A concerted effort is underway to turn Israel into the hub of a potential regional US medical supply chain that reduces American dependence on China.
The heart of the campaign is a bipartisan push on Capitol Hill to mandate and fund the opening of a US Food and Drug Administration office in Israel, which would assist companies within Israel and Arab countries that recognize it to produce medicines and medical supplies for the lucrative US market.
The drive is spearheaded by the US Israel Education Association, a small faith-based nonprofit organization headquartered in Alabama.
Over the past decade, the USIEA has brought senior congressional leaders to Israeli settlements in the West Bank, has worked with the same lawmakers to secure hundreds of millions of dollars in US funding for the Iron Dome anti-missile system, and has developed ties between Israeli and Palestinian business communities.
It is now working with lawmakers on both sides of the aisle on the ambitious “near-shoring” initiative. The term describes moving supply chains from distant countries to those that are closer to the US – in this case, ideologically as well geographically.
The effort, though ambitious, has particular bipartisan appeal. It would address American national security concerns by reducing US dependence on China, a Republican congressional priority.
US overdependence on China for its medicines was an issue even before the COVID-19 pandemic in 2020.
The year before, the Congressionally mandated US-China Economic and Security Review Commission — established in 2000 — held a hearing titled “Exploring the Growing US Reliance on China’s Biotech and Pharmaceutical Products.”
“National health security and national security are threatened by US dependence on China for thousands of ingredients and raw materials to make our medicines,” testified Rosemary Gibson, author of “China Rx: Exposing the Risks of America’s Dependence on China for Medicine.”
With the move of production of key medicines and ingredients from the US to China, supply could be weaponized against the US, Gibson warned.
There are also concerns over the reliability of Chinese regulatory standards. “As a result of US dependence on Chinese supply and the lack of effective health and safety regulation of Chinese producers, the American public, including its armed forces, are at risk of exposure to contaminated and dangerous medicines,” read a 2019 US-China ESRC report.
The COVID-19 pandemic and disruption to global supply chains underscored how dependent the US is on China for everything from surgical masks to semiconductors.
“Those are very precarious and tenuous supply lines,” Peter Pitts, former associate commissioner of the FDA, told The Times of Israel by phone. “We have to be able to protect our supply of necessary medical products to the United States. And theoretically, by working with Israel, for example, or the United Arab Emirates or Morocco or Bahrain, we can move some of the manufacturing for these essential medical products out of China; for example, have them manufactured in countries more friendly to the United States.”
The FDA, which ensures the safety of drugs, medical devices, biological products and food sold in the US, opened an office in Jordan in 2011 but closed it without explanation in 2013. It currently has international offices in Europe, India, Latin America, and, of course, China, but none in the Middle East or North Africa.
On the Democratic side of the aisle, the campaign dovetails with President Joe Biden’s priorities.
In September he issued an executive order calling on the US State Department and other federal agencies that “engage with international partners as part of their missions shall… encourage regulatory cooperation and the adoption of best practices to evaluate and promote innovative products.”
Biden’s September executive order was part of a wave of legislation targeting US reliance on China’s biotechnology and medicines, some of which explicitly saw Israel as a key component of an alternative to China. In May 2020, during the early stages of the pandemic, Republican Senator Ted Cruz and his Democrat counterpart Chris Coons introduced The Expanding Medical Partnerships with Israel to Lessen Dependence on China Act.
“Our dependence on China for life-saving medications and treatments is deeply problematic,” Cruz said in a statement. “By expanding partnerships with Israel – an ally and a global leader in medicine – to develop coronavirus treatments, this legislation is a common sense step to address that threat.”
The legislation found its way into the 2021 National Defense Authorization Act, authorizing $4 million for joint life sciences research between the US and Israel.
Opening an FDA office in Israel, with a possible satellite office in the UAE, would also tighten ties among Abraham Accords countries.
“What we want to do in the United States is help to advance the philosophy of the Abraham Accords, which is to build relationships, personal relationships and of course business relationships between the participating countries,” Pitts explained. “And one way to do that is to make those countries a center for biopharmaceutical development and manufacturing.”
“High-ranking officials in the relevant committees” in Congress are hard at work turning the vision into legislation, according to USIEA CEO Heather Johnston.
On September 21, at the request of the House Energy and Commerce Committee senior leadership, the USIEA presented a white paper explaining the need for a regional FDA office.
In May, a bipartisan group of congressmen, including California Democrat Lou Correa of the Homeland Security Committee and Republican Neal Dunn of the Energy and Commerce Committee, visited Israel to explore the issue on a trip funded by USIEA. They met with then-prime minister Naftali Bennett, opposition leader and now presumptive incoming premier Benjamin Netanyahu, Defense Minister Benny Gantz, and US Ambassador Tom Nides, as well as Amir Reichman, CEO of the Jerusalem-based BiondVax Pharmaceuticals.
“I never look at Israel or parts of the Middle East as being far away,” Correa told The Times of Israel in May. “I look at them as strategically part of the US economy, part of our future. So Israel, I say, can and should be part of this… But don’t forget there’s other countries in this area that can be part of a manufacturing miracle.”
Phone line or office
Despite the support among American lawmakers, not all the relevant parties have expressed open support for the idea.
The FDA would prefer to open a dedicated phone line for Middle Eastern companies, according to sources who have discussed the matter with agency officials.
An FDA spokeswoman would not comment on any specific efforts in the Middle East, saying only that the agency “periodically reviews the locations of its foreign offices and considers whether additional offices are warranted.”
“If the FDA were to determine a need for an additional office or offices, it would consult with the departments of Health and Human Services and State,” she continued. “Typically, the host country government also needs to approve the office. This process can be lengthy.”
The FDA doesn’t yet see the need to open up an office in Israel, explained sources who are in touch with agency officials.
A spokesman for Netanyahu declined to comment on the Likud leader’s position on the initiative before he takes office. Netanyahu was tasked with forming a government on Sunday.
Talks on the matter between the country began in Netanyahu’s prior tenure as prime minister, so there is reason to believe he would back the effort.
Asher Salmon, head of International Relations at the Health Ministry and a key figure in determining his office’s stance, told The Times of Israel on Tuesday that the ministry’s stance on the project is that they “are looking for closer ties between Israel and the FDA in any area that will contribute to Israeli interests.”
“We are not sure what is the proper structure, whether opening an office in Israel will improve the situation or not improve it,” he explained. “We are open to discussions on how an office should be opened, if there is a need for an office to be opened, what it should contain in order to be effective.”
At the same time, he emphasized that this FDA office, should it open, would be unique. “Other FDA offices around the world deal with the regulation of food, or regulation of medicine production. Those two things are not relevant for us. We are talking about a totally new type of office, which deals with speeding up clinical trial processes.”
Faster and more efficient
Senior players in Israel’s biopharmaceutical industry, on the other hand, are enthusiastic backers of the project.
Opening an FDA office in Israel would be “hugely impactful,” said Jon Medved, CEO of OurCrowd, an Israeli equity-crowdfunding platform that launched a $200 million Global Health Equity Fund with the World Health Organization, focused on breakthrough technologies with the potential to improve healthcare around the world.
“Israeli companies have several issues where they go to market with medical products or services,” he continued. “Foremost is the regulatory regime. It’s not easy at all for Israeli companies to go through this process. Many of them don’t have the experience. They’re far away. Therefore, this thing is strategic.”
The FDA has a “very arcane, Byzantine structure,” lamented Pitts.
“[Opening an office] can give them good, solid, on-the-ground, real-time advice rather than having to go through a Washington DC consultant to do things over the telephone with the [time] differences,” he continued.
It would also show international investors that Washington is serious about working with Israeli companies to bring their products to the US, by far the world’s largest pharmaceutical market.
The office “will help the FDA move a lot faster in understanding and regulating novel fields in the convergence of technology and biology,” offered Yair Schindel, managing partner of aMoon, an Israeli healthtech investment fund. “It will also help Israel generate more healthtech innovation and mobilize these innovations into the US market faster and more efficiently.”
Schindel has briefed several members of US Congress over Zoom on the importance of the project.
The regional drug development process would begin with Israeli research and development, said Israeli healthcare entrepreneur Morris Laster.
“Innovation then moves over to advanced clinical trials, whether it be in Morocco, Egypt, or UAE Accords, and then basically get manufactured,” said Laster. “Now, if you have the FDA come on top of UAE regulatory, you basically have access to the First World as well.”
“Can Egypt produce needles? Yes,” said Reichman. “Can they produce glass and vials at cheap cost and compete with China? Of course. So we can give roles to each of the allies, provide work, provide prosperity, and secure the supply chain. But we need to do it thoughtfully.”
The near-shoring project would have additional geopolitical benefits for the US, argued Reichman. China and Russia have been making inroads in the Persian Gulf region and elsewhere in the Middle East in drug development and infrastructure.
“It can block Russian and Chinese companies’ access to this area,” he said. “Healthcare and infrastructure are the ties to the people and influence.”
The fate of the near-shoring initiative lies now in the hands of Congress, who could fund an FDA office in a 2023 appropriations bill after the November 8 midterms.
The support of Israel’s next government will also be a key factor in the effort moving forward.
“It can be a unique proposition whereby we help to advance peace in the Middle East,” Pitts argued. “We help to protect America’s supply of essential medical products through FDA’s physical presence in the region.”
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