After the devastation in Puerto Rico following the hurricane there, and I was at FDA when we grappled with that crisis, fully 10 percent of all the manufacturing capacity for drugs destined for the United States were taken offline. So 10 percent of all the drugs that Americans consume, the manufacturing was offline. I called around to every CEO who had a plant down there to get an assessment of it and we worked very closely with the companies. Almost consistently, the companies that had the biggest challenges that were manufacturing the lowest-margin products. So it was the companies manufacturing medical devices that were lower margin or the drugs. The branded companies that were manufacturing drugs there had very hardened facilities. They had redundant generators, they had months and months of fuel on hand, they had no disruptions in their manufacturing because their facilities were so well equipped. They were manufacturing products that were very high margin. If you are making a pill that costs $100,000, you are going to invest in the things you need to make sure that you can keep manufacturing that pill. And the amount of money that it takes to ensure that there will absolutely not be a disruption in manufacturing that pill is going to be a small percentage of the total margin on that product. So you will want to make sure that there are no disruptions.
So, what I would be worried about coming out of this are those products—generic drugs and things that are lower-margin products—where there hasn’t been as much investment in redundant capacity and hardening supply chains.
Jacob Heilbrunn is the editor of the National Interest.