Ensuring availability of critical minerals required bold, targeted action. Financing critical medicines will require the same resolve — tailored to the distinct economics of drugs.
How should the U.S. government respond when another country takes actions that could cripple portions of our domestic manufacturing base? When China banned exports of gallium, germanium, and antimony to the United States in late 2024 (later suspended), Washington moved fast. Within months, the President was in the Oval Office announcing Project Vault — a $12 billion public-private partnership to facilitate financing for essential raw materials to insulate American manufacturers from future supply shocks.
That is what a national priority looks like.
But what happens if China decides to restrict exports of the active pharmaceutical ingredients that go into the generic drugs that fill American medicine cabinets? The answer, at the moment, would be: not much. Not because the threat isn’t real, it is, but because the United States does not yet have in place the financing architecture for critical medicines that it has been busy building for critical minerals.
Or imagine, as we did, how the COVID-19 pandemic would have played out if China, and not the U.S., had manufactured the highly effective medical countermeasures. To prevent such a scenario from playing out in the future, MITRE published a ten-point action plan in 2021 calling for policy, program, and financing reforms to strengthen the U.S. biopharma industrial base, arguing that the pandemic had exposed a reactive, transactional government approach to preparedness and that the U.S. needed a proactive, sustained framework to ensure an adequate supply of medical countermeasures, essential medicines, and medical supplies against both biological and geopolitical threats. Most of those reforms remain unheeded.
Or note China’s dizzying ascendance as a powerhouse in drug development, along with the American capital fueling it. China’s share of global biotech patents surged from just 1% in 2000 to 28% in 2019, surpassing the U.S. share, and its biopharma R&D spending has increased 400-fold over the past decade. The deal flow tells the story: Chinese biopharma licensing to Western drugmakers surged nearly 10-fold to a record $138 billion in 2025, and 2026 is already on pace to break that mark with average deal sizes up 76% year-over-year. Further, J.P. Morgan reports China-origin assets represented 50% of global large-cap pharma licensing deals with initial payments above $50 million in Q1 2026 and captured 75% of the total dollars paid at signing in that group, up from essentially 4% in 2021.
The BIOSECURE Act addressed Chinese companies operating on U.S. soil; it left untouched the river of American capital and intellectual property flowing the other way. The proposed addition of biotechnology to the COINS Act aims to restrict that outward capital flow but it has also exposed a schism in the U.S. biopharma ecosystem.
A new report released earlier this month by the National Academies of Sciences, Engineering, and Medicine makes an important point with uncomfortable precision: U.S. manufacturing productivity has declined markedly over the past 15 years, China has led global manufacturing output since 2011 and now accounts for roughly 35% of gross world manufacturing compared to 12% for the United States. The Academies call for a national industrial manufacturing strategy (something nearly every leading competitor nation already has) to align resources and close the gap. Critical medicines are an acute instance of a systemic problem.
What We’re Building for Minerals
The critical minerals financing system didn’t exist five years ago. It was deliberately constructed, piece by piece, in response to a perceived threat. And it’s important to understand how it works before asking whether it can be replicated for medicines.
The Export-Import Bank (EXIM) is the workhorse. That agency’s Supply Chain Resiliency Initiative provides financing for international mining projects, but with a twist: the financing is tied to long-term off-take contracts between the foreign producer and a U.S. manufacturer. An off-take contract is simply a commitment to buy. For instance, a battery maker agrees in advance to purchase a specified quantity of lithium from an Australian mine, and that commitment becomes the basis for the loan. The buyer gets supply security. The producer gets the financing to extract the minerals. The lender has a revenue stream to lend against. The risk of every private sector participant goes down.
Project Vault establishes a U.S. Strategic Critical Minerals Reserve, an independently governed public-private partnership that stores 60 critical minerals in secure facilities across the country. It is manufacturer-driven: companies identify which materials they need, at what volumes, and commit financially to the program. The government backstops the financing up to $10 billion. The market drives the demand signal.
The U.S. International Development Finance Corporation (DFC) plays a complementary role. DFC takes equity stakes in mining projects internationally, recently closing a $600 million investment in a $1.8 billion critical minerals consortium. Its contingent liability ceiling was raised from $60 billion to $205 billion in the FY2026 National Defense Authorization Act. The Defense Department closes the loop with procurement guarantees, providing the demand certainty that makes private investment viable.
Three agencies. Defined roles. A coherent system.
Why Medicines Are Harder, But Not Impossible
The off-take model works cleanly for commodities. A ton of lithium is a ton of lithium. Pharmaceuticals are more complicated, and the complications vary by category, roughly speaking: (1) generic medicines (off patent) representing ~90% of volume, ~10% of market value; (2) innovative medicines (on patent) representing ~10% of volume and ~90% of market value; and (3) medical countermeasures, which encompass generic and innovative medicines and represent a very small fraction of a percent of the market for medicines (with the exception of pandemics).
For generic drugs, the active pharmaceutical ingredients (APIs) and upstream key starting materials that go into most of what Americans take are overwhelmingly manufactured in China and India. The concentration risk is real and well-documented: more than 8 in 10 of the top 100 generic medications used by Americans have no U.S.-based source of APIs. But generic APIs aren’t quite commodities (e.g., quality, regulatory approval, and sourcing all vary) and the economics of generic manufacturing are brutally thin. Domestic producers simply cannot compete on price with Chinese and Indian manufacturers operating at scale with lower labor and regulatory costs.
An off-take mechanism could change that calculus, but it requires a committed buyer willing to pay a modest premium for supply chain security over lowest-price procurement. The private sector has begun to test this model: CivicaRx, a nonprofit generic drug company backed by a consortium of hospital systems, uses long-term purchase commitments from its members to support domestic manufacturers of essential medicines. It works, but at a scale that barely registers against overall vulnerability. A government-backed analog, or an expansion of the CivicaRx model with federal support, would be a plausible path to rebuilding domestic manufacturing capacity.
For medical countermeasures (e.g., vaccines, antivirals, treatments for biological threats), something closer to the off-take model already exists. The government’s Biomedical Advanced Research and Development Authority (BARDA) used advance purchase commitments to guarantee a market for Covid vaccines before they existed, but notably in a crisis context. Those are structurally similar to what EXIM does for minerals. The government commits to buy; the manufacturer has a basis to invest.
This is the most developed example of the model applied to medicines, and it can work if there is sufficient pull to derisk development, manufacturing, and demand. The question is whether it can be extended beyond emergency preparedness to the broader category of medicines. In fact, the civilian U.S. medical countermeasure program was launched post-9/11 in the wake of the anthrax attacks, on a market-making model. The Project BioShield Act of 2004 authorized an advance appropriation of $5.6 billion over 10 years and enabled commitments years in advance of market approval. However, that investment proved insufficient to build a biodefense industrial base that was fit for mission.
For innovative patented medicines, the off-take model largely doesn’t apply. You cannot pre-commit to purchasing a drug that hasn’t been approved yet, and the IP and regulatory timelines that govern drug development don’t map neatly onto the kind of long-term supply agreements that underpin minerals financing. Different instruments are more relevant here — equity investment, loan guarantees for manufacturing facilities, and R&D incentives.
One innovative model comes from MIT’s Andrew Lo and colleagues, whose megafund concept proposes large and diversified portfolios of drug development assets, sized to attract institutional capital by spreading risk across enough candidates that the overall return becomes predictable. Applied to nationally strategic medicines (e.g., rare disease treatments, next-generation antimicrobials, medicines with high biodefense relevance), a government-catalyzed megafund could mobilize private capital at a scale that individual drug investments cannot.
The point is not that medicines financing is impossible. It is that it requires a more differentiated approach than minerals financing, tailored to the distinct economics of each drug category. That differentiation is exactly what the current non-system fails to provide.
What Needs to Happen
Consider what a serious gap analysis actually reveals about the existing toolkit.
BARDA is the strongest analog to the minerals financing system, but its mandate stops well short of what’s needed. Its powers are tightly bound to medical countermeasures for chemical, biological, radiological, and nuclear threats, pandemic influenza, and emerging infectious diseases. It does not cover the broad universe of drugs that Americans depend on daily.
A separate office within the Department of Health and Human Services (HHS), the Administration for Strategic Preparedness and Response (ASPR) Center for Industrial Base Management and Supply Chain (IBMSC), was stood up specifically to address generic drug and API supply chain vulnerabilities. And while a December 2023 presidential determination under the Defense Production Act gave IBMSC expanded authority to fund construction and make advance commitments for medicines deemed essential to national defense, the total deployed against that authority amounts to roughly $31.5 million across two awards — a rounding error relative to Project Vault’s $10 billion. More recently, ASPR was directed to be moved under CDC as part of the March 2025 HHS restructuring, though legal questions remain, and faces a proposed $356 million budget cut for 2027.
The Strategic Active Pharmaceutical Ingredients Reserve (SAPIR), which President Trump directed be filled via executive order in August 2025, is a stockpile, not a financing mechanism. It is led by IBMSC, not BARDA, and adopts a public health rather than a national security framework. That addresses the symptom without building the capacity to reduce the underlying risk. The United States currently manufactures only about 10 percent of the APIs used in prescription drugs. The SAPIR stores a six-month supply of APIs for 26 critical drugs. Project Vault pairs its stockpile with a $10 billion financing commitment designed to build the supply chain that makes the stockpile less necessary over time. The SAPIR has no equivalent investment on the supply side.
EXIM has domestic manufacturing authority that explicitly covers biotech and biomedical products. It was included in the Make More in America initiative from the beginning, and pharmaceuticals and APIs were identified in the 2021 supply chain review that motivated the program. But in practice, that authority has never been activated at scale for biopharma. There is no pharmaceutical equivalent of Project Vault. There is no off-take financing program for generic API manufacturing. The authority sits unused.
DFC’s recently expanded financing authority and its reauthorization could open the door to investing in medical countermeasure production in high-income countries, analogous to what it has done for critical minerals. But no such transactions have materialized.
The pattern across each of these agencies is the same: the authority exists, the gap analysis has been done informally at least once, and nothing happened. That is not a statutory problem. It is a political and organizational one.
The real gap involves systems architecture, accountability, funding, and prioritization. China has been intentional, patient, and has provided substantial resources in pursuit of its “industrial policy of everything.”
No one has mapped existing tools into a coherent system with defined agency roles and clear accountability. There is no interagency framework that assigns HHS, DFC, EXIM, and DoD complementary roles for critical medicines the way the minerals system does. There is no critical medicines equivalent of EXIM’s chairman standing in the Oval Office and putting a number on the government’s commitment.
That ambiguity is itself a vulnerability. When the critical minerals supply chain is stressed, someone is responsible for the response. When the pharmaceutical supply chain is stressed, the responsible party is less clear. And the history of the last several years suggests that ambiguity produces stockpiles and executive orders, not industrial base investment or competitiveness in a vital technology platform: biotechnology.
A recent post on this Substack page points out that the federal government’s growing off-balance sheet of equity investments in strategic industries lacks the transparency, accountability, or architecture to manage that exposure coherently. Critical medicines investments are an opportunity to improve on all fronts.
The National Security Commission on Emerging Biotechnology put it plainly in its April 2025 report: “There is time to act, but no time to wait.” That is true. But acting requires more than urgency. It requires an executive branch with clear authority, a budget commensurate with the task at hand, and accountability for results. The United States built a financing architecture for critical minerals because it decided to act. It can do the same for critical medicines. The question is whether it will act before China forces our hand.