IV Insufficiency

What’s Happening: Hurricane Helene flooded a North Carolina manufacturing facility that produces 60 percent of all fluid supplies used in the United States for IVs and in-home dialysis. Baxter International, the operator of the North Carolina facility, stated Monday that it will begin phasing in production by the end of the year, but the timeline for full production is not yet known.

Why It Matters: The shutdown of the Baxter facility has contributed to an IV fluid shortage impacting 86 percent of all health care providers in the United States. Hospitals in response have begun rationing IV supplies to between 40–60 percent of normal levels, with 75 percent of providers saying they have canceled or may cancel elective surgeries. The Food and Drug Administration (FDA) has released an update that three IV-related products are no longer commercially available to meet U.S. demand, as the Baxter facility’s shutdown has resulted in 1.5 million fewer IV fluid and dialysis bags produced daily. To make up for this shortfall, the FDA will allow the importation of IV solutions – from Canada, China, Ireland, and the United Kingdom – that are normally banned for reasons of regulatory oversight. It is unclear how long the temporary import authorization will last.

Looking Ahead: The shortage of IV supplies will likely spark conversation about the concentration of pharmaceutical and medical supply chains, given the fact that 85 percent of U.S. IV supplies are produced by just two facilities in storm-prone locations (a facility in Florida, which produces 25 percent of IV fluids, was in the path of Hurricane Milton but is still operational). This market concentration, as one might expect, almost certainly raises the price for providers and consumers alike, demonstrated in part by the fact that 500ml of Baxter Normal Saline sells for about $10 in Canada compared to $146 for 1,000ml in the United States. (Notably, in 2014 the FDA issued an import alert in response to an attempted saline importation from a Baxter facility – the same company now shut down in North Carolina – operating in Canada.) That the FDA is only now (and temporarily) allowing the importation of IV fluids from other countries, which the agency normally deems unsafe for U.S. consumption, is probably cause for greater scrutiny of its ability to regulate the purchase of foreign medical products.

U.S. Chip Sales Curtailed

What’s Happening: According to anonymous sources, the Biden Administration is considering introducing restrictions on exports of certain artificial intelligence (AI) chips to several countries, particularly in the Middle East. These measures would include setting a limit on export licenses for countries on a national security basis with the intended purpose of preventing high-performance chips from being used for military applications. This policy would build upon export curbs placed on U.S. chips sold to China last year, a move that primarily impacted Nvidia, a top U.S. producer of semiconductor chips. The administration’s rumblings about restrictions appear to be more than just talk, however, as Nvidia stated in its 2024 annual review that it expected new licensing restrictions would be placed on its high-performance chips starting in the fourth quarter of this year. The restricted countries mentioned include Saudi Arabia, the United Arab Emirates, and Vietnam.

Why It Matters: New country-by-country export licensing caps on AI chips would most impact Nvidia and competing semiconductor firm on which the Biden Administration has already placed export limits for 40 countries. While some restrictions may be justified for national security reasons, it is important to recognize that such restrictions also significantly hinder the bipartisan goal of promoting a world-class semiconductor industry – a goal advanced most notably in the much-touted CHIPS and Science Act, which poured more than $50 billion in taxpayer money into advancing U.S. chip manufacturing. Limiting the sale of top-of-the-line U.S. chip products, in the latest case to include some of our allies, reduces U.S. chip companies’ global market share as it puts an artificial cap on global demand for their products. While the Chinese market, for example, accounted for 20 percent of revenue for

Looking Ahead: Given that Nvidia’s 2024 annual report anticipates the implementation of export caps, it’s likely the Biden Administration will proceed with its plan. Yet limiting these companies’ ability to export – and therefore reducing their profitability – under the rationale of national security will reinforce a concerning precedent. Such a policy could theoretically justify limiting the export of goods ranging from steel to critical minerals, as these similarly possess strategic value and can be utilized for military applications.