Neely said he would be at “full capacity” but needs government support, such as grants and other incentives, to expand. “I would think that this committee would want generic labs to be at full capacity,” he said, noting that one case study worth following for drug makers is the domestic sugar market. (CPA used sugar protection as a model for generics in a recent comment published on Oct. 22.)
Patrick Cashman, President of USAntibiotics in Tennessee, one of the only amoxycillin producers in the country, said the government also has a role to play in helping critical drug makers fire on all eight cylinders.
“We need targeted grants and low interest loans,” he said. “We need legislation like the CHIPS Act for generics. Essential medicines need to be deemed a national security asset because that is what will make them eligible for programs that are available to other critical sectors. We need a long term and sustained commitment to stay in business,” he said.
Sen. Scott singled out the lopsided treatment by FDA inspectors of U.S. labs versus Indian labs.
“If the FDA walked into Oxford and found a violation, found bird feathers and lizards walking around, what would happen,” Scott said. To the layman, it may sound like a radical exaggeration. But to people in the industry, they have read of many accounts of Indian labs being slapped on the wrists for ventilation systems dirty with bird feathers and waste, let alone lab records thrown away to make it impossible for FDA inspectors to see if the lab is following Current Good Manufacturing Practices (CGMP) needed to sell drugs in the U.S. market.
“If we ever got a Form 483 we would be closed and I would probably be indicted,” Neely said about the form and letter the FDA sends to labs that failed to meet CGMP standards. “The difference between us and India is that all they will do in that case is move operations to another one of their labs in India, or they will remind the FDA that if they ban an import, we will have a shortage,” Neely said. “That is the national security we face.”
Eric Edwards, Chief Executive Officer of PHLOW-USA said the U.S. lost the industrial base to make active pharmaceutical ingredients “over a 40 year period. In some cases, we rely on just a single source overseas to treat a variety of acute and chronic disease.”
Neely said his family takes a combined 28 generic medications, but none are American made. One comes from Canada. The rest are from India or China. “The only way I know where they are made is because I am in the industry so I know where to look,” he said.
This was another side bar issue during the hearing – and it comes out often in hearings on medication. Witnesses always note that doctors and pharmacists do not know where the medication comes from. Often that medication is not as effective. Generic drugs manufactured in India are linked to significantly more “severe adverse events” for patients who use them than equivalent drugs produced in the United States, according to a study by Ohio State University published in the Productions and Operations Management academic journal in February.
Neely touted tariffs as a solution.
“We have a long time to reform this industry but we have to get started and we can get started with the Section 232 investigation,” he said. “I think that is the first part to make sure we can respond to the problems we have in this industry.”
CPA submitted extensive comments in May to the Commerce Department’s Section 232 investigation into pharma, documenting how America’s dependence on foreign-made generic drugs poses severe national security risks.
“It is unacceptable that the most advanced country in the world can’t ensure a steady, safe supply of basic medicines for its own citizens,” said Sen. Scott. “The solution is simple: we must make drugs in America again. When we manufacture here at home, we can strengthen oversight, have safe drugs, and grow our economy.”
The Special Committee on Aging does not set any legislative agendas, or debate bills. It is considered a watchdog group that advises the Senate on topics discussed in its hearings.
Four Generic Drug Makers Tell Senate Committee the Government Holds Keys to Reshoring Critical Drugs
The Senate Special Committee on Aging was back at it this week discussing the woeful predicament of the domestic generic drug industry and its import-facing supply chain. This time, the Committee heard from four generic drug makers opposed to advocacy groups and Washington think tanks. Recall that CPA’s economist Andrew Rechenberg was one of four witnesses at a similar hearing on Oct. 8.
The fact that the Committee held a hearing on a similar topic only five weeks prior may explain why only two Republicans showed up in the question and answer period. Chairman Rick Scott (R-FL) and Ranking Member Kirsten Gillibrand (D-NY) showed once again that they two stand united on this issue, with both in favor of reshoring generic drug manufacturing. It is often hard to decipher where the two differ, suggesting rare bipartisan unity on the goal of producing more essential drugs in the U.S.
The four witnesses, all makers of various generics domestically, cited the need for better government procurement policies that take an “any-and-all” approach to government bids, opposed to carve outs for small businesses or special interest bidders, only. They also called for the need for long-term government procurement to build reserves for critical drugs, much like the Defense Department, now officially the Department of War, is now doing with critical minerals. They all wanted this for generic drugs. There was also more talk among panelists and the two Senate leaders on the Committee about targeted incentives for producers. Still, we do not hear any Committee members bringing up the PILLS Act, a bill that is like a CHIPS Act for generic drugs – something one witness said is needed. The PILLS Act could serve as a foundation to put these incentives in place by law.
Allan Coukell, Chief Government Affairs & Public Policy Office for CivicaRx, has become a regular at these hearings. He told the Senate once again that one of the reasons CivicaRx can make generic drugs in the U.S. is thanks to partner hospitals that agree to fixed volume, multi-year, long term contracts. The government can step in and do the same with other generic drug makers, especially for critical drugs often in short supply and import dependent.
“That gives us a stability that usually does not exist in the U.S. generic drug business,” he said at the hearing titled Made in America: Restoring Trust in Our Essential Medicines. “Those contracts let companies know that they are going to have market share and it gives them a commitment to make that product long-term. Everything in this market is based on price. That does not mean that we become indifferent to price, but we really need to weigh other factors when thinking about the drugs we are going to use,” he said.
Senator Tommy Tuberville (R-AL), one of the four Senators who asked questions on Wednesday’s hearing, wondered if it was financially viable to make drugs in the U.S.
Coukell told him that some injectables are viable today, but other essential medicines that sell for 30 cents are not. He compared CivicaRx putting tap water in a medicine vial and still being more expensive than an Indian import.
“You need a system where purchasers also select for quality and domestic supply chains,” he said. “If that costs more for the buyer, you probably have to make them whole for that cost differential if you want to protect that drug and make it here.”
Quality is not cheap, neither is labor. An American lab will never be able to compete on labor overhead with their rivals in India and China.
“For every dollar we spend, I’m going to say at least 38 cents is spent on quality,” said Tom Neely, Chairman of the Board, Oxford Pharmaceuticals in Alabama. “Our foreign competition is cutting their cost so they can get into the formulary,” he said. A formulary in the pharmaceuticals market is a list of prescription medications that a health insurance plan, pharmacy benefit manager (PBM), or a medical institution approves for coverage and use. If price is always a factor, the formulary will often go to the importer.
Neely said he would be at “full capacity” but needs government support, such as grants and other incentives, to expand. “I would think that this committee would want generic labs to be at full capacity,” he said, noting that one case study worth following for drug makers is the domestic sugar market. (CPA used sugar protection as a model for generics in a recent comment published on Oct. 22.)
Patrick Cashman, President of USAntibiotics in Tennessee, one of the only amoxycillin producers in the country, said the government also has a role to play in helping critical drug makers fire on all eight cylinders.
“We need targeted grants and low interest loans,” he said. “We need legislation like the CHIPS Act for generics. Essential medicines need to be deemed a national security asset because that is what will make them eligible for programs that are available to other critical sectors. We need a long term and sustained commitment to stay in business,” he said.
Sen. Scott singled out the lopsided treatment by FDA inspectors of U.S. labs versus Indian labs.
“If the FDA walked into Oxford and found a violation, found bird feathers and lizards walking around, what would happen,” Scott said. To the layman, it may sound like a radical exaggeration. But to people in the industry, they have read of many accounts of Indian labs being slapped on the wrists for ventilation systems dirty with bird feathers and waste, let alone lab records thrown away to make it impossible for FDA inspectors to see if the lab is following Current Good Manufacturing Practices (CGMP) needed to sell drugs in the U.S. market.
“If we ever got a Form 483 we would be closed and I would probably be indicted,” Neely said about the form and letter the FDA sends to labs that failed to meet CGMP standards. “The difference between us and India is that all they will do in that case is move operations to another one of their labs in India, or they will remind the FDA that if they ban an import, we will have a shortage,” Neely said. “That is the national security we face.”
Eric Edwards, Chief Executive Officer of PHLOW-USA said the U.S. lost the industrial base to make active pharmaceutical ingredients “over a 40 year period. In some cases, we rely on just a single source overseas to treat a variety of acute and chronic disease.”
Neely said his family takes a combined 28 generic medications, but none are American made. One comes from Canada. The rest are from India or China. “The only way I know where they are made is because I am in the industry so I know where to look,” he said.
This was another side bar issue during the hearing – and it comes out often in hearings on medication. Witnesses always note that doctors and pharmacists do not know where the medication comes from. Often that medication is not as effective. Generic drugs manufactured in India are linked to significantly more “severe adverse events” for patients who use them than equivalent drugs produced in the United States, according to a study by Ohio State University published in the Productions and Operations Management academic journal in February.
Neely touted tariffs as a solution.
“We have a long time to reform this industry but we have to get started and we can get started with the Section 232 investigation,” he said. “I think that is the first part to make sure we can respond to the problems we have in this industry.”
CPA submitted extensive comments in May to the Commerce Department’s Section 232 investigation into pharma, documenting how America’s dependence on foreign-made generic drugs poses severe national security risks.
“It is unacceptable that the most advanced country in the world can’t ensure a steady, safe supply of basic medicines for its own citizens,” said Sen. Scott. “The solution is simple: we must make drugs in America again. When we manufacture here at home, we can strengthen oversight, have safe drugs, and grow our economy.”
The Special Committee on Aging does not set any legislative agendas, or debate bills. It is considered a watchdog group that advises the Senate on topics discussed in its hearings.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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