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President Trump's new executive order has loopholes. Photo: Scott Olson/Getty Images

President Trump signed an executive order Thursday that would require the federal government to buy "essential medicines" and certain medical supplies from American manufacturing plants.

The big picture: Similar to Trump's recent executive orders that target drug prices, it's unclear how much this policy would change the drug and device supply chain, and there are several loopholes.

How it works: Under the executive order, which is fiercely opposed by the pharmaceutical and drug supply industries, the Food and Drug Administration has 30 days to make a list of medications, drug ingredients and medical devices that federal agencies would have to purchase from U.S. manufacturing facilities.

Yes, but: The executive order does not apply if the drugs and supplies are not already made in the U.S., or if the policy would "cause the cost of the procurement to increase by more than 25 percent."

Between the lines: The coronavirus outbreak raised concerns that the country is too reliant on foreign manufacturing, especially if things unexpectedly shut down and create shortages of lifesaving drugs and protective gear.

  • But experts say drug manufacturers, wholesalers, pharmacies and others involved in making and dispensing drugs and supplies have strong financial incentives to produce and buy cheap — especially when it comes to generic drugs — and that usually means looking overseas.
  • A vast majority of pharmaceutical ingredients, for example, are made in China and India. The executive order doesn't change the lower cost of labor or materials in those countries.

"It's not going to have a major impact," said Awi Federgruen, a supply chain professor at Columbia Business School. "You've got to create an incentive structure that will simply make it attractive for manufacturers to produce here rather than produce overseas."

Go deeper

Nov 15, 2020 - World

Mexico tops 1 million coronavirus cases, as death toll nears 100,000

A sign above crowds of people in a street in Mexico City, Mexico, warning to "avoid masses" and keep distance from others during a nationwide, 12-day shopping event that's running through Nov. 20, designed to stimulate the economy. Photo: Cristopher Rogel Blanquet/Getty Images

Mexico surpassed 1 million coronavirus cases and over 98,200 deaths from COVID-19 late Saturday, per Johns Hopkins data.

Driving the news: Mexican health officials have focused on testing the seriously ill and conducted only about 2.5 million COVID-19 tests in total — representing 1.9% of the population, AP reports.

Nov 14, 2020 - Health

Austria announces nationwide lockdown as COVID-19 cases soar

Austria's Chancellor Sebastian Kurz hold a news confernce in Vienna. Photo: Herbert Neubauer/APA/AFP via Getty Images

Austria will impose a nationwide lockdown on Tuesday, Chancellor Sebastian Kurz said Saturday, after a nighttime curfew and partial shutdown failed to control the country's surge in coronavirus cases.

Why it matters: Austria is experiencing an average of 7,000 new COVID-19 cases a day, Kurz tweeted on Saturday. The nation confirmed a record 9,586 new virus cases on Friday, per Reuters.

Nov 14, 2020 - World

In pictures: Diwali celebrated amid coronavirus pandemic

A woman lights sparklers during Diwali in Allahabad, India. Photo: Sanjay Kanojia/AFP via Getty Images

Many are celebrating a relatively low-key Diwali, the festival of lights, this year as coronavirus cases surge in many parts of the world.

Driving the news: Coronavirus restrictions and social distancing efforts have derailed the plans of many Hindus, Sikhs and Buddhists who usually celebrate the festival by attending large gatherings.