In House Hearing, Unanimous Agreement on China Risks in American Rx Supply

We have reached the point in the pharmaceutical supply chain debate where we are now beating a dead horse. Everyone agrees, in particular that reliance on China for key ingredients used to make medicines is risky; and everyone agrees that further up market – in advanced biotech – China is becoming an unmatched rival that could easily shrink America’s role in drug innovation. There are a number of options. Everyone knows them. From targeted, bureaucratic, reforms inside the Food and Drug Administration (FDA) on regulations for clinical trials, to partnering with Europe, to tariff and incentive structures for American labs. What’s missing is action.

Two things lie at the heart of the matter: China’s growing clout in advanced biotech threatens the future of American research labs, especially those involved in clinical trial work. To a lesser extent, China’s role as a key supplier of ingredients used to make generic drugs, much of them made in India, and bound for the United States is a red alert for the pharma supply chain.

On March 18, the House Select Committee on the CCP held a hearing titled “From the Science Lab to the Medicine Cabinet: How China is Cornering the Market on Our Medicines.” Some of the biggest takeaways from that hearing were tariffs gaining support, along with the need for a ‘CHIPS Act’ for critical drugs, like antibiotics.

Since 2020, U.S. pharmaceutical companies have signed $53B in licensing deals with Chinese biotech firms. China now supplies ~1/3 of new compounds entering the U.S. drug pipeline.

That means American innovation, capital, and data are increasingly flowing into a system tied to…
— Select Committee on China (@ChinaSelect) March 12, 2026

The House Select Committee on the CCP highlighted a report authored by CPA Senior Economist
Mihir Torsekar published in January.

Tariffs Will Play a Role

Tariffs will play a role, or should, said the Committee’s Ranking Member Ro Khanna (D-CA-17). We are still awaiting the results of an ongoing Section 232 investigation into the pharma supply chain initiated last April.

“I am supportive of strategic tariffs and want to make sure China is not dumping steel or any of the things we produce, but where we lack industrial capabilities, tariffs won’t solve the bigger problems,” Khanna said. Here, the Congressman was talking about production of key starting materials (KSM), which become part of the active pharmaceutical ingredients (API) that make a drug a medicine, either as a liquid, capsule, or in pill form.

A Section 232 tariff for generic drugs should operate as a dual-track tariff-rate quota (TRQ) system for both finished dose forms (FDF) and active pharmaceutical ingredients, with separate quotas and specific tariffs tied to U.S. demand and domestic capacity, adjusted periodically. Imports within quota enter at low or zero tariffs, while excess or high-risk supply faces steep per-dose or per-kilogram tariffs. Preferential access is limited to FDA Mutual Recognition Agreement (MRA) countries (currently EU, UK, Switzerland) to ensure equivalent safety standards, while non-MRA sources face higher penalties. Quotas tighten as domestic production scales, creating clear long-term investment signals and reducing dependence on unsafe or subsidized imports.

“We need to have an industrial policy in things that are important to the economy like KSM and API, which seem to be imperative to building this market in the United States,” he said. “If we did a CHIPS Act for pharmaceuticals and had federal procurement along with it, like Trump did with Operation Warp Speed (and critical minerals) that kind of policy could get KSM and API production back into the U.S.,” he said.

The “Work With Allies” Approach

Rep. Jill Tokuda (D-HI-2) asked if the U.S. needed a unified strategy on this, mainly aligning our interests with that of the G7 in Europe, “so we can work together to decouple this risk from China.” Tokuda also noted that she tried to get the Defense Department to commit to buying U.S. made medicines in a recent NDAA (it was reauthorized in December) and they shot her down, saying they were too small of a purchaser and that the domestic purchasing requirement should be across the Federal government. She said she will try again.

Marta E. Wosińska, Senior Fellow at Brookings, put the onus on Congress to come up with purchasing requirements. She also agreed with Tokuda that the U.S. should work with Europe, highlighting an antibiotics lab in Copenhagen that is shutting down due to competition from developing economies, likely from India and China combined. [Testimony]

“The G7 needs to work collectively on common threats,” Tokuda said.

Then she said something even more interesting, repeating a question raised by Sen. Kirsten Gillibrand (D-NY) on the same topic earlier in the week. For generics, the cheaper price takes precedent, even over quality, making it a competition Americans cannot easily win.

“We have to get over this cheap obsession and consider what will make us more secure as a country,” Takuda said.

On the question of allies and tariffs, Wosińska includes India as a key ally here and says one strategy to consider was imposing tariffs on Indian labs that use Chinese KSM. How that would be policed, enforced, and trusted, remains a mystery.

“For essential medicines, the ones where we are most likely to compete directly with China, then I think full onshoring of those medicines, including KSMs, is the way to go,” she said. “This is not going to happen on its own. There needs to be funding for this. This is a big call to Congress; the money needs to come. Even so, essential medicines are a very small percentage of the medicines we take. I would be surprised if they touched one percent of the patients in the U.S. We need to think about what we are going to do about everything else – statins, blood pressure medications. In an ideal world, we would onshore everything, so we have to think how to work with allies,” Wosińska said.

The Big Money: Biotech and Future Pharma

Although generic medications are the most immediate, kitchen table issue, a growing concern in hearings such as this is China’s fast move up the biotech supply chain. CPA senior economist Andrew Rechenberg highlighted China’s rise in a report published in October called the Biotech Cold War, and he also testified before Chairman Rick Scott (R-FL) and Ranking Member Gillibrand in an October hearing of the Senate Special Committee on Aging.

Rep. Shontel Brown (D-OH-11) explained the importance of biotech to her constituents.

“When we talk about pharmaceutical supply chains, we are also talking about whether communities like the ones I represent are able to stay in business and make medicines we rely on, and whether they are in the business to keep doing R&D,” she said. Her comment spoke to the realities on the ground in American pharmaceutical labs nationwide. Simply put, a lot of the hard R&D and human clinical trials can get done in China, and in world class labs.

We have the institutions, the talent and the infrastructure to be part of the solution but only if federal policies are aligned with domestic manufacturing that strengthens our biotech research ecosystems and builds supply chains with trusted partners. This is about health security, economic security, and making sure American communities are not lost as this market grows.

– Rep. Shontel Brown of Ohio, member of the House Select Committee on the CCP, March 18, 2026

Rep. Gus Bilirakis (R-FL-12) said he, too, has heard from constituents about this new rivalry with China biotech companies. “They struggle to stay competitive against Chinese companies due to misaligned incentives in our own healthcare ecosystem,” he said, without getting into details. These misaligned incentives are now legion – from government payment rules to the Pharmacy Benefit Manager (PBM) organizations that are under increasing scrutiny in Washington, facing more criticism during hearings about healthcare costs.

Bilirakis is the leader of the American Made Medicines Caucus with Reps. Claudia Tenney (R-NY-24) and Buddy Carter (R-GA-1). Tenney has her own ‘CHIPS Act’ for pharmaceuticals, called the ‘PILLS Act,’ which CPA supports.

“It is important that we incentivize American manufacturing particularly as we face rising safety concerns with many drugs made abroad,” he said. \

Earlier in the week, nearly 90,000 bottles of children’s pain reliever Ibuprofen were pulled from pharmacies after consumers reported finding a “gel-like mass and black particles” inside the medication, according to an enforcement report issued by FDA. This over-the-counter drug was imported from India and made by Strides Pharma Science.

“This Committee is focused on how to win this strategic competition with China and I can’t think of an area more relevant than pharma and biotech to do that,” said Rep. Darin LaHood (R-IL-16). He cited the dual benefits of “cost” that China brings to the table – one is the cost benefit for U.S. labs due to a lower regulatory burden and labor overhead – and the other is the cost of final drugs sourced from China, or with Chinese compounds inside.

“When a patient on the operating table needs drugs, there is no time to worry about supply chains. But right now, the patient on the table is the U.S.A.,” said Rep. Neal Dunn (R-FL-2). “We are handing this market to China. We know our vulnerabilities. You can’t let a strategic adversary control your logistics. I think we have failed in that regard when it comes to China and pharma.”

Patrick Cashman, President of USAntibiotics, was one of four people providing testimony. He has been a lead witness on this case for the last two years. His company is one of the most important sources of Amoxicillin in the country. He is looking to expand. Competing with India is one thing; going toe-to-toe with China is a whole other level.

“The Chinese government doesn’t look at pharma as a profitable enterprise; they look at it as a strategic asset,” he said. “The cost of production to them is irrelevant. Their goal is to put you out of business.”