It’s the second month in a row now that the U.S. Senate Special Committee on Aging has taken up the question of our woeful generic drugs supply chain. This time, however, Ranking Member Kirsten Gillibrand (D-NY), started the hearing off by touching on a key topic in pharmaceuticals: the cost equation can no longer override the quality equation.
“There is one framing that is repeated at each of these hearings, and that is that the United States has become reliant on China and India for key ingredients to manufacture generic drugs. But underlying market factors in the U.S. have led to a race to the bottom, whereas incentives are based on cost and not quality. Congress must work with industry to move away from cost being the only factor in purchasing,” she said, adding that incentives for pharma labs were also needed. “We have ceded much territory in the generic drugs supply chain but there are still steps we can take to reshore,” she said in her opening remarks.
CPA ally Rosemary Gibson [Testimony] highlighted a recent Department of Defense study on 42 generic drugs. The study is ongoing. “So far, 13 generic drugs have been tested by the Department and 15% failed basic quality standards,” Gibson said. “In any industry, if you had 15% defects, the entire line would be shut down. There are a handful of pharmaceutical companies that scour the earth looking for the cheapest lab, but this narrative that all generics are made the same is not true.”
Gillibrand & Scott Agree on First Principles
Both Gillibrand and Committee Chairman Rick Scott (R-FL) are pretty much in lockstep on first principles – the generic supply chain needs fixing; the government will have to be involved to make reshoring enticing and be involved in long term purchasing of fully U.S.-made medications, not just medications packaged here or loaded into capsules and jars.
Gillibrand and Scott announced their CLEAR Labels Act in February, a bill that Scott first touted during a February hearing designed specifically around that topic. Current federal labeling requirements do not require public disclosure of where ingredients or finished medicines are made. Patients, pharmacists, and health care providers lack visibility into the origins of their medications, something that bill wants to fix, as ProPublica reporters noted in an article published Feb. 6.
Truth in labeling is arguably one of the easiest moves Congress can take at the moment. Other issues for generics go beyond labeling transparency, something Gillibrand and Scott would agree with.
It was Gillibrand’s opening salvo on quality that adds a new angle to the reshoring debate. Quality should be added to the supply chain resilience argument. The Committee is seemingly in full agreement that reliance on China for key starting materials and active pharmaceutical ingredients is a severe chokepoint. Moreover, the FDA inspectors do not review those labs as frequently as their U.S. counterparts. Indian and Chinese labs lead in FDA Warning Letters and their labs are the ones mostly getting hit with import restrictions, risking drug shortages in the U.S. due to our lackluster generics footprint.
“We should require companies selling here to be subject to the same FDA inspection scenario as the U.S. lab; this should be non-negotiable,” said former Florida Congressman Ted Yoho [Testimony]. Yoho said Section 232 tariffs on generics were warranted, and that Defense Department purchases of medicines should be 100% American-made,”from KSM to API. Failure to reshore jeopardizes our national security and it should not be accepted.”
The U.S. has allowed the industrial base behind generics to erode sharply. A Senate Committee on Aging report stated that since 2002, pharmaceuticals manufactured in the U.S. dropped by 46%, and that in 2024 the U.S. manufactured 37% of the pharmaceuticals it consumed – down from 83% in 2002. The Food and Drug Administration said that by 2019, only 28% of API labs supplying the U.S. market were based in the U.S. with the single largest country source being India, and China accounting for 13%. The national security dimension is no longer theoretical. The Department of Defense said in a 2023 supply chain assessment of 1,744 drug families that at least 22% had unknown API origin and 54% of government purchased pharmaceuticals were deemed “high” or “very high risk” due to reliance on China, India, or even unknown sourcing that makes quality assessments difficult to impossible.
The unspoken word in the hearing might as well have been “Taiwan.” The current military operation in Iran has everyone thinking again about supply chain risks. For Iran, it is the Strait of Hormuz and the oil trade. For China, it is Taiwan. Only Taiwan is (potentially) worse than the Strait of Hormuz, mostly due to the number of key imported items coming from there – it won’t just be semiconductors. It will be essential medications as well.
“We don’t have a lot of time to make a decision and take action on this,” Yoho said. “We should have done this six years ago. Supply chain risk is only going to increase,” he said.
China is very good at owning a market and “they understand choke points and how to use them,” said Chan Harjivan, the key architect behind Operation Warp Speed in the early COVID-19 pandemic years. [Testimony] “We need transparency of the generic drug supply chain; we need diversity of supply and local labs need long term contracts,” he said, adding that the key risk is that if prices rise, the price increase will be captured by the middle men, known as the Pharmacy Benefit Managers (PBMs), and not the generic labs.
Recommendations For Immediate Action
Gordon Chang, a well-known China hawk in media circles, recommended Section 232 tariffs to the Committee. [Testimony].
“Section 232 tariffs will be good,” Chang said. “It could create the conditions, along with a tax credit and Defense Production Action, that would stimulate investment production immediately.”
Gibson recommended the government use the critical minerals model for antibiotics and essential generics. “There are a lot of people here ready to do that,” she said. President Trump’s Executive Order 14241 in 2025 directed federal agencies, including Defense, to prioritize domestic mineral production, triggering DPA Title III funding for mining, processing, and refining.
Gibson also recommended federal government buyers use quality data over pricing to make their buying decisions. “That will drive out the substandard generics that are principally made in Asia,” she said.
The Aging Committee debates policy, but does not set agendas or put forth bills for Senate floor votes. Still, Congress is getting more informed and interested in this topic—especially if it is framed within the usual national security / supply chain resilience narrative. This is where Congress is strongest and is able to push back against the import lobby.
“I think we will get something done on this,” said Chairman Scott. “When you take medicine each day, there is a good chance the ingredients came from China. But Congress has failed to demand transparency and focuses on price over anything else. When Covid hit, the shortages [on PPE and critical medicines] hit within weeks. That was a warning. We didn’t take the hint.”
Gillibrand said she is focused on generics. “I hope to have meaningful legislation so we can move on this issue in Congress.”
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.
Sen. Gillibrand Says U.S. Generics Need Incentives to Reshore; Cost Shouldn’t Trump Quality
It’s the second month in a row now that the U.S. Senate Special Committee on Aging has taken up the question of our woeful generic drugs supply chain. This time, however, Ranking Member Kirsten Gillibrand (D-NY), started the hearing off by touching on a key topic in pharmaceuticals: the cost equation can no longer override the quality equation.
“There is one framing that is repeated at each of these hearings, and that is that the United States has become reliant on China and India for key ingredients to manufacture generic drugs. But underlying market factors in the U.S. have led to a race to the bottom, whereas incentives are based on cost and not quality. Congress must work with industry to move away from cost being the only factor in purchasing,” she said, adding that incentives for pharma labs were also needed. “We have ceded much territory in the generic drugs supply chain but there are still steps we can take to reshore,” she said in her opening remarks.
CPA ally Rosemary Gibson [Testimony] highlighted a recent Department of Defense study on 42 generic drugs. The study is ongoing. “So far, 13 generic drugs have been tested by the Department and 15% failed basic quality standards,” Gibson said. “In any industry, if you had 15% defects, the entire line would be shut down. There are a handful of pharmaceutical companies that scour the earth looking for the cheapest lab, but this narrative that all generics are made the same is not true.”
Gillibrand & Scott Agree on First Principles
Both Gillibrand and Committee Chairman Rick Scott (R-FL) are pretty much in lockstep on first principles – the generic supply chain needs fixing; the government will have to be involved to make reshoring enticing and be involved in long term purchasing of fully U.S.-made medications, not just medications packaged here or loaded into capsules and jars.
Gillibrand and Scott announced their CLEAR Labels Act in February, a bill that Scott first touted during a February hearing designed specifically around that topic. Current federal labeling requirements do not require public disclosure of where ingredients or finished medicines are made. Patients, pharmacists, and health care providers lack visibility into the origins of their medications, something that bill wants to fix, as ProPublica reporters noted in an article published Feb. 6.
Truth in labeling is arguably one of the easiest moves Congress can take at the moment. Other issues for generics go beyond labeling transparency, something Gillibrand and Scott would agree with.
It was Gillibrand’s opening salvo on quality that adds a new angle to the reshoring debate. Quality should be added to the supply chain resilience argument. The Committee is seemingly in full agreement that reliance on China for key starting materials and active pharmaceutical ingredients is a severe chokepoint. Moreover, the FDA inspectors do not review those labs as frequently as their U.S. counterparts. Indian and Chinese labs lead in FDA Warning Letters and their labs are the ones mostly getting hit with import restrictions, risking drug shortages in the U.S. due to our lackluster generics footprint.
“We should require companies selling here to be subject to the same FDA inspection scenario as the U.S. lab; this should be non-negotiable,” said former Florida Congressman Ted Yoho [Testimony]. Yoho said Section 232 tariffs on generics were warranted, and that Defense Department purchases of medicines should be 100% American-made,”from KSM to API. Failure to reshore jeopardizes our national security and it should not be accepted.”
The U.S. has allowed the industrial base behind generics to erode sharply. A Senate Committee on Aging report stated that since 2002, pharmaceuticals manufactured in the U.S. dropped by 46%, and that in 2024 the U.S. manufactured 37% of the pharmaceuticals it consumed – down from 83% in 2002. The Food and Drug Administration said that by 2019, only 28% of API labs supplying the U.S. market were based in the U.S. with the single largest country source being India, and China accounting for 13%. The national security dimension is no longer theoretical. The Department of Defense said in a 2023 supply chain assessment of 1,744 drug families that at least 22% had unknown API origin and 54% of government purchased pharmaceuticals were deemed “high” or “very high risk” due to reliance on China, India, or even unknown sourcing that makes quality assessments difficult to impossible.
The unspoken word in the hearing might as well have been “Taiwan.” The current military operation in Iran has everyone thinking again about supply chain risks. For Iran, it is the Strait of Hormuz and the oil trade. For China, it is Taiwan. Only Taiwan is (potentially) worse than the Strait of Hormuz, mostly due to the number of key imported items coming from there – it won’t just be semiconductors. It will be essential medications as well.
“We don’t have a lot of time to make a decision and take action on this,” Yoho said. “We should have done this six years ago. Supply chain risk is only going to increase,” he said.
China is very good at owning a market and “they understand choke points and how to use them,” said Chan Harjivan, the key architect behind Operation Warp Speed in the early COVID-19 pandemic years. [Testimony] “We need transparency of the generic drug supply chain; we need diversity of supply and local labs need long term contracts,” he said, adding that the key risk is that if prices rise, the price increase will be captured by the middle men, known as the Pharmacy Benefit Managers (PBMs), and not the generic labs.
Recommendations For Immediate Action
Gordon Chang, a well-known China hawk in media circles, recommended Section 232 tariffs to the Committee. [Testimony].
“Section 232 tariffs will be good,” Chang said. “It could create the conditions, along with a tax credit and Defense Production Action, that would stimulate investment production immediately.”
Gibson recommended the government use the critical minerals model for antibiotics and essential generics. “There are a lot of people here ready to do that,” she said. President Trump’s Executive Order 14241 in 2025 directed federal agencies, including Defense, to prioritize domestic mineral production, triggering DPA Title III funding for mining, processing, and refining.
Gibson also recommended federal government buyers use quality data over pricing to make their buying decisions. “That will drive out the substandard generics that are principally made in Asia,” she said.
The Aging Committee debates policy, but does not set agendas or put forth bills for Senate floor votes. Still, Congress is getting more informed and interested in this topic—especially if it is framed within the usual national security / supply chain resilience narrative. This is where Congress is strongest and is able to push back against the import lobby.
“I think we will get something done on this,” said Chairman Scott. “When you take medicine each day, there is a good chance the ingredients came from China. But Congress has failed to demand transparency and focuses on price over anything else. When Covid hit, the shortages [on PPE and critical medicines] hit within weeks. That was a warning. We didn’t take the hint.”
Gillibrand said she is focused on generics. “I hope to have meaningful legislation so we can move on this issue in Congress.”
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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