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The Biden administration is considering exercising something called “march-in rights” as a policy prescription to curb drug prices. But as with any prescription, there is a need to weigh efficacy against the side-effects. In this case, there is  that the vast majority of drugs would not be impacted by march-in rights because most of the patents underlying them are not federally-funded. On the other hand, the harm that this policy will inflict on a pillar of the nation’s innovation system will be substantial. 

This pillar of the U.S. innovation system, the of 1980, provides that recipients of federal research funding have the option to retain patents on the inventions arising out of their research. The Act also establishes safeguards to ensure protection from the non-use or unreasonable use of federally funded innovations. One such safeguard, march-in rights, to require the licensee to grant a license to “any responsible entity or entities” when they determine that the inventor is not moving to commercialize the technology, or that action is needed to protect public health or safety.

Essentially, the authors imply that the US price premium could be significantly reduced without affecting research and development investments or having other adverse effects. This is a strikingly bold and unfounded conclusion. There is no sound economic rationale to suggest that price ratios across countries or revenue premiums in the United States should match current research and development spending. Hence, the fact that price differences and research and development spending levels fail this arbitrary test does not offer a basis for sound policy making.

The issue of drug prices is always controversial, but in today’s politically charged environment, it seems particularly important to carefully evaluate this post’s methods and conclusions—and to do so through the lens of the economic principles that drive companies to search for new medicines and set prices for them. Thought leaders and policy makers would be well advised to approach this issue with a clear-eyed view of facts and underlying principles that govern economic behavior.

The cost of prescription drugs in the U.S. continues to be a source of concern for patients, caregivers, and policymakers. In a recent poll of U.S. adults, 77% of respondents with varying political affiliations said that prescription drug costs were “unreasonable” (1). In 2016, the U.S. spent $450 billion on prescription medicines, accounting for 14% of total health care spending and projected to increase to $610 billion by 2021 (2). Much of this increase in drug spending is due to brand-name drugs that are protected from generic competition by patents and regulatory exclusivity (3). Though they constitute only 10% of prescriptions dispensed in the U.S., brand-name drugs account for 74% of drug spending (4). During the market exclusivity period, the brand-name manufacturer can earn sizable profits, which can help to drive further pharmaceutical innovation and investment in drug development.

In the U.S., drug prices typically decline rapidly once generic drugs receive U.S. Food and Drug Administration (FDA) approval and begin to enter the market. The greater the number of generic manufacturers’ versions in a market, the steeper the price decline, with prices decreasing to less than 20% of the original drug’s price (5, 6). In 2016, generic drugs accounted for only 27% of overall U.S. drug spending yet constituted 89% of drug prescriptions in the U.S. (7), a dramatic increase from just 19% of prescriptions in 1984 (8). Low-cost generic drugs generated $253 billion in savings to the U.S. health care system in 2017 and more than $1 trillion in the past decade (4, 9). Appropriate use of low-cost generic drugs is associated with improved patient medication adherence (10, 11) and health outcomes (12).

When Americans think of drug prices, they usually think that they're too high. And for name brand drugs, that's often the case compared with the rest of the world.

But when it comes to, medicines that are workhorses in hospitals, the opposite problem is true. They can be too cheap.

The evolving international order has mostly been divided into two categories of powers: status quo and revisionist. The latter, as the term signifies, are powers who aim to revise the existing global systems or order by altering it gradually or overthrowing it completely through new measures or initiatives. A gradual change would indicate the rise of an evolutionary revisionist power, while a sudden or rapid change indicates a revolutionary revisionist power. Essentially, a revisionist power aims to enhance its power, status and authority in global decision-making process, seeking to remodel the international system, and eventually the order, in its favor. A revolutionary revisionist power views such an endeavor through the lenses of realism. 13 Alternatively, an evolutionary revisionist power follows the idealist school of thought, or a gradualist path: it would not necessarily confront the established great powers in seeking to change the existing international systems and order. 14

Scholars, such as John Mearsheimer and Suisheng Zhao, argue that rising powers such as China and India, with the potential to emerge as major (or great) powers, would continue to pose challenges for the existing international system and order. 15 The intensity to compete, perhaps to challenge the existing system or order, is more noticeable in China than in other powers, highlighting that China is more ‘revisionist’ than a normal ‘status quo’ power. 16 The reasons behind China’s perception as a revisionist power in Indo-Pacific are appositely clear. These include authoritarian and unilateral initiatives to bring out fast-track infrastructure development along with connectivity through the flagship Belt and Road Initiative (BRI) and assertive claims in the maritime domains, such as the South China Sea and East China Sea disputes. Further, mounting claims over land territories and attempts to create a distinct order through the creation of international institutions or forums that are evidently linked to China’s national interests are also important factors. 17 On account of this, the tag of revisionism on Beijing appears today to be justified. 18

In April, China’s military completed three days of large-scale combat exercises around Taiwan that rehearsed blockading the island and said  it is “ready to fight … at any time to resolutely smash any form of ‘Taiwan independence’ and foreign interference attempts.” The actions followed U.S. pledges to arm up Taiwan and Taiwanese President Tsai Ing-wen’s diplomatically risky meeting on U.S. soil with U.S. House Speaker Kevin McCarthy. In recent months several Chinese fighter jets have buzzed American military aircraft over the South China sea. Barring a confrontation over Taiwan, however, Xi and other senior Chinese officials have said they do not want war with the United States. Relations between the two powers should not be a “zero-sum game where one side outcompetes or thrives at the expense of the other,” as Xi told Biden at their last bilateral meeting in Bali in November, according to a Chinese Foreign Ministry statement.

So far, China’s actions seem to be speaking louder than such words. LaPlante conceded that fears Beijing is calculating it must act against Taiwan sooner than later are “a very valid concern. It is always a question that is on everybody’s mind.” In an interview, LaPlante said that sense of urgency is why Biden has invoked the emergency Defense Production Act, enacted during the Korean War, to rebuild and expand the nation’s domestic hypersonic missile industry. This is a key area of Chinese advancement, and U.S. officials fear that Beijing seeks to use hypersonics to push U.S. ships and bases out of close range in the Asia-Pacific region.

While the world should hope a full-scale conflict between US and China can be avoided, relations between the two superpowers continue to deteriorate. Now politicians, experts, and even America's military leaders have started to raise the question: Just how prepared is the US if the threats from Beijing become something more serious?

War in the Western Pacific is likely not an immediate danger, , but it is a possibility. Were the US to end up in a war with China, the likely cause would be a Chinese military assault on the self-run democratic island of Taiwan, which Beijing has long claimed as Chinese territory and is seen as a challenge to its authoritarian rule. President Joe Biden has that the US would come to Taiwan's defense if China attacked, a break from previous administrations' policy of strategic ambiguity. But as major rivals, the US and China could also find themselves at war for other reasons, such as China's of the South China Sea, where US and Chinese military ships and planes often find themselves in close proximity. 

I keep thinking about the comment that Rep. Mike Gallagher (R-Wis.) made at the , back on Feb. 28, of the House select committee on the Chinese Communist Party (CCP): “This is an existential struggle over what life will look like in the 21st century, and the most fundamental freedoms are at stake.” The committee chairman was right, but not in the way that he meant.

A leading China hawk, Gallagher claimed: “The CCP is laser-focused on its vision for the future — a world crowded with techno-totalitarian surveillance states where human rights are subordinate to the whims of the party.” While it’s true that the Chinese Communist Party has created a system of “techno-totalitarian surveillance” in China and is happy to sell its surveillance technology , there is scant evidence that it is conspiring to export its system of oppression globally. Gallagher’s vision is merely an update of the old Cold War paranoia about a supposed Soviet plot to take over the world, which missed the fact that Soviet leaders were driven primarily by defensive concerns about their own security.

The Biden Administration's Unprecedented Proposal for Government Intervention in Technology Companies under the Bayh-Dole Act

On December 7, 2023, the Biden administration released a request for information (RFI) regarding an unprecedented proposal for the government to take over the patents of start-ups and other companies where those patents are the byproduct of a federal grant. The proposal is based on a never-used provision of the Bayh-Dole Act -- exercising the government's so-called "march in" rights. The administration's proposal would apply to all technologies and all sectors of the economy and likely halt private sector investment in many early-stage, developing technologies.

In the decades to come, advanced bioweapons could threaten human existence. Although the probability of human extinction from bioweapons may be low, the expected value of reducing the risk could still be large, since such risks jeopardize the existence of all future generations. We provide an overview of biotechnological extinction risk, make some rough initial estimates for how severe the risks might be, and compare the cost-effectiveness of reducing these extinction-level risks with existing biosecurity work. We find that reducing human extinction risk can be more cost-effective than reducing smaller-scale risks, even when using conservative estimates. This suggests that the risks are not low enough to ignore and that more ought to be done to prevent the worst-case scenarios. How worthwhile is it spending resources to study and mitigate the chance of human extinction from biological risks? The risks of such a catastrophe are presumably low, so a skeptic might argue that addressing such risks would be a waste of scarce resources. In this article, we investigate this position using a cost-effectiveness approach and ultimately conclude that the expected value of reducing these risks is large, especially since such risks jeopardize the existence of all future human lives. Historically, disease events have been responsible for the greatest death tolls on humanity. The 1918 flu was responsible for more than 50 million deaths,1 while smallpox killed perhaps 10 times that many in the 20th century alone.2 The Black Death was responsible for killing over 25% of the European population,3 while other pandemics, such as the plague of Justinian, are thought to have killed 25 million in the 6th century—constituting over 10% of the world's population at the time.4 It is an open question whether a future pandemic could result in outright human extinction or the irreversible collapse of civilization. A skeptic would have many good reasons to think that existential risk from disease is unlikely. Such a disease would need to spread worldwide to remote populations, overcome rare genetic resistances, and evade detection, cures, and countermeasures. Even evolution itself may work in humanity's favor: Virulence and transmission is often a trade-off, and so evolutionary pressures could push against maximally lethal wild-type pathogens.5,6 While these arguments point to a very small risk of human extinction, they do not rule the possibility out entirely. Although rare, there are recorded instances of species going extinct due to disease—primarily in amphibians, but also in 1 mammalian species of rat on Christmas Island.7,8 There are also historical examples of large human populations being almost entirely wiped out by disease, especially when multiple diseases were simultaneously introduced into a population without immunity. The most striking examples of total population collapse include native American tribes exposed to European diseases, such as the Massachusett (86% loss of population), Quiripi-Unquachog (95% loss of population), and the Western Abenaki (which suffered a staggering 98% loss of population).9 In the modern context, no single disease currently exists that combines the worst-case levels of transmissibility, lethality, resistance to countermeasures, and global reach. But many diseases are proof of principle that each worst-case attribute can be realized independently. For example, some diseases exhibit nearly a 100% case fatality ratio in the absence of treatment, such as rabies or septicemic plague. Other diseases have a track record of spreading to virtually every human community worldwide, such as the 1918 flu,10 and seroprevalence studies indicate that other pathogens, such as chickenpox and HSV-1, can successfully reach over 95% of a population.11,12 Under optimal virulence theory, natural evolution would be an unlikely source for pathogens with the highest possible levels of transmissibility, virulence, and global reach. But advances in biotechnology might allow the creation of diseases that combine such traits. Recent controversy has already emerged over a number of scientific experiments that resulted in viruses with enhanced transmissibility, lethality, and/or the ability to overcome therapeutics.13-17 Other experiments demonstrated that mousepox could be modified to have a 100% case fatality rate and render a vaccine ineffective.18 In addition to transmissibility and lethality, studies have shown that other disease traits, such as incubation time, environmental survival, and available vectors, could be modified as well.19-21 Although these experiments had scientific merit and were not conducted with malicious intent, their implications are still worrying. This is especially true given that there is also a long historical track record of state-run bioweapon research applying cutting-edge science and technology to design agents not previously seen in nature. The Soviet bioweapons program developed agents with traits such as enhanced virulence, resistance to therapies, greater environmental resilience, increased difficulty to diagnose or treat, and which caused unexpected disease presentations and outcomes.22 Delivery capabilities have also been subject to the cutting edge of technical development, with Canadian, US, and UK bioweapon efforts playing a critical role in developing the discipline of aerobiology.23,24 While there is no evidence of state-run bioweapons programs directly attempting to develop or deploy bioweapons that would pose an existential risk, the logic of deterrence and mutually assured destruction could create such incentives in more unstable political environments or following a breakdown of the Biological Weapons Convention.25 The possibility of a war between great powers could also increase the pressure to use such weapons—during the World Wars, bioweapons were used across multiple continents, with Germany targeting animals in WWI,26 and Japan using plague to cause an epidemic in China during WWII.27 Non-state actors may also pose a risk, especially those with explicitly omnicidal aims. While rare, there are examples. The Aum Shinrikyo cult in Japan sought biological weapons for the express purpose of causing extinction.28 Environmental groups, such as the Gaia Liberation Front, have argued that “we can ensure Gaia's survival only through the extinction of the Humans as a species … we now have the specific technology for doing the job … several different [genetically engineered] viruses could be released”(quoted in ref. 29). Groups such as R.I.S.E. also sought to protect nature by destroying most of humanity with bioweapons.30 Fortunately, to date, non-state actors have lacked the capabilities needed to pose a catastrophic bioweapons threat, but this could change in future decades as biotechnology becomes more accessible and the pool of experienced users grows.31,32 What is the appropriate response to these speculative extinction threats? A balanced biosecurity portfolio might include investments that reduce a mix of proven and speculative risks, but striking this balance is still difficult given the massive uncertainties around the low-probability, high-consequence risks. In this article, we examine the traditional spectrum of biosecurity risks (ie, biocrimes, bioterrorism, and biowarfare) to categorize biothreats by likelihood and impact, expanding the historical analysis to consider even lower-probability, higher-consequence events (catastrophic risks and existential risks). In order to produce reasoned estimates of the likelihood of different categories of biothreats, we bring together relevant data and theory and produce some first-guess estimates of the likelihood of different categories of biothreat, and we use these initial estimates to compare the cost-effectiveness of reducing existential risks with more traditional biosecurity measures. We emphasize that these models are highly uncertain, and their utility lies more in enabling order-of-magnitude comparisons rather than as a precise measure of the true risk. However, even with the most conservative models, we find that reduction of low-probability, high-consequence risks can be more cost-effective, as measured by quality-adjusted life year per dollar, especially when we account for the lives of future generations. This suggests that despite the low probability of such events, society still ought to invest more in preventing the most extreme possible biosecurity catastrophes.

Bioterrorists could one day kill hundreds of millions of people in an attack more deadly than nuclear war, will warn world leaders. Rapid advances in genetic engineering have opened the door for small terrorism groups to tailor and easily turn biological viruses into weapons. A resulting disease pandemic is currently one of the most deadly threats faced by the world, he believes, yet governments are complacent about the scale of the risk. Speaking ahead of an address to the Munich Security Conference, the said that while governments are concerned with the proliferation of nuclear and chemical weapons, they are overlooking the threat of biological warfare. Mr Gates, whoseis funding research into quickly spotting outbreaks and speeding up vaccine production, said the defence and security establishment “have not been following biology and I’m here to bring them a little bit of bad news”. Mr Gates will today (Saturday) tell an audience of international leaders and senior officers that the world’s next deadly pandemic “could originate on the computer screen of a terrorist”. He told the Telegraph: “Natural epidemics can be extremely large. Intentionally caused epidemics, bioterrorism, would be the largest of all. “With nuclear weapons, you’d think you would probably stop after killing 100million. Smallpox won’t stop. Because the population is naïve, and there are no real preparations. That, if it got out and spread, would be a larger number.” He said developments in genetic engineering were proceeding at a “mind-blowing rate”. Biological warfare ambitions once limited to a handful of nation states are now open to small groups with limited resources and skills. He said: “They make it much easier for a non-state person. It doesn’t take much biology expertise nowadays to assemble a smallpox virus. Biology is making it way easier to create these things.” The increasingly common use of gene editing technology would make it difficult to spot any potential terrorist conspiracy. Technologies which have made it easy to read DNA sequences and tinker with them to rewrite or tweak genes have many legitimate uses. He said: “It’s not like when someone says, ‘Hey I’d like some Plutonium’ and you start saying ‘Hmmm.. I wonder why he wants Plutonium?’” Mr Gates said the potential death toll from a disease outbreak could be higher than other threats such as or nuclear war. He said: “This is like earthquakes, you should think in order of magnitudes. If you can kill 10 people that’s a one, 100 people that’s a two... Bioterrorism is the thing that can give you not just sixes, but sevens, eights and nines. “With nuclear war, once you have got a six, or a seven, or eight, you’d think it would probably stop. [With bioterrorism] it’s just unbounded if you are not there to stop the spread of it.” By tailoring the genes of a virus, it would be possible to manipulate its ability to spread and its ability to harm people. Mr Gates said one of the most potentially deadly outbreaks could involve the humble flu virus. It would be relatively easy to engineer a new flu strain combining qualities from varieties that spread like wildfire with varieties that were deadly. The last time that happened naturally was the 1918 Spanish Influenza pandemic, which went on to kill more than 50 million people – or nearly three times the death toll from the First World War. By comparison, the recent Ebola outbreak in West Africa which killed just over 11,000 was “a Richter Scale three, it’s a nothing,” he said. But despite the potential, the founder of Microsoft said that world leaders and their militaries could not see beyond the more recognised risks. He said: “Should the world be serious about this? It is somewhat serious about normal classic warfare and nuclear warfare, but today it is not very serious about bio-defence or natural epidemics.” He went on: “They do tend to say ‘How easy is it to get fissile material and how accurate are the plans out on the internet for dirty bombs, plutonium bombs and hydrogen bombs?’ “They have some people that do that. What I am suggesting is that the number of people that look at bio-defence is worth increasing.” Whether naturally occurring, or deliberately started, it is almost certain that a highly lethal global pandemic will occur within our lifetimes, he believes. But the good news for those contemplating the potential damage is that the same biotechnology can prevent epidemics spreading out of control. Mr Gates will say in his speech that most of the things needed to protect against a naturally occurring pandemic are the same things needed to prepare for an intentional biological attack. Nations must amass an arsenal of new weapons to fight such a disease outbreak, including vaccines, drugs and diagnostic techniques. Being able to develop a vaccine as soon as possible against a new outbreak is particularly important and could save huge numbers of lives, scientists working at his foundation believe.

The world is fixated on viruses thanks to COVID-19. Public and private sectors have mobilized extraordinary levels of resources in tackling the pandemic, including developing vaccines in record time and antiviral and antiretroviral treatments for the disease. In the process, however, another major microbial threat has been neglected. In a study published in The Lancet in January, researchers at the University of Washington estimated that 1.3 million people die each year from bacterial infections that are resistant to antibiotics. Such infections kill more people annually than do HIV/AIDS, diarrhea, and malaria. Antibiotic resistance causes more deaths than any infectious disease apart from COVID-19 and tuberculosis.

These new estimates have brought the problem of antibiotic resistance out of the shadows and confirmed what most public health experts, researchers, and clinicians have known for a long time: the overuse of antibiotics risks making the drugs useless and brewing the next major health crisis. As incomes around the world have risen, so has the consumption of antibiotics—in particular in the agricultural sector, where the drugs are used at an industrial scale on animals. Such extensive use creates the conditions that allow bacteria to become resistant to the drugs. Antibiotic resistance could well become the leading cause of death by infectious disease in the coming years. In 2016, the United Nations General Assembly called for global action to protect the world’s antibiotics, but there has been little progress since. The consequences of inaction are serious. With antibiotics rendered ineffective, societies would return to a world of greater death and deteriorating life expectancy in which common surgeries, transplants, and chemotherapy become much more dangerous because of the high risk of untreatable infection.

Historically, some of the most consequential pandemics have been caused by bacterial diseases such as the bubonic plague or cholera. With the advent of effective public health interventions and the introduction of antibiotics, recent pandemics have been associated with viruses while bacterial pandemics have diminished in frequency and scale. The COVID-19 pandemic has highlighted the many challenges faced in preparing for and responding to modern public health emergencies (PHE), and it has spurred efforts to prevent future ones; these efforts, however, have largely focused on viral pathogens. It must not be forgotten that secondary bacterial infections have also played an important role in exacerbating morbidity and mortality during viral pandemics, as observed during the 1918 influenza pandemic, and, to a lesser degree, during COVID-19.1,2 With the diminishing power of antibiotics to treat infections due to increasing antimicrobial resistance (AMR), the threat of a bacterial pandemic or a viral pandemic—accompanied by secondary bacterial infections resistant to our available stock of antimicrobials—remains possible. Antimicrobial resistance is a material threat to the health of all Americans, even in the absence of a pandemic. Nearly 1.27 million deaths were attributed, globally, to difficult-to-treat bacterial infections in 2019.3 A PHE such as a pandemic or other large-scale infectious disease outbreak is likely to exacerbate the problem of AMR and the conditions that support its spread. Therefore, efforts to tackle AMR through crisis-mode planning are our best defenses against a PHE caused by an untreatable bacterial pathogen or a PHE caused by a virus with inevitable secondary bacterial or fungal infections.4 As we have witnessed during the most recent example of a PHE with COVID-19, there were challenges with our ability to maintain infection control and antimicrobial stewardship practices due to overcrowded healthcare settings, stresses on the healthcare workforce (including staffing shortages), a lack of rapid diagnostics to guide treatment decisions, and shortages of routine medications and medical supplies, among other factors. Furthermore, the frequent movement of pathogens between humans, companion and food animals, and the environment, profoundly affected the health of the animal care workforce. Moreover, the depletion of the agricultural workers by illness had a negative impact on animal health and food security.5

Nicola Principi, Ettore Silvestri, and Susanna Esposito, "Advantages and Limitations of Bacteriophages for the Treatment of Bacterial Infections," Front. Pharmacol. 10:513, 5-8-2019, 

Potential Advantage of Bacteriophage (BP) Use to Treat Bacterial Infections

At the July launch of the AMR Action Fund, Admiral Brett P. Giroir, U.S. assistant secretary for health, said the following:

"Antimicrobial resistance, I do believe, is the existential threat of this century."

The Biden administration is considering exercising something called “march-in rights” as a policy prescription to curb drug prices. But as with any prescription, there is a need to weigh efficacy against the side-effects. In this case, there is  that the vast majority of drugs would not be impacted by march-in rights because most of the patents underlying them are not federally-funded. On the other hand, the harm that this policy will inflict on a pillar of the nation’s innovation system will be substantial. 

This pillar of the U.S. innovation system, the of 1980, provides that recipients of federal research funding have the option to retain patents on the inventions arising out of their research. The Act also establishes safeguards to ensure protection from the non-use or unreasonable use of federally funded innovations. One such safeguard, march-in rights, to require the licensee to grant a license to “any responsible entity or entities” when they determine that the inventor is not moving to commercialize the technology, or that action is needed to protect public health or safety.

**THE BOTTOM OF THIS CARD IS ALSO AN ANSWER TO THE PRICING TURN**

Introduction 

This definition of “national security” is broader than just the defense industry or military-related efforts; it also could encompass the very ability of a nation to ensure economic well-being, public health, and protection of a nation's key infrastructure. Supply chain disruptions cause general economic disruption and key commodity shortages, which then in turn can, in fact, drive aggressive national behavior and international instability. And ironically, this reactive aggressive national behavior can happen even if the health of a national economy itself depends upon continued international economic interdependence. Indeed, this very interdependence can create vulnerabilities. So a systematic effort, cutting across agencies and public and private sectors, could be one way to ensure these vulnerabilities are understood and mitigated. Supply Chain Disruption and Conflict Dispersed supply chains develop because actors find it's economically advantageous to seek the least-expensive and most-productive sources of supply. These dispersed chains develop for good reasons, but they create complicated interdependencies whose risks and vulnerabilities are sometimes not even understood, let alone mitigated. While the reasons for creating these chains lie largely with private interest, the effects of disruption—which can come from sources ranging from malign human action to natural disaster—are rarely localized. When shortages occur in one industry, the disruptions in one area nearly always spill into adjacent companies and sectors. Whole economies feel the impact, not isolated actors. The impact on vulnerable populations may be particularly dire. Supply chain disruptions do not just create higher prices and shortages among high-end consumer products, such as cars. They also affect more-basic commodities such as generic drugs or energy, increasing the cost of living and the provision of basic needs. This kind of disruption can create instability more generally, promoting conditions for conflict between and within nations. For the most part, nations try to maintain access to markets and resources by peaceful means such as stockpiling, direct investment in partner nations, and use of other financial incentives. However, there is no guarantee that such competition will remain peaceful. As affluent nations and individuals can find ways to mitigate shortages, they may create blocs of “haves” and “have nots,” where some actors have enough but others cannot meet basic needs. “Haves” may find ways to more directly change distribution, most likely at the expense of other “have nots.” Or “have” nations may try to forcefully safeguard what they have gained and work to exclude competitors. In all these cases, the actors are facing shortages, occasioned by interdependence, and seeking security for themselves in ways that actually promote wider international systemic instability. Escalation of Conflict In some cases, supply chain disruptions can have an even more-direct impact than general disruption, causing shortages of commodities the nation must have to ensure national security. This kind of disruption can go beyond matters of justice, equity, and general prosperity to threatening a nation's very ability to defend itself and look after its citizens. Some examples are pharmaceuticals and personal protective equipment, energy, food, raw materials used in manufacturing, and semiconductors used in multiple different systems including military applications. Such shortages can make the need for a national government to act more dire and immediate and thus raise the risk of conflict. In some cases, particular types of raw materials only exist in certain places, so shifting to more-secure sources isn't even possible.

In addition to semiconductor production, China has invested substantially in artificial intelligence and its telecommunications infrastructure. This combination of data from the country’s global roll out of 5G and unprecedented processing capability will provide the Chinese government with unrivaled power to influence governments and control societies. [5] These capabilities also make it easier for Chinese agents to access proprietary and confidential information, posing a threat to supply chains as American businesses engage in commerce globally. The current FBI Director, Christopher Wray, has sounded the alarm on this issue, describing the scale of Chinese intellectual property theft as “the largest transfers of wealth in human history.”[6] Chinese development of artificial intelligence capabilities with 5G will exacerbate supply chain vulnerabilities, enabling greater technology theft and exposing data on materiel used in the production of U.S. and NATO weapons systems. This infiltration into supply chains that support military requirements is not theoretical. In 2018, the Department of Defense published a report “Assessing and Strengthening the Manufacturing and Industrial Base and Supply Chain Resiliency of the United States,” which found that the majority of counterfeit electronics came from China and create vulnerabilities in American defense systems.[7] In 2019, the U.S. Justice Department uncovered and prosecuted cases involving Chinese-made cameras and surveillance equipment found on American military installations.[8] The presence of these electronics shows how military supply chains may be compromised. Even with fifth generation aircraft, autonomous naval vessels, or next generation squad weapons, Chinese exploitation of supply chain vulnerabilities may jeopardize U.S. Military capabilities by diminishing the readiness and potential production of these weapons systems.

Competition between the United States and China in the realms of electric and autonomous vehicles could determine the future control of global supply chains in an unprecedented way, according to a lawmaker and several experts. “Our competitors, particularly in China, are not holding back,” said Sen. Gary Peters (D-Mich.) during an April 27 event hosted by the Center for Strategic and International Studies, a security-focused think tank. “We cannot fall behind on the global stage.” Peters said that the future of the automotive industry was in electric vehicles (EVs) and autonomous vehicles (AVs), and that the nation to best develop those industries would win a great advantage in the global marketplace. To that end, former Director of National Intelligence Adm. Dennis Blair noted that both EVs and AVs were singled out in Beijing’s “Made in China 2025” industrial plan as part of its top 10 high-tech areas to seize leadership in. This, he said, demonstrated a clear effort to displace the United States as the lead controller of global supply chains and the international industrial ecosystem. “If the United States loses full spectrum industrial capacity in the automotive industry, and this means designing the cars, testing them, building them, fixing them, the whole ecosystem, then we are hollowing out the industrial sector that we counted on to become the arsenal of democracy in the second world war,” Blair said. “The big picture is China’s all-of-government push and the importance of the automotive sector to American industrial capability.” Blair added that the ongoing technological decoupling of China from the rest of the world in terms of its data and systems standards would prove a vital component of how Sino-American competition in the sector unfolded. “This sort of decoupling of the Chinese economy from the rest of the world is something you need to watch in this space,” Blair said. “It may be that separate AI [artificial intelligence] industries and AV technologies grow up in China and the rest of the world.” John Bozzella, President of the Alliance for Automotive Innovation, agreed that China could effectively seize control of vital supply chains by seizing industrial prominence in EV and AV technologies, thus pushing the United States out of access to vital technologies. “The countries that really take the lead in developing cutting edge innovative technologies in the auto sector are going to control the supply chains, set the standards, set the running rules, and really own global markets,” Bozzella said.