Bloomberg recently reported on the US Defense Department’s examination of the quality and safety of imported drugs. The concern is valid — subsequent reports have detailed quality issues at factories in India, resulting in shortages of cancer drugs, deaths related to contaminated cough syrups, and other problems. Here’s a short reading list on the drug quality problem.
"US Military Is So Worried About Drug Safety It Wants to Test Widely Used Medicines,"
https://www.bloomberg.com/news/articles/2023-06-07/drug-safety-fears-spur-pentagon-plan-to-test-widely-used-meds
“US Watchdog Cracks Down on Indian Drugmakers,”
https://www.bloomberg.com/news/newsletters/2023-06-05/us-fda-cracks-down-on-india-s-pharma-firms-after-two-year-hiatus
“Drug-Quality Problems Overseas Ripple Through US Health Care,”
https://www.bloomberg.com/news/newsletters/2023-06-12/drug-quality-problems-overseas-ripple-through-us-health-care
The first article above triggered a search of Cumberland archives that turned the link to an old commentary that became a column in the Sarasota Herald Tribune.
In the column, which takes 3 minutes to read, we described how changes in US tax policy, which began in 1996 and were phased in over 10 years, drove pharmaceutical industry production offshore and decimated a safe and efficient drug production system in Puerto Rico. The politicians who gave Americans this “gift” are long gone, and most folks cannot name them. But we continue to pay the price for their errors today.
Please note that the changes in tax law that were initiated in 1996 could be repealed any time that a bipartisan federal Washington group decides to put America first instead of their selfish partisan political agendas. There’s no reason not to do this right now. Have you heard any candidate for president in 2024 talk about this issue? Note that there are now about 15 of them if we count D, I, and R.
Here’s the former column, with a ready solution to the drug quality problem. Note that the Puerto Rico debt issues are resolved now, so there is no financial impediment to a repeal of the 1996 law.
“Trump opportunity, Puerto Rico, pharma,”
https://www.heraldtribune.com/story/business/columns/2020/05/18/trump-opportunity-puerto-rico-pharma/112595756/
Also note that we are overweight in the healthcare sector, and that includes pharmaceutical companies, in the US Equity ETF portfolio.
David R. Kotok
Chairman & Chief Investment Officer
Email | Bio
