United States. With one exception, the foregoing laws do not apply to federal government procurements below the simplified acquisition threshold (currently set at $3500). Further, as with the EO, the foregoing laws provide for waivers and exceptions.

The Trade Agreements Act (TAA)⁹ provides the President with the authority to waive the BAA and other discriminatory provisions for eligible products from countries that have signed an international trade agreement with the United States, or that meet certain other criteria, such as being a least developed country. The President has delegated this waiver authority to the U.S. Trade Representative. The value of the procurement is the determining factor in the applicability of the trade agreements. By way of example, where a country is a signatory to the World Trade Organization Government Procurement Agreement¹⁰, the BAA is waived for federal government procurements equal to, or exceeding, $182,000¹¹. The TAA does not waive application of the Berry Amendment to DoD procurements. Currently, offers of TAA eligible products receive equal consideration with domestic offers. The EO’s requirement that Critical Inputs, Essential Medicines, Medical Countermeasures, and the Finished Drug Products and Finished Devices be “produced in the United States” is stricter than the current BAA requirements¹² and is, in fact, analogous to the DoD’s Berry Amendment’s requirements for textiles and food. As a result, it is likely that the procurement of Essential Medicines and Medical Countermeasures likely would be prohibited by the EO unless 100% of the components and resulting product are manufactured in the United States¹³.

Certain agencies may have agency-specific authority, such as the Berry Amendment, to limit procurement to products produced in the United States, as directed by the EO. More generally, the Federal Acquisition Regulation (FAR), at 25.401, provides the following exceptions to the application of the TAA to certain federal government procurements as follows:

1. “Acquisitions set aside for small businesses;
2. Acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes;
3. Acquisitions of end products for resale;
4. Acquisitions from Federal Prison Industries, Inc., under Subpart 8.6, and acquisitions under Subpart 8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled; and
5. Other acquisitions not using full and open competition, if authorized by FAR Subpart 6.2 or 6.3, when the limitation of competition would preclude use of the procedures of this subpart or sole source acquisitions justified in accordance with FAR §13.501.”

As identified in (5) above, FAR Subpart 6.3 permits federal agencies, under certain conditions, to contract with the private sector without using full and open competition¹⁴. Circumstances permitting other than full and open competition include: (1) there is only one responsible source and no other supplies or service will satisfy agency requirements, (2) unusual and compelling urgency, (3) industrial mobilization, engineering, developmental, or research capability, or expert services, (4) international agreement, (5) authorized or required by statute, (6) national security, or (7) public interest¹⁵.

Accordingly, the EO appears to contemplate that a contracting agency would rely upon one of these reasons to limit a procurement to domestic products in accordance with the EO, but the EO does not specify which of these bases is the general authority for the EO.

Requirements for identifying and addressing supply chain vulnerabilities

Section 3(a) of the EO provides as follows:

“Within 180 days of the date of this order, the Secretary of Health and Human Services, through the FDA Commissioner and in consultation with the Director of OMB,shall take all necessary and appropriate action, consistent with law, to identify vulnerabilities in the supply chain for Essential Medicines, Medical Countermeasures, and Critical Inputs and to mitigate those vulnerabilities.”

Specific measures contemplated include (i) considering proposing regulations or revising guidance on the collection of information from manufacturers regarding the sources of Critical Inputs, (ii) entering into agreements with other federal agencies to obtain information regarding supply chain vulnerabilities, (iii) recommending changes in law to the President, and (iv) reviewing FDA regulations to determine whether they may be a barrier to domestic production.

Separately, the EO requires DoD to conduct its own vulnerability assessment:

Director of OMB, shall take all necessary and appropriate action, consistent with law, to “Within 180 days of the date of this order, the Secretary of Defense, in consultation with the identify vulnerabilities in the supply chain for Essential Medicines, Medical Countermeasures, and Critical Inputs necessary to meet the unique needs of the United States Armed Forces and to mitigate the vulnerabilities identified in subsection (a) of this section.”

As noted above, section 1 (Policy) of the EO states that the President is directing each agency “to identify vulnerability in the Nation’s supply chains” for these products. As such, it appears that each agency may be expected to evaluate supply chain vulnerabilities, rather than delegating that responsibility to FDA or another specific agency.

Requirements for USTR

Section 2(d) of the EO provides in relevant part as follows:

“No later than 30 days after the FDA Commissioner has identified, pursuant to section 3(c) of this order, the initial list of Essential Medicines, Medical Countermeasures, and Critical Inputs, the United States Trade Representative shall, to the extent permitted by law, take all appropriate action to modify United States Federal procurement product coverage under all relevant Free Trade Agreements and the World Trade Organization Agreement on Government Procurement to exclude coverage of Essential Medicines, Medical Countermeasures, and Critical Inputs. ...After the modifications to United States Federal procurement coverage take effect, the United States Trade Representative shall make any necessary, corresponding modifications of existing waivers under section 301 of the Trade Agreements Act of 1979.” (Emphasis added).

It is impossible to tell at this early stage what role the USTR will play in this process and what “actions” USTR will have to take in order to remove Essential Medicines, Medical Countermeasures and Critical Inputs from the WTO Agreement on Government Procurement and the other Free Trade Agreements; this may vary by treaty, may require renegotiation of certain treaty obligations, or may involve the application of certain national security exceptions.

Additional requirements for FDA

Section 3(b) of the EO requires FDA to:

“(i) accelerate FDA approval or clearance, as appropriate, for domestic producers of Essential Medicines, Medical Countermeasures, and Critical Inputs, including those needed for infectious disease and CBRN threat preparedness and response;

(ii) issue guidance with recommendations regarding the development of Advanced Manufacturing techniques¹⁶;

(iii) negotiate with countries to increase site inspections and increase the number of unannounced inspections of regulated facilities manufacturing Essential Medicines, Medical Countermeasures, and Critical Inputs; and

(iv) refuse admission, as appropriate, to imports of Essential Medicines, Medical Countermeasures, and Critical Inputs if the facilities in which they are produced refuse or unreasonably delay an inspection.”

The last of these requirements may be particularly noteworthy – FDA may block importation of products unless FDA can conduct inspections as requested. The EO does not specify any timeframe within which these actions must be taken.

Requirements for EPA

Section 4 of the EO requires EPA, consistent with law, to “take all appropriate action to identify relevant requirements and guidance documents that can be streamlined to provide for the development of Advanced Manufacturing facilities and the expeditious domestic production of Critical Inputs, including by accelerating siting and permitting approvals.”

There is no indication yet how EPA will comply with the EO’s mandates. However, one possibility is that the agency will create an exemption similar to the treated articles exemption under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). There, anti-microbial pesticide manufacturers can avoid FIFRA registration by implementing specific language on a product’s label. In order to comply with the EO, EPA potentially could seek to institute a similar exemption for manufacturers of Essential Medicines that expedites licensing requirements if certain labeling conditions are met.

The EO does not contain any timeframe within which EPA must identify these opportunities for “streamlining.”

Requirements related to procurement through e-commerce platforms

Section 2(b) of the EO requires OMB, within 90 days of the date of the EO, to “review the authority of each agency to limit the online procurement of Essential Medicines and Medical Countermeasures to e-commerce platforms that have:

(A) adopted, and certified their compliance with, the applicable best practices published by the Department of Homeland Security in its Report to the President on “Combating Trafficking in Counterfeit and Pirated Goods,” dated January 24, 2020; and

(B) agreed to permit the Department of Homeland Security’s National Intellectual Property Rights Coordination Center to evaluate and confirm their compliance with such best practices...”

The Department of Homeland Security report referenced in subsection (A) above contains 10 best practices for e-commerce platforms. While we do not believe it is worthwhile to list them all here, some examples include: using “significantly enhanced vetting of third party sellers” requiring proof of identification, certification regarding previous sanctions for counterfeit/pirating activities, and acknowledgement of trademark rights of products sold; setting and engaging policies and procedures for notifying consumers and rights holders about the discovery of counterfeit or pirated products and involving law enforcement; requiring that foreign sellers provide a form of security where foreign products are sold to U.S. consumers specifically designed to cover the potential harm from counterfeit or pirated products; and requiring disclosure of the country of origin for all products sold.

Requirements related to the Defense Production Act

Section 5 of the EO requires the Secretary of HHS, as appropriate and in accordance with Executive Order 13603 (March 16, 2012), to use the authority under section 101 of the Defense Production Act (DPA) “to prioritize the performance of Federal Government contracts or orders for Essential Medicines, Medical Countermeasures, or Critical Inputs over performance of any other contracts or orders, and to allocate such materials, services, and facilities as the Secretary deems necessary or appropriate to promote the national defense.”

This effectively permits the Secretary of HHS to require that manufacturers or distributors provide Essential Medicines, Medical Countermeasures or Critical Inputs to prioritize federal government contracts over other federal government and commercial contracts, and potentially even to require production of any of the foregoing that a manufacturer otherwise would not manufacture or market.

However, section 101(b) of the DPA provides that “[t]he powers granted in this section shall not be used to control the general distribution of any material in the civilian market unless the President finds (1) that such material is a scarce and critical material essential to the national defense, and (2) that the requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship.” Section 201(d) of Executive Order 13603 requires that the Secretary of any department which seeks to use this authority must make this finding and submit it to the President for approval, and only upon presidential approval may the Secretary exercise these authorities.

Accordingly, it appears that additional actions may be required for the Secretary of HHS to exercise this authority. Whether the required findings can be made will depend upon the facts and circumstances of each instance in which the Secretary seeks to exercise such authority.

Conclusion

The EO was issued as one of a flurry of executive orders in recent weeks and, like those other orders, is appropriately viewed in the context of electoral politics. While the EO ostensibly creates “actionable” obligations on the part of federal agencies, as a practical matter it is unclear whether it will have significant near-term impact given the need for agency action, the reality that many existing product manufacturing and supply chains are both heavily regulated and fundamentally global in nature, and the limitations of existing statutes and trade agreements. Indeed, for products that are less fungible and subject to less clinical competition, it is unclear what incentives may exist for modifying those manufacturing and supply chains.

Nevertheless, if the mandates of the EO ultimately are implemented, it may create longer-term opportunities and incentives – particularly through long-term, dual source government contracts that may establish stable revenue bases to promote domestic product manufacturing. For companies interested in pursuing those potential opportunities, unused or underutilized domestic manufacturing facilities or capacity may present attractive near-term transactional opportunities for API sourcing, contract manufacturing, licensing, or the like.

1. Available at whitehouse.gov.
2. Section 6 of the EO requires agencies to submit an annual report to the President, beginning December 15, 2021, providing, among other things details of the Essential Medicines, Medical Countermeasures and Critical Inputs procured by the agency, the sources of same, and its annual itemized expenditures for same, and to publish such report on the agency’s website and in the Federal Register, with the redaction of any information protected from disclosure by law. Accordingly, that provision implicitly requires identification of at least some of the products on FDA’s list.
3. See cnbc.com.
4. World Health Organization Model List of Essential Medicines, 21st List, 2019 (Explanatory Note), available at apps.who.int.
5. 42 U.S.C. § 247d-6a(a)(2)(A) defines a “qualified countermeasure” in relevant part as a drug, biological product or device (based on Federal Food, Drug, and Cosmetic Act definitions) “that the Secretary [of HHS] determines to be a priority (consistent with sections 182(2) and 184(a) of title 6) ... to diagnose, mitigate, prevent, or treat harm from any biological agent (including organisms that cause an infectious disease) or toxin, chemical, radiological, or nuclear agent that may cause a public health emergency affecting national security.” 42 U.S.C. § 247d-6d(i)(7) defines “qualified pandemic or epidemic product” in relevant part as a drug, device or biological product used “to diagnose, mitigate, prevent, treat, or cure a pandemic or epidemic” or “to limit the harm such pandemic or epidemic might otherwise cause.” A “security countermeasure” is defined at 42 U.S.C. § 247d-6b(c)(1)(B) in relevant part as a drug, biological product or device the Secretary determines to be a priority (consistent with sections 182(2) and 184(a) of title 6) to diagnose, mitigate, prevent, or treat harm from any biological, chemical, radiological, or nuclear agent identified as a material threat under paragraph (2)(A)(ii) of such section and that the Secretary determines under paragraph (2)(B)(ii) of that section to be a necessary countermeasure. The definitions also encompass certain related drugs, biological products and devices (e.g., to treat harm resulting from administration of another countermeasure or to enhance the effect of another countermeasure), and contain other requirements (e.g., for FDA approval or emergency use authorization). 29 C.F.R. Part 1910 includes numerous Occupational and Safety Health Administration regulations; 29 C.F.R. § 1910.132 appears to relate specifically to personal protective equipment, described as “personal protective equipment for eyes, face, head, and extremities, protective clothing, respiratory devices, and protective shields and barriers ... necessary by reason of hazards of processes or environment, chemical hazards, radiological hazards, or mechanical irritants encountered in a manner capable of causing injury or impairment in the function of any part of the body through absorption, inhalation or physical contact”.
6. “Qualifying Countries” is defined to have the meaning set forth in section 225.003 of the Defense Federal Acquisition Regulation, which in turn defines the term as “a country with a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country, and the memorandum or agreement complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 2457. Accordingly, the following are qualifying countries: Australia, Austria, Belgium, Canada, Denmark, Egypt, Finland, France, Germany, Greece, Israel, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom of Great Britain and Northern Ireland.”
7. 41 U.S.C. Chapter 83, E.O. 10582, December 17, 1954 and 41 U.S.C. 1907.
8. 10 U.S.C. 2533a.
9. 19 U.S.C. 2501, et. seq.
10. The current WTO GPA signatories are as follows: Armenia, Aruba, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taipei, Taiwan (officially referred to by the World Trade Organization as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)”), Ukraine, and United Kingdom.
11. Other trade agreements contain other dollar thresholds.
12. The BAA imposes a “component test” for all products other than “Commercial Off the Shelf” or “COTS” products. The component test requires that the cost of the domestic (US) components of the product exceed 50% of the cost of all components in the product. The component test has been waived for the acquisition of COTS products such that a COTS product is a domestic product if it is manufactured in the U.S. regardless of the country of origin of the components. The EO’s stricter definition of “produced in the United States” will require a rulemaking to revise the current provisions of the FAR to address the EO’s new definition and its application to Essential Medicines.
13. The TAA’s tests for a product’s country of origin is whether a product was “manufactured” or “substantially transformed” in that country. Recently, and departing from a 70 year practice, the U.S. Court of Appeals for the Federal Circuit held, in Acetris Health, LLC v. United States, 949 F.3d 719 (Fed. Cir. 2020) that the country of origin of active pharmaceutical ingredients (APIs) did not dictate the country of origin of the resulting pill (which in this instance was the United States). Rather, the Court held that it was the country where the pill was manufactured, rather than country where the API was manufactured, that dictated the country of origin for the “pill” or pharmaceutical product being sold. A full description of the Acetris decision can be found here. The EO is a step back for pharmaceutical manufacturers after the Acetris decision in that the “pill” and its API will have to be “produced in the United States” for the federal government to acquire that “pill” as a Essential Medicine or Medical Countermeasure.
14. FAR § 6.301(a).
15. FAR § 6.302-1 – 7.
16. Section 7(b) of the EO defines “Advanced Manufacturing” as “any new medical product manufacturing technology that can improve drug quality, address shortages of medicines, and speed time to market, including continuous manufacturing and 3D printing.”