Drug products intended for the US market are increasingly being produced at offshore locations prompting legislators to call for reshoring of production.

Verdict has conducted a poll to assess whether companies should be stopped from bidding on federally funded healthcare contracts if they outsource outside of the US.

Bidding on federally funded healthcare contracts

Analysis of the poll results shows that companies should be free to bid on their merits and should not be stopped from bidding on federally funded healthcare contracts, as opined by a majority 48% of the respondents.

Another 29% of the respondents voted that exemptions are needed if there is no US-made, while the remaining 23% opined that companies outsourcing outside the US should be stopped from bidding for federally funded healthcare contracts.

The analysis is based on 214 responses received from the readers of Verdict network sites Hospital Management, Medical Device Network, and Pharmaceutical Technology between 28 September and 09 November 2020 and by industry experts through a survey between 07 October and 26 October 2020.

Federally funded healthcare contracts and outsourcing

The COVID-19 pandemic has increased the number of drug production contracts being outsourced out of the US raising concerns among legislators on the need to shift the supply chain to the US. Many base ingredients for drugs used for treating severe ailments such as Alzheimer’s, Parkinson’s, HIV/AIDS, and depression are being manufactured outside the US in markets such as India and China.

The disruption caused by the pandemic to the supply chains has led legislators to call for nearshoring or reshoring of such drug production to ensure supply of these much-needed drugs. Government support for reshoring operations will be critical, however, as China has the advantage of cheaper labour and production costs.

US President elect Joe Biden has proposed policies to ensure onshoring operations including removal of incentives for pharmaceutical companies producing products offshore and providing new incentives to shift manufacturing back to the US.