Earlier this week, U.S. Senators Tom Carper (D-DE) and Todd Young (R-IN) wrote to U.S. Trade Representative Katherine Tai "express[ing] concern with recent action by China related to the procurement of medical devices." The Senators note at the outset that they represent states "with a robust medical device industry," and they "are troubled that this adverse action could negatively impact jobs, consumers, and broader economic health, especially as industries recover from pandemic-induced supply chain disruptions."

The Chinese action at issue is the "volume-based procurement (VBP) system," which, the Senators say, "inherently places American businesses at a disadvantage." VBP has been described as "a series of drug procurement policies carried out in China, aimed at encouraging generic substitutions and bringing down the cost of drugs that have passed their exclusivities"; the VBP policy "aims to achieve a lower price through large-volume procurement, to realise the so called 'volume for price' strategy."

In their letter, they argue that "[t]he VBP distorts the Chinese medical device market, which in turn undermines the sustainability of U.S. exports and American jobs." Before VBP’s introduction last year, they say, "the U.S. and China had a relatively balanced trade relationship in medical devices with U.S. exports exceeding $6 billion." However, "[t]he current structure of the VBP focuses exclusively on the lowest price without regard for the quality and value of the medical device product," which "negatively affects American manufacturers, threatens jobs, and could seriously impact the viability of this industry in the future: over fifty percent of the U.S. medical device products sold in China are manufactured by American workers residing in the U.S."

The Senators urged Ambassador Tai "to raise this issue in diplomatic outreach to China’s trade ministry and advocate for an equitable and transparent procurement process of mutual benefit," and recommended  "consultation with industry representatives to understand the true scope of the problem ... ."