SYK - President Biden to use 1950 law to boost essential drug production

2023-11-27 13:13:29 ET

U.S. President Joe Biden plans to invoke the Defense Production Act of 1950 to build up domestic production of essential drugs, as one of the many actions announced during the first meeting of his new supply chain resilience council.

The Cold War-era federal law was used to mobilize defense and war resources, expanding the supply of essential materials. President Biden plans to issue a presidential determination to broaden the scope of the Department of Health and Human Services (HHS) to enable investment in domestic manufacturing of essential medicines, medical countermeasures, and critical inputs deemed "essential to the national defense".

HHS in turn has identified $35M for investments in domestic production of key starting materials for sterile injectable medicines. It will also appoint a supply chain resilience and shortage coordinator to strengthen medical product and critical food supply chains.

As part of this effort, the US defense department will also release a report on pharmaceutical supply chain resilience, in order to reduce reliance on "high-risk foreign suppliers".

Johnson & Johnson ( JNJ ), Pfizer ( PFE ), Merck ( MRK ), AbbVie ( ABBV ), Eli Lilly ( LLY ) and other major US drugmakers are likely to benefit from such concentrated efforts to boost domestic production. Manufacturers of medical products such as Abbott ( ABT ), Hologic ( HOLX ), Medtronic ( MDT ), Boston Scientific ( BSX ), Stryker ( SYK ) and others will also likely benefit.

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