U.S. manufacturing has shifted overseas for decades with at least one notable bright spot: The majority of all medical technology used in the United States is made here. Commerce Secretary Gina Raimondo called medtech “the last bastion of advanced manufacturing” in the United States. The medtech industry is proud of our domestic staying power, but it isn’t easy, and we can’t do it alone.
Patients and providers, perhaps often without even realizing it, depend on smart federal policy to promote U.S. manufacturing and the stable supplies of the components and materials our industry needs to serve patients in the United States and worldwide. We welcome the latest White House announcement of actions to strengthen U.S. supply chains, including medical products. Buy as the administration implements its plan, we urge consideration of these critical points:
The administration of medicine requires more than the medicine itself. Needles, syringes, infusion ports, and tubes deliver vaccines, insulin, nutrition, and chemotherapy drugs. Without it, healthcare delivery simply couldn’t happen.
The medtech industry sources inputs worldwide, competing with far bigger industries for raw materials and critical components. The global semiconductor chip shortage struck everything from car to smart phone manufacturing. Medtech is less than 1 percent of the overall semiconductor chip market but relies on these vital components for life-saving technologies, including diagnostic testing, patient monitoring systems, ventilators and other respiratory devices, robot-aided surgical equipment, ultrasounds, neonatal ICU machinery, and continuous blood glucose monitors.
A smart phone on back order is an inconvenience. Critical medical technology on back order, at best, delays care and, at worst, risks lives. As medtech becomes more complex, products require more inputs sourced from all over the world. Supply chain management is more important than ever.
The United States leads the world not only in medtech manufacturing but also innovation. Resilient, diverse supply chains are key to a strong U.S. medtech base.Equally important are policies to promote manufacturing and research and development. Most medtech innovation comes from the United States. The process requires extensive, expensive research and development. Small, emerging companies and startups often are idea-rich but cash-poor to fund the necessary R&D.
There are more important ways policymakers can continue to support a strong U.S.-based medtech industry from a supply-chain perspective:
- The immediate and long-term prioritization of medtech needs in programs such as the CHIPS Incentives Program for sufficient quantities of critical components – in addition to semiconductor chips, circuit boards, monitors, resins, polymers, medical grade packaging, the helium in magnetic resonance imaging (MRI) machines, and the materials needed for sterilization -- among industries competing for supplies.
- Supporting greater diversification of supply chains to reduce barriers to the flow of goods, with public-private partnerships to enhance resiliency and agility and reduce over-reliance for any aspect of manufacturing or supply. The new U.S. Department of Commerce Supply Chain Center and the Indo-Pacific Economic Framework for Prosperity, including the United States and 13 regional partner nations, are among key initiatives for this work.
Working with partners on improvements will increase steady-state visibility across the health supply chains and help ensure the medtech industry is well-positioned to quickly mobilize in any crisis or disruption.
- More consistent treatment of U.S. and foreign manufacturers on inspections: The FDA inspects foreign facilities much less frequently than domestic facilities. Consistency is necessary for quality assurance in a global supply chain.
- Enacting legislation including the Medical Supply Chain Resiliency Act by U.S. Senators Tom Carper (D-Delaware) and Thom Tillis (R-N.C.) and Representatives Michelle Steel (R-Calif.) and Brad Schneider (D-Ill.) and the Promoting Resilient Supply Chains Act from Representatives Larry Bucshon, M.D., (R-Ind.) and Lisa Blunt Rochester (D-Del.).
- On transportation, formalizing a “fast pass” or “green lane” at the national and international levels to expedite the handling of critical medical products and inputs at ports of entry, as directed in the FAST PASS Act from Representatives Mike Ezell (R-Miss.) and John Garamendi (D-Calif.).
- Workforce training and apprenticeships, including the utilization of public-private partnerships in collaboration with academia, to advance a new generation of medtech manufacturers in the United States, including at nodes of transport, warehouses, and with key suppliers.
- Tax incentives and investments to support research and development, including tax deductions for R&D expenses in the year they occur, and domestic manufacturing. In Medicare, the single biggest U.S. healthcare payer, a pay-for-performance program or other incentives could strengthen supply chains by shifting purchasing toward the most reliable manufacturers.
Announcing its new plan, the White House said, “Robust supply chains are fundamental to a strong economy.”
Robust supply chains are every bit as critical to the medical technology industry. Medtech is the backbone of patient care, an essential part of the incredible work our doctors and nurses do around the clock to improve and save countless lives. On behalf of the companies that develop these miracles of modern medicine, we urge Congress and the administration to protect the supply chains upon which they depend.
Scott Whitaker is the President and CEO of AdvaMed, The Medtech Association, the world’s largest trade association representing medical technology and device companies.
