2021 LS&HC Horizons - Flipbook - Page 66
66
Hogan Lovells
Biden’s potential use of the Defense Production Act
At the outset of the pandemic last spring,
one of the key tools that the U.S. government
invoked to address supply chain issues and to
procure products was the Defense Production
Act (DPA). The DPA provides the government
with a broad set of authorities to influence
domestic industry in the interest of national
defense, including the authority to: (1) issue
“rated orders” to commercial suppliers, and
(2) allocate materials and facilities to further
these needs. DPA rated orders generally go to
the “head of the line” as compared with existing
commercial orders.
The Trump Administration utilized the DPA
on multiple occasions, issuing rated orders for
COVID-19 vaccine, PPE, and ventilators. The
Biden Administration has made clear that it
also is committed to utilizing DPA authorities,
and that it will aim to approach DPA use more
holistically and strategically. It already has
announced initiatives to accelerate domestic
production, both up and down the supply chain
– to cover production of vaccines, therapeutics,
and COVID-19 tests, as well as needed raw
materials and components (e.g., glass vials
and needles).
Indeed, strategic use of the DPA requires
analysis of the various – and potentially
significant – impacts from all angles, including
effects on international trade/supply chain and
public health in the broadest sense. As DPA
rated orders prioritize government orders above
all others, they have the potential to impact
supply contracts with foreign governments.
For example, any delay of COVID-19 vaccines
obligated under existing contracts could well
be met with foreign retaliation, including
restrictions on exports to the U.S. of supplies
and raw materials needed for vaccine
manufacture. Additionally, DPA orders
could have ripple effects on drug and device
manufacture across-the-board in terms of
shortages or delays in manufacture of products
needed to treat other critical diseases. Balancing
these various concerns will need to be front and
center in any successful DPA strategy.
Mike Heyl
Partner, Washington, D.C.
mike.heyl@hoganlovells.com
Joy Sturm
Partner, Washington, D.C.
joy.sturm@hoganlovells.com
