Committee Ranking Member Kirsten Gillibrand (R-NY) noted that the Aging Committee has held “eight hearings on this topic” and considered this one the final hearing in a series on reshoring generic drugs. “We need to change the incentives that permit a race to the bottom in generic drug manufacturing,” she said.
Both Gillibrand and Scott tend to be on the same page on this topic. Only Sen. Andy Kim (D-NJ), who represents numerous pharmaceutical companies and distributors in New Jersey, was present at the hearing, however.
The three witnesses, including CPA’s Mihir Torsekar, gave advice on fast actions to begin reshoring. Suggestive measures went beyond building a tariff architecture for generic drugs, with Mihir noting that “a 100 percent tariff on a drug that costs one cent only raises the price by a penny.”
Kurt Orlofski, CEO of PAI Pharma, was the only U.S. drug maker present. They make roughly 100 million doses of liquid medications annually. Orlofksi said the company supports the CLEAR Labels Act but had other ideas to bring back production.
“FDA should prioritize API and key starting materials domestically manufactured,” he said, especially for government procurement of medicines. “U.S. labs should be getting preferential treatment. I keep coming back to the fact that 70 percent of our medications today are filled with foreign products. What are we doing about that today? If you are first to file on an off-patent drug 12 years from now that is not going to help today. So if you file with the FDA for an application to bring a drug back, how about you shorten the timeline down to four months to make that happen? Plus, my application is behind many other applicants, including foreign labs who want to sell generics here. You have to make it very clear for the FDA to give the U.S. lab priority,” he said, hinting that legislation might be required. But Sen. Scott said the FDA could go ahead and do that already on their own.
Changes in the way the current pharmaceutical sales model works could help local producers, Orlofksi told the Committee.
“Oftentimes, the decision to buy is made by the wholesaler…let’s say a drug is reimbursed at $15, which is normal; maybe you do $16 for a U.S. lab and $14 for the foreign lab,” he said.
When a U.S. manufacturer like PAI can produce the same drug as a foreign lab, the current reimbursement and distribution system can structurally favor the lowest-cost supplier, which often benefits the overseas producer.
At the FDA level, for an application to produce and sell generics, there is almost no differentiation between a U.S. company and a foreign one. There is also no requirement for pharmacies to source U.S. made drugs at all, even if there are options for that.
Christine Baeder, President of Apotex USA in Florida, part of Canadian drug maker Apotex, said they stopped producing penicillin this year in Canada, citing competition from Asian imports. One suggestion she had was the return of the 180-day market exclusivity rule for the first generic manufacturer to successfully challenge a branded drug patent.
“In recent years, the value of 180-day exclusivity has eroded. This is the ideal place to start,” she said about the Hatch-Waxman 180-day exclusivity incentive. Hatch-Waxman gives the generic manufacturer who is the first eligible Abbreviated New Drug Application filer to challenge a patent a 180 day safety window during which the FDA generally cannot approve later generic drug maker challengers to the same patent. That head start, she said, can be valuable because once foreign generics enter the market, prices collapse. The policy was designed to reward the company willing to spend the money and assume the litigation risk of challenging the branded manufacturer’s patent. Baeder told the Committee that the potential reward is no longer strong enough in many cases to justify that investment.
Baeder’s talk of the 180-day rule, and Orlofksi’s suggestion of reimbursement differentials suggests market participants believe there are other solutions beyond tariffs; and that these solutions should either be made in conjunction with tariffs, or in lieu of tariffs should the White House lose its appetite for them.
The overarching debate remains price versus quality, and price versus supply.
“If making a generic drug here costs 40 percent more, the premium for reshoring is only 6.5 cents on the dollar,” said Mihir. He was citing the July CPA report titled The Hallowing Out of America’s Medicine Cabinet by CPA’s Senior Economist Andrew Rechenberg. “If that reduces the risk of drug shortages, it’s a win.” Mihir suggested to the Committee that imports from labs that were subject to Import Alerts by the FDA be independently tested, and that the FDA act faster in granting permits for essential medicine labs. He also advocated for the need for multi-year procurement contracts and a floor vote on the PILLS Act, a roughly three year old bill that treats generic drugs policy similar to the CHIPS law.
“There is an urgent need to address our reliance on China and India for drugs,” said Scott. “We need to manufacture more medicine in the U.S. and to do that we might need to see more domestic companies signing contracts with federal agencies to make generic drugs long term.”
Senate Aging Committee Chairman Makes Bold Prediction on Rx Labeling Laws
Chairman Rick Scott (R-FL) of the Senate Aging Committee made a prediction during a hearing on domestic generic drug manufacturing on Wednesday, saying that his CLEAR Labels Act will become law this year. The law would require drug makers put the source of their active pharmaceutical ingredients, or APIs – the key active ingredients that make up the final product itself – on the label. As it is, drug companies tend to put nothing on the label, or only where the medicine was distributed and packaged. There is a hope that labeling requirements would be a step in the direction of giving U.S. generic drug manufacturers more preferential treatment, but this would require more acts of Congress, the FDA, or new rules for defense department procurement officers in charge of buying medicine for veteran hospitals, for example.
“America makes only 27 percent of the medicine it consumes, but in 2002 it was 72 percent,” Scott said in his opening remarks this week. “We have almost completely lost our ability to make generic drugs in this country. Meanwhile, manufacturers in China and India have falsified records, and they cut corners on quality. Just recently, the Chinese equivalent of FDA was caught taking bribes for drug approvals.”
Chen Shifei, former deputy director of China’s National Medical Products Administration, essentially China’s FDA, was sentenced by a Shanghai court in April to 14 years in prison for bribery. The court said that from 2003–2024, Chen used his position as a drug regulator to help labs obtain permits and licenses and received more than 46.43 million yuan (~$6.8 million) in money and property in return.
Yu Wenming, former head of the National Administration of Traditional Chinese Medicine, was sentenced on August 21, 2026 to 15 years for accepting more than 63.44 million yuan (~$9.5 million) in bribes, according to China’s anti-corruption messaging commission — the Central Commission for Discipline Inspection. The court specifically found that Yu helped people with drug-registration approvals. Were they safe, and ready for market? Who knows?
Although the Chairman did not mention India, America’s leading source of generics is not too far behind its northern neighbor.
Insights into where pharmaceuticals are made are slim. Patients and doctors usually have no idea where their medicine comes from. More often than not, it comes from labs in India where FDA inspector visits are announced unlike here in the U.S., when they can happen at any time. Scheduled visits give labs a chance to clean up their act, and even then they are often on the receiving end of so-called Warning Letters, threatening their exports to the U.S. In his testimony before the Committee, CPA Senior Economist Mihir Torsekar said roughly 90 percent of the time foreign labs were given up to 12 weeks of notice before an inspector came, adding “that is important because announced inspections come with 40 percent problems found in labs, but that number drops when the inspection dates are announced.” Leveling the playing field, a phrase often repeated on Capitol Hill when it comes to global commerce, could require similar FDA treatment for foreign labs. That type of regulation change is the lowest hanging fruit.
In June 2022, India’s Central Bureau of Investigation (CBI) arrested S. Eswara Reddy, a Joint Drugs Controller at the Central Drugs Standard Control Organization (CDSCO), India’s closest equivalent to the FDA, in an alleged bribery scheme involving Biocon Biologics. Biocon participates in the U.S. biologic and biosimilars drug market. The CBI alleged that Reddy was to receive ₹900,000 (a lot of money in India; around $9,500 here) in return for favorably processing three Biocon-related files and supporting a waiver of a Phase III clinical trial for an injectable insulin. Investigators said he was caught during a transaction. Biocon Biologics denied their team bribed anyone.
There is no evidence that any of these labs were banned from exporting to the U.S. If they were not, no doctor or pharmacist would know if the Tylenol they were taking, or the blood pressure pills they were selling, were made from a lab whose chief regulators preferred cash payouts and real estate over ascertaining drug efficacy.
“The FDA needs to treat this as a safety issue and Congress needs to give companies the tools they need to bring drug manufacturing back to the U.S. without patients having to pay more for drugs,” Scott said.
How to Reshore Generic Drugs
Committee Ranking Member Kirsten Gillibrand (R-NY) noted that the Aging Committee has held “eight hearings on this topic” and considered this one the final hearing in a series on reshoring generic drugs. “We need to change the incentives that permit a race to the bottom in generic drug manufacturing,” she said.
Both Gillibrand and Scott tend to be on the same page on this topic. Only Sen. Andy Kim (D-NJ), who represents numerous pharmaceutical companies and distributors in New Jersey, was present at the hearing, however.
The three witnesses, including CPA’s Mihir Torsekar, gave advice on fast actions to begin reshoring. Suggestive measures went beyond building a tariff architecture for generic drugs, with Mihir noting that “a 100 percent tariff on a drug that costs one cent only raises the price by a penny.”
Kurt Orlofski, CEO of PAI Pharma, was the only U.S. drug maker present. They make roughly 100 million doses of liquid medications annually. Orlofksi said the company supports the CLEAR Labels Act but had other ideas to bring back production.
“FDA should prioritize API and key starting materials domestically manufactured,” he said, especially for government procurement of medicines. “U.S. labs should be getting preferential treatment. I keep coming back to the fact that 70 percent of our medications today are filled with foreign products. What are we doing about that today? If you are first to file on an off-patent drug 12 years from now that is not going to help today. So if you file with the FDA for an application to bring a drug back, how about you shorten the timeline down to four months to make that happen? Plus, my application is behind many other applicants, including foreign labs who want to sell generics here. You have to make it very clear for the FDA to give the U.S. lab priority,” he said, hinting that legislation might be required. But Sen. Scott said the FDA could go ahead and do that already on their own.
Changes in the way the current pharmaceutical sales model works could help local producers, Orlofksi told the Committee.
“Oftentimes, the decision to buy is made by the wholesaler…let’s say a drug is reimbursed at $15, which is normal; maybe you do $16 for a U.S. lab and $14 for the foreign lab,” he said.
When a U.S. manufacturer like PAI can produce the same drug as a foreign lab, the current reimbursement and distribution system can structurally favor the lowest-cost supplier, which often benefits the overseas producer.
At the FDA level, for an application to produce and sell generics, there is almost no differentiation between a U.S. company and a foreign one. There is also no requirement for pharmacies to source U.S. made drugs at all, even if there are options for that.
Christine Baeder, President of Apotex USA in Florida, part of Canadian drug maker Apotex, said they stopped producing penicillin this year in Canada, citing competition from Asian imports. One suggestion she had was the return of the 180-day market exclusivity rule for the first generic manufacturer to successfully challenge a branded drug patent.
“In recent years, the value of 180-day exclusivity has eroded. This is the ideal place to start,” she said about the Hatch-Waxman 180-day exclusivity incentive. Hatch-Waxman gives the generic manufacturer who is the first eligible Abbreviated New Drug Application filer to challenge a patent a 180 day safety window during which the FDA generally cannot approve later generic drug maker challengers to the same patent. That head start, she said, can be valuable because once foreign generics enter the market, prices collapse. The policy was designed to reward the company willing to spend the money and assume the litigation risk of challenging the branded manufacturer’s patent. Baeder told the Committee that the potential reward is no longer strong enough in many cases to justify that investment.
Baeder’s talk of the 180-day rule, and Orlofksi’s suggestion of reimbursement differentials suggests market participants believe there are other solutions beyond tariffs; and that these solutions should either be made in conjunction with tariffs, or in lieu of tariffs should the White House lose its appetite for them.
The overarching debate remains price versus quality, and price versus supply.
“If making a generic drug here costs 40 percent more, the premium for reshoring is only 6.5 cents on the dollar,” said Mihir. He was citing the July CPA report titled The Hallowing Out of America’s Medicine Cabinet by CPA’s Senior Economist Andrew Rechenberg. “If that reduces the risk of drug shortages, it’s a win.” Mihir suggested to the Committee that imports from labs that were subject to Import Alerts by the FDA be independently tested, and that the FDA act faster in granting permits for essential medicine labs. He also advocated for the need for multi-year procurement contracts and a floor vote on the PILLS Act, a roughly three year old bill that treats generic drugs policy similar to the CHIPS law.
“There is an urgent need to address our reliance on China and India for drugs,” said Scott. “We need to manufacture more medicine in the U.S. and to do that we might need to see more domestic companies signing contracts with federal agencies to make generic drugs long term.”
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