Witnesses spoke about key chokepoints in the supply chain. These were mostly geographical, followed by the concentration of active pharmaceutical ingredients (API) and key starting materials (KSM) used in making that API which almost exclusively come from China. Even the European producers are sourcing from there.
“India provides more than a third of our APIs and China’s inroads into this market is rising fast,” said Ronald Piervincenzi, Chief Executive Officer of United States Pharmacopeia, a hundred year old member organization whose core mission is to build trust in medicine safety.
He said his organization has identified 100 medicines vulnerable to API and KSM risk that would be difficult to substitute. “These are generic drugs that are susceptible to geopolitical tensions, as well. The end result is an increasingly fragile supply chain that hurts patient care and is bad for national security,” he said.
The U.S. continues seeing widespread drug shortages. It is common for the FDA’s drug shortages list to have a hundred or more drugs in short supply, or currently unavailable. There are currently at least 80 drugs in short supply at this time, including basic generics used in hospital settings such as dextrose monohydrate injections. These are commonly used intravenously (IV) for people who are unable to eat or used to treat dehydration. It’s hard to find in the U.S. at this time.
Hospital pharmacists across the U.S. have reported as many as 300 critical drug shortages at any given time. Some 85% of doctors say these shortages are moderately or critically impacting care. Doctors often lack crucial medicines such as antibiotics, sedatives, cancer drugs, all typical and foundational medicines necessary in any hospital setting.
Reps. Jake Auchincloss (D-MA-4) and Raul Ruiz (D-CA-25) were anti-tariff in their prepared remarks. They were following a Democratic Party trend seen in other Committee hearings whenever tariffs are addressed.
“How do we make generic drugs on American soil and keep drugs affordable?” Rep. Ruiz asked, a sentence that may as well include cars, planes and hamburg meat. “Tariffs will raise prices on medicine and all the components of the medical delivery supply chain,” he said.
Rep. Auchincloss went further. “I don’t like the subsidy and tax breaks ideas for generic drugs,” he said, sounding more like a Bush-era Republican than a Massachusetts Democrat.
Witnesses disagreed with that take.
“Expanding the domestic supply chain takes time and needs government help,” said Dawn O’Connell, an attorney who served as the Assistant Secretary for Preparedness and Response (ASPR) at the U.S. Department of Health and Human Services (HHS) under President Biden. [Testimony]
“We have an opportunity to promote investment in domestic manufacturing for key generics, or reshoring of whatever those key products are,” she said, adding the legislative strategy “should include tax incentives and thoughtfully applied tariffs.”
Generic Drugs Need Government Support, House Health Subcommittee Admits
U.S. based generic drug makers need government support to expand – and maybe even to survive – the onslaught of imports nearly every member of the House Energy and Commerce Committee Subcommittee on Health said in a hearing on Wednesday. They have one solution in the House already – Rep. Claudia Tenney’s (R-NY-24) PILLS Act, but the bill was never mentioned. This was a lost opportunity, assuming members know enough about the bill. Witnesses basically recommended a CHIPS Act for essential drugs, and yet the Health Subcommittee failed to acknowledge that such a bill exists.
One of the witnesses, John Murphy, CEO, Association of Accessible Medicines (AAM), [Testimony] told the Committee that, “the economic footprint of U.S. generics has shrunk by $6.5 billion over the last five years and production is increasingly imported with a slew of foreign companies looking to access the United States market. We have no national strategy or any real incentive.” He then went on to mention “targeted tax incentives like the CHIPS Act” as a good example for industrial policy. Signed into law in 2022, the act authorizes historic investments in curiosity-driven, exploratory research and use-inspired translational research.
“We have dormant capacity,” Murphy said. “The right incentives means existing facilities can start new production lines without building new plants. The sooner we begin the sooner we benefit. We need to reduce our reliance on any single foreign source,” he said.
Committee members singled out China, followed by India as a close second country of great concern. Despite Democrats on the Committee mostly criticizing the Trump administration’s roughly 10% budget cut to the Food and Drug Administration (FDA), there is bipartisan consensus on increasing domestic supply. This strategy included tariffs as a tool, the R&D tax credit in the One Big Beautiful Bill Act (H.R.1), and reductions in time frames to get a permit to build a new lab, or expand an existing one.
Comments like those below were common at Wednesday’s hearing:
Witnesses supported tariffs and/or a combination of tax and other incentives.
Patrick Cashman, CEO of USAntibiotics in Tennessee, the only domestic producer of amoxicillin, said he supported the ongoing Section 232 trade investigation. [Testimony] His lab’s previous owners filed for bankruptcy a few years ago when they could no longer compete against China and India imports. “We rebooted, came under new ownership, and re-entered the commercial market to produce antibiotics,” he said.
Without antibiotics, routine surgeries can become fatal. Amoxicillin accounts for 50 million prescriptions annually and is the most prescribed antibiotic. Anyone who was suffering from pneumonia during the COVID-19 years was likely given an amoxicillin prescription.
The Tennessee-based lab went from having no market share in the U.S. to now having around 5% market share, Cashman said, then warned: “If we went out of business, the U.S. would be totally reliant on imports for the most commonly required antibiotics. We face challenges like lax regulatory oversight, and that is what allows these drug makers in China and India to cut as much as 25% off their cost,” he said.
U.S. Dangerously Reliant on High-Risk Imported Drug Supply
Read More »Like most pharmaceutical companies in these hearings, they all tout the need for long term government contracts to shore up demand and give them some sense of business security. Cashman also recommended that antibiotics be listed as a critical drug by the FDA. That listing, he said, means a pharmaceutical company can then access certain government support systems like other critical goods that are offered.
Witnesses spoke about key chokepoints in the supply chain. These were mostly geographical, followed by the concentration of active pharmaceutical ingredients (API) and key starting materials (KSM) used in making that API which almost exclusively come from China. Even the European producers are sourcing from there.
“India provides more than a third of our APIs and China’s inroads into this market is rising fast,” said Ronald Piervincenzi, Chief Executive Officer of United States Pharmacopeia, a hundred year old member organization whose core mission is to build trust in medicine safety.
He said his organization has identified 100 medicines vulnerable to API and KSM risk that would be difficult to substitute. “These are generic drugs that are susceptible to geopolitical tensions, as well. The end result is an increasingly fragile supply chain that hurts patient care and is bad for national security,” he said.
The U.S. continues seeing widespread drug shortages. It is common for the FDA’s drug shortages list to have a hundred or more drugs in short supply, or currently unavailable. There are currently at least 80 drugs in short supply at this time, including basic generics used in hospital settings such as dextrose monohydrate injections. These are commonly used intravenously (IV) for people who are unable to eat or used to treat dehydration. It’s hard to find in the U.S. at this time.
Hospital pharmacists across the U.S. have reported as many as 300 critical drug shortages at any given time. Some 85% of doctors say these shortages are moderately or critically impacting care. Doctors often lack crucial medicines such as antibiotics, sedatives, cancer drugs, all typical and foundational medicines necessary in any hospital setting.
Reps. Jake Auchincloss (D-MA-4) and Raul Ruiz (D-CA-25) were anti-tariff in their prepared remarks. They were following a Democratic Party trend seen in other Committee hearings whenever tariffs are addressed.
“How do we make generic drugs on American soil and keep drugs affordable?” Rep. Ruiz asked, a sentence that may as well include cars, planes and hamburg meat. “Tariffs will raise prices on medicine and all the components of the medical delivery supply chain,” he said.
Rep. Auchincloss went further. “I don’t like the subsidy and tax breaks ideas for generic drugs,” he said, sounding more like a Bush-era Republican than a Massachusetts Democrat.
Witnesses disagreed with that take.
“Expanding the domestic supply chain takes time and needs government help,” said Dawn O’Connell, an attorney who served as the Assistant Secretary for Preparedness and Response (ASPR) at the U.S. Department of Health and Human Services (HHS) under President Biden. [Testimony]
“We have an opportunity to promote investment in domestic manufacturing for key generics, or reshoring of whatever those key products are,” she said, adding the legislative strategy “should include tax incentives and thoughtfully applied tariffs.”
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