Economic Nationalism

COVID-19 Industrial Policy Fails Again

A Connecticut company got a $138 million government contract in order to break America's supposed "dependence" on foreign-made syringes. It has yet to produce even a single one.


It's a good thing Americans don't have to wait for the federal government's hand-picked suppliers of vaccines and syringes to end the COVID-19 pandemic. Those operations are not going well.

First, let's check in with ApiJect Systems Corp, a Connecticut-based medical supply company that got a $138 million government contract last year to develop a newfangled syringe that would be pre-filled with COVID-19 vaccine. You might think that's a lot of money simply to save the few seconds it takes to fill a syringe with vaccine—but the real goal of the contract was to reduce America's supposedly debilitating (and vastly overstated) reliance on medical equipment made in other countries.

The project will "help significantly decrease the United States' dependence on offshore supply chains and its reliance on older technologies with much longer production lead times," a Pentagon spokesman told NBC when the contract was announced last May. Why trade with other countries when we can make better syringes here in America, and do it faster too?

That is exactly what the proponents of industrial policy keep saying. So how is it working out?

Not great. More than 215 million doses of COVID-19 vaccine have been administered to Americans, but not a single one has been delivered via the fancy new syringes that ApiJect Systems is getting paid to produce. In fact, NBC reported on Wednesday that ApiJect has yet to produce a single syringe.

It gets worse. As part of an overall package of government contracts and federal loans that NBC says totaled $1.3 billion (ApiJect says the figure is lower), the company was supposed to build a manufacturing facility that would not only meet the COVID-19 pandemic head-on but would eventually provide syringes prefilled with other vaccines too. A spokesman for the industrial park in North Carolina where the facility was supposed to be built tells NBC that there's no factory there.

Fortunately, America has access to plenty of syringes already—thanks to those awful global supply chains everyone is always complaining about.

Although lots of syringes are made in the United States—the U.S. is the world's second-leading exporter of the product, according to the World Bank—we also imported more than $600 million of syringes from China, Mexico, Germany, and other countries in 2018, the most recent year covered by the World Bank's trade database. That's how the global supply lines for lots of medical goods work. Far from being over-reliant on drugs or equipment from any one part of the world, America's medical supply chains are vast, complex, and resilient—as the pandemic has illustrated.

Meanwhile, politicians who want to break those supply chains would leave Americans dependant on a few hand-picked suppliers at home.

Speaking of which, how are things going at Emergent BioSolutions, the federal government's hand-picked manufacturer of American-made vaccines?

Oh, boy. "Federal regulators have found serious flaws at the Baltimore plant that had to throw out up to 15 million possibly contaminated doses of Johnson & Johnson's coronavirus vaccine," The New York Times reports. "Production is now on pause in the United States, and all vaccines manufactured at the plant have been quarantined."

Unlike ApiJect, which received government funds during last year's rush to throw as much money at possible pandemic-ending ideas, Emergent Biosolutions has been on the federal dole since 2012 for the express purpose of domestic vaccine production in the event of a viral outbreak. That it has so far been unable to produce a single usable dose of vaccine is a damning illustration of the failure of industrial policy. This is the ultimate "you had one job" situation.

Under industrial policy, businesses become successful by lobbying for government contracts rather than by making products that work. Emergent BioSolutions "spent much of the last two decades cornering a lucrative market in federal spending on biodefense," the Times reported earlier this month. But while getting fat on government contracts, audits found "a persistent problem with mold in areas required to be kept clean, poor disinfection of some plant equipment leading to growth of bacteria, the repeated approval of raw materials that had not been fully tested, and inadequate training of some employees"—issues that likely culminated in the contamination problems that have plagued Emergent's COVID-19 vaccine production.

Once again, it's only because the United States has access to a global system of supply chains for vaccines—most of which are produced in Belgium and Germany—that we are coming out of the pandemic as soon as we are.

Nationalist industrial policy might make for good politics in some places, but it has a long track record of failure. I would much rather have a German-made COVID vaccine delivered through a Chinese-made syringe right now than be left waiting for ApiJect and Emergent to finally accomplish whatever they're doing with hundreds of millions of tax dollars.