Across industries, consumer priorities tend to emerge slowly. But once they take root, they change how we define value. When shopping for a new car, some consumers prioritize style and performance, while others prioritize safety and practicality. While price has always been a key consideration for most car shoppers, safety emerged as a key consideration after Ralph Nader’s 1965 book Unsafe at Any Speed called attention to vehicle design risks, and fuel efficiency became an important factor during the 1970s energy crisis. Building codes also evolved: cost and structural integrity used to be enough, but starting in the 1990s, new requirements around both earthquake resilience and accessibility under the Americans with Disabilities Act began reshaping how we design and evaluate buildings. In the early 2000s, some of us went from comparing fat and sugar on food labels to asking where the food in our grocery stores came from — a shift that gained traction with the rise of the organic movement and concerns about environmental sustainability and fair trade.
MCOs and PBMs make policy decisions that impact the market’s access to drugs, devices, and diagnostics, as well as medical services and preventive care. These decisions are usually based on three factors, relative to alternatives:
- How well it works (i.e., efficacy)
- How safe it is
- How much it costs
This system, focused on cost-effective care, makes sense. But it overlooks a growing risk: where and how these products are made. In a world of global supply chains and potential disruptions due to natural disasters, economic instability (e.g., tariffs), deliberate sabotage, or attacks (physical or cyber) from geopolitical adversaries, ignoring where and how products are made could leave us exposed.
It’s time to start thinking differently — starting with biosecure access, a concept that brings biosecurity into how drugs, devices, and diagnostics are evaluated — alongside safety, efficacy, and cost.
The biosecurity blind spot
More than 70% of the active pharmaceutical ingredients (APIs) used in U.S. medicines come from overseas — primarily from China and India. China dominates the supply of critical drugs like antibiotics, creating significant vulnerability in our health care system. Similar vulnerabilities exist for many medical devices and diagnostic supplies, which often rely on single-source overseas manufacturers with limited redundancy or surge capacity.
When COVID-19 hit, we saw what happens when pharmaceutical supply chains break down. Hospitals ran short on sedatives for ventilated patients, pharmacists faced backorders for common generics, and manufacturers scrambled to source active ingredients from overseas suppliers. But it doesn’t take a global pandemic. In 2017, for instance, a blaze at a Pfizer plant in Puerto Rico disrupted the supply of critical injectable drugs, straining hospitals across the country.
Yet today’s market-access frameworks offer no incentives to choose more secure, domestic suppliers. In fact, U.S.-made drugs often end up restricted or on nonpreferred copay tiers — despite their strategic advantage — simply because they cost a bit more.
So, what happens when we succeed in reshoring drug manufacturing — but payers still prefer the least expensive option? That risks undermining the very efforts designed to make our system more resilient.
Biosecure access isn’t about overhauling how payers work overnight. Rather, it’s about elevating supply-chain security to stand alongside the traditional trinity of safety, efficacy, and cost — particularly for prescription drugs critical to public health and national security.
Consider this approach as planting a seed of change in how we assess value. While modest at first, this shift could fundamentally reshape how we secure our medical supply chain in the years ahead.
Lessons in domestic sourcing
Health care isn’t the first sector to face this challenge. Other industries have successfully incentivized intermediaries to prefer domestic or secure sourcing. Here are a few standout examples:
Defense and aerospace: Contractors like Raytheon and Lockheed must source U.S.-made components as a non-negotiable requirement. It’s not just encouraged — it’s codified in procurement regulations through policies like the Buy American Act.
Energy infrastructure: Want federal tax credits for your solar project? You’ll get a bigger one if your panels and batteries are made in the United States. That’s built into the Inflation Reduction Act — and it’s working.
Telecom networks: After the Commerce Department issued security concerns over microchips made by Huawei, a Chinese technology company, the United States funded a “rip and replace” program to remove high-risk foreign equipment. Telecom companies that complied got federal support.
Food and agriculture: If schools want USDA support for lunch programs, they have to prioritize U.S.-grown food. That’s part of the Buy American provision for public nutrition programs.
These examples demonstrate that intermediaries — whether contractors, utilities, or retailers — consistently respond to well-designed incentive structures, suggesting a similar approach could succeed with payers.
Incentivizing payers to support domestic manufacturing
So how do we apply this to health care? As a way to seed policy discussions, here are several concepts to nudge MCOs and PBMs to care about biosecurity — roughly ordered from lighter-touch interventions to those that would require greater coordination or investment.
Transparency mandates: The federal government could require drug manufacturers to disclose where APIs, components, and finished products are made for essential medications. In parallel, payers could be required to report the sourcing of drugs on their formularies, especially for high-risk or vulnerable supply chains. Together, these measures would create shared visibility into systemic sourcing risk and help government agencies, providers, and purchasers track how much of the drug supply depends on fragile or concentrated sources.
Biosecurity risk ratings: HHS, in collaboration with the FDA or the Administration for Strategic Preparedness and Response (ASPR), could support the development of standardized biosecurity risk scores for drugs, devices, and diagnostics — analogous to credit ratings or cybersecurity certifications. These scores would evaluate factors like the geographic concentration of API sources, number of manufacturing sites, and historical vulnerability to disruption. Payers could incorporate these scores into their P&T committee or medical technology committee reviews. Over time, they could help differentiate products that offer similar clinical and cost outcomes but differ in supply chain risk — similar to how Energy Star ratings once guided consumer appliance choices.
Consumer-driven models: Some employers and plan members may be willing to pay slightly more for health plans that prioritize domestic manufacturing, especially in light of recent drug shortages or national security concerns. Health plans could offer optional benefit designs that favor U.S.-sourced products, similar to how investment firms offer “green” or environmental, social, and governance (ESG)-aligned funds. These “resilience-focused” or “Made in America” plans would give consumers a way to align their health care spending with their values — creating demand–pull pressure on payers to include domestically manufactured products on formularies and in medical policies. These models would complement upstream reforms by expanding market signals for secure supply chains.
Purchasing pools: The federal government could help improve the price competitiveness of domestic drugs by organizing or supporting purchasing pools — buying collectives that aggregate demand across public payers like Medicare, Medicaid, and the VA. These pools could focus on critical drug categories such as sterile injectables and antibiotics, enabling larger-scale contracts with manufacturers that commit to resilient, domestic supply chains. Agencies such as HHS or ASPR could coordinate these efforts, leveraging the government’s purchasing power without the need for new subsidy programs.
Medicare and Medicaid adjustments: Federal payers could reward health plans that support supply chain resilience through modest adjustments to existing funding formulas. For example, CMS could pilot enhanced federal matching rates — known as the Federal Medical Assistance Percentage, which determines how much the federal government pays toward state Medicaid costs — for programs that cover drugs, devices, or diagnostics meeting domestic manufacturing or redundancy criteria. In Medicare Advantage, CMS could test incorporating resilience metrics — such as the share of U.S.-sourced drugs on preferred formulary tiers — into Medicare Star ratings or bonus payments. These adjustments could begin with select drug classes like oncology or anti-infectives and gradually scale up, reinforcing biosecurity as a component of value alongside safety, efficacy, and cost.
Tax credits: The federal government could offer performance-based tax credits to plan sponsors that cover or advantage a threshold percentage of U.S.-manufactured drugs, especially in strategically critical categories such as antibiotics, sterile injectables, and shortage-prone medications. These credits could be scaled based on the share of qualifying products, similar to incentives in the renewable energy sector, and would help offset the cost differential associated with prioritizing resilient, domestic supply chains.
Long-term purchasing contracts: The federal government could commit to long-term purchasing agreements with manufacturers that invest in supply-chain resilience — such as domestic API production, geographically diversified sites, or surge capacity. These multiyear contracts would create predictable demand and reduce market risk for manufacturers, making it more economically viable to produce essential drugs, devices, and diagnostics domestically. Priority could be given to drugs with limited manufacturers, history of shortages, or strategic importance to national health security like sterile injectables or antibiotics.
Mandates and restrictions: The federal government could mandate public payers to cover and even advantage U.S.-sourced drugs for certain essential medications. A related option would be to restrict federal reimbursement for critical drugs produced overseas when a therapeutically equivalent, domestically manufactured alternative is available. While more direct, these approaches would likely increase costs and face political headwinds — making lighter-touch nudges more practical starting points.
Let’s start small and grow from there
We don’t need to get everything perfect right away. But we do need to start recognizing that the lowest-cost product isn’t always the highest value — especially if it leaves us vulnerable.
While biosecurity is a national strategic concern, its implications ripple across the health care system. By influencing payers — the gatekeepers — to consider biosecure access, we can use market levers to grow a more resilient health care system. With time, biosecure access could become as standard a consideration as cost effectiveness — not just a niche concern, but a core part of how we define value.
Resilient systems don’t just happen. They’re deliberately seeded and nurtured.
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