Major American pharmaceutical manufacturer Johnson & Johnson (J&J) has announced a planned $55 billion in domestic investments over the next four years, which is a 25 percent increase over its domestic investments during the previous four years. The investments are focused on increasing domestic manufacturing and research and development, with some of the $55 billion slated to build three new facilities inside the United States. A fourth new facility is already under construction in Wilson, North Carolina, with the intended purpose of manufacturing medications. The company’s leadership said the increased investment would provide good-paying jobs for American workers, increase the amount of medications available to Americans, and build an export market for those same medications to consumers in other countries.
Johnson & Johnson’s recent announcement is seen as a planned response to tariffs on imported medication scheduled to go into effect on April 2, and the company included in its announcement that it manufactures more medications here at home than in foreign countries. The positive news about increased pharmaceutical manufacturing by Johnson & Johnson comes on the heels of a similar boost in domestic investment by industry peer Eli Lilly. Together, the two firms are investing over $80 billion in the U.S. economy over the next four years, adding thousands of full-time jobs. Importantly, Johnson & Johnson also makes numerous over-the-counter medical supplies and supplements, ranging from mouthwash to bandages, benefiting even those consumers who do not take prescription medication.
U.S. Reliance on Imported Drugs Could be Security Risk
Aside from the benefits of more full-time jobs and potentially lower drug prices due to increased supply, Johnson & Johnson’s significant investment in domestic manufacturing of pharmaceuticals can be seen as an improvement in national security. The United States has relied on a steady increase in imported medication since 2000, and in recent years, American medical patients have faced shortages of many medications. Many of our imported medications are generics, constituting about 90 percent of total prescription medications.
Imports are vital for approximately two-thirds of generic drugs taken by Americans, which help them function and remain productive on a daily basis. By having to import these drugs or their precursors (materials), the U.S. is vulnerable to losing access in the event of a geopolitical conflict. Particularly, the U.S. imports lots of drugs from China, which could suspend this trade in the event of a trade war, or physical war, between itself and America’s allies. A looming conflict over Taiwan could result in the suspension of drug imports from China, hurting American consumers. Johnson & Johnson being able to make more of these medications here at home would significantly ease that shortage.
Demand for Pharmaceuticals Increasing Due to Aging Population
Increased domestic investment by Johnson & Johnson and Eli Lilly is also important due to the steady increase in demand for medications. Our nation’s aging population means more Americans require prescription medications, especially to remain productive on the job. Losing access to these medications could jeopardize the productivity of our labor force, making it a public policy priority to keep these drugs available. Domestic manufacturing can prevent negative supply shocks that cause shortages and massive price hikes, ensuring steady affordability for workers. Medication affordability is an area of bipartisan agreement, with both the Biden and Trump presidential administrations focusing on the topic between 2017 and 2024.
Image credit: Johnson & Johnson
