[Senate Hearing 118-709]
[From the U.S. Government Publishing Office]
S. Hrg. 118-709
THE DEPARTMENT OF DEFENSE'S EFFORTS TO ENSURE SERVICEMEMBERS' ACCESS TO
SAFE, HIGH-QUALITY PHARMACEUTICALS
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HEARING
before the
SUBCOMMITTEE ON PERSONNEL
of the
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
APRIL 30, 2024
__________
Printed for the use of the Committee on Armed Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http: //www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
61-558 PDF WASHINGTON : 2025
COMMITTEE ON ARMED SERVICES
JACK REED, Rhode Island, Chairman ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire DEB FISCHER, Nebraska
KIRSTEN E. GILLIBRAND, New York TOM COTTON, Arkansas
RICHARD BLUMENTHAL, Connecticut MIKE ROUNDS, South Dakota
MAZIE K. HIRONO, Hawaii JONI ERNST, Iowa
TIM KAINE, Virginia DAN SULLIVAN, Alaska
ANGUS S. KING, Jr., Maine KEVIN CRAMER, North Dakota
RICK SCOTT, Florida
ELIZABETH WARREN, Massachusetts TOMMY TUBERVILLE, Alabama
GARY C. PETERS, Michigan MARKWAYNE MULLIN, Oklahoma
JOE MANCHIN III, West Virginia
TAMMY DUCKWORTH, Illinois TED BUDD, North Carolina
JACKY ROSEN, Nevada ERIC SCHMITT, Missouri
MARK KELLY, Arizona
Elizabeth L. King, Staff Director
John P. Keast, Minority Staff
Director
Subcommittee on Personnel
ELIZABETH WARREN, Massachusetts, RICK SCOTT, Florida
Chairman MIKE ROUNDS, South Dakota
RICHARD BLUMENTHAL, Connecticut DAN SULLIVAN, Alaska
MAZIE K. HIRONO, Hawaii TED BUDD, North Carolina
TIM KAINE, Virginia
TAMMY DUCKWORTH, Illinois
(ii)
C O N T E N T S
april 30, 2024
Page
The Department of Defense's Efforts to Ensure Servicemembers' 1
Access to Safe, High-Quality Pharmaceuticals.
Members Statements
Statement of Senator Elizabeth Warren............................ 1
Statement of Senator Rick Scott.................................. 3
Witness Statements
Joint statement of:
Martinez-Lopez, Hon. Lester, Assistant Secretary of Defense for
Health
Affairs, Department of Defense............................... 5
Smith, David J., M.D., Deputy Assistant Secretary of Defense
for Health
Readiness Policy and Oversight, Department of Defense........ 5
Dertzbaugh, Mark, M.D., Principal Assistant for Research and
Technology,
United States Army Medical Research and Development Command.. 5
Beebe, Matthew R., Director of Acquisition (J7), Defense 8
Logistics Agency.
Barber, Melissa, Ph.D., Postdoctoral Fellow...................... 20
Mendez, Bryce H.P. Specialist in Defense Health Care Policy, 53
Congressional Research Service.
Suarez, Colonel Victor A., USA (Ret.), Founder and Principal 66
Growth Partner, Blu Zone Bioscience & Supply Chain Solutions,
LLC.
Questions for the Record......................................... 86
APPENDIX A
References of Dr. Dr. Melissa Barber........................... 102
Supportive articles submitted by Mr. Victor A. Suarez
White House Plan to Curb Drug Shortages Doesn't Address
Generics'
Quality.................................................... 103
The National Security Rationale for Stockpiling Key
Pharmaceutical
Ingredients................................................ 110
The Pentagon Wants to Root Out Shoddy Drugs.................. 121
(iii)
THE DEPARTMENT OF DEFENSE'S EFFORTS TO ENSURE SERVICEMEMBERS' ACCESS TO
SAFE, HIGH-QUALITY PHARMACEUTICALS
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TUESDAY, APRIL 30, 2024
United States Senate,
Subcommittee on Personnel,
Committee on Armed Services,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:30 p.m. in
room SR-232A, Russell Senate Office Building, Senator Elizabeth
Warren (Chairman of the Subcommittee) presiding.
Committee Members present: Warren, Kaine, and Scott.
OPENING STATEMENT OF SENATOR ELIZABETH WARREN
Senator Warren. This hearing will come to order.
We welcome everyone to today's hearing to receive testimony
on the efforts of the Department of Defense to ensure
servicemembers' access to prescription drugs that are safe,
high quality, and effective.
We owe our servicemembers and their families the best
possible health care. This is a morale issue, it is a
recruiting issue, and ultimately, it is a national security
issue.
DOD spends about $5 billion every year on pharmaceuticals.
That is about 2 percent of the entire U.S. commercial
pharmaceutical market. Now to make these purchases, DOD must
navigate many of the same challenges as civilian health
systems.
For example, according to the FDA, almost half of the drugs
on DOD's operational medicines list--a list that contains drugs
necessary for warfighting that are essential for meeting the
medical needs of servicemembers--about half those drugs are in
shortage. This includes the blood thinner heparin, a common
anesthesia drug called midazolam, and morphine for pain
management. The impact of these drug shortages can be
devastating. A shortage could mean using a drug with worse side
effects, or it could mean having to use the second-or third-
line treatment for an illness, rather than the treatment that
is most effective.
While there are many factors that can cause shortages from
spikes in demand to natural disasters to inspection failures--
most drugs in shortage share a common feature: they are
generics. That means they are no longer protected by patents,
and they can be made by any manufacturer with approval from the
FDA. Despite this, most generic drugs have very little
competition. In fact, 40 percent of the generic drugs sold in
the United States have just one manufacturer.
Why? Because the profit margin for some generic drugs is so
low that American manufacturers just are not interested in
making them. As a result, more of DOD's generic drug supply is
coming from foreign manufacturers who can produce the drugs at
even lower costs.
DOD's reliance on overseas manufacturers is not limited to
finished drug products. The ingredients used to make the
medicines, called active pharmaceutical ingredients, or APIs,
and the ingredients used to make APIs, known as key starting
materials, or KSMs, are also increasingly sourced from abroad.
The COVID-19 pandemic exposed the risks we face by
importing more and more of our commercial drug supply overall.
DOD relies on those imported drugs and that gives potential
adversaries the power to restrict DOD's access, which can
result in harm to our servicemembers, to their families, and to
our national security. In addition, the U.S. has less and less
visibility into and oversight of foreign manufacturers and
their manufacturing practices, and that is particularly true
with China.
These problems have concerned me for a long time, and that
is why I partnered with Senator Rubio to secure language in the
fiscal year 2023 NDAA requiring DOD to develop guidance for
risk management of the Department's pharmaceutical supply
chain, to report on supply chain vulnerabilities, and to
establish a working group to develop policies for allocating
scarce pharmaceutical resources.
When a drug does not work properly it can have serious
consequences for servicemembers. Bloomberg reported last year
that an outside lab tested tacrolimus, an immunosuppressant
used to treat soldiers who have lost limbs in combat. The
results revealed that some generic versions of the drug might
not work. Worse yet, they could cause kidney failure or
seizures.
So last summer, in accordance with Senator Rubio's and my
provision, DOD entered into a cooperative agreement with an
independent lab to conduct a pilot study to test the quality of
12 finished drugs in the military drug supply. In November, DOD
revealed that 27 percent of the drugs on the FDA's Essential
Medicines List are at, quote, ``Very High Risk'' because they
are either dependent on Chinese manufacturers using Chinese
ingredients or were derived from unknown sources.
So we are holding this hearing today to learn more about
these challenges and to discuss DOD's capacity to address them.
I want to thank Ranking Member Scott for his commitment to
improve the quality of life for our servicemembers and for
their families, and to our witnesses, I say welcome and thank
you for appearing today.
We will have two panels. The first panel consists of
officials from the Department of Defense who will explain how
DOD is currently addressing drug shortages and DOD's existing
capabilities for biomedical research and development. I am
pleased to have the opportunity to introduce them, which I will
do in just a minute, but I want to see if Senator Scott has any
remarks he would like to make first.
STATEMENT OF SENATOR RICK SCOTT
Senator Scott. Sure. First I want to thank Chair Warren for
doing this. I think this is a very important issue. I think any
of us that would have a health issue, we would want to make
that our kids and our grandkids, that they had the best
medicine out there, and it sure does not seem like we are doing
that.
For several years I have raised concerns over the
pharmaceutical supply chain in this country. The COVID pandemic
exposed the vulnerabilities in our supply chains and the
dangers of continuing to be reliant on Communist China for
medicines and other critical products. I do not know if
anybody, logically, would ever want to be dependent on
Communist China for anything.
While the pandemic is over, these problems continue.
America is far too dependent on Communist China and other
foreign producers, and our supply chains will be massively
disrupted when Xi decides to invade Taiwan. I do not think it
is a question of if. I think it is a question of when.
If we do not take action to fix this now, the supply chain
disruption that will occur when Communist China strikes Taiwan
will be extreme and cause unbearable pain for the United States
and every American family. No one will be safe from the impact
of supply chain disruption if we continue down our current
path. Prices will skyrocket even higher; product shortages will
be widespread and severe. I mean, I just cannot imagine that we
are buying essential items like medicines, technology,
household goods, you name it. Everything is going to be
affected, and I do not know why we buy anything from Communist
China.
But today we want to focus on medicine and the
pharmaceutical supply chains that our military depends on. I am
glad we have this opportunity to discuss how pharmaceutical
safety, quality, and supply chain issues affect our
warfighters. I think we all agree that America's dependence on
Communist China and other foreign producers for medicines is a
significant problem, and it does not appear to being addressed.
I have been fighting for legislation to get this fixed. My
American Drugs Act will create a strong incentive for companies
to invest in domestic pharmaceutical production, address the
ongoing drug shortages, and work to prevent future ones, and
shift away from reliance on Communist China. The American Drugs
Act seeks to fix this problem by leveraging the buying power of
the Federal Government and requiring Federal health programs to
purchase American-manufactured generic drugs if there are two
or more manufacturers of a generic drug. I think this bill is
needed, given the issues we face today, and as the Chair said,
it is not a little bit of money that our defense industry is
buying. It is billions of dollars every year.
The Department of Defense recently conducted a
pharmaceutical supply chain study, as required by 860 of the
fiscal year 2020 National Defense Authorization Act, and I want
to thank Chair Warren for leading that effort. This study
revealed the Department has a high dependence on foreign
material and foreign trade agreements to maintain current
pharmaceutical capabilities. I do not know anybody in their
right mind who trusts anything made in China. The report shows
that 54 percent of the pharmaceutical ingredients that
encompassed the products on the FDA's Essential Medicines List,
being the critical pharmaceuticals that the Department should
have access to, are from sources that are at a high risk of
disruption. Who would do that? Only a quarter of the drugs on
the list have domestic manufacturers.
As I mentioned earlier, during COVID we learned the hard
way that relying on non-allied countries for our medical supply
chain poses a real danger. For that reason it is imperative
that we work to ensure DOD's supply chains are independent from
non-allied nations for necessary pharmaceutical treatments. In
the future these supply chains could easily cease to exist, and
I assume they will when China invades Taiwan.
I am also working on legislation that would have the DOD
work with manufacturers to buildup our domestic pharmaceutical
manufacturing base. If we have a drug shortage of antibiotics,
where about 90 percent of the key inputs to make those drugs
come from China, it becomes a readiness issue because our
strength comes from a ready and health warfighter.
About 90 percent of the drugs dispensed at the pharmacy are
generic drugs, but a country like China-controlled generic drug
manufacturing makes us more dependent as we ramp up for
possible conflict.
Today I look forward to hearing from both the Defense
Logistics Agency and the Department of Defense Health Agency to
discuss the findings of the Department's pharmaceutical supply
chain study and their ongoing work to study and secure these
supply chains.
In addition to focusing on pharmaceutical supply chains'
security we must address the specific medical countermeasure
needs of the warfighter. The Walter Reed Army Institute of
Research has a Pilot Bioproduction Facility that can aid the
transition phase from research and development to early stage
clinical trials for warfighter-specific vaccines and biologics.
While this effort is small in scale, it is important that we
discuss the success that General Bailey and his team have found
in keeping our warfighter healthy and combat ready.
History shows us that infectious diseases have a high
morbidity rate in theaters of war. As we look toward the pacing
threat in the Pacific I would like to understand the medical
challenges that our troops will face, what innovative tools and
improve medical countermeasures in advance of a contingency.
Last, we will discuss the ongoing pilot program on quality
and safety of pharmaceuticals. The Department of Defense
Uniformed Services University of the Health Sciences is leading
a pilot program to assess pharmaceutical product quality in the
military health system pharmaceutical supply chain. While this
pilot program is in the early stages, we utilize the military
health system as a representative example to conduct a thorough
review of the pharmaceutical supply chain to include a risk
assessment analysis of our domestic manufacturing capacity and
analytical testing of drug products from various suppliers.
I am deeply concerned by our lack of resiliency and
transparency in this area. I look forward to hearing the
results of this study over the coming years. I want to thank
all of you for being here, and I simply do not understand how
we ever got ourselves dependent on China and why we are not
doing more to get it done.
Senator Warren. Thank you very much. Thank you, Senator
Scott.
As I said, our first panel is going to be about drug
shortages and R&D for the Department of Defense. From my left
to my right we have Dr. Mark Dertzbaugh, Principal Assistant
for Research and Technology for the U.S. Army Medical Research
and Development Command; we have with us Dr. Martinez-Lopez--it
is good to see you--Hon. Dr. Lester Martinez-Lopez, Assistant
Secretary of Defense for Health Affairs at the Department of
Defense--welcome; Dr. David Smith, Deputy Assistant Secretary
of Defense for Health Readiness, Policy and Oversight at the
Department of Defense; and Mr. Matthew R. Beebe, who is
Legislative Affairs Director at the Defense Logistics Agency.
I understand, Dr. Lester Martinez-Lopez, that you are going
to give a joint statement to get us started?
Dr. Martinez-Lopez and Mr. Beebe, as well.
Senator Warren. All right, and then Mr. Beebe will speak.
Thank you. You are recognized, Dr. Lester Martinez-Lopez.
JOINT STATEMENT OF HON. LESTER MARTINEZ-LOPEZ, ASSISTANT
SECRETARY OF DEFENSE FOR HEALTH AFFAIRS, DEPARTMENT OF DEFENSE;
DAVID J. SMITH, M.D., DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR
HEALTH READINESS POLICY AND OVERSIGHT, DEPARTMENT OF DEFENSE;
AND MARK DERTZBAUGH, M.D., PRINCIPAL ASSISTANT FOR RESEARCH AND
TECHNOLOGY, UNITED STATES ARMY MEDICAL RESEARCH AND DEVELOPMENT
COMMAND
Dr. Martinez-Lopez. Chairwoman Warren, Ranking Member
Scott, and distinguished Members of the Senate Armed Services
Committee, I am pleased to represent the Office of the
Secretary of Defense to discuss the Department of Defense's
commitment to ensure access to safe and effective
pharmaceutical products we procure and use in the Military
Health System.
In this testimony we will inform the Committee about the
Department's initiative to maintain a secure pharmaceutical
supply chain, assuring our MHS beneficiaries receive the
highest quality pharmaceutical products available.
Over the past few decades, production of most American
generic drugs, and particularly the ingredients needed to make
them, has moved overseas. With this movement, national security
supply chain concerns arise. Similar to civilian health care
groups and other parts of the U.S. Government, the Department's
core areas of concern are unstable sourcing of pharmaceutical
and/or active pharmaceutical ingredients and the availability
of domestic manufacturing for contingency scenarios.
Consistent with the National Biodefense Strategy, Section
3.5, ``Guidance on Agile Therapeutic Development and
production,'' and Executive Order 14017, ``America's Supply
Chains,'' the Department is taking a range of actions to
address these vulnerabilities. Specifically reference to the
MHS policy efforts, the Department's pharmacy and medical
logistics teams established a Pharmacy Supply Chain Risk
Management Working Group. This group leverage existing and new
assessments of all aspects of the supply chain, with focal
areas on the critical pharmaceuticals for beneficiary care that
are on the Joint Deployment Formulary. We have begun the
development of policies and procedures based on this effort to
enable allocation of resources in the case of supply chain
disruption.
Another effort to generate insights, led by the Uniformed
Services University of the Health Sciences, we are evaluating
aspects of the MHS pharmaceutical supply chain, to include
domestic manufacturing capability, documentation of the supply
chain, and supply chain security and resilience. Our objective,
through our research initiative, is to generate meaningful and
actionable information on drug and active pharmaceutical
ingredient supply chain resiliency. Using the MHS as a
representative example, this study will conduct a thorough
environmental scan of the pharmaceutical supply landscape,
including a risk assessment, analysis of the domestic
manufacturing capacity, and examination of the pharmaceutical
supply chain, analytical testing of drug products from various
suppliers, and study of proposed scoring systems and the
associated policy considerations. Through this study the MHS
will gain insights into which manufacturers, and associated
supply chains meet reliability essential to the Department's
Joint Deployment Formulary.
In addition to the USU-led work, the Defense Health Agency
Research and Development focuses on developing novel solutions
at Walter Reed Institute of Research. At WRAIR, structural and
computational biologists harness the latest generation in
electron microscopy, the next generation in sequencing,
monoclonal antibody generation, machine learning technologies
and novel adjuvants in design of the next-generation vaccine
candies, which are then tested in preclinical models.
Through a range of efforts evaluating the supply chain
vulnerability and resiliency we hope to drive more effective
care while preparing for any potential shortfalls in supply
chain.
In conclusion, I would like to sincerely thank you for your
continued support of military medicine and for inviting me here
to discuss the important issues surrounding the health of our
warfighters and our DOD beneficiaries. I look forward to your
questions.
[The prepared statement of Dr. Martinez-Lopez follows:]
Prepared Statement by Dr. Lester Martinez-Lopez, Assistant Secretary of
Defense (Health Affairs)
Chairwoman Warren, Ranking Member Scott, distinguished Members of
the Senate Armed Services Committee, I am pleased to represent the
Office of the Secretary of Defense to discuss the Department of
Defense's (DOD's) commitment to ensure access to safe and effective
pharmaceutical products we procure and use in the Military Health
System (MHS). We are honored to represent the dedicated military and
civilian medical professionals in the MHS, providing direct support to
our combatant commanders and delivering or arranging health care for
our 9.6 million beneficiaries.
The Department's primary mission is to defend the Nation. As
codified in DOD policy on supply chain management,\1\ we focus on
identifying, monitoring, and assessing the security risks and potential
disruptions within and outside of the DOD supply chain to mitigate the
risk to supply chain operations that may impact availability or quality
of material solutions. As it relates to the pharmaceutical supply
chain, fulfilling this mission means our MHS beneficiaries, including
our warfighters, have ready access to quality pharmaceutical products
to ensure their best health outcomes and to optimize the health
readiness of the Force. Considering pharmaceutical supply chain
vulnerabilities, and in line with our mission of maintaining a ready
medical force, we have a responsibility to identify and evaluate these
emerging threats and develop data informed solutions to mitigate them.
---------------------------------------------------------------------------
\1\ DODI 4140.01, March 6, 2019 (whs.mil)
---------------------------------------------------------------------------
In this testimony, we will inform the Committee about the
Department's initiatives to maintain a secure pharmaceutical supply
chain assuring our MHS beneficiaries receive the highest quality
pharmaceutical products available. We will specifically focus on
opportunities to enhance security of the supply chain, generate
information necessary for contingency planning and response, and the
potential for financial savings to the MHS.
Over the past few decades, production of most of America's generic
drugs and particularly, the ingredients needed to make them, has moved
overseas. With this movement, National Security supply chain concerns
arise. Similar to civilian healthcare groups and other parts of the
U.S. Government, the Department's core areas of concern are unstable
sourcing of pharmaceuticals or active pharmaceutical ingredients and
availability of domestic manufacturing for contingency scenarios.
Consistent with the National Biodefense Strategy section 3.5,
``Guidance on Agile Therapeutic Development and Production,'' and
Executive Order 14017, ``America's Supply Chains,'' the Department is
taking a range of actions to address vulnerabilities. Specifically to
the MHS efforts, my office has several efforts. The Department's
pharmacy and medical logistics teams established a Pharmacy Supply
Chain Risk Management Working Group. This group leverages existing and
new assessments of all aspects of the supply chain, with focal areas on
the critical pharmaceuticals for beneficiary care that are on the on
the Joint Deployment Formulary. We have begun the development policies
and procedures based on this effort to enable allocation of resources
in the case of supply chain disruption.
Another effort to generate insights, led by the Uniformed Services
University of the Health Sciences (USU), is evaluating six aspects of
the MHS pharmaceutical supply chain, to include: domestic manufacturing
capability, documentation of the supply chain, and supply chain
security and resilience. Our objective, through our research
initiative, is to generate meaningful and actionable information on
drug and active pharmaceutical ingredient (API) supply chain
resiliency. Using the MHS as a representative example, this study will
conduct a thorough environmental scan of the pharmaceutical supply
landscape, including a risk assessment, analysis of the domestic
manufacturing capacity, and examination of the pharmaceutical supply
chain, analytical testing of drug products from various suppliers, and
study of scoring systems and the associated policy considerations. This
pilot study will generate data pertaining to essential drugs for
military operations. Through this study the MHS will gain insights into
which manufacturers, and associated supply chains meet reliability
essential to the Department's Joint Deployment Formulary. By creating
more transparent information concerning supply chains that are able to
consistently deliver quality medications, this study may enable
manufacturers to be able to better compete and allow major purchasers
of drugs, like the DOD, to direct our purchasing to best value
manufacturers.
USU has begun work on the first part of the study, ``A Comparison
of Essential Medicines Lists from Three Agencies,'' that will compare
the publicly available essential medicines lists of the DOD, the FDA,
and the World Health Organization. Future studies will include
evaluation and risk assessment of the DOD drug supply chain, an
analysis of domestic drug manufacturing capability, and study of a
proposed scoring tools for drug quality.
In addition to the USU led work evaluating existing products, the
Defense Health Agency Research and Development (DHA R&D) focuses on
developing novel solutions. DHA R&D has a long history of researching
and developing new medical technologies in support of readiness and
health care for servicemembers from accession, through training,
deployment, and medical treatment on the battlefield. This research and
development also led to new technologies and vaccines that have saved
countless lives across the world. The committee has asked for more
information on the capabilities at the DHA's Walter Reed Army Institute
of Research (WRAIR).
WRAIR is one of our premier laboratories at the center of
researching and developing such new technologies and vaccines.
The WRAIR conducts vaccine research in partnership with industry,
other US government partners academic, and international research
partners. At WRAIR, structural and computational biologists harness the
latest generation in electron microscopy, the next generation in
sequencing, monoclonal antibody generation, machine learning
technologies and novel adjuvants to design innovative next-generation
vaccine candidates, which are then tested in preclinical models.
WRAIR's Pilot Bioproduction Facility, or PBF, manufactures test
batches of vaccines of military relevance for use in human clinical
phase 1 and early phase 2 trials. Vaccine candidates manufactured at
the PBF can then transition to the WRAIR Clinical Trials Center, and
subsequent expanded field testing. Through WRAIR's forward deployed
directorates centered in Thailand, Kenya, and the Republic of Georgia,
WRAIR maintains enduring relationships with clinical research centers
in over 10 countries around the globe. WRAIR has led pivotal trials for
dengue, malaria, chikungunya, Lassa, Ebola, and HIV vaccine products.
Additionally, WRAIR has developed intellectual property behind two
Shigella vaccine candidates currently in phase 2 clinical trials.
Through a range of efforts evaluating the supply chain
vulnerability and resiliency we hope to drive more effective care while
preparing for any potential shortfalls in supply chain. In parallel, we
seek to contribute along with our USG, academic, and industry partners
to develop novel solutions to future health threats from capability to
delivery.
In conclusion, I would like to sincerely thank you for your
continued support of military medicine and for inviting me to be here
with you today to discuss the important issues surrounding the health
of our warfighters and our DOD beneficiaries. I look forward to your
questions.
Senator Warren. Thank you, Mr. Secretary. Mr. Beebe?
STATEMENT OF MATTHEW R. BEEBE, DIRECTOR OF ACQUISITION (J7),
DEFENSE LOGISTICS AGENCY
Mr. Beebe. Good afternoon, Madam Chair, Ranking Member
Scott, and distinguished Members of the Senate Armed Services
Personnel Subcommittee. Thank you for the opportunity to
testify today. My name is Matt Beebe. I am the Senior
Procurement Executive for the Defense Logistics Agency, or DLA,
a Department of Defense combat support agency. I am grateful to
have the chance to speak to you today about some of the work
DLA is doing to improve visibility and transparency within the
DOD pharmaceutical supply chain and ensure that our military
servicemembers have access to safe, high quality
pharmaceuticals.
DLA's mission is to deliver readiness and lethality to the
warfighter always, and support or nation through quality,
proactive, global logistics. In support of that mission, DLA
manages the full spectrum of pharmaceuticals for the military
and their dependents all over the world, to include supply to
military hospitals.
Although our military customers set pharmaceutical
requirements based upon the needs of today's warfighters, it is
DLA who purchases those products and manages critical end-to-
end supply chain logistics to ensure that military
servicemembers get the pharmaceuticals they need, when they
need them. We accomplish this by leveraging commercial
capabilities and contracting with commercial distribution
companies who use their global networks of sources to deliver
FDA-approved medicines to servicemembers at military treatment
centers or wherever they are located throughout the world.
In line with our logistics mission and to better serve our
customers and the warfighter, DLA is always seeking to improve
our ability to identify, manage, and mitigate logistical and
supply chain risks, including those impacting pharmaceutical
supply chains.
One area of focus in this issue is foreign dependency of
pharmaceuticals. A 2021 report by the DOD inspector general
identified that due to the dependency of the U.S. commercial
pharmaceutical market on ingredients from foreign suppliers, a
disruption of the supply chain of those ingredients to domestic
manufacturers had the potential to cause drug shortages, which
could ultimately compromise the standards of care for military
servicemembers.
Similarly, in November 2023, DOD submitted a report in
response to Section 860 of the National Defense Authorization
Act for fiscal year 2023, regarding risks in DOD pharmaceutical
supply chains. In that report, DOD identified the defense
supply chain for pharmaceuticals is highly dependent upon
foreign or unknown sources, in large part due to the global
nature of the pharmaceutical supply chain for both finished
products and active pharmaceutical ingredients, or APIs.
DOD identified several pervasive information gaps that
hinder its ability to obtain visibility and transparency in
these supply chains, particularly the lack of readily available
and authoritative data on the sources of finished generic
drugs, their APIs, and other key ingredients. Having this
information would significantly improve our ability to
illuminate the complex pharmaceutical supply chain and help DOD
ensure that our military servicemembers continue to have access
to safe, high-quality pharmaceuticals.
As the provider of critical pharmaceutical products to our
Nation's warfighters, we are steadfastly committed to working
with the Department, other Federal agencies, and Congress to
strengthen our collective ability to identify, mitigate, and
prevent risks in the pharmaceutical supply chain.
DOD and the Department sincerely appreciate your interest
in these issues. I look forward to addressing your questions.
[The prepared statement of Mr. Beebe follows:]
Prepared Statement by Matthew R. Beebe
Thank you for the opportunity to testify before the Senate Armed
Services Personnel Subcommittee. As the Senior Procurement Executive
for the Defense Logistics Agency (DLA), I am here to discuss the report
submitted by the Department of Defense in November 2023 pursuant to
Section 860 National Defense Authorization Act (NDAA) for fiscal year
2023 regarding risks in DOD pharmaceutical supply chains.
DLA is a combat support agency. We manage end-to-end, global supply
chain logistics in support of the services and Combatant Commands.
DLA's mission is to deliver readiness and lethality to the Warfighter
Always and support our Nation though quality, proactive global
logistics. As part of that mission, DLA procures and manages the full
spectrum of pharmaceuticals for the military and their dependents all
over the world, to include supply to military hospitals. DLA is DOD's
largest purchaser of these products, acquiring $5.3 billion of
pharmaceutical products in Fiscal Year 2023. In addition, DLA comprises
approximately 23 percent of the total Federal demand. Other major
Federal Government purchasers include the U.S. Departments of Veterans
Affairs and Health and Human Services, for a total of $22.9 billion in
fiscal year 2023 for the entire Federal Government. Although the total
Federal Government spend is considerable, it represents a very small
percentage of global demand.
DLA's pharmaceutical purchases are driven by the needs of its
defense customers, primarily the Defense Health Agency (DHA). DLA
executes its defense supply mission through the pharmaceutical prime
vendor program, which leverages commercial capabilities and
efficiencies to meet DOD needs. DLA contracts with commercial
manufacturers and distributors to satisfy customer requirements for
pharmaceutical products through integration with commercial supply
chains.
The Food and Drug Administration (FDA) within the U.S. Department
of Health and Human Services (HHS) regulates the U.S. commercial
medical products, including pharmaceuticals. DOD leverages commercial
pharmaceutical supply chain capabilities. DOD is supported by the
commercial medical industrial base and provides medical treatment and
care for the U.S. Military. Within DOD, DHA manages the personnel,
facilities, treatment protocols, and requirements of the military
healthcare system. In turn, DLA supports DHA and other defense
customers by procuring the pharmaceutical supplies and services needed
by the Department, based upon the requirements and specifications
defined by its customers.
The issue of foreign dependency in pharmaceuticals has been a
recognized risk for some years. A 2021 DOD Inspector General report,
``Evaluation of the Department of Defense's Mitigation of Foreign
Suppliers in the Pharmaceutical Supply Chain,'' found that ``[a]
disruption of the supply of foreign-made APIs to domestic manufacturers
could cause a drug shortage that affects every level of the U.S. health
care system. Since the DOD is a consumer of the U.S. commercial
pharmaceutical market, which is dependent on ingredients from foreign
suppliers, these potential drug shortages could ultimately compromise
the standard of care for military servicemembers and DOD beneficiaries.
Implementing measures to mitigate the risks of a pharmaceutical supply
disruption would provide a defensive capability and mitigate public
health and national security risks.''
In recognition of these risks, DLA began developing the
Pharmaceutical Provenance Solution (PPS) in 2021, a cloud-based
software solution that uses various data bases, including the publicly
available, Food and Drug Administration Drug Shortage Data base, to
help provide visibility and analytics of the country of origin and
sources of supply of finished drugs, active pharmaceutical ingredients
(APIs), and excipients. PPS provides insight into a variety of factors
related to pharmaceutical supply chain risks.
The Section 860 report primarily focused on foreign dependence on
active pharmaceutical ingredients (API), which is one of a variety of
potential risks and vulnerabilities within pharmaceutical supply
chains. As referenced in the report, DOD is in process of developing
the Supply Chain Risk Management (SCRM) Framework and Taxonomy with
implementation guidance, as well as the SCRM governance process. The
Department utilized the PPS when creating the Section 860 report to
help identify sources of supply risks. The report findings are based
upon the results of an initial DOD pharmaceutical supply chain analysis
examining 1,744 drug families, which equates to 12,917 specific drugs,
identified by national drug codes, or about 10 percent of the total
drugs available in the U.S. marketplace.
As referenced in the report, based upon this initial supply chain
analysis, DOD identified a high dependence on foreign material and
trade agreements to maintain current pharmaceutical capabilities.
Although 28 percent of the APIs are sourced from North America and are
considered at least moderately secure, 5 percent are sourced from
China, and 22 percent are unknown. In total, DOD identified that 54
percent of the DOD pharmaceutical supply chain is considered either
high or very high risk, with dependency on non-Trade Agreements Act
(TAA) compliant suppliers, as defined in the Section 860 report,
sourcing from China and India, or unknown.
In addition to identifying the degree of overall foreign dependency
for DOD procured products, the section 860 report identifies the
following mitigations and recommendations in consideration of
mitigating risk on foreign dependance:
Work with the Military Services and other DOD Components
regarding transition to TAA-compliant viable therapeutic API
alternatives.
Pursue efforts to validate sources of supplies/production
capacity from industry.
Enhance PPS capabilities.
Engage suppliers of pharmaceuticals with Unknown country
of origin to determine source of API and update in PPS data base.
Work with relevant Federal stakeholders to support
domestic production of finished generic drugs, APIs, and key
ingredients.
Focus on utilization of secure ingredient sources
following DLA's sourcing hierarchy.
Partner with the FDA and other Federal stakeholders to
facilitate provision of the necessary business intelligence to
determine the source for the finished drug, API and key ingredients
acquired by the Federal Government.
The information provided by PPS has enhanced DLA's ability to share
information with customers and other stakeholders to develop risk
mitigations and actions to address potential shortages and issues of
availability. Additionally, DOD participates in the HHS Joint Supply
Chain Resilience Working Group. The formal Working Group operates under
the authority of the Critical Infrastructure Partnership Advisory
Council and facilitates engagements between government representatives
at the Federal, State, local, tribal, and territorial levels and
representatives from critical infrastructure owners and operators to
conduct deliberations and form consensus positions to assist the
Federal Government in developing resiliency.
Going forward, DOD anticipates that insight into pharmaceutical
supply chain risks will improve as additional information is gathered
and risk assessment capabilities are further refined; however,
pervasive information gaps remain. The Department identified the lack
of authoritative data on the sources of finished generic drugs, their
APIs, and other key ingredients as a critical DOD information gap. In
the report, DOD recommended that manufacturers of pharmaceuticals sold
in the U.S. provide definitive information on the production location
of all their finished drugs and the source of all APIs and key
ingredients, and the percentages of APIs and key ingredients coming
from each source, for each lot produced. The current lack of
manufacturer production and sourcing data for generic drugs hinders
DOD's ability to obtain visibility and transparency within the supply
chain. That in turn makes it more difficult for DOD to identify areas
of risk. Obtaining this information and having it available to Federal
stakeholders responsible for assessing and mitigating vulnerabilities
to our Nation's pharmaceutical supply chain would increase our
collective readiness and facilitate development of solutions to address
foreign dependencies.
I want to thank you for your interest in this important topic and
the important work the DLA is doing to bring greater visibility and
transparency to the DOD pharmaceutical supply chain. As the provider of
critical pharmaceutical products to our Nation's warfighters, we are
steadfastly committed to working with the Department, other Federal
Departments and agencies, and Congress to strengthen our collective
ability to identify, mitigate and prevent risks in the pharmaceutical
supply chain.
Senator Warren. Thank you, Mr. Beebe.
I am going to start with the first round of questions. The
Defense Health Agency provides care for about 9 million people
in the military health system, and that includes by dispensing
prescription drugs to servicemembers and to their families.
Earlier this month, the American Society of Health System
Pharmacists announced that there were a record 323 active drug
shortages during the first quarter of 2024. That is an all-time
high in the United States.
Dr. Martinez, you are in charge of ensuring the health and
safety of our servicemembers. When DHA cannot get a critical
drug because it is in shortage, can you just explain to
everyone what options you have to ensure that servicemembers
and their families are receiving the care they need?
Dr. Martinez-Lopez. Chairwoman, thank you for the question.
You know, the health of our beneficiaries is of most importance
to all of us, and when you face the issue of not having the
drug, the right drug for that patient then your choices are to
go and look at alternate drugs that may not be exactly the same
one for that condition or for that patient. It may have a
different side effect profile.
So let me give you an example. Amoxicillin may be a drug.
It is an antibiotic, made overseas, and used everywhere for
basic infections. But let's say I do not have it. Now I have to
take other antibiotic, and at the same time I am trying to
combat resistance of antibiotic. I am using an antibiotic that
is not indicated for that condition. So there I lose twice,
once because I am not giving the right antibiotic to my
patients but on top of that I am losing ground on my fight
against antibiotic resistance.
In other events, like in an epinephrine injection, that can
be life or death. We do not have hours to decide what the
alternate is. So that may translate into a life, right on the
spot.
So this creates a conundrum for all health care
professionals, and it is not just us. It is across the Nation
we are facing this.
Senator Warren. Okay. So worse health outcomes for the
patient and worse health outcomes for the system overall, is
what I am hearing you say.
According to the FDA, one of the leading factors
contributing to drug shortages is quality issues. For example,
an FDA inspection of a manufacturing plant in India revealed a,
quote, ``cascade of failure'' at the plant's quality control
unit. Investigators found problems with systems to prevent
microbial contamination, to keep processing areas sterile, and
to protect critical production documents, including they found
a trash bag full of records that had been torn and doused in
acid. The plant temporarily closed, resulting in widespread
shortages of common chemotherapy drugs across the United
States, affecting both civilian and servicemembers.
As more of our drug supply chain moves overseas, these
kinds of quality concerns are going to become even more common.
So last summer, DOD launched a pilot with an independent lab to
test drug products for safety and effectiveness. For example,
it will test whether the drug contains any contaminants,
whether it contains the correct dosage, and whether it has the
expected potency.
The pilot study is going to look at 12 drugs on DOD
Operational Medicines List, which includes drugs that are
necessary for warfighting, and its Predeployment Medicines
List, which includes drugs that help servicemembers control
chronic conditions to meet standards for deployment. Together
the pilot will test medicines needed to stabilize wounds,
alleviate pain, and treat infections.
Dr. Smith, can you share why DOD thought it was necessary
to conduct this pilot study?
Dr. Smith. Thank you for the question, Senator Warren. As
we have noted, we are most concerned about ensuring the access
to safe and effective drugs, and as you noted we are doing a
number of studies. The 860 study that we have referred to and
then also the study for the Uniformed Services University, that
is evaluating, in particular, a quality scoring tool by
DeBastiani, that was published in the Journal of the American
Pharmacy Association just last year as an additional factor for
us to consider as we purchase medications on the market, and
you pointed out the various FDA recalls and the issues that
have been coming up.
Additionally, we have heard that within the generics, where
there are multiple manufacturers using the same API, that there
may be a variance in those generics. So we thought with all of
those factors it would be useful to conduct this pilot study
that you referred to, that ultimately will look at 42 drugs
from our Joint Deployment Formulary, to see if we can
differentiate between the generics and make us actually a
better buyer and actually reward manufacturers that produce the
product that is spot on. Over.
Senator Warren. Good. So you are talking about a study that
you are doing because you hear a lot of problems out there, and
also this may help you figure out how to respond to those going
forward. Is that a fair summary?
Dr. Smith. I think that is fair.
Senator Warren. Good. Good. So when DOD is making decisions
about purchasing drugs, price is often the most important
consideration, but it should not be the only consideration.
Whether a drug is made by a reliable manufacturer or whether
its active ingredients are made, and where they are made should
also inform purchasing decisions.
The Defense Logistics Agency is responsible for procuring
pharmaceuticals on behalf of the Military Health System, but
DHA can put requirements on the purchases. Dr. Martinez, if DOD
identifies significant risks to the safety of its drug supply
chain will DHA add requirements on drug quality to ensure that
we are buying effective, safe, the best drugs for our
servicemembers?
Dr. Martinez-Lopez. Senator, based on the information the
pilots give us, I think we will be in a position to, if that is
indicated, to make it so.
Senator Warren. Okay. So you can put that into your
requirements, and you are telling me that if you are concerned
about quality you will put it into your requirements.
Dr. Martinez-Lopez. Yes.
Senator Warren. For the drug. Good. That is what I want to
hear. You know, I am glad that DOD has taken steps to evaluate
drug quality, and the Department should be prepared to use this
information to improve quality and accessibility of the
prescription drugs that our servicemembers need. Thank you.
Senator Scott?
Senator Scott. Thank you. Mr. Beebe, how many different
drugs do you buy in a year? How many different ones?
Mr. Mr. Beebe. Well, our catalog probably is in the tens of
thousands of items. Of course, that is not all different drugs.
In some cases it is dosage differences, application
differences.
Senator Scott. Okay. Tens of thousands. All right. Do you
personally believe that we should not buy things from Communist
China?
Mr. Mr. Beebe. I agree basically, or in reality we follow
existing regulation on how and where to buy materials, whether
it be pharmaceuticals or other items.
Senator Scott. Sure. But do you believe that we should not
buy from Communist China?
Mr. Mr. Beebe. I agree, sir.
Senator Scott. Okay. So in the last 12 months, how many
drugs have we stopped buying from Communist China?
Mr. Mr. Beebe. When we buy pharmaceuticals we buy with a
preference toward domestic or safe, assured sources, although
in many cases we do not know where the sources are. Normally we
buy from domestic or our trading partners, but we do not always
have visibility of where the ingredients of those
pharmaceuticals come from, which is why it was so important for
us initiate the study and identify where we believe the sources
of the ingredients are.
Senator Scott. But today you could just say, ``I am not
going to buy anything that has an ingredient that comes from
Communist China. You could say, ``I am not going to buy
anything that has an ingredient from Communist China. I am not
going to buy anything that is packaged in Communist China. I am
not going to buy anything that is in any way in the supply
chain impacted in Communist China.'' You could do that today,
right?
Mr. Mr. Beebe. Actually, I do not believe the regulation
actually supports that, in that very often the final product is
manufactured domestically or from an ally, and if it is
substantially transformed in those countries it is in
accordance with trade agreements in the Buy American Act.
Senator Scott. So what is the limitation? Why can you not
make that decision today?
Mr. Mr. Beebe. Because often the final product is
manufactured either domestically or with an ally----
Senator Scott. But you could set that as a standard and
then it is a requirement--you could set the standard that
whatever you buy can have nothing, anywhere in the supply
chain, comes from Communist China. You could decide that today.
Mr. Mr. Beebe. If that standard exists, yes, but that is
not for DLA to decide. We have to follow existing regulations
and policy and----
Senator Scott. Who set regulations that said you could
not--the Secretary of Defense testified the other day that we
should not buy anything from Communist China. So what
regulation would it be?
Mr. Mr. Beebe. That would establish that?
Senator Scott. Yes. What regulation would stop you from
being able to do it today?
Mr. Mr. Beebe. I cannot say what that regulation would be,
but I certainly support being part of the discussion with the
Department of Defense.
Senator Scott. Why don't you just do it. Just do it and see
what happens. Why don't you just say tomorrow, you just do it.
Like I am a business guy. I negotiated contracts with people. I
ran the largest hospital company in the country. I was the
biggest buyer of pretty much everything in health care on the
provider side, and once I signed a contract I said our
hospitals could not buy anything that day. They said, like
that, and we are not going to buy those gloves, that drug, that
device. Why don't you just do it?
Mr. Mr. Beebe. We do not buy end products from China unless
it is the only source available and we can justify the waiver.
Senator Scott. So you believe that if there is a product
that there is a supplier in the United States today, you do not
buy anything made in China if there is supplier of that product
today?
Mr. Mr. Beebe. If the end product is available
domestically, that is where we will buy it, yes.
Senator Scott. Do all of you believe that? So if come back
and tell you that there are suppliers here that compete with
China, that cannot get contracts with you, you will be shocked.
Mr. Mr. Beebe. If we are talking about the end product,
yes.
Senator Scott. What is the difference?
Mr. Mr. Beebe. Well, much of what we are talking about is
the active pharmaceutical ingredients that originate from China
that get molded into a final product. When we buy the final
product we are buying it from the United States or a domestic
trading partner, and we cannot, until recently, see whether or
not there were some ingredients from China or other country of
concern. It was not visible, and we are working to make it
visible.
Senator Scott. But why don't you just say, starting today
you will not contract, just put it out there, you are not going
to contract with anybody if anything--not just the active
ingredients--there is no part of the process where Communist
China is involved in it. There is none. Or Russia, Iran, but
primarily Communist China. Why don't you just do it right now?
Mr. Mr. Beebe. If we made that absolute then we would be
creating a sufficient amount of non-availability for our health
professionals.
Senator Scott. But if you do not do it today, when are you
going to do it? I mean, if you do not start today, I mean, when
are you going to do it? If you do 10,000, why don't you start
off with 1,000 and see how bad it is? I mean, I am just a
business guy, and I did not buy from my competition. This is
not competition. These people are trying to kill us. Oh, they
are killing us. I mean, Chinese precursors are killing 70,000
people with fentanyl a year. So why don't you just do it?
What I am trying to understand is, I think all of you agree
Communist China wants to destroy our way of life. I think we
all would, right? Does anybody disagree?
[No response.]
Senator Scott. Nobody disagrees. So let's do it today. What
I do not understand is why don't we do it today? I just do not
get it. Can somebody explain to me why we do not?
Dr. Smith. Sir, there are some of the APIs that only
originate from China, that are critical to medications that we
use on a daily basis, and so that would be one of the
impediments that needs to be resolved to be able to go that
direction, sir.
Senator Scott. So, Dr. Smith, how many is that?
Dr. Smith. I am aware on the Joint Deployment Formulary,
and this is specifically China, and as Mr. Beebe pointed out we
have an issue with provenance on a fair percentage of our Joint
Deployment, but I am aware, I believe--and I can take it for
the record--27 drugs that the APIs are specifically only
sourced from China.
Senator Scott. Have we put out a bid for Americans to say,
will somebody do it, on those, those 27?
Dr. Smith. As part of our work on 860, it is part of what
we are going through to confirm and work solutions to this
issue. But we are well aware that there is a substantial amount
of the APIs, the active pharmaceutical ingredients, that are
coming from Mainland China. Over.
Senator Scott. So that is not 27 out of 10,000, right?
Dr. Smith. I should probably take it for the record, sir,
and we can give you the information. But I think it is 27 out
of 920, or so.
Senator Scott. Okay. I am sorry.
Senator Warren. No, no. That is fine.
Senator Scott. I just want to understand why we do not do
it today. I mean, in business we would just say, guys, we had a
nice meeting. We found out that these people are trying to
destroy it, and we just say, okay, guys. We all decide, as of
today, we will not do business with them. We do that in
business all the time. I do not know why we just do not do
that. I do not know what the limitation is. If there is a
limitation, I want to all--the Secretary of Defense has told me
he does not want to buy anything from China.
Dr. Martinez-Lopez. Sir, if I may, the main limitation we
have right now, like Dr. Smith said, is that some of these
drugs, the API is only made in China, and that is in the global
market. So if we decide not to buy Chinese, I man, I think the
number is around 5 percent of it, that we know of, of all the
drugs in the formulary, that the API comes from China, and we
do not know about 20-something percent of them where the API
comes from. So that creates a conundrum. So if we could source
it some other place, that would be great.
Senator Scott. Okay. So why would we not do this. There are
all these different options. Number one, what I would do is
just say I am not going to do it, and everybody has to sign a
contract that they will not do it, and let's see what happens.
I guess they will come back and tell us, right. Or we could say
you have got 90 days to tell us where all your ingredients come
from, and then we could make a decision. But, I mean, in my
business life I would not say, ``Let's do a study.'' I would
say, ``No, I am not going to do it.''
I am just trying to figure out, if there is an impediment,
just tell me what it is. Are you in the same position I am?
Senator Warren. Yes, and I want to followup on your point.
Okay, I just want to followup on this about the risks we run
from having overseas manufacturing that is either in China or
some other nation that is not an allied nation, because they
all pose this risk and we need to worry about it.
I mentioned in my opening remarks that Senator Rubio and I
got a provision in the fiscal year 2023 NDAA for DOD to put
together a report, and it came out last November, about drug
supply chain risks in military, and evaluated 211 drugs. It
found that half of those were either at high or very high risk
because the active pharmaceutical ingredients, the APIs, for
those drugs are sourced from China or non-Trade Agreement Act
countries, or are just simply unknown, nobody knows where they
are coming from.
So you identified, Mr. Beebe, that 27 APIs are sourced
exclusively from China, but I would just point out that is only
a little over 10 percent of the drugs. It is not half the drug
we are talking about here. We have got a lot more drugs that if
you right that it is only 27, then we have got a lot of other
drugs that are being sourced overseas, that we think there is a
substantial risk.
So the question becomes whether or not we should bring that
manufacturing back to the United States. Is that in our
national defense?
So let me put that question to you, Mr. Beebe. Should we be
manufacturing these drugs domestically, and what is the risk if
we keep running these manufacturing facilities overseas for
China or non-Trade Agreement Act countries?
Mr. Mr. Beebe. So yes, ma'am. First of all, Dr. Smith is
the one that made reference to the 27----
Senator Warren. Sorry. Sorry.
Mr. Mr. Beebe.--but I will go ahead and address the
question first. So yes, we studied the FDA Essential Medicine
List, and that is what was the basis for the report that
identified a high amount of APIs sourced in China or other non-
TA countries. Since then we have doubled that population,
adding some of the highest volume pharmaceuticals that are
purchased by our medical treatment facilities, as well as the
overlap with the Joint Deployment Formulary, to expand the
amount that we have reviewed, and the results are essentially
the same, by percentage, as in same percentage of those coming
from countries of high risk as well as the same percentage of
unknown, which is, to me, equally troubling that I do not even
know how to characterize the risk.
Do I support bringing more domestic capacity? Absolutely. I
mean, not only does domestic capacity mean that we have better
access, but it also means that the government can better
influence prioritization when there needs to be decisions of
priority.
Senator Warren. Okay.
Mr. Mr. Beebe. That is very important too. Yes, ma'am.
Senator Warren. So let's talk a little bit about what is
involved in increasing domestic manufacturing of these
pharmaceuticals. Last summer, DOD released its inaugural DOD
Biodefense Posture Review. This outlined the Department's
capabilities to counter biothreats and identify domestic
manufacturing as a priority reform initiative. According to the
Posture Review, we have reduced drug manufacturing here in the
United States so much that we simply do not have the commercial
capacity to manufacture what our troops need, and because the
Department's, quote, ``unique biodefense demands'' are small
and not commercial competitive, reliable domestic manufacturing
partners are actually hard to find.
But that is not the end of the story. DOD has its own
manufacturing capabilities, capabilities with a proven track
record of success. In 2017, DOD's Advanced Development and
Manufacturing Biopharmaceutical Facility to help manufacture
medical countermeasures became fully operational. DOD has a
second biomanufacturing facility at the Walter Reed Army
Institute for Research, WRAIR. The Walter Reed facility has
developed many vaccines that DOD relies on today to protect our
troops from a number of diseases, including Zika, Ebola, and
adenoviruses.
Dr. Dertzbaugh, you help oversee WRAIR, and WRAIR has
developed many essential products that both servicemembers and
civilian populations use today. Can you explain why WRAIR was
the best place to develop these discoveries rather than just
leaving it to private industry?
Mr. Dertzbaugh. Thank you, Chairwoman, for the question. I
appreciate the opportunity to talk about DHA R&D's infectious
disease research capabilities. Our two laboratories, the Walter
Reed Army Institute of Research and then the U.S. Army Medical
Research Institute of Infectious Diseases, have the
capabilities and the subject matter experts to get after these
infectious disease threats that our servicemembers might
encounter when they are deployed overseas or fighting an
adversary or even in training. So those capabilities help us
find countermeasures for solutions to medical infectious
disease threats that are not commercially viable in the U.S.
because there is no market for this. There is no threat to the
U.S. population, in general.
Senator Warren. All right. That is very helpful. Thank you.
Because WRAIR's Pilot Biopharmaceutical Facility has been
crucial in addressing these potential threats and keeping our
servicemembers safe, especially when private sector is not in a
position to fulfill that role.
As DOD considers how to implement the recommendations it
has identified on domestic manufacturing, the Department should
also think about how to replicate the capabilities at
facilities like WRAIR to strengthen supply chain resilience and
to keep our members safe and bring that manufacturing home.
Thank you.
Senator Kaine?
Senator Kaine. Thank you, Madam Chair and Ranking Member
Scott, and I appreciate the witnesses being here. I have two
questions that I would like to ask. While reliance on APIs from
foreign countries that are adversaries presents significant
threats, the good news in this challenge is that we are not
alone. Not every other country is an adversary. We have
networks of alliances, unlike any of our adversaries.
I wonder whether, and maybe I will start with you Mr.
Secretary, have we discussed this challenge with nations with
whom we have close economic, military, diplomatic ties, and
explored ways we can deal with those challenges in a joint way?
Dr. Martinez-Lopez. Thank you for the question, Senator.
The answer is yes. Actually, we talked with a couple of allies,
trying to figure out their ability to produce all the drugs
that could use, and to their amazement and my amazement----
[Audio interruption.]
Dr. Martinez-Lopez.--we have to have a secure chain of
supply. I owe it to my servicemembers----
[Audio interruption.]
Senator Kaine.--within the DOD, from antidepressants to----
Dr. Smith. It is a wide range. Yes, sir.
Senator Kaine. What are we expecting to learn from this,
and I suspect that if we do learn something from this data, the
application is not just the military application. This would be
good information in the civilian space, whether it is Medicare
or civilian. It would be really good to have that.
Dr. Smith. Yes sir, and I think as I had mentioned, we are
looking at this quality tool that was actually proffered by a
group of academic pharmacists last year to see whether or not,
indeed, we can differentiate by manufacturer. So we are looking
at all the in a particular drug and then doing this
additional--I mean, clearly looking at all of the good work
that FDA and the regulatory piece does, but then adding onto it
testing, looking at potency, looking at the dose, and also
looking at contaminants that may be used as fillers, et cetera,
in the product.
Then if we find anything we have also contracted with three
other academic institutions to do validation of that work. If
it pans out, we think it will help us direct our buying toward
those manufacturers that produce what we would define as the
highest quality products. But it is a pilot, and that is why we
have characterized it that way, because we do not know, and I
do not think this has ever been tested, if you will.
Senator Kaine. I am talking about the timing of the pilot
and when do you expect it to start, you know, getting good
information back?
Dr. Smith. It is to run 2 years. We started the actual work
in November. They have just finished contracting with the--or I
believe it is finished, but they are in the process with these
third-party or additional partners. So we should start seeing
beginning information. As Senator Warren said and you have, we
are doing the first 12 right now. But our intention is to do
about 42 different drugs. So I would anticipate that clearly by
early next year we will start flowing in, but the whole project
is scheduled over a 2-year period.
Senator Warren. Thank you. Senator Scott?
Senator Scott. Secretary, let's think about--because I
think you are right, what you were talking about how we can use
this whole buying power idea. So let's think about it. I have
checked with the Chair to see if she would be okay with this.
But could you prepare a letter that we would send out to
basically all of the health care community--you know, we could
do it through like the hospital association, pharmaceutical,
everybody--and say this is the problem, you guys have the
buying power, we believe we ought to create a domestic market,
and so everybody starts doing their part.
So, the way I would think about doing it is, number one, if
the Chair is okay with this, we would do it with you, and send
a letter out to the entire health care community. I think they
would probably read it if it came from you and from us, and
talk about what you are doing, the concern that you have
addressed today. Then maybe wait 30 or 60 days, and then invite
all the associations together on a conference call to answer
their questions, and get ideas from them about what we could do
to help build a domestic market.
Dr. Martinez-Lopez. Senator, that is a very intriguing
proposition. I have not thought about it. But really I would
like to be part of it, but it has to be really the whole
government. So ask for help from HHS and other agencies. HHS
has the lead for the country in this particular issue, and
obviously I would have to clear it with the Secretary to make
sure that it is appropriate, and if it is, we will pursue it.
Senator Scott. So let's do this. If it is okay with the
Chair, let's start with us. If we can get other people to sign
on, HHS, all these people, that is great. If they do not, let's
go forward if we can. If not, we can do it, if the Chair is
okay with it, and then after that let's do a call and tell them
why this does not work.
Dr. Martinez-Lopez. Senator, you may well know, we need to
ask, but if I get that from my Secretary then I will be more
than glad to lead the effort.
Senator Scott. Let me know, because he said in testimony
that he did not want to buy anything from Communist China.
Then, Mr. Beebe, I think we all would like to have
something happen. So could you come back, maybe--I do not know
what is appropriate, whatever you think is appropriate--and
maybe meet with the Chair and me and our staff and just say,
okay, what is the limitation and what can we do today. If you
tell us there is a limitation, then I think at least the three
of us that are here, I think we are all on the same page--and
it is just crazy that we are doing this to ourselves, and being
dependent on China--we are all on Armed Services, and we will
work hard to get it affixed to the NDAA. I do not know if that
makes sense to you. Is that doable? Thirty or 60 days, is that
realistic?
Mr. Mr. Beebe. Yes, sir. I mean, absolutely, we want to be
part of the solution. The illumination we are doing to try to
identify the sources is the beginning of having some
information to use toward that dialog, to figure out how we can
move the market or adjust the market. I will be glad to
respond.
Senator Scott. Let's try to do it in 30 days. The NDAA is
coming up this year pretty quick now, because it is May 1
tomorrow, right. But the faster you can do it, the three of us
will work with you.
Mr. Mr. Beebe. I would offer that because that is very much
a policy discussion that we would want to include the other
stakeholders from the Department.
Senator Scott. Sure. But, I mean, we have Paul on our team,
and I know you have great people on your team. We will work
with you. But the faster we do it, there is a greater chance
the three of us can get it in the NDAA this year.
Senator Warren. Let's make sure we have got Mr. Dertzbaugh
on this, as well, since I see WRAIR is the model for when the
market has a complete breakdown and cannot produce what it is
that our military needs.
Mr. Dertzbaugh. Ma'am, if I may speak, that is true to a
point, I would say. We certainly have the ability in our
production facility to make small quantities of vaccines. It
does not have the ability to make any drug products, though. We
are still reliant on commercial manufacturers to produce large
quantities of those materials if we are going to use them.
Senator Warren. I understand that you are small, but
successful. But I also understand, and I hope you are hearing
here, all of you are hearing, how committed we are to
redomesticating our pharmaceutical supply chain and production.
I think you are going to be part of that, as well. Good. We
good? Senator Kaine, you good?
Senator Kaine. I am good.
Senator Warren. All right. Thank you all. I appreciate you
being here today, and I ask for Panel 2 to come in. Thank you.
[Pause.]
Senator Warren. Thank you. Thank you for being with us. The
second panel will feature testimony that clarifies DHA's
existing authorities to insulate servicemembers from drug
shortages and offers additional solutions.
We have with us today, again from my left, Dr. Melissa
Barber, a postdoctoral fellow at the Yale Collaboration for
Regulatory Rigor, Integrity, and Transparency; Dr. Bryce H.P.
Mendez, a Specialist in Defense Health Care Policy at the
congressional Research Service; and Mr. Victor A. Suarez, a
retired U.S. Army colonel, and Founder and Principal Growth
Partner of Blu Zone Bioscience & Supply Chain Solutions, LLC.
So I will start the first round of questioning here.
Most of the time, DOD will continue to purchase drugs from
the commercial drug market.
Oh, I am so sorry. I am so eager to get to them. I
apologize. If we could we still start with our testimony. Dr.
Barber, would you like to start us, please?
STATEMENT OF MELISSA BARBER, Ph.D., POSTDOCTORAL FELLOW
Dr. Barber. Chair Warren, Ranking Member Scott, and Members
of the Subcommittee, thank you for the invitation to testify
today. I am a postdoctoral fellow at Yale University,
researching pharmaceutical markets.
Both here and in my written testimony I will endeavor to
report, as precisely and honestly as I can, evidence from the
academic and policy literature on drug market failures and
other remedies. My remarks today reflect my own views, not the
view of my employer or any other organization.
No one here today disputes that the military faces
challenges in ensuring a reliable supply of safe, high-quality
pharmaceuticals. No one here today disputes the unacceptable
risks this creates for the health and well-being of
servicemembers and their families, as well as operational
readiness. So the task before us then is to unravel the root
causes of challenges in the supply chain and to develop
solutions.
First, military procurement of medicines is exposed to many
of the problems seen in broader commercial markets for
medicines, including increasing costs and supply and stability.
Supply chains for many drugs are vulnerable to interruption. We
do not even know the scale of the problem. A recent report by
DOD noted that they could not determine the API source of 22
percent of drugs. But within the academic literature we find
that approximately one-third of generic active pharmaceutical
ingredients produced for use in U.S. markets were manufactured
by a single facility, and an additional third were manufactured
by only two or three facilities.
This Committee may not have jurisdiction over industrial
policy, but it still must reckon with the downstream results of
decades of policy decisions that have resulted in the
concentration and offshoring of most pharmaceutical production.
Second, economists widely agree that markets for medicines
do not always behave like typical markets and are far from
being few or competitive. We should leave our idealized,
orderly supply and demand curves in the cloakroom. They will
not be of much use to us this afternoon as theoretical lenses.
We have to instead understand these markets on their own terms
and through rigorous analysis of empirical data.
Markets for medicines for military use are even more
unusual. One factor is many are national monopolies and
monopsonies because they involve hyper-specialized goods, often
produced in quantities too small to be manufactured cost-
effectively by more than one company. A review of DOD contracts
shows many such hyper-specialized products, all the way from
anthrax vaccines, battlefield-suitable analgesic auto-injector
kits and nerve agent antidotes, to the specialized medicines
used by California sea lions that the U.S. Navy trains for
defense purposes. When there is only one buyer and seller, the
DOD is not bidding in a competitive market. The DOD is the
market, and that demands that we think about market problems
and market solutions in a nuanced, context-specific way.
Third, for some drugs there is an irreconcilable mismatch
between commercial incentives and defense needs, which cannot
be solved with purely market-based solutions. Pharmaceutical
companies are incentivized to manufacture a drug if it gives
them a good return on investment. A supply line that
manufactures an expensive cancer drug that serves a wide market
is just more profitable than manufacturing drugs with small
markets, like anthrax vaccines or drugs with low margins, like
off-patent antibiotics.
In contrast, the military is conscious of costs but is
ultimately incentivized to purchase drugs that meet operational
needs and protect the health of servicemembers. Sometimes, but
not always, these incentives overlap, and when they do not, one
often-tried solution to bridge that gap is to pay
pharmaceutical companies enough that it becomes worth their
while to manufacture the drugs the military needs. For products
used mostly or only by the military, we have seen time and time
again that the expected demand has not been sufficient to
generate a healthy number of bidders.
We therefore have to be realistic about when the DOD will
be able to buy itself out of market failures. The DOD just does
not have the spending power to fundamentally change the
incentives that govern the commercial market to serve defense
needs. DOD spending, as many have spoken today, accounts for
less than 2 percent of overall spend in the United States.
These limitations of using commercial markets to ensure a
resilient supply chain for military needs bring me to my final
point. When it comes to medicines for military use, we live,
and have always lived, in a mixed economy. By this I mean that
the public and private sectors have both played an important
role in developing, manufacturing, and supplying medicines in
the United States for over 160 years. The private sector has
efficiently supplied DOD with many needed medicines.
However, for many other medicines where the military is the
sole market, or the commercial market has struggled to meet
military needs, the military has brought manufacturing in
house. The history of the military producing medicine stretches
back to at least the Civil War, when pharmaceutical
manufacturing facilities were established in Philadelphia and
Astoria to stabilize supply chains for the Union army, with
many other examples outlined in my written testimony.
The public sector, more generally, has solved puzzles that
the private sector was not incentivized to explore, like how to
manufacture penicillin, and the public sector in the United
States continues to successfully manage products as complex as
vaccines and monoclonal antibodies today.
We cannot afford to hold onto the hope that markets will
always sort themselves out. At present, government creation of
manufacturing capacity is usually done reactively, with
initiatives created in response to particular crises. As one
example, it took over 10 years and $100 million for DOD to
bring adenovirus vaccine manufacturing back online after Wyeth,
the sole supplier, held DOD to ransom, to renovate the facility
at excessive cost.
I bring up this history to dispel any misconceptions about
military drug production as a new idea, rather than as an idea
older than the Department of Defense itself. In my written
testimony I detail independent review after independent review,
recommending that the military build on past successes and
existing capacity and bring the manufacturing of priority
products back in house. I also detail decades of bipartisan
support for this from the congressional Record.
Today I echo their conclusions in recommending that
Congress introduce legislation establishing clear options for
creating a government-owned facility to manufacture priority
health products to meet unmet DOD needs. Thank you.
[The prepared statement of Dr. Barber follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator Warren. Thank you, Dr. Barber. Mr. Mendez.
STATEMENT OF BRYCE H.P. MENDEZ, SPECIALIST IN DEFENSE HEALTH
CARE POLICY, CONGRESSIONAL RESEARCH SERVICE
Mr. Mendez. Good afternoon, Chairwoman Warren, Ranking
Member Scott, and Members of the Subcommittee. Thank you for
inviting the congressional Research Service to testify today.
This afternoon I will summarize my written statement by
starting with a brief overview of the medical research and
development capabilities of the Department of Defense, or DOD,
followed by a summary of why and how the Department aims to use
those capabilities to develop drugs. I will conclude by
identifying considerations that Congress may face with regard
to DOD medical research, development, and manufacturing of
these products.
The U.S. military has a long history of contributing to the
discovery of novel drugs and other medical countermeasures.
Early and well-known contributions took place during and
shortly after the Spanish American War when Army medical
research efforts supported the discoveries of typhoid, yellow
fever, and malaria vaccines. The lessons learned from the
Spanish American War, and other conflicts throughout our
Nation's history, have laid the groundwork for Congress and DOD
to invest in, build, and sustain military medical research and
development capabilities. Today, DOD uses these capabilities to
protect servicemembers from health threats, respond to medical
capability requirements of the joint force, meet the needs of
the National Defense Strategy, and to also respond to
congressionally directed research topics.
DOD medical research and development enterprise includes a
number of entities like the Defense Health Agency, the military
departments, Defense Advanced Research Projects Agency, and the
Chemical and Biological Defense Program, among others. Congress
appropriates research funding to these entities, who are then
responsible for resourcing, performing, or sponsoring medical
research projects.
Two of these entities, in particular, provide DOD with
capabilities to develop drugs using different approaches. One
capability is the Pilot Bioproduction Facility at the Walter
Reed Army Institute of Research in Maryland. This government-
owned facility provides a test ground for Federal agencies,
academia, and private companies to pursue early development and
small-scale production of drugs so that they can be
transitioned into advanced clinical trials.
Another capability is the Advanced Development and
Manufacturing Biopharmaceutical Facility in Florida,
administered by the Chemical and Biological Defense Program.
The contractor-owned, contractor-operated facility, which
became operational in 2017, provides DOD with priority access
and surge capacity to produce medical countermeasures.
When DOD discovers a potential drug candidate, the
Department is generally subject to Food and Drug
Administration, or FDA, requirements and procedures for review,
approval, and clearance. Since at least 1997, Congress has
provided DOD with an ability to request a Presidential waiver
of certain FDA requirements, including those for administering
investigational new drugs, or off-label uses of a drug, and
informed consent for certain products authorized for emergency
use.
In 2017, Congress provided the Secretary of Defense with
the ability to make requests to the FDA Commissioner for
expedited review, approval, and clearance of certain medical
products when there is an existing or potential military
emergency. These authorities provide frameworks for DOD and FDA
to share information and to collaborate and coordinate on the
development of safe and effective medical products that serve
the military's needs.
Turning now to the role of Congress, I wanted to highlight
two issues that this Subcommittee may face. First, Congress
could consider defining or clarifying the role that DOD should
have in conducting in-house drug manufacturing. A question that
Congress could consider is whether or not DOD should be in the
business of manufacturing drugs or other medical products, and
if so, for what purpose and to what extent?
Second, Congress could consider assessing DOD's medical
research development and manufacturing approach to better
understand its effect on industry participation or engagement
with the Department. Congress has given DOD certain authorities
and tools that it may use to generate interest and incentivize
industry to work with the military. These authorities and tools
include unique contracting mechanisms, technology transfer
opportunities, and a process for expedited FDA reviews and
approvals. Congress could evaluate whether DOD has used these
authorities and tools as Congress intended and explore how they
might attract, influence, or deter companies from doing
business with the military.
This concludes my remarks. Thank you for the opportunity to
testify, and I look forward to your questions.
[The prepared statement of Mr. Mendez follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator Warren. Thank you, Mr. Mendez. Colonel Suarez.
STATEMENT OF COLONEL VICTOR A. SUAREZ, USA (RET.), FOUNDER AND
PRINCIPAL GROWTH PARTNER, BLU ZONE BIOSCIENCE & SUPPLY CHAIN
SOLUTIONS, LLC
Colonel Suarez. Good afternoon, Chairwoman Warren, Ranking
Member Scott, and distinguished Members of this Committee.
Thank you for the opportunity to speak with you today.
My name is Vic Suarez, and I have recently retired from the
U.S. Army after 27\1/2\ years of Active Service, as a medical
service and acquisition corps officer, specializing in the
advanced development of biologics, managing the medical supply
chain, and meeting America's finest sons and daughters as a
commander four times, twice in the combat zone.
During the past 10 years I have been heavily involved in
advanced development of biodefense medical countermeasures,
served as the Chief of Staff at the Walter Reed Army Institute
of Research, and was selected by General Gus Perna to serve at
Operation Warp Speed, from 2020 to 2021 as the Lead Vaccine
Program Manager. I am speaking today primarily in my role as a
Founder of Blu Zone Bioscience, a life science consulting firm.
When I left Active Duty 6 months ago, my principal goal was
to affiliate with organizations that were mission-aligned with
my responsibilities in the DOD, including enhancing national
security and protecting human health, and to that end
supporting domestic companies that could support those two
missions. To this end, I partnered with two organizations, the
Council on Strategic Risks and the Securing America's Medicines
and Supply coalition. Both organizations are focused on
ensuring access to essential medicines for patients and the
warfighter.
On November 27, 2023, the Department of Defense, in
response to the fiscal year 2023 National Defense Authorization
Act, Section 860, provided the Senate and House Armed Services
Committee an interim risk report on the Department's reliance
on overseas-derived pharmaceuticals. A significant finding was
that 54 percent of the national drug codes sourced from the DOD
had active pharmaceutical ingredients, or APIs, and excipients
non-API, that came from non-Trade Agreement Act compliant
countries, including China.
This recent finding presents a clear and present danger to
national security. It should compel us to explore better
legislative and trade policies that strengthen our Federal
acquisitions, economic, and health security to reduce our
reliance on overseas essential medicines, their key starting
materials, and API. We must manufacture more of these materials
domestically to ensure high-quality manufacturing processes and
products, including a reliable and resilient material medical
supply chain supporting this essential industry.
A major contributing factor to this national security and
health security risk is a little-known but controversial court
case titled Acetris Health, LLC v. United States. In this case,
the United States Court of Appeals for the Federal Circuit
overruled a long-standing precedent regarding the origin of a
drug by ruling that a drug could be considered to be
manufactured or substantially transformed in the U.S. and sold
to the Federal Government, even if its API and all of its
components, to include excipients, were manufactured in TAA-
banned countries.
Today, a Chinese firm could make all the API and precursor
materials for a medicine, ship it to a United States subsidiary
that does packaging and final labeling, and still be able to
label it as American made. This would be considered an
American-made drug and principally illustrates this loophole.
In my testimony today I wish to highlight a dysfunctional
market where generic drug companies compete in a race to the
bottom in generic drug pricing and manufacturing, a principal
driver of drug shortages, which just 2 weeks ago, as you
mentioned earlier, Senator, was reported by the American
Society of Health System Pharmacists, that our Nation is at an
all-time high, since 2001, of 323 known drug shortages.
Overwhelming downward pressure in generic drug costs with
no consideration for supply reliability or quality leads
domestic manufacturers to operate at approximately 50 percent
utilization capacity. Many of these domestic companies are
closing plants and essential medicine production lines, or
being acquired by foreign entities, which will only downgrade
our Nation's ability to independently provide health care for
its citizens during a global pandemic or during a national
security event.
Finally, I want to applaud the Department of Defense
efforts to assess these strategic risks through both the
assessment of the origin supply chain at the Defense Logistics
Agency as well as the Uniformed Services University
Pharmaceutical Assessment of Quality Pilot Study, or PhaQS, as
both these efforts will provide more transparency and
potentially enable millions of our service men and women, their
families, and other TRICARE retiree, like me, confidence that
when they go to a military treatment facility in the U.S. or
serve in combat that they will always have access to the
highest quality medicines, at the most affordable prices,
something that is possible if we are willing to disrupt the
status quo.
Thank you for your attention as I raise these significant
considerations concerning our Nation's overreliance on non-
Trade Agreement Act nations for our pharmaceuticals, and I
encourage Congress, and this Committee, in particular, to
closely monitor and support the DOD's efforts to care for our
warfighters, their families, and retired military.
I look forward to your questions.
[The prepared statement of Colonel Suarez follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Mr. Suarez has submitted supportive articles found in
Appendix A.
Senator Warren. Thank you, Colonel Suarez. I appreciate it.
I am going to start the questions here. Most of the time
DOD will continue to purchase drugs from the commercial drug
market, but there are some instances when it makes sense for
DOD to produce the medication itself, for example, when DOD is
the only customer. An example is the adenovirus vaccine. While
adenovirus typically causes mild cold or flu-like symptoms, it
is a major cause of serious respiratory illness among
servicemembers, particularly during basic training. That is why
WRAIR developed an adenovirus vaccine which it then licensed to
private industry.
But because there is not a broad market for the adenovirus
vaccine, it has sometimes been difficult to find a manufacturer
that was willing to produce it. In fact, for over a decade, DOD
was unable to vaccinate new recruits for adenovirus because the
manufacturer decided to stop producing the vaccine, and there
was no other manufacturer who was interested in doing this.
Mr. Mendez, you have studied the defense health care system
closely. First, let's start with, how did this disruption
affect the health of servicemembers?
Mr. Mendez. Thank you for the question, Senator, and that
is correct. DOD exhausted their last supply of the adenovirus
vaccine in about 1998, 1999. At that time, DOD estimated that
the absence of that supply of vaccine would lead to about over
10,000 preventable infections from the adenovirus, over 4,200
medical visits of recruits in the recruit training pipeline,
who are at risk for adenovirus, and over 850 hospitalizations,
within a year, to an extent DOD did observe that in the absence
of the vaccine.
Senator Warren. Okay. So in other words people got sick,
they had to go to the doctor. There were deaths associated with
this adenovirus. All of that potentially affects warfighter
readiness. You have got all these young people who are
together, and the disease is moving among them, right? The
virus is moving among them.
Dr. Barber, you are an expert on pharmaceutical
manufacturing. What did it take to finally get a new
manufacturer to produce the adenovirus vaccine for DOD?
Dr. Barber. After stocks were depleted in 1999, DOD does
what it usually does. It put out a tender, and the previous
manufacturer that had pulled out of the market, Wyeth, they
agreed to do a tech transfer, but only if DOD would reimburse
them for it, which is quite the demand given, as we heard
today, DOD developed that vaccine and had done tech transfer to
them free of charge in the first place.
Only one manufacturer even considered bidding at the time,
Greer, but they withdraw because they asked DOD for $10 million
up front, and DOD could not agree to it at the time.
All in all, it is estimated that it took about $100 million
and 10 years for new vaccines to become available again.
Senator Warren. You know, this is just stunning. DOD, as
you say, does the research, develops the vaccine, gives it away
to try to be able to get a manufacturer going, and they end up
paying a private manufacturer, I think you said $100 million.
Is that about right?
Dr. Barber. In the end, yes.
Senator Warren. In the end, in order to build a facility to
manufacturer this vaccine that we need, on top of the money
they paid to purchase the vaccine from the manufacturer, all
because DOD is at the mercy of private actors who just are not
interested in marketing these products for a relatively small
market.
Mr. Mendez, is the adenovirus vaccine the only example of a
product that the private market has been unwilling to
manufacture for DOD/
Mr. Mendez. No. The adenovirus is not a unique case. DOD
has many challenges in finding a lot of medical
countermeasures, over many decades. Current challenges that
they experience and are working through include products to
address anthrax, botulism, cholera, hemorrhagic fevers,
tularemia, and other health threats.
Senator Warren. All right. You know, this is a real
problem, when the market just does not meet what it is that DOD
needs, and this is going to continue. We are going to continue
to have medications that DOD requires in order to keep
servicemembers healthy, and that simply are not profitable for
private industry to come in and produce.
Dr. Barber, what would be the advantages if DOD decided to
manufacture these drugs itself?
Dr. Barber. A public manufacturer is likely, depending on
the drug, to be enormously cost saving. To bring back the
adenovirus example, the current contract with Teva is worth
about $38 million per year. That is actually a lot of money to
pay for a single vaccine. As a point of comparison, it is about
80 percent annually of how much California has budgeted to
build an entire insulin factory.
A report by the Army estimated adenovirus factory startup
cost at $100 million, with annual costs to $10 million per
year. So that works out to DOD breaking even from building and
running a manufacturing facility in just 3 years.
Besides costs, by manufacturing their own drugs, DOD could
ensure reliable supply and support wider strategic aims and
restoring domestic production capacity.
Senator Warren. Okay. So you pencil this out and discover
at least for some of these drugs it would be cheaper for DOD to
manufacture it themselves, and it would have the added benefit
of you know what your supply chain is, there would not be any
secrets in the supply chain, and we would have a reliable
source for these drugs.
This is why I am introducing a new bill, the Keep DOD's
Drug Supply Secure Act, to direct DOD to manufacture the drugs,
devices, vaccines, and other medical products when there is a
risk of shortage or quality concerns. This bill gives us an
opportunity to resolve drug shortages, to secure the
pharmaceutical supply chain, and to ensure safe and effective
drugs for our servicemembers. Thank you.
Senator Scott.
Senator Scott. Thank you, Chair. Colonel Suarez, So you
heard the testimony before, and Mr. Beebe said there are about
10,000 drugs that they buy. Does that sound about right?
Colonel Suarez. When we are talking about national drug
codes, we are talking in the thousands. So between 5,000 to
10,000 that they can source from within the industry for
pharmaceuticals.
Senator Scott. All right. So today, is there just even one
of those that they could just say, ``Today I'm not going to buy
anything else from China?'' Do you know of any one of them that
they could do that?
Colonel Suarez. No, but I think the fundamental issue that
they could probably do that is with help from the Congress to
address the loophole I mentioned in my opening statement. The
Department tried to do this--and I am talking the VA--back in
2019, and they were challenged in court when they wanted to
execute an executive order to buy American products. They were
challenged by this company, Acetris Health, to say, well, we
make this product overseas, and then we do the final packaging
and labeling in the United States, and we are going to call it
United States. Well, that is not how precedent was defined for
a Made in America drug. That was always defined by where the
API was made.
Senator Scott. So you think we have to have a law that says
that Made in America means something different than what that
court case said?
Colonel Suarez. Yes. I think this is an opportunity----
Senator Scott. Can you get that to us?
Colonel Suarez. Yes.
Senator Scott. I will work on that. Okay. So let's say we
get that fixed. Is there anything else that would prevent us
from somebody in Mr. Beebe's position from just saying, ``Today
we are not buying any more''? What else would there be? Any
other limitation?
Colonel Suarez. I think some of the challenges that could
be there is especially in those areas where we are solely
reliant on a supply chain that is only made in China, for
example. So right now if you look at the API Innovation Center,
they have really done some studies where they have looked at
the supply chain. They call out 60 vital medicines in the
United States. They estimate of the 60 vital medicines in the
United States, about 20 percent of them are solely sourced with
APIs from China, and then for key starting materials, it is
about 45 percent of those vital medicines are solely sourced--
that means there is no other supplier.
Senator Scott. Just go back, on solving the problem. Is the
only limitation is if we get a law passed that says that Made
in America means X, that it is all produced here, we do not use
any of their ingredients, blah-blah-blah, and no packaging,
nothing, so is that going to give the Department of Defense the
ability to fix it today?
Colonel Suarez. I think when that loophole is closed I
think it gives a clear pathway to do what you are suggesting.
Senator Scott. Okay. That is the only limitation.
Colonel Suarez. I do not think that is the only limitation.
Senator Scott. What else would it be?
Colonel Suarez. I think an understanding that having
quality differentiation in the marketplace other than cost is
another big hurdle for us to try to grapple with, and this is
dealing with the status quo----
Senator Scott. Oh, are you saying that they decide based on
price and nothing else?
Colonel Suarez. What I am suggesting is that the
marketplace for generic small-molecule pharmaceuticals is
primarily based on a cost basis, and no real measure of quality
in that decision matrix.
Senator Scott. So I am a business guy. In business, I would
not buy just based on price.
Colonel Suarez. Correct.
Senator Scott. Do you think we do that?
Colonel Suarez. Unfortunately, that is where the market is
going for that commodity.
Senator Scott. Why?
Colonel Suarez. Because what has happened over the last
couple of decades--and this really happened around late 2021,
when we voted for China to be a Most Favored Nation, and they
all of a sudden grew their economy and we started to transition
our manufacturing overseas--what they found was they used their
most competitive advantages, and that is access to cheap labor
and their inability to really focus on environmental concerns
in manufacturing.
So they could lower the price of goods very low, to the
point where they could target specific industries, like the
pharmaceutical industry, and even specific drugs, and actually
push some of our companies either out of business or from
stopping making critical medicines.
Senator Scott. So is there anything else we need to do to
stop it?
Colonel Suarez. I think part of it also is you could
leverage Defense Production Act to incentivize and pass
legislation for funding to actually bolster our domestic supply
chains and manufacturing in the United States. You created
incentives for the marketplace to say, hey, there is an initial
incentive, just like the CHIPS and Science Act, to manufacture
in the United States.
Senator Scott. So why do they not do it now. We have got
the Defense Production Act right now. Why don't they just do
it?
What I do not get is everybody--I think we have all come to
the conclusion China is bad. They want to destroy our way of
life. Why are we buying their crap?
Colonel Suarez. Part of it is because in the past 20-plus
years they have done a very masterful job of integrating into
our biotech and biopharma and many pharmaceutical manufacturing
industries. They started with early innovative companies, when
they are small biotechs and they are desperate because they are
cash strapped. So they basically hire them as contract research
organizations. They develop those drugs and products throughout
the life of that drug application. So as that company matures
and it gets licensure, their entire supply chain might be
dependent on materials from China.
Senator Scott. So do we need to prevent China from being
able to invest in our pharmaceutical industry?
Colonel Suarez. What I would suggest to the Congress is
that they place limits on those known companies that have
either stolen intellectual property or have a bad intent to
take American technology----
Senator Scott. Do we need legislation, or can they do that
on their own right now?
Colonel Suarez. Well, so companies can make those
decisions----
Senator Scott. No. Can the Department of Defense prevent a
Chinese company from investing?
Colonel Suarez. I do not know if the Department could do
that directly without getting challenged in court.
Senator Scott. I do not get this. I mean, we do not buy
stealth bombers from China, so why do we buy drugs from China?
Colonel Suarez. So what I would offer is that when you look
at things like the Berry Amendment, those were originally
designed, like in 1941, and they focused on important things
like textiles and food and all those to support defense
purchasing of those critical commodities.
What I would suggest is either you amend that to include
pharmaceuticals and medicines, or you address the loophole that
I mentioned, and once you can do that--and this is not an
original idea from me. The API Innovation Center pointed this
out about 18 months ago. So what I would say is once we fix
that through legislation, a lot of the other things that you
are suggesting can more easily occur without challenges in
court.
Senator Scott. Okay. So if we want to solve this, name the
list. We have got to change that court case, and that is one.
Colonel Suarez. Yes, so that is one. The second one is I
would encourage the DOD to continue monitoring this quality
assessment pilot so that we can better understand that health
care systems actually can buy low-cost drugs that are of high
quality, because some initial data shows that that is very
possible, and then the third thing----
Senator Scott. We do it in the private sector every day, so
it is all possible.
Colonel Suarez. Yes. Yes, sir.
Senator Scott. We would not have to have a study. I mean,
that is pretty basic stuff.
Colonel Suarez. The study actually generates the data that
is irrefutable that you could use to justify the decisions. So
yes, sir.
Senator Scott. We do it every day, because we like our
products to work. Every manufacturing company buys based on
quality, because it likes their end product to work.
Colonel Suarez. Yes, in normal markets you are absolutely
correct, sir. That is how normal markets work. Unfortunately,
in the pharmaceutical industry that has not been the standard.
Senator Scott. Because we did not do any testing.
Colonel Suarez. No. It is not that we did not do any
testing. It is that the regulatory agency had a very difficult
time, as we transitioned our manufacturing over to Asia, mostly
India and China, we lost an ability to actually regulate and
inspect those manufacturing plants.
Senator Scott. Yes, but we can inspect it afterwards.
Colonel Suarez. Right. But the problem is we have such a
big backlog right now, and now when they are checking these
facilities they are finding egregious problems. That is why
some of those plants are shutting down as they remediate those
problems, and thus that increases more drug shortages, and that
is part of what we are seeing right now.
Senator Scott. Okay. So we have got the court case, assess,
what else?
Colonel Suarez. Then I think really provide incentives to
industry to domestically manufacture more essential medicines
here, not only the finished product, the API, and the key
starting materials.
Senator Scott. Well, I think it will happen, except for
what Dr. Barber is talking about. I mean, some things are going
to be so small you cannot do it. But there is enough money, if
it is big enough, right.
Colonel Suarez. Correct.
Senator Scott. If we say we are going to have a domestic
product, we can do it. I do not disagree with what you are
saying. There are going to be some markets that are not going
to be big enough, and this is going to be cheaper. There are
two options. One, pay somebody to do it, like what you said, or
do it ourselves.
Colonel Suarez. May I add one other thing, too? There are
some really good initiatives that are happening in the United
States right now, for example, in Senator Kaine's State, for
example, with Civica RX, a public benefit corporation, working
with Phlow and AMPAC, where they are actually going after these
most essential medicines. That is a model that actually could
be expanded across the country to address those critical,
essential, low-cost generic medicines.
So I think we are starting to see more and more examples
like what we see in the commonwealth of Virginia that could
actually help correct the market over time, so that we can
actually address these critical risks.
Senator Scott. Thank you.
Senator Warren. Good. Thank you. Dr. Barber?
Dr. Barber. It was just to say that in terms of market
share, DOD's fund really is quite, quite low. I mean, $7
billion is not very much in multinational corporation terms, in
terms of global markets. So it really is a drop in the bucket,
and the market power just is not there for most products.
Senator Scott. I mean, I agree. That makes sense. But you
would think if everybody worked together, like if all of our
allies were part of this, which we should be able to do, there
are still going to be things that make sense, that you cannot
get. Somebody is not going to have an incentive because there
is not enough profit margin. But if we could get everybody to
buy together, we could, in theory.
Dr. Barber. A major limitation is the data still is not
there in terms of where provenance is, and thank you for
bringing up the Acetris case. It is incredibly important, and I
would encourage the Committee to reach out to the DLA for legal
counsel in terms of kind of what their powers are.
I have been doing API research for a long time in terms of
capacity building and distribution, and I am heartened that in
the last 3 years people have started to take it really
seriously in terms of initiatives to not supply. But they are
still very ad hoc. There is no systematic mapping. FDA is not
doing it. EMA is not doing it. The WHO is not doing it. We have
to show data with everyone, with our allies, with all
countries. So it has to be an international effort to map how
many factors are making a given drug, where are they, what is
the capacity. We need to do this systematically. We cannot rely
on ad hoc measures.
Senator Warren. You know, I very much appreciate that. What
I think we are hearing over and over is we need to bring
pharmaceutical manufacturing back to the United States, and
that it is a critical national defense issue. It is also
critically important for the health of our people.
I hear this breaks into two parts. One is commercial
manufacturing, which as you rightly point out, we do not have
the right incentives in place. We do not even have the right
information in place to require meaningful domestic
manufacturing and meaningful insight into the supply chain, to
know that we are safe in the drugs that we are getting and into
the APIs that we are getting. That is one part of the problem.
Then the other part of the problem is the manufacturing
challenges for what are much more modestly scaled projects that
we are going to have to move to military manufacturing.
Otherwise, we are just not going to get this stuff, or we will
pay prices that are so outrageous that we would have been a lot
better off--it would have been cheaper to have built it
internally.
So I think those are the two challenges we face, and I know
that we both want to work on here.
I want to thank all of our witnesses for their testimony
today. I also want to thank Jon Clark, Gary Leeling, Noah Sisk,
and Katie Magnus, for their work in helping put today's hearing
together.
We have a letter from the National Association of
Manufacturers. They have asked that it be included in the
record. Any objection?
Without objection on that.
[The information referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator Warren. With that, do we have a period of time for
questions? Nope. Alright. We have got 7 days for questions for
anybody who wants them. You will have 30 days to reply to those
if there are answers that are needed.
With that, this hearing is adjourned. Thank you all.
[Whereupon, at 4:10 p.m., the Committee adjourned.]
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator Mazie K. Hirono
production location of drugs
1. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, in the Report on the DOD Pharmaceutical Supply Chain
Risks from November 2023, I am concerned that DLA could not identify 22
percent of the sources of ingredients for 211 drugs on the Essential
Medicines List. DOD recommended that manufacturers of pharmaceuticals
sold in the U.S. be required to provide the Food and Drug
Administration with definitive information on the production location
of finished drugs and the source of key ingredients because this
information gap is a substantial vulnerability to the supply chain. For
the Panel, do you have an update on what has been done to make this
change?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. Thank you for
this important question. The Defense Logistics Agency is in the best
position to provide the answer to this question consistent with their
functions and responsibilities.
Mr. Beebe. To DLA's knowledge, no changes have been made that would
require manufacturers of pharmaceuticals sold in the U.S. to provide
definitive information on the production location of finished drugs and
the source of key ingredients. DLA continues to work with the FDA and
other Federal stakeholders through participation in various working
groups focused on addressing the broad national challenges posed by the
prominence of foreign sources for APIs and pharmaceuticals.
national preparedness
2. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, how does the Department plan to work with the rest of
the interagency to address our national preparedness to ensure access
to high quality pharmaceuticals, even during times of national
emergency like a war or global pandemic?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. The Department is
working within the interagency in alignment with Executive Order (EO)
14017, ``America's Supply Chains'' and EO 13953, ``Addressing the
Threat to Domestic Supply Chain from Reliance on Critical Minerals From
Foreign Adversaries and Supporting the Domestic Mining and Processing
Industries'' to address an all of government approach and solution to
pharmaceutical supply chain vulnerabilities. The Department is
committed to a supply chain risk management framework that promotes
coordination and communication within the Department as well as with
the interagency. As part of this effort, and to address DOD
pharmaceutical supply chain management requirements more effectively,
the Department developed the Pharmaceutical Provenance Solution (PPS)
which provides a means and method to identify active pharmaceutical
ingredients (API) with associated risks and dependencies. This program
requires continuous monitoring and information updates to sustain as a
relevant source of risk and dependencies. PPS enables the Department to
consider specific pharmaceutical sourcing risk considerations as part
of the supply chain risk analysis, e.g., to avoid pharmaceutical
sources considered very high or high risk.
Mr. Beebe. In December 2023, DOD chartered the Pharmacy Supply
Chain Risk Management Working Group (``Pharm SCRM WG'' or ``WG'') as a
standing work group under the Defense Medical Logistics Proponent
Committee (DMLPC). The WG has established three sub-working groups,
each of which is responsible for one of the deliverables identified
within Section 860(b) of the fiscal year 2023 NDAA.
The WG has three Co-Chairs consisting of a Defense Health Agency
(DHA) Medical Logistics Pharmacist, a DHA Pharmacy Operations Division
(POD) Pharmacist, and a Defense Logistics Agency (DLA) Pharmacist. The
WG Voting Members include pharmacist representatives from the Army,
Navy, Air Force, Marines, DHA Medical Logistics, DHA POD, and DLA. The
WG has advisors who participate in the working group but are non-voting
members. These advisors are representatives from the Food and Drug
Administration (FDA), the Administration for Strategic Preparedness and
Response (under the Department of Health and Human Services), the DHA
Medical Logistics Chief Medical Officer, Military Service Logistics
Subject Matter Experts, Defense Advanced Research Projects Agency, the
Department of Homeland Security, the Office of the Joint Chiefs of
Staff, the Office of Naval Research, Office of the Assistant Secretary
of Defense (Health Affairs), and the DHA Medical Logistics Supply Chain
Management Office.
The Pharm SCRM WG's deliverables are to develop and publish
implementing guidance for risk management for the DOD's supply chain
for pharmaceuticals. Additionally, the WG will:
Assess risks to the Department's pharmaceutical supply
chain.
Identify the pharmaceuticals most critical to beneficiary
care at military treatment facilities.
Develop and recommend establishment of DOD-level policies
for allocating scarce pharmaceutical resources of the DOD in case of a
supply chain disruption.
3. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, how does the Department use its purchasing power to
address drug shortages?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. Thank you for
this important question. The Defense Logistics Agency is in the best
position to provide the answer to this question consistent with their
functions and responsibilities.
Mr. Beebe. DOD's pharmaceutical purchasing power does not impact or
address drug shortages in the commercial market. The DOD pharmaceutical
supply chain is fully dependent on the U.S. commercial pharmaceutical
sector which is facing an ongoing nation-wide drug shortage crisis. As
a result, DOD experiences the same drug shortages and risks as the rest
of the Nation. In addition, the DOD pharmaceutical supply chain
represents less than 2 percent of the U.S. commercial purchases and a
much smaller percentage of the global commercial market. As such, DOD
does not have enough pharmaceutical purchasing power to leverage
significant change on either the U.S. or global commercial
pharmaceutical market.
U.S. chronic drug shortages are a national security risk that
requires a whole of government response. The Department of Health and
Human Services is the Federal agency responsible for decisions on
priorities and allocation under the Defense Production Act for
pharmaceuticals and is the ultimate Federal arbiter of resource
allocation. Pharmaceutical purchasing power, which in the case of DOD
is less than 2 percent of U.S. purchases, is not relevant to resource
allocation authorities.
The Department relies on the actions of its logistics and medical
professionals to mitigate the impacts of shortages. In the past when
DOD has experienced shortages, DOD has taken the following actions to
resolve/mitigate:
Explored the shortage circumstances and engaged the
commercial partners (pharmaceutical manufacturers, Prime Vendors, etc.)
to determine the root cause of the shortage and developed a joint
strategy with the commercial partners and DLA customers to mitigate or
resolve the shortage.
Identified clinically appropriate pharmaceutical
alternatives, if they exist, and communicated this information to
Military Treatment Facilities and other DOD medical organizations.
Leveraged pharmaceutical experts to develop formulary
alternatives, limit fill quantities, etc.
4. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, how is the Department working with its Pharmacy Benefits
Manager (PBM) to support a more diverse supply chain?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. In accordance
with TRICARE Pharmacy contract requirements, if there is a supply
disruption and the National Prime Vendor (NPV) cannot support, Express
Scripts (ES) can access their commercial supply, if they can support,
without negatively impacting their commercial book of business.
However, that is typically only for a very short period while they try
to work with the NPV to find an alternate source. Once the supply for a
drug is re-established, the government will replenish ES for the
commercial supply used during the disruption.
Mr. Beebe. DLA does not engage with Pharmacy Benefits Managers.
protecting dod healthcare from cyberattacks
5. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, Change Healthcare, one of the largest drug prescription
processors in the U.S., including for the Department of Defense, was
the victim of a cyberattack in February of this year that disrupted
service. Is the Defense Health Agency working with U.S. CYBERCOM and
our interagency partners to help protect critical commercial companies
that support DOD's health mission like Change Healthcare from cyber
intrusions?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. The DHA, in
conjunction with Joint Force Headquarters--DOD Information Network
(DODIN), a component of U.S. Cyber Command, protects and defends its
own networks and systems. As a member of the Defense Industrial Base
(DIB), Change Healthcare and its parent company Optum participate with
other DIB partners in collaboration with the DOD's Cyber Crime Center
(DC3) which provides cyber security support to the DIB and works across
industry to address risks and threats to all of DOD's commercial
partners.
The DHA is a member of the Department of Health and Human Services
(HHS) sponsored Health Threat Operations Center (HTOC), with which it
receives and shares cyber threat intelligence information affecting
Federal healthcare delivery partners. Collaboration among HHS' Federal
healthcare delivery partners including the Department of Veterans
Affairs (VA) and the DHA through HHS' HTOC enables advancement of
Federal cyber threat predictive analytics, information sharing and
engagement.
Cyber security incidents in the commercial sector are a law
enforcement matter, with the FBI typically leading the investigation.
With respect to the cyberattack in February 2024, the DHA remained in
close contact with Optum security officials during the investigation
and through restoration of services, and used all available threat
intelligence information, with the approval of law enforcement, to
fortify DHA's defenses against the same or similar attacks and threat
actors.
Mr. Beebe. While DLA cannot respond for DHA, DLA recognizes the
importance of implementing cybersecurity safeguards across all
Department of Defense contracts, including those within the defense
pharmaceutical supply chain. DLA contracts appropriately include
cybersecurity clauses as prescribed by the Federal Acquisition
Regulation (FAR) and Defense Federal Acquisition Regulation Supplement
(DFARS).
6. Senator Hirono. Dr. Martinez-Lopez, Dr. Smith, Dr. Dertzbaugh,
and Mr. Beebe, does the DOD have a mitigation plan in the event a
future catastrophic cyberattack cripples the pharmaceutical supply
chain for an extended period of time?
Dr. Martinez-Lopez, Dr. Smith and Dr. Dertzbaugh. Thank you for
this important question. The Defense Logistics Agency is in the best
position to provide the answer to this question consistent with their
functions and responsibilities.
Mr. Beebe. DLA maintains close operating relationships between the
DHA and the pharmaceutical industrial base. For a crippling cyber-
attack on the commercial supply chain, DLA would work with the
industrial base to process manual orders, may conduct distribution
support actions, and work with DHA to both prioritize and allocate
supplies, as well as potentially redistribute supplies within the DOD
Medical Network.
__________
Questions Submitted by Senator Dan Sullivan
pharmaceutical supply chain
7. Senator Sullivan. Dr. Martinez-Lopez and Mr. Beebe, AstraZeneca,
announced last month their plans to manufacture drugs for the U.S. and
China independently as the potential for conflict would disrupt getting
drugs to market. Other pharmaceutical manufacturers are following suit.
Do you assess that the independent supply chains that many in the
pharmaceutical industry are already doing mitigate risk of Chinese or
other high-risk sources for both pharmaceuticals and their raw
components from being used for servicemembers?
Dr. Martinez-Lopez. Thank you for this important question. The
Defense Logistics Agency is in the best position to provide the answer
to this question consistent with their functions and responsibilities.
Mr. Beebe. DLA supports efforts to increase the number of
manufacturers of APIs and other pharmaceutical components from domestic
or Trade Agreements Act countries to the extent that those products are
available for servicemembers. DLA would require additional information
to assess the potential and mitigation effectiveness of removing high-
risk sources from the supply chain.
8. Senator Sullivan. Dr. Martinez-Lopez and Mr. Beebe,
servicemembers will still require pharmaceuticals while deployed or
forward stationed. Logistics and supply chains in a contested
environment are likely to be disrupted during large scale conflict,
particularly in the Indo-Pacific. What options are you exploring to
ensure continuity of access for servicemembers far from the United
States during time of conflict?
Dr. Martinez-Lopez. To facilitate continuity of access to
pharmaceuticals for servicemembers, the DHA manages the Joint
Deployment Formulary (JDF). The JDF consists of 917 medication line
items needed for contingency operations. The JDF is not just a list of
medications but also a logistical readiness tool that aligns procurable
National Stock Numbers (NSNs) to each of the 917 medication line items.
These procurable NSNs are monitored daily to maximize readiness and
ensure any supply chain disruptions are adjudicated as quickly as
possible. The JDF team works with each of the Services to maximize use
of JDF medications in their assemblages to help ensure supply chain
resilience. Additionally, the Services/Theater Lead Agent(s) for
Medical Materiel (TLAMMs) need to be better postured and positioned to
ensure access to (catalogued) and availability of (stocked) these
critical medications when they are needed most. That may also entail
developing and/or increasing pre-positioned stocks of select
pharmaceuticals that would be most critical during the early stages
(i.e., the first 60 days) of large-scale combat operations), especially
if we face a near-peer competitor and must deal with a contested
logistics environment.
Mr. Beebe. In general, DLA supports its OCONUS customers using the
same processes and networks it uses for its CONUS customers. We use
premium air transportation to move medical materiel from the U.S. to
our OCONUS customers worldwide. We are currently working with our
USTRANSCOM counterparts to open new transportation lanes to support
customers in the CENTCOM, AFRICOM, and INDOPACOM.
prolonging storage of materials and pharmaceuticals
9. Senator Sullivan. Dr. Barber and Mr. Mendez, in the transition
to lower-risk and domestic supply chains, what in your opinion can DOD
and the FDA do to ensure continuity of available drugs?
Dr. Barber. The two most effective reforms that the FDA and DOD
could undertake to ensure sustainable and reliable drug supply are 1)
increasing transparency across the public and private sector supply
chains and 2) increasing public sector manufacturing capacity.
Transparency: In the last 2 years, legislation has been proposed
that would require companies to disclose their API sources and some
information about production volumes (see for example the Drug Shortage
Prevention Act of 2023 (H.R. 3008); the Drug Shortages Prevention and
Quality Improvement Act (S. 2586); the Senate Finance Committee
Addressing Drug Shortages discussion draft; and the Energy and Commerce
Stop Drug Shortages Act discussion draft). None of these bills have
passed. However, DOD and FDA have other tools that can improve
transparency. DOD can use its purchasing power to compel disclosure of
this information and FDA could issue administrative guidance to these
ends. The following information should be requested and made publicly
available so actors across the supply chain can accurately forecast
demand and the effects of markets shocks: approximate production
volumes of API and finished product by company and facility, source of
API, and anticipated demand increases.
Transparency through company reporting alone is inadequate,
however. Despite their importance to global drug supply, there is no
systematically collected data, monitoring, or international
coordination to map global API production. As a result, the central
questions for supply chain resilience for medicines--how many API
manufacturers are there globally, and what capacity exists or could be
mobilized in an emergency?--cannot be answered with currently collected
data. Existing analyses only account for API for products marketed in
the USA, rather than a more comprehensive scope of global API
productionsites. Global data are important because the loss of a
manufacturer (for example, due to a natural disaster or factory fire)
that does not supply the United States will nevertheless affect US
supply and markets, as global demand competes for a reduced supply.
Another limitation of existing data is that there is little accounting
for the common situation where two facilities are documented as unique
API suppliers, despite buying either finished or nearly finished API
from a single facility (in effect, allowing a drug to appear to have
more stable multiple producers when it in fact is monosource).
Fundamental limitations in existing data highlight the importance of
FDA and DOD conducting proactive risk assessments and supply mappings
rather than relying on existing administrative data.
Public sector manufacturing capacity: As I outlined in my written
testimony, both government-owned, government operated (GOGO) and
government-owned, contractor operated GOCO models have been successful
in ensuring reliable access to drugs on a cost-effective basis. Public
capacity is especially vital for drugs with limited commercial markets.
A range of government reviews in recent decades have recommended GOGO
and GOCO models to address military drug production needs.
The DOD commissioned a special task force (``Project
Badger'') in the 1990's to assess whether or not commercial markets
could serve defense needs.\1\* After making inquiries to all commercial
manufacturers as to their interest and ability to manufacture needed
vaccines, the task force concluded that ``the best option appeared to
be a facility that was government owned (and funded).'' \1\* The
proposed model was a GOCO model, where the government would own and
construct a facility as a ``national asset'', but a contractor would
staff production.\1\* In the mid-1990's, a GOCO vaccine facility was
included within a DOD budget request but ``was subsequently withdrawn
in favor of an approach that relies upon private industry to meet the
vaccine needs of the DOD.'' \1\*
* Please see References on page 103.
Separately, a GAO report recommended in 1991 that ``the
Army could improve and expand its in-house vaccine production
facilities to meet its needs.'' \2\* Walter Reed Army Institute of
Research (WRAIR), laboratory suites at the Medical Research Institute
of Infectious Diseases at Fort Detrick, and an NIH-owned GOCO facility
were proposed as possible sites. \2\* A pilot program was proposed, but
by 1994 an amendment was introduced to specifically prohibit DOD from
further pursuing this initiative. \3\*
* Please see References on page 103.
In 2000, the Institute of Medicine (IOM) of the National
Academies convened an expert committee to advise the U.S. Army Medical
Research and Materiel Command on production, with a focus on the
``naturally occurring disease threats'' that are a priority of DHA.\4\*
The resulting 2002 Expert Committee report recommended that DOD pursue
GOCO production facilities.
* Please see References on page 103.
GOCO initiatives have attracted bipartisan legislative
support. Former Republican Governor Jim Gilmore, head of the 2001
Advisory Panel to Assess Domestic Response Capabilities for Terrorism
argued that ``The establishment of a government-owned, contractor-
operated national facility for the research, development and production
of vaccines and therapeutics for specified infectious, especially
contagious diseases, is needed.'' \5\*
* Please see References on page 103.
The New York Times reported plans by the Pentagon to
``[build] its own vaccine plant to produce eight vaccines for military
use--the existing anthrax vaccine and a new one, plus vaccines for
smallpox, plague, tularemia, botulinum, ricin and equine encephalitis.
It would cost $1.56 billion to build and run over 25 years, including
$386 million in construction costs, the Department estimated.'' \6\*
Further details of the proposed program are either not in the public
domain or I was unable to locate them.
* Please see References on page 103.
As part of the 2003 National Defense Authorization Act, a
bipartisan amendment was introduced by Senator Hutchinson of Texas (R),
Senator Mikulski of Maryland (D), Senator Lincoln of Arkansas (D),
Senator Sarbanes of Maryland (D), and Senator Roberts of Kansas (R)
authorizing the construction of a ``Government-owned, contractor
operated facility'' for the ``production of vaccines for agents known
or anticipated to be used in biological weapons'', for which ``The
Secretary shall provide for the operation of the facility constructed .
. . as a Government-owned, contractor-operated facility.'' \7\* In
introducing the amendment, the sponsor Senator Hutchinson (R-AR)
defended the importance of the public sector in provision of some
essential medical goods:
* Please see References on page 103.
``This problem has been examined many times over the past
decade. In fact, it has been studied twice by the Department of
Defense. Both times, the conclusion was that our Nation needed
a Government-owned, contractor-operated vaccine production
facility . . . The private sector, for all of the good that it
does, cannot, against some of the boutique biological pathogens
and threats that may exist now and in the future against our
troops and against our civilian population, and will not in the
future see this as a profitable commercial venture. The
insurance for the American people, and the insurance for our
men and women in uniform, is to have a Government-owned
production facility, contractor-operated, to ensure that
vaccine will always be available if and when it is needed.''
\5\*
* Please see References on page 103.
In a 2004 hearing of the Select Committee on Homeland
Security, committee members and expert witnesses discussed the (by that
time de-classified) Project Badger findings in the context of revived
proposal to establish a GOCO to serve defense medical needs.1 Major
General Lester Martinez-Lopez (Commanding General, U.S. Army Medical
Research and Materiel Command, Fort Detrick, Maryland) described the
benefits of Government owned facilities as ``government control of
production, availability, and distribution flexibility for emergency
production technologies meets national security priorities for bio-
defense vaccines overcomes limited industry interest in bio-defense
products.''\1\* Another expert witness--an experienced researcher and
administrator of biological defense programs--acknowledged the
political challenge of introducing the GOCO model. Reflecting on the
urgent need and failure of the contractor-owned, contractor operated
(COCO) model to deliver reliable access to needed drugs, she strongly
encouraged the Select Committee to support the GOCO proposal:
* Please see References on page 103.
``Although the pharmaceutical firms seem opposed to the GOCO
approach, citing the availability of capacity already existing,
this belies that fact that each year industry has difficulty
meeting existing market demands. Recent shortages in tetanus,
pertussis, and flu vaccines support the perception that there
is no excess capacity available for biodefense vaccine work . .
. As time passes, the costs [of building government-owned
facilities] will only increase, and the Nation will be at the
mercy of the fragile, profit-motivated pharmaceutical industry
to make the bio-defense vaccines that are needed. In my
opinion, Congress should strongly consider appropriating funds
for a GOCO facility for bio-defense medical
countermeasures.\1\*
* Please see References on page 103.
The hearing also highlighted operational and strategic
advantages of GOGO and GOCO models over COCO models, including:\1\*
* Please see References on page 103.
RFPs are not required for each product.
Long-term contracts a) provide needed stability in
small markets; b) encourage increased capacity by operating contractors
for specialized production needs and regulatory requirements; c) signal
sustained government support for medical countermeasures.
Increased efficiencies and flexibility as production
needs can be decided by the government on an as-needed basis.
Bidirectional efficiencies and opportunities for
innovation through collaborations with government R&D labs.
A key theme in the 2023 DOD Biodefense Posture Review was
the need for an integrated approach by the Chemical and Biological
Defense Program (CBDP) and Defense Health Program (DHP).\8\* The Review
recommended that DOD ``review DHP and DHA efforts to enable far-forward
care, speed clinical trials and research within the Military Health
System, inform optimal clinical care strategies, and support
development of MCM specific to the military population.'' The BPR
ultimately concluded that the ``CBDP and DHP have sufficiently unique
missions, partners, and processes that drive a ``spirit of
competition'' and innovation that argue against consolidating
authorities and responsibilities into a single program.''
* Please see References on page 103.
A second key theme in the Biodefense Posture Review was
the importance of ensuring supply chain reliability for key medical
products.\8\* The Review recommended that the Chemical and Biological
Defense Program (CBDP) and Defense Health Program (DHP) should partner
with the Office of the Assistant Secretary of Defense for Industrial
Base Policy ``to prioritize on-shoring of production and distribution
of key chemicals critical to produce DOD-unique biodefense MCMs.'' The
Review recommended use of the Defense Production Act (DPA) and
Manufacturing Innovation Institutes to expand domestic API production.
* Please see References on page 103.
I agree with these recommendations, and urge this Committee to
consider ways to adequately resource and direct DOD to invest in public
capacity for priority products.
Mr. Mendez. CRS can provide options as a basis for discussion, but
does not provide policy recommendations, opinions, or endorse specific
options. The following selected options, offered in no priority, may
address potential effects of a transition to ``lower-risk and domestic
supply chains'' on the availability of certain drugs \1\ to meet DOD
supply requirements. These options may produce effects that could
impact existing programs, costs, resources, beneficiary care, military
readiness, defense industrial base, drug manufacturing industry, or
other stakeholders.
---------------------------------------------------------------------------
\1\ For the purposes of this memorandum, CRS utilizes the U.S. Food
and Drug Administration (FDA) definition for ``drugs,'' which refers to
substances recognized by an official pharmacopoeia or formulary;
intended for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease; intended to affect the structure or any function
of the body; or intended for use as a component of a medicine but not a
device or a component, part, or accessory of a device. CRS also
utilizes the FDA definition for ``biologics,'' which refer to a ``wide
range of products such as vaccines, blood and blood components,
allergenics, somatic cells, gene therapy, tissues, and recombinant
therapeutic proteins.'' For more on these definitions, see https://
www.fda.gov/drugs/ drug-approvals-and-data bases/drugsfda-glossary-
terms.
DOD could reinvigorate efforts to standardize drug supply
requirements as a means to improve medical interoperability across the
joint force and reduce the demand for an expansive drug inventory or
formulary. \2\
---------------------------------------------------------------------------
\2\ Standardization efforts include those pursued by the Defense
Medical Materiel Standardization Program, available at https://
www.health.mil/ Military-Health-Topics/Health-Readiness/ Medical-
Logistics/Defense-Medical-Materiel-Standardization-Program; and other
activities aligned under the 2015 Joint Concept for Health Services,
available at https://www.jcs.mil/ Portals/36/Documents/Doctrine/
concepts/joint_concept_health_services.pdf.
DOD could expand existing capabilities and capacity to
conduct research, initial development, safety and effectiveness
---------------------------------------------------------------------------
testing, advanced development, or manufacturing of drugs.
DOD could stimulate commercial interest by addressing
perceptions of risk and barriers to entry in drug research,
development, and manufacturing for the military. \3\
---------------------------------------------------------------------------
\3\ For an overview of perceptions of risk, see CRS Testimony
TE10099, Department of Defense's efforts to ensure servicemembers'
access to safe, high-quality pharmaceuticals, by Bryce H. P. Mendez.
DOD could evaluate the cost and benefits of scaling-up
its existing drug product lines and/or building capacity for new
product lines at the DOD advanced development and manufacturing
biopharmaceutical facility. \4\
---------------------------------------------------------------------------
\4\ For more on the DOD advanced development and manufacturing
biopharmaceutical facility, see Kelly Burkhalter and Chris Southworth,
``Enduring Capability: JPEO-CBRND evolves public/private partnership
with National Resilience,'' DOD News, December 5, 2023, at https://
www.jpeocbrnd.osd.mil/Media/News/Article/3607443/enduring-capability-
jpeo-cbrnd-evolves-publicprivate-partnership-with-national/
#:?:text=Locatedpercent20inpercent20Alachua; and Joint Program
Executive Office for Chemical, Biological, Radiological, Nuclear
Defense, ``DOD ADM: Advanced Development and Manufacturing Facility,''
YouTube video, January 6, 2021, at https://www.youtube.com/
watch'v=247I4DROHfE.
DOD, in coordination with other Federal agencies, could
explore the use of global health engagement activities \5\ to develop
or expand the drug manufacturing capacity of partner nations or
countries designated as compliant under the Trade Agreements Act. \6\
---------------------------------------------------------------------------
\5\ For more on global health engagement, see CRS Report R47326,
Global Health Engagement in the Department of Defense, by Bryce H. P.
Mendez.
\6\ For more on the Trade Agreements Act, see CRS Report R46748,
The Buy American Act and Other Federal Procurement Domestic Content
Restrictions, by David H. Carpenter and Brandon J. Murrill. For a list
of Trade Agreements Act-designated countries, see https://www.gsa.gov/
buy-through-us/purchasing-programs/multiple-award-schedule/help-with-
mas-contracts-to-sell-to-government/roadmap-to-get-a-mas-contract/
readiness-assessment-for-mas-offerors/look-up-trade-agreements-
actdesignated-countries.
DOD could continue or enhance its partnership with the
Department of Health and Human Services to provide inputs to, ensure
military equities are represented in, and generally support whole-of-
government solutions to address nationwide drug shortages and to
---------------------------------------------------------------------------
enhance supply chain resilience for medical products.
DOD could continue executive order-directed \7\ or
congressionally directed efforts to identify risks, develop mitigation
strategies, and support whole-of-government initiatives to address the
security and resilience of the U.S. drug supply chain.\8\ These efforts
include ongoing coordination with the U.S. Food and Drug Administration
(FDA) for medical product development and assessment,\9\ implementation
of DOD risk management guidance for the drug supply chain.\10\
development of plans to mitigate drug shortages and reducing dependence
of active pharmaceutical ingredients from foreign sources.\11\
---------------------------------------------------------------------------
\7\ For example, see Executive Order 14017, ``America's Supply
Chains,'' 86 Federal Register 38, March 1, 2021; Executive Order 13953,
``Addressing the Threat to the Domestic Supply Chain From Reliance on
Critical Minerals from Foreign Adversaries and Support the Domestic
Mining and Processing Industries,'' 85 Federal Register 193, October 5,
2020; and Executive Order 13944, ``Combating Public Health Emergencies
and Strengthening National Security by Ensuring Essential Medicines,
Medical Countermeasures, and Critical Inputs are made in the United
States,'' 85 Federal Register 158, August 6, 2020.
\8\ For more on whole-of-government initiatives to address U.S.
drug supply chain resilience, see Department of Health and Human
Services (HHS) , Public Health Supply Chain and Industrial Base, One-
year Report in Response to Executive Order 14017, February 2022,
https:// aspr.hhs.gov/MCM/IBx/2022Report/Documents/Public-Health-Supply
Chain-and-Industrial-Base percent20 One-Year-Report-Feb2022.pdf; HHS,
``Public Health Emergency Medical Countermeasure Enterprise Strategy
and Implementation Plan,'' 2022, at https://aspr.hhs.gov/PHEMCE/2022-
SIP/Documents/PHEMCE-SIP-2022-508.pdf; and Cybersecurity and
Infrastructure Security Agency, ``Healthcare and Public Health Sector
Government Coordinating Council Charter,'' updated March 10, 2016, at
https://www.cisa.gov/sites/default/files/ publications/hph-gcc-charter-
2016-508.pdf.
\9\ P.L. 115-92.
\10\ P.L. 117-263 Sec. 860.
\11\ P.L. 118-31 Sec. 716.
10. Senator Sullivan. Dr. Barber and Mr. Mendez, does DOD need to
anticipate disruption while transitioning supply chains by stockpiling
now?
Dr. Barber. The question of stockpiles is nuanced and context-
specific. Maintaining `buffer stocks' is common practice in supply
chain management and should be increased in correlation with the degree
of risk for a given product (i.e., monosource or other high-risk
products and components should have more months of stockpiled product
than products with more stable and low-risk supply chains). However,
there can be negative repercussions to health systems if stockpiling is
not conducted responsibly. Responsible stockpiling requires: a)
providing ample notice to relevant stakeholders, b) encouraging
manufacturers to increase production to meet expanded demand in
advance, and c) responsibly and transparently sharing stock.
Federal contracts should require that manufacturers develop regular
production risk evaluation and management plans and keep buffer stocks
corresponding to expected risk. Stockpile volumes should correspond to
the anticipated time needed to remedy production shocks. These vary by
product, but as a rough rule of thumb, small-molecule drug production
takes between 6 months and a year to bring new suppliers online, and
biologics and complex injectable drugs take two to 3 years. Thus, for a
small-molecule drug with only one supplier, in the short term the
government should ensure 1 year of stockpiled supply, and in the long
term should work to diversify suppliers, including by establishing
public production.
Mr. Mendez. DOD maintains several stockpiles to support wartime
requirements and to mitigate potential supply chain challenges in times
of national emergency.\12\ These stockpiles include the National
Defense Stockpile, war reserve materiel stocks, Army prepositioned
stocks, and the Defense Health Agency pandemic stockpile program. DOD
components (i.e., military departments and DOD agencies) generally
develop stockpile requirements (e.g., types of materials or products,
quantities, prepositioning, and distribution) based on combatant
commander requirements for campaign and contingency plans.\13\ Each DOD
component managing a stockpile is also responsible for accounting,
storing, maintaining, and distributing stocks to support military
operations.\14\ For example, the Department of the Army manages the
Army prepositioned stocks, which include medical products (e.g., drugs)
to support instances where a temporary surge in medical supplies is
required to provide immediate support for military operations.\15\
---------------------------------------------------------------------------
\12\ For more on DOD stockpiles, see CRS Report R47833, Emergency
Access to Strategic and Critical Materials: The National Defense
Stockpile, by Cameron M. Keys; CRS In Focus IF11574, National
Stockpiles: Background and Issues for Congress, by G. James Herrera and
Frank Gottron; and CRS In Focus IF11699, Defense Primer: Department of
Defense Pre-Positioned Materiel, by Cameron M. Keys.
\13\ Ibid; and DOD Instruction 3110.06, War Reserve Materiel (WRM),
January 7, 2019, at https://www.esd.whs.mil/Portals/54/Documents/DD/
issuances/dodi/311006p.pdf. For more on campaign and contingency
planning, see Joint Publication 5-0, Joint Planning, updated December
1, 2020 at https://irp.fas.org/doddir/dod/jp5_0.pdf.
\14\ CRS analysis of DOD Instruction 3110.06, War Reserve Materiel
(WRM), January 7, 2019; and DHA Administrative Instruction 7040.03,
Defense Health Program Stockpile Materials, October 3, 2023, at https:/
/www.health.mil/Reference-Center/DHA-Publications/2023/10/03/ AI-7040-
03; and Joint Service Regulation 4145.04, Department of Defense (DOD)
Stock Readiness Program, updated March 13, 2023, at https://
www.marines.mil/Portals/1/Publications/
MCOpercent204450.15Bpercent20wpercent20CH-1.pdf.
\15\ Crystal Maynard, ``Army Medical Prepositioned Stockpiles:
Ready for Action,'' U.S. Army Medical Research and Development Command,
May 22, 2023, at https://mrdc.health.mil/ index.cfm/media/articles/
2016/army_medical_prepositioned_stockpiles_ready_for_action.
---------------------------------------------------------------------------
Since DOD components manage these stockpiles based on combatant
commander requirements, medical products in these stocks do not account
for supply requirements generally needed to support day-to-day health
care operations in military treatment facilities (MTFs). In a 2021
report, the DOD Inspector General (DODIG) stated that DOD ``continues
to evaluate the pre-positioned capabilities and stocks to maximize its
effectiveness in an increasingly constrained resource environment.''
\16\ The DODIG also asserted that ``to mitigate the risks of
disruptions to the pharmaceutical supply chain due to the DOD's
reliance on foreign suppliers, the DOD should identify the quantity of
critical finished drug products needed for routine MTF operations and
develop policy for allocating scarce pharmaceutical resources in case
of a supply disruption.'' \17\
---------------------------------------------------------------------------
\16\ DOD, Evaluation of the Department of Defense's Mitigation of
Foreign Suppliers in the Pharmaceutical Supply Chain, September 20,
2021, p. 27, at https://media.defense.gov/2021/ Sep/22/2002859154/-1/-
1/1/DODIG-2021-126--RRDACTRD.PDF.
\17\ 17 Ibid.
---------------------------------------------------------------------------
Within the context of broader U.S. national drug supply shortages
over the past decade, some experts have advocated for health systems
and medical product suppliers to create ``stockpiles set aside for
times of emergency'' and ``buffer inventories'' to mitigate acute
changes to the drug supply chain. \18\ Other experts have cautioned
that drug stockpiling could have unintended consequences like increased
costs and ``excessive hoarding'' behaviors that exacerbate current
shortages. \19\
---------------------------------------------------------------------------
\18\ Marta E. Wosinska, Drug Shortages: A Guide to Policy
Solutions, The Brookings Institution, March 2024, at https://
www.brookings.edu/wp-content/uploads/2024/03/20240318CHP_
Wosinska_DrugShortagesFULL.pdf.
\19\ FDA, Drug Shortages: Root Causes and Potential Solutions,
updated February 21, 2020, at https://www.fda.gov/ media/ 131130/
download'attachment; and American Society of Health-System Pharmacists,
Drug Distribution and Control: Procurement-Guidelines, ASHP Guidelines
on Managing Drug Product Shortages, 2024, pp. 100-108, at https://
www.ashp.org/-/media/ assets/policy-guidelines/docs/guidelines/
managing-drug-product-shortages.pdf.
---------------------------------------------------------------------------
In December 2023, Congress directed DOD to establish a military
pharmaceutical and medical device vulnerability working group, which is
tasked to, among other items, develop a plan for ``stockpiling
essential medications to ensure availability of a 180-day supply during
an armed conflict or other supply chain disruption.'' \20\
---------------------------------------------------------------------------
\20\ P.L. 118-31 Sec. 716.
11. Senator Sullivan. Dr. Barber and Mr. Mendez, does DOD need to
anticipate disruption by exploring potentially prolonging the storage
life of already available drugs?
Dr. Barber. This is a critical and relatively low-cost, high-
benefit intervention by DOD. DOD and FDA already jointly administer the
Federal Shelf Life Extension Program (SLEP), but this is restricted
only to federally maintained stockpiles. A 2006 review of SLEP testing
reported that products had an average extension of 66 months, and 88
percent of 3,005 tested lots had expiration dates extended by at least
1 year.\9\*
* Please see References on page 103.
DOD and FDA should conduct shelf-life studies for a wider range of
products. Better understanding of longer-term effectiveness of products
across the wider supply chain benefits both the health system at large
and DOD's specific needs. Studies should also evaluate storage
conditions. As one example, recent heat stability testing of insulin
found that while pharmacopoeias recommend that unopened insulin vials
be refrigerated and insulin be stored at ambient temperatures of up to
25 to 30 degrees Celsius during a 4-week period of treatment, insulin
was heat stable in temperatures 25 to 37 degrees Celsius.\10\* Rising
temperatures and more frequent extreme weather events add further
urgency to heat stability research.
* Please see References on page 103.
Mr. Mendez. The Defense Health Agency (DHA) manages the drug
products included in the DOD shelf-life extension program (SLEP). \21\
The program establishes procedures to consider and extend the shelf
life of certain stockpiled products that are near or at the date of
expiration. For certain medical products (e.g., FDA-regulated
pharmaceutical drugs), DOD may request product testing and shelf-life
extension from the FDA in order to maintain stockage requirements or
continue use of the product beyond the labeled expiration date. \22\
Current DOD policy stipulates that a product may be considered for
shelf-life extension if the following criteria are met:
---------------------------------------------------------------------------
\21\ DOD Manual 4140.27 (Volume 1), DOD Shelf-Life Management
Program: Program Administration, updated December 11, 2019, p. 17, at
https://www.esd.whs.mil/Portals/54/Documents/ DD/issuances/dodm/
414027--vol1.PDF. DOD also manages the SLEP for other Federal
stockpiles (e.g., Strategic National Stockpile) in collaboration with
the administering Federal agency.
\22\ For more on SLEP, see Ibid.; DHA Procedural Manual 6430.05,
Shelf-Life Extension Program, updated March 10, 2023, at https://
www.health.mil/Reference-Center/DHA-Publications/ 2023/03/10/DHA-PM-
6430-05; FDA, ``Expiration Dating Extension,'' accessed June 18, 2024,
at https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-
regulatory-and-policy-framework/expiration-dating-
extension#:?:text=Shelfpercent2DLife percent20
Extensionpercent20Program,-
Stockpilingpercent20drugspercent2Cpercent20vaccines&
text=SLEPpercent20ispercent20thepercent20Federalpercent2Cpercent20
fee,stability percent20 testing percent20 conducted percent20 by
percent20FDA; and FDA briefing slides, ``Shelf-Life Extension Program
(SLEP), December 15, 2010, at https:// web.archive.org/ web/2017
0722095243/https:/ www.fda.gov/ downloads/EmergencyPreparedness/
Counterterrorism/UCM 253309.pdf.
the shelf-life extension is directed by a military
---------------------------------------------------------------------------
service or agency,
the product is part of a pre-positioned and/or
contingency stock,
the total inventory value per lot is at least $10,000,
and
the product was not requested and denied for shelf-life
extension within the last 12 months. \23\
\23\ DHA Procedural Manual 6430.05, Shelf-Life Extension Program,
updated March 10, 2023, p. 13.
---------------------------------------------------------------------------
DOD components may also submit a request for an exemption to the
criteria based on other reasons (e.g., national security, market
availability, or service-specific priorities). \24\
---------------------------------------------------------------------------
\24\ Ibid.
---------------------------------------------------------------------------
DOD's original intent for SLEP was to ``limit expenditures and
defer drug replacement costs'' for stockpiled products. \25\ CRS is not
aware of whether or not DOD has or is considering use of SLEP as a
potential mitigation strategy to curb drug supply chain disruptions, or
to address other potential concerns with DOD's supply and demand for
drugs. Congress could consider whether or not the use of shelf-life
extensions for drugs can viably mitigate short-or long-term
``disruption'' to the supply chain. Congress could also consider
whether or not DOD and the FDA have the appropriate capacity and
capability to accommodate a potential increase in shelf-life extension
requests for drug products.
---------------------------------------------------------------------------
\25\ Ibid., p. 11.
---------------------------------------------------------------------------
emerging & novel threats
12. Senator Sullivan. Dr. Dertzbaugh, how can DOD best leverage
Walter Reed's Army Institute of Research to make vaccines to new or
novel infectious diseases that servicemembers might be more susceptible
to than the greater population?
Dr. Dertzbaugh The DOD can best leverage its organic vaccine
manufacturing capacity to make small batches of experimental vaccine
candidates to use in early stage preclinical and clinical testing of
their safety and immunogenicity under the standards defined by the FDA.
These vaccine candidates should address DOD-validated infectious
disease threats that servicemembers may encounter when deployed
overseas, and for which there are no current medical countermeasures
available from other sources.
13. Senator Sullivan. Dr. Dertzbaugh and Dr. Smith, there are
foreseeable threats, particularly biological and chemical threats,
which might only be used to target servicemembers. Since servicemembers
are a relatively small group compared to the greater population,
civilian pharmaceutical suppliers and manufactures are less likely to
work on those problem sets. Does DOD have the organic capacity to
address the likely biological and chemical threats that servicemembers
might face that aren't being addressed by industry?
Dr. Dertzbaugh The DOD has the organic research capacity to develop
medical countermeasures to address infectious disease threats that
servicemembers may encounter, and for which pharmaceutical companies
may not view as commercially viable to pursue. However, the DOD does
not have the organic expertise or capacity to perform large-scale
manufacturing of these countermeasures to protect servicemembers. The
DOD would be dependent on a commercial entity, such as a Contract
Development & Manufacturing Organization (CDMO) for scale-up,
manufacturing, and fill/finish of the final product under FDA Good
Manufacturing Processes (GMP).
Dr. Smith. The DOD has the organic research capacity to develop
medical countermeasures to address infectious disease threats that
servicemembers may encounter, and for which pharmaceutical companies
may not view as commercially viable to pursue. However, the DOD does
not have the organic expertise or capacity to perform large-scale
manufacturing of these countermeasures to protect servicemembers. The
DOD would be dependent on a commercial entity, such as a Contract
Development & Manufacturing Organization (CDMO) for scale-up,
manufacturing, and fill/finish of the final product under FDA Good
Manufacturing Processes (GMP).
14. Senator Sullivan. Mr. Suarez, having worked in both the Army
and industry, you are well-suited to answer if you think DOD has
partnered appropriately with industry to advance pharmaceuticals
designed to protect servicemembers in austere environments?
Mr. Suarez. Thank you for this question. I think the DOD has
struggled to appropriately partner with industry to advance
pharmaceuticals designed to protect servicemembers due to its lack of
visibility in the upstream supply chain, the ``Acetris Loophole''
enabling non-TAA generic medicines to dominate the market and a lack of
federally driven legislation that incentivize more domestic, high
quality and reliable drug suppliers to sell to the DOD and Federal
customers. During my service in the U.S. Army, I had the opportunity to
help lead, plan, and manage the end-to-end global defense supply chain
for pharmaceuticals, other medical supplies, and devices. As I
testified, the medical supply chain offers unique challenges, many of
which are addressed in the procurement of other key materials. During
my time on Active Duty, I observed three distinct challenges unique to
the medical supply chain: (1) lack of upstream supply chain visibility;
(2) perverse disincentives related to the `Acetris' loophole; and (3) a
lack of `pull' incentives to sufficiently allow for a domestic
manufacturing preference in DOD and other Federal procurement
activities.
By addressing these challenges, I believe that the DOD will be
better positioned to lead and advance the resiliency of the medical
supply chain and ensure availability of medicines to our
servicemembers; and can set the example for the rest of the Federal
Government and industry to follow.
1. Upstream Supply Chain Visibility
Sec. 860(a) of the Fiscal Year 2023 National Defense Authorization
Act (NDAA) required the Under Secretary of Defense for Acquisition and
Sustainment (USD(A&D)) to issue a report on the DOD's Pharmaceutical
Supply Chain Risks. As a part of that report, the DOD analyzed 1,744
(drug families), equating to approximately 12,917 national drug codes
(specific drugs), or about 10 percent of the total U.S. marketplace.
The DOD found that for the GSNs (generic sequence numbers) analyzed, at
least 22 percent had an unknown source of active pharmaceutical
ingredient (API). More troublesome, 54 percent of the total DOD
pharmaceutical supply chain is considered ``high or very high risk''
with dependency on non-Trade Agreement Act (TAA) compliant suppliers,
sourcing from China or other nations often dependent upon China for raw
materials and precursor chemicals.
The lack of upstream supply chain visibility and the inability of
regulatory agencies to effectively oversee production have contributed
to ongoing drug shortages. A case study example is a generic
antimicrobial product that addresses warfighter wound injury. While
such antimicrobials may be characterized as multi-source drugs (MSDs),
it is very possible that, with the trends toward manufacturing
consolidation, all manufacturers will utilize API from the same
upstream facility. In the event of a drug shortage--whether prompted by
a natural disaster, economic crisis, manufacturing delays due to
quality deficiencies, or geopolitical conflict--all downstream
suppliers would subsequently lose access to the drug, leading to major
adverse healthcare impacts domestically and globally.
To this end, I have been supportive of a procurement requirement
within the DOD that would require contracting officers to procure from
manufacturers that meet the following criteria: (1) source the finished
drug product (FDP) from a U.S.-based manufacturer and (2) source API
for the drug from a domestic source or a TAA-compliant nation, and
preference suppliers who can validate that key starting and precursor
materials for API are primarily coming from domestic or TAA compliant
sources. To mitigate exacerbating shortages or other capability gaps, I
also support the utilization of waiver authority to ensure continued
access to these drugs. Such a program would simultaneously reduce
supply chain risks while providing critical visibility as to the drug's
country of origin.
2. `Acetris' Loophole
In February 2020, the U.S. Court of Appeals for the Federal Circuit
in Acetris Health LLC v United States overturned a long-standing
precedent regarding a drug's origin, holding that a drug could be
``manufactured'' in the U.S. even if its API and all its components
were derived from non-TAA compliant countries. This loophole
exacerbates national security and known drug quality risks.
The DOD health system and the Veteran Health Administration (VHA)
should be required to adhere to the intent of the Berry Amendment,
which could be done by overturning what has been colloquially known as
the ``Acetris Loophole'' and clearly defined in Federal law that a
drug's country of origin should be defined by where the API is
physically synthesized and manufactured.
The Berry Amendment was enacted in 1941 to promote purchasing
certain U.S. goods (primarily food and textiles) for national security
and domestic trade. I recommend that Congress update this language to
include the purchase of essential medicines explicitly to include the
purchase of essential drugs and medical supplies. The idea to drive
necessary change in an otherwise broken market using U.S. Federal
procurement is supported by a 2022 Department of Health and Human
Services (HHS) report entitled ``Essential Medicines and Manufacturing
Resilience Assessment.'' The Administration for Strategic Preparedness
and Response (ASPR) proposed two primary supply chain recommendations:
``Leverage the Federal Government's collective buying power to reform
procurement protocols'' and ``revise purchasing models to increase
emphasis on product quality and supply chain resilience, not simply
lowest cost.''
3. Properly Incentivizing Domestic Manufacturing
Procurement policy is just one policy lever that the U.S.
Government and the DOD should employ to create a resilient global
supply chain with U.S.-domiciled facilities. To this end, I am
encouraged by exploring partnerships between the Department of Defense
(DOD) and the Administration for Strategic Preparedness and Response
(ASPR) to promote industrial base expansion efforts for manufacturing
generic and essential medicines. To this end, I have supported a
`CHIPS-style' program for the U.S. pharmaceutical supply chain. Such a
program would lean on DOD expertise to make targeted investments in
U.S. manufacturers to increase line capacity and utilization for
essential drugs. Those in shortage employ the use of advanced and
continuous manufacturing technologies, employ the use of advanced and
continuous manufacturing technologies, and work with the Centers for
Medicare and Medicaid Services (CMS) to provide proper payment reform
to incentivize hospital and retail uptake of high-quality generic drugs
manufactured.
In conclusion, I believe a combination of policy and legislative
reforms will better position the DOD to partner with industry to
address drug shortages, meet warfighter needs, and mitigate ongoing
national security risks to the Department its servicemembers and
beneficiaries.
covid-19 lessons learned
15. Senator Sullivan. Dr. Barber, has U.S. industry at-large
implemented lessons learned from the COVID-19 pandemic related to
vaccine production?
Dr. Barber. Thank you for this query. This is a challenging
question to answer given the broad scope of issues at play. Broadly, my
assessment is that while there were some important developments--for
example, Operation Warp Speed was a testament to the power of the
public sector to lead accelerated vaccine development and rollout
timelines--broadly the wider industry at large has returned to business
as usual. The private sector has not significantly increased spending
into pandemic preparedness. To prepare for the next pandemic, long-
term, predictable investment is needed to develop vaccines and
therapeutics for priority pathogens with pandemic potential.
Collaborations with the private sector must include strong
conditionalities that lock in fair prices and give the Federal
Government the power to scale up and transfer technology as needed.
16. Senator Sullivan. Dr. Barber, has U.S. industry at-large
implemented lessons learned from the COVID-19 pandemic related to
vaccine distribution?
Dr. Barber. Questions of production and distribution are closely
linked. Difficult distributional and prioritization questions were
exacerbated by artificial scarcity in supply that could have been
addressed through public leadership to exercise existing legal powers
to facilitate technology transfer and collaboration with global
partners.
17. Senator Sullivan. Dr. Barber, has U.S. industry at-large
implemented lessons learned from the COVID-19 pandemic related to
vaccine storage?
Dr. Barber. I was not involved in vaccine storage during the COVID-
19 pandemic, and defer to other experts with more first-hand experience
to answer this question. Briefly, I would encourage this Committee and
Congress more broadly to support programs that integrate product use
considerations into product design and support wider public
infrastructure for the manufacture, storage, and distribution of
critical health products.
__________
Questions Submitted by Senator Ted Budd
pharmaceutical supply chain
18. Senator Budd. Mr. Beebe, the Department of Defense has
identified that 54 percent of its pharmaceutical supply chain is
considered either high or very high risk, with dependency on non-Trade
Agreements Act compliant suppliers. Can you describe ongoing efforts to
address our dependency on foreign and sometimes adversarial nations for
our pharmaceutical supplies? What does success look like for decreasing
reliance on foreign supply chains?
Mr. Beebe. DLA continues to use the Pharmaceutical Provenance
Solution (PPS) tool to illuminate the supply chain for pharmaceuticals
DOD considers key to its mission. DLA has expanded its analysis to
include the drugs in the DLA Warstopper Program, the DOD Joint
Deployment Formulary, and the top 1,000 drugs, by volume, purchased by
DOD customers. This progress has expanded analytics to cover all drugs
included in DOD's go-to-war contingency programs and those necessary to
support DOD's nine million beneficiaries. DLA continues to conduct
these analyses, which are ongoing; however, initial results mirror the
findings in the NDAA Section 860 report, which is that the sourcing for
more than half of this pharmaceutical group is identified as high or
very high-risk locations (in accordance with the definitions used in
the report, which included from unknown sources). In view of these
findings, the Supply Chain Risk Integration Framework (SCRIF),
previously known as the SCRM Working Group, has taken the following
actions to ensure coordination and communications across the enterprise
to identify, assess, and mitigate or resolve the risks associated with
the sourcing of its mission essential pharmaceuticals.
DLA uses a four-step process to reduce its pharmaceutical supply
chain risk. First, DLA is advising all stakeholders of the risk and
garnering their support in mitigating the risks. Second, the DLA
Customer Pharmaceutical Operations Center is identifying viable
alternatives to products from high-risk sources and providing them to
DLA customers. Third, DLA is working with the interagency to increase
on-shore or near-shore FDA-approved, TAA-compliant sources for finished
drugs and APIs. DLA's long-term target is to eliminate dependence on
high-risk sources. However, progress will come slowly. DLA depends on
the U.S. commercial sector for the pharmaceuticals it acquires and
reversing 20 years of drug and API globalization will take time,
investment, and a national commitment to change.
A major risk to DLA's ability to mitigate foreign dependency is not
being able to identify the sources for APIs. Having access to the right
level of data is the first step in being able to identify and mitigate
risk.
19. Senator Budd. Mr. Beebe, do you see opportunities to shift some
of our supply chains to domestic sources or to diversify the supply
chain, perhaps to Allied and Partner countries?
Mr. Beebe. In any supply chain, diversity and redundancy of
reliable sources is beneficial to those who rely upon that supply chain
for products. To that end, DLA supports efforts to increase the number
of domestic and TAA manufacturers and producers for pharmaceuticals.
However, DOD is fully dependent on the global commercial supply chain,
where manufacturing is driven largely by low labor and production
costs. Without a business incentive to increase domestic and/or near-
shore manufacturing, a change to the current geographic structure of
the market is unlikely.
20. Senator Budd. Mr. Beebe, how is the DOD coordinating or sharing
information with the Department of Health and Human Services related to
pharmaceutical supply chains?
Mr. Beebe. DOD and the Department of Health and Human Services (FDA
and ASPR) are both members of the Pharmacy SCRM Working Group. DLA has
also engaged the FDA to increase and enhance data sharing capabilities.
academic research institutions
21. Senator Budd. Dr. Martinez-Lopez, how is the DOD leveraging
academic research and science out of our universities to address
current health threats?
Dr. Martinez-Lopez. The Department continues to utilize academic
research and science to address various health threats facing our
servicemembers through health-related research, development, testing,
and evaluation activities. The DHA research program partners with
universities to focus on advancing the state of medical science in
those areas of most pressing need and relevance to today's emerging
threats and future threat scenarios. Health threat areas include
traumatic brain injury (TBI), psychological health (including Post
Traumatic Stress Disorder (PTSD)), combat casualty care, military
operational medicine, military infectious diseases, radiation health
effects, and clinical and rehabilitative medicine. The Military Health
System utilizes collaborative partnership agreements such as
Educational Partnership Agreements, Cooperative Research and
Development Agreements, and Military Training Agreements to enter into
strategic health research, education, and training collaborations with
universities.
fda-dod collaboration
22. Senator Budd. Mr. Mendez, the Fiscal Year 2018 NDAA contained a
provision that authorized the Secretary of Defense to work with the
Food and Drug Administration on additional emergency uses for medical
products to reduce deaths and severity of injuries caused by agents of
war. How has DOD-FDA collaboration been so far?
Mr. Mendez. On December 12, 2017, Congress enacted Section 716 of
the National Defense Authorization Act for fiscal year 2018 (Fiscal
Year 2018 NDAA; P.L. 115-91), which amended 10 U.S.C. Sec. 1107a, to
allow the Secretary of Defense to authorize emergency use of a non-Food
and Drug Administration (FDA) approved medical product outside of the
United States to ``reduce the number of deaths or the severity of
harm'' to servicemembers and others deployed in support of the Armed
Forces caused by a risk or agent of war.\26\ The enacted provision
allowed the Secretary of Defense to utilize this authority only when
the emergency use of the medical product does not meet Federal Food,
Drug, and Cosmetic Act requirements for involving an ``actual or
threatened attack with a biological, chemical, radiological, or nuclear
agent or agents.'' \27\ In the report accompanying the Fiscal Year 2018
NDAA, the conferees stated that the traditional pathways to the Food
and Drug Administration's approval and licensure of critical medical
products for combat casualty care are too slow to allow for rapid
insertion and use of these products on the battlefield. The conferees
believe this provision could lead to even higher survival rates from
severe combat wounds and injuries suffered by servicemembers. The
conferees expect the Department of Defense] to consult with the
Commissioner of the Food and Drug Administration when evaluating
medical products for combat casualty care and to use this new authority
strictly for approval of medical products for battlefield wounds and
injuries. \28\
---------------------------------------------------------------------------
\26\ P.L. 115-91 Sec. 716.
\27\ Ibid; and 21 U.S.C. Sec. 360bbb-3 (prior to December 12,
2017).
\28\ H.Rept. 115-404, p. 851.
---------------------------------------------------------------------------
After enacting P.L. 115-91, on that same day, Congress also enacted
P.L. 115-92 to repeal Section 716 of the Fiscal Year 2018 NDAA and to
amend the Federal Food, Drug, and Cosmetic Act (FFDCA; 21 U.S.C.
Sec. 360bbb-3) to provide for a process in which the Secretary of
Defense may request that the Secretary of Health and Human Services,
acting through the Commissioner of Food and Drugs, take actions to
``expedite the development and review'' of an application or
notification for emergency use of a medical product ``if there is a
military emergency, or significant potential for a military emergency,
involving a specific and imminently life-threatening risk to United
States military forces of attack with an agent or agents, and the
medical product that is the subject of such application, submission, or
notification would be reasonably likely to diagnose, prevent, treat, or
mitigate such life-threatening risk.'' \29\ The law (P.L. 115-92) also
established requirements for DOD, FDA, and other Federal entities to
meet periodically in order to ``facilitate enhanced collaboration and
communication.'' \30\
---------------------------------------------------------------------------
\29\ P.L. 115-92.
\30\ Ibid.
---------------------------------------------------------------------------
After Congress enacted P.L. 115-92, DOD and FDA published an
``Initial Work Plan for Products Relevant to the Department of
Defense'' in January 2018.\31\ The plan's aim is to ``create a robust
and enduring pathway that will efficiently address the needs of the DOD
and meet the [FDA's] obligations'' to servicemembers.\32\ DOD and FDA
also signed a memorandum of understanding (MOU) in 2018 to formalize
collaboration and communication between the two entities.\33\
---------------------------------------------------------------------------
\31\ FDA, ``Initial Work Plan for Products Relevant to the
Department of Defense (DOD),'' January 2018, at https://www.fda.gov/
media/110237/download.
\32\ Ibid., p. 1.
\33\ FDA, ``Memorandum of Understanding Concerning Coordination
With The Food and Drug Administration Regarding Department of Defense
Medical Product Development and Assessment'' (MOU 225-19-001), November
2, 2018, at https://www.fda.gov/about-fda/domestic-mous/mou-225-19-001.
---------------------------------------------------------------------------
With regard to the status of DOD and FDA collaboration, CRS is
unable to assess the collaboration in the absence of objective
performance metrics. It remains to be seen how well DOD and FDA work
together and whether or not they have adhered to the collaboration
requirements directed by Congress in P.L. 115-92.\34\ What can be
observed is that after the enactment of P.L. 115-92, both entities have
announced a number of DOD medical products that may have received FDA
approval utilizing the processes established in the initial work plan,
the 2018 MOU, and other existing interagency agreements.\35\ These
products include laboratory-based and field deployable traumatic brain
injury (TBI) blood tests; medical countermeasures for nerve agents and
chemical weapons; vaccines to protect against tick-borne encephalitis
and Ebola; and freeze-dried plasma.\36\
---------------------------------------------------------------------------
\34\ Ibid.
\35\ Other interagency agreements include MOUs between FDA and Army
Medical Research and Materiel Command (MOU 225-20-010), and FDA and the
Uniformed Services University of the Health Sciences (MOU 225-22-016),
available at https:// www.fda.gov/ about-fda/ fda-memoranda-
understanding/ domestic-mous.
\36\ For more on these products, see FDA, ``FDA/DOD
Collaborations,'' updated March 29, 2023, at https:// www.fda.gov/
emergency-preparedness-and-response/ mcm-issues/ fdadod-collaborations.
23. Senator Budd. Mr. Mendez, given the FDA already has oversight
over the pharmaceutical industry and the DOD and the FDA are able to
work in collaboration with each other as pharmaceutical supply chains
relate to national security, is there an imminent need for the DOD to
manufacture drugs?
Mr. Mendez. CRS cannot make a determination as to whether or not
DOD or other Federal agencies have a ``need'' to perform or not perform
certain actions. CRS can inform the congressional debate about whether
there may be a need for DOD to manufacture drugs, the timeliness of
addressing a need (if it exists), and potential effects of certain
actions or inaction.
In several instances described below, DOD and Congress have
considered this question of whether or not a need exists for DOD to
manufacture drugs and explored options to address drug supply
challenges.
In 1990, the Secretary of Defense directed the Assistant
Secretary of Defense for Health Affairs to create a task force to
investigate the industrial base capability for producing medical
countermeasures against anthrax and botulinum toxin and to develop
short-and long-term options and recommendations for increasing vaccine
production. \37\
---------------------------------------------------------------------------
\37\ Assistant Secretary of Defense for Health Affairs Memorandum,
``Expansion of Industrial Base for Biological Vaccine Production,''
October 5, 1990, at https://gulflink.health.mil/va/va_refs/n46en061/
970107_sep96_decls48_0001.htm. For more on these efforts, see Anna
Johnson-Winegar, Department of Defense Biological Defense Program Needs
for Strategic Biotechnology Development, DOD, Presentation to the BIO-
Defense and Homeland Security Procurement Conference and Expo, April
30, 2002, at https:// web.archive.org/ web/ 20030624231021/ http://
www.acq.osd.mil/cp/winegar30 apr02_bio.pdf.
In 1993, Congress prohibited DOD from using fiscal year
1994 appropriated funds for ``architectural and engineering services or
for construction design in connect with the Department of Defense
vaccine production facility.'' \38\
---------------------------------------------------------------------------
\38\ Section 2852 of the National Defense Authorization Act for
Fiscal Year 1994 (P.L. 103-160).
---------------------------------------------------------------------------
In 1994, DOD considered a proposal to create a vaccine
production facility ``that can produce vaccines to counter the use of
biological warfare.'' \39\
---------------------------------------------------------------------------
\39\ DODIG, ``Expanded Uses of the Major Range and Test Facility
Bases,'' Audit Report 95-061, December 30, 1994, p. 6, at https://
media.defense.gov/1994/Dec/30/2001714848/-1/-1/1/95-061.pdf.
In 1994, the House Armed Services Committee questioned
the Secretary of Defense and other DOD witnesses about DOD plans to
establish a vaccine production facility during authorization and
oversight hearings on an Fiscal Year 1995 NDAA. \40\
---------------------------------------------------------------------------
\40\ U.S. Congress, House Armed Services Committee, Authorization
and Oversight, hearing on National Defense Authorization Act for Fiscal
Year 1995 and Oversight of Previously Authorized Programs, 103d Cong.,
2d sess., 1994, HASC No. 103-32, pp. 266-268.
In 2000, Congress directed DOD to provide a report on the
``implications of reliance on the commercial sector to meet the
requirements of the Department of Defense for biological warfare
defense vaccines.'' \41\
---------------------------------------------------------------------------
\41\ Section 218 of the Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001 (P.L. 106-398).
In 2000, the Deputy Secretary of Defense tasked an
independent panel of experts to provide recommendations on how DOD
should ``best develop and oversee a vaccine acquisition production
program.'' \42\
---------------------------------------------------------------------------
\42\ DOD, DOD Acquisition of Vaccine Production, Report to the
Deputy Secretary of Defense by the Independent Panel of Experts,
November 29, 2000, at https:// apps.dtic.mil/ sti/tr/pdf/
ADA422848.pdf.
---------------------------------------------------------------------------
In 2015, Congress limited the availability of
appropriated funds that DOD may obligate for a medical countermeasures
advanced development and manufacturing (ADM) facility and required a
report to Congress describing the ADM facility. \43\
---------------------------------------------------------------------------
\43\ Section 221 of the National Defense Authorization Act for
Fiscal Year 2016 (P.L. 114-92). The law also required a Comptroller
General review of DOD's report to Congress. For more, see U.S.
Government Accountability Office, Biological Defense: Additional
Information that Congress May Find Useful as It Considers DOD's
Advanced Development and Manufacturing Capability, July 2017, at
https:// www.gao.gov/ products/ gao-17-701.
---------------------------------------------------------------------------
Congress could assess whether or not a need exists for DOD to
manufacture drugs to mitigate broader supply chain resiliency
challenges. Congress may also consider requirements, if any, of such an
initiative to avoid unintended effects on the commercial market, to
meet military requirements for medical countermeasures, to support the
availability of medical countermeasures for public health emergencies,
or to address existing drug shortages in the United States.
APPENDIX A
References of
Dr. Melissa Barber
1. Toward a national biodefense strategy [Internet].
2004; Available from: https://www.Congress.gov/event/108th-
congress/house-event/LC13942/text's =1&r=61
2. General Accounting Office. Biological Warfare: Role of
Salk Institute in Army's Research Program [Internet]. 1991;
Available from: Washington, DC, USA
3. Prohibition on use of funds for planning and design of
Department of Defense vaccine production facility [Internet].
1993. Available from: https://www.Congress.gov/103/statute/
STATUTE-107/STATUTE-107-Pg1547.pdf
4. Protecting Our Forces: Improving Vaccine Acquisition
and Availability in the U.S. Military [Internet]. Washington,
DC.: National Academies Press; 2002 [cited 2024 Apr 6].
Available from: http://www.nap.edu/catalog/10483
5. Proceedings and Debates of the 107th Congress, Second
Session. Congressional Record [Internet] 148(88). Available
from: https://www.Congress.gov/107/crec/2002/06/27/CREC-2002-
06-27.pdf
6. Melody Petersen, Andrew Pollack. A NATION CHALLENGED:
THE DEFENSES; Big Push to Accelerate Vaccine Effort [Internet].
The New York Times. 2001;Available from: https://
www.nytimes.com/2001/09/28/business/a-nation-challenged-the-
defenses-big-push-to-accelerate-vaccine-effort.html
7. Tim Hutchinson. S.Amdt.4069 to S. 2514 [Internet].
Available from: https://www.Congress.gov/amendment/107th-
congress/senate-amendment/4069/text?s
=1&r=77&q=%7B%22search%22%3A%22%26%231606%22%7D
8. Biodefense Posture Review. Washington, DC, USA:
Department of Defense; 2023.
9. Lyon RC, Taylor JS, Porter DA, Prasanna HR, Hussain
AS. Stability profiles of drug products extended beyond labeled
expiration dates. Journal of Pharmaceutical Sciences [Internet]
2006 [cited 2025 Jan 24];95(7):1549-60. Available from: https:/
/linkinghub.elsevier.com/retrieve/pii/S0022354916320457
10. Kaufmann B, Boulle P, Berthou F, et al. Heat-stability
study of various insulin types in tropical temperature
conditions: new insights toward improving diabetes care. PLoS
One [Internet] 2021 [cited 2025 Jan 24];16(2):e0245372.
Available from: https://journals.plos.org/plosone/
article?id=10.1371/journal.pone.0245372
Supportive articles submitted by Mr. Victor A. Suarez to
follow:
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Pentagon Wants to Root Out Shoddyy Drugs.
The FDA Is In Its Way.
The U.S. drug-safety regulator has resisted independent testing that's
widely used in Europe.
Bloomberg
By Anna Edney and Riley Griffin
December 4, 2023 at 7 PM EST
One morning in October, U.S. Army Colonel Victor Suarez
finished his usual morning workout--a 32-mile bike ride--and
then sat down in his home office in Frederick, Maryland. When
he opened his email, his stomach dropped.
Suarez spent his career getting medicines to military
hospitals and combat troops, including those in Iraq and
Afghanistan. He had recently sought out an independent lab to
assess the quality of those drugs, in large part because he
doubted the US Food and Drug Administration's ability to police
a supply chain now dominated by low-cost manufacturers in India
and China. His inbox offered a glimpse of the first batch of
test results.
They revealed that some generic versions of one important
drug, given to soldiers who've lost limbs in combat, might not
work. They could even cause kidney failure and seizures. The
idea that already-wounded personnel might be facing an even
more difficult recovery--all to save a dollar or two a pill--
gutted Suarez. ``Oh my God, what are we doing here?'' he
recalled thinking.
Still more infuriating was that doctors had long warned the
FDA that some versions of the drug performed poorly. Known by
the chemical name tacrolimus, it's typically prescribed to
organ-transplant patients. The lab Suarez engaged had started
testing samples in early September. One of the generics
assessed as problematic is manufactured in India by Intas
Pharmaceuticals Ltd. It was only a couple of weeks later that
the FDA announced, after more than a decade of study, that the
Intas version wasn't equivalent to the brand-name drug it
sought to mimic. The outside lab had taken a month to flag
similar problems.
As Suarez well knew, this isn't just a problem for the
military. Tacrolimus is just one example of the painful
compromises at the heart of an American health-care system in
love with--and increasingly suffering from--cheap generic
drugs.
They've saved taxpayers and consumers hundreds of billions
of dollars a year. But recalls related to drug manufacturing
quality doubled in the U.S. from 2018 to 2022. With almost 80
percent of FDA-registered generic production facilities located
overseas, years can pass between inspections. Profit margins on
generics are so thin that there are often only one or two
suppliers of vital medications. As a result, quality issues are
fueling shocking shortfalls in supply, which a U.S. Senate
committee will examine on Tuesday. Shortages in the U.S.
reached near-record highs this year and left cancer patients,
among others, waiting for life-saving treatments. Generics are
supposed to be affordable and safe. Instead, they're cheap--but
sometimes dangerous.
In February, U.S. health authorities linked eye drops made
in India to a rare bacterial strain that led to four deaths,
blinded others and caused dozens of infections. Sold over the
counter at major U.S. drugstores, the drops came from a factory
that had never been inspected by the FDA. Indian-made cough
syrups laced with toxic industrial solvents have turned up over
the past year and a half in 10 countries. They've been linked
to the deaths of at least 140 children. The discovery of a
probable carcinogen in blood pressure pills made in India and
China five years ago is still driving recalls, with the same
chemical appearing more recently in diabetes treatments.
The US reliance on India's manufacturers is only growing as
it turns away from China, a geopolitical rival. But in the
effort to woo a strategic partner and ensure needed supplies,
the FDA has been slow to address mounting evidence of flawed
drugs. The regulator shut down a program of unannounced
inspections in India almost a decade ago. When FDA inspectors
do make it inside factories there, they've documented
disturbing conditions, from barefoot workers in areas supposed
to be sterile to widespread corner-cutting on tests.
Amid the scrutiny, Intas is becoming a familiar name. Maker
of the tacrolimus that jumped out in the tests Suarez saw, it's
also an essential supplier of generics used to treat cancer.
The company suspended production of them after FDA inspectors
found that workers at one plant in India stashed shredded test
results in garbage bags to hide evidence of shoddy
manufacturing practices. (Intas said in a statement that it is
``in the process of remediating the findings'' and that it is
``committed to providing safe and effective medicines.'') The
subsequent shortages impacted care for one in 10 patients this
year, the American Cancer Society says.
Concern about the Nation's drug supply has reached the
point that big hospitals, the Defense Department and Congress
are raising questions about the FDA's ability to monitor it.
The Pentagon in August chose an independent lab with which the
FDA has publicly feuded, Valisure LLC, to test some of the
generics available to millions of military personnel and their
families, 2 years after Kaiser Permanente, a health system
serving 12.7 million in the US, started a similar program with
the lab.
The efforts have run headlong into a major roadblock: the
FDA itself. One might assume the US drug regulator, which dates
to the 19th century Division of Chemistry, leads the mission of
testing drugs. In fact, the FDA resists the idea of grading
drugs by quality and rarely conducts tests of its own. Agency
officials sought to block the Pentagon's nascent study, cast
doubt on Valisure's methods and, according to multiple
government officials, soured a Biden administration effort this
year to introduce third-party testing more widely.
FDA spokesperson Jeremy Kahn said the agency ``is
continuously working to ensure that all drugs meet the highest
quality standards with the health and well-being of Americans
top of mind.'' Agency officials have said many of the problems
are a hangover from a decline in inspections during the
pandemic and that a system based on spot checks and occasional
reprimands is working.
The drawbacks of that approach were apparent in May, when
an inspection of a second Intas facility in Ahmedabad, India,
turned up more quality issues, including workers who made up
favorable test results and ignored evidence of contamination.
Inspectors had identified similar problems in 2019. Company
officials suggested pausing production for the US to address
the issues, according to a person familiar with the matter who
declined to be identified discussing sensitive matters. The
FDA, this person said, feared the fallout of even more
shortages and advised against it.
In November, after Bloomberg News asked an agency
spokesperson about the decision, the FDA banned some exports
from the plant to the US. But the ban didn't apply to more than
two dozen generics, including tacrolimus and 16 cancer drugs.
Robert Califf, The FDA Commissioner, donned a garland of
pink flowers on the steps of the US Embassy in New Delhi in
September, smiling broadly for a photo with the American
ambassador as he embarked on a trip to meet with government
officials, drug company executives and academics. His
subsequent blog post walked a line between pep talk and tough
talk for India's embattled generic drug industry. While noting
the ``global attention focused on serious instances of quality
failures,'' he said he'd also visited firms that are doing ``a
tremendous and reliable job'' in a country that remains a
critical partner.
Califf, who also led the FDA during the last year of the
Obama administration, has returned to an agency in crisis. He
and other officials were called before Congress last year to
explain the FDA's slow response to evidence of contamination in
baby formula made in Michigan that was linked to infant deaths.
Before that came its approval, in 2021, of a potentially
lucrative drug for Alzheimer's disease over the objections of a
scientific advisory panel that questioned the drug's
effectiveness. The agency didn't make him available to comment
for this story.
The revolving door at the FDA, as at many other branches of
government, is well-worn. At least four former chiefs of its
office of compliance later became consultants to generic
drugmakers. The head of its Center for Drug Evaluation and
Research, Patrizia Cavazzoni, previously held senior positions
at the drug giants Pfizer Inc. and Eli Lilly & Co. Like nine of
ten of his predecessors, Califf, a cardiologist, went on to
work for drug companies or serve on their boards. Between his
stints as FDA chief, Califf worked for Google parent Alphabet
Inc.'s Verily Life Sciences unit and had advisory or board
roles for at least seven other companies, including one
developing Alzheimer's treatments. (He has quit all of them
since returning to the regulator.)
But the person who most shaped the modern FDA is
Cavazzoni's mentor, Janet Woodcock, 75, who said last month
that she's retiring after a 37-year career that included
running the drug evaluation center and serving as acting
commissioner, for a year until Califf's appointment. Now
principal deputy, she's known to people in the industry as
``shadow commissioner.'' As the regulator has lurched from
controversy to controversy in recent years, it is Woodcock's
mindset that has been preeminent. It boils down to encouraging
manufacturers to fix problems themselves. ``You cannot test
products into compliance,'' she said in an email. ``The best
quality is assured when manufacturers are dedicated to high
quality.''
Some former agency officials say this approach leaves the
FDA reacting to problems instead of anticipating them. It also
allows officials to shift blame, said Frank Yiannas, the former
deputy commissioner for food policy and response, who described
the baby formula crisis as a preventable tragedy exacerbated by
the agency's own mistakes. ``There's a fear at the FDA where
nobody wants to be responsible for the supply chain,'' he said.
``The American public expects the government to do all that
they can.''
Woodcock laid out the agency's ``risk-based approach'' two
decades ago in a regulatory framework called ``Pharmaceutical
Quality for the 21st Century.'' Ideally, the FDA would do as
little as possible. She envisioned ``a maximally efficient,
agile, flexible manufacturing sector that reliably produces
high-quality drug products without extensive regulatory
oversight.''
The offshoring of US pharmaceutical manufacturing to India
and China was then just getting started, but some had already
warned about losing control. A 1998 report by what's now called
the Government Accountability Office cited concern about the
FDA's ``ability to ensure the safety and quality of the
increasing volume of foreign-produced drugs imported daily into
the United States.''
Those worries materialized a decade later, when a
contaminated blood thinner made in China led to hundreds of
deaths in the US. That same year, the FDA opened its first
offices in Beijing and New Delhi. The agency opened a second
India office in Mumbai the following year, and had plans to
hire 19 staffers in the country.
In a case that again jolted the generics market, the US
unit of India's Ranbaxy Laboratories Ltd. in 2013 pleaded
guilty to felony charges of selling adulterated drugs and lying
about it to the FDA. Ranbaxy paid $500 million to settle the
case, which further exposed the flaws of an FDA inspection
regime organized to monitor a domestic manufacturing base that
was rapidly disappearing. While surprise inspections were easy
to do in the US, the overseas inspectors had to announce their
arrival weeks or months in advance.
The next year, following the Ranbaxy scandal, the FDA
started a pilot program for unannounced inspections in India.
It uncovered more troubling signs that factories there weren't
just dirty and under-equipped; workers were routinely hiding
sensitive documents.
But the program lasted only about a year, until a July 2015
email from Alonza Cruse, then acting director of the FDA's
Office of Pharmaceutical Quality Operations. ``The pilot will
end immediately,'' Cruse wrote in the email, obtained by
Bloomberg. No explanation. The agency later told the GAO, the
investigative arm of Congress, that its staff hadn't developed
any metrics on which to evaluate the pilot's success.
Two former employees, who didn't want to be identified
discussing internal matters, said FDA leaders were also
concerned that unannounced inspections could undermine efforts
to deepen relations with India, a year after the nationalist
government of Prime Minister Narendra Modi came to power. Asked
about those claims, FDA spokesperson Kahn said the agency's
``collaboration with India highlights continued advancement of
the production and availability of medical products that both
countries and the entire world rely upon.''
By 2019, India's manufacturing clout had grown to the point
that the country had more FDA-registered generic drug
facilities than the US, according to a Bloomberg analysis of
agency data. (India had 30 percent as of Oct. 1, compared with
22 percent for the US and 13 percent for China.) Yet the FDA's
footprint in the country has shrunk. After closing the Mumbai
office in 2016, it had a drug inspection staff that recently
numbered four in New Delhi. The office primarily focuses on
building relationships in government and industry rather than
compliance.
Just before the pandemic, Valisure, a tiny lab in New
Haven, Connecticut, started gaining customers--and embarrassing
the FDA--by doing something people expect the regulator already
does: test drugs.
The lab's co-founder, Adam Clark-Joseph, had suffered
complications from an anticonvulsant drug he was taking. He'd
connected with a friend from Yale University, a molecular
biologist named David Light, and they'd become convinced there
was a business in screening medications. (Bloomberg
commissioned Valisure this year to test Indian-made cough
syrups obtained from six countries; one test found unsafe
levels of toxic chemicals in a cold medication sold in Iraq and
prompted a recall.)
The FDA doesn't regularly test either ingredients or the
finished products. During inspections, it primarily checks to
see how well companies follow manufacturing procedures rather
than conduct its own sampling. When the regulator does find
problems, it typically relies on the company to voluntarily
take action to address the root cause.
At first, Valisure operated as a pharmacy and tested the
medications it dispensed. Light said about 10 percent had
problems, such as contamination or the lack of an active
ingredient. Then came a bombshell finding in 2019 that Zantac,
the widely used heartburn drug, was contaminated with a
chemical that likely causes cancer. A massive recall followed.
Valisure also found leukemia-causing benzene in hand
sanitizers, sunscreens and antiperspirants. Again, companies
withdrew the products--and the FDA had to answer questions from
Congress about how an obscure lab had sounded the alarm first.
Months after the Zantac revelation, the pandemic forced a
near-halt in the FDA's inspections. Agency officials still
found time, in May 2021, to send a team into Valisure's
offices. In public statements about the lab, the regulator had
grown increasingly critical, telling reporters its own testing
revealed discrepancies from Valisure's. Though the agency also
found unsafe levels of the probable carcinogen NDMA in Zantac,
it said the lab's tests had inflated them.
The inspection had been ordered by ``HQ,'' agency
headquarters in Silver Spring, Maryland, a high-ranking FDA
investigator wrote in an email obtained through a public
records request.
Staffers on the ground appeared mystified by the
assignment. Over the following weeks, according to the emails,
the FDA team repeatedly conveyed to top officials that nothing
at the lab indicated the testing it did was subject to agency
oversight. Valisure doesn't make drugs, and its contracts with
clients say none of its testing should be used for any
regulatory purpose. Twice, the team tried to close the
inspection. They suggested that a discussion about some
technical violations they'd spotted, not an official
admonition, would suffice. But Francis Godwin, head of the
Office of Manufacturing Quality, insisted on a tougher report,
the emails show. (Godwin didn't respond to a request for
comment.)
Nineteen months after the initial inspection, the FDA
published an eight-page letter enumerating flaws in data
collection and equipment that applied if Valisure were to do
regulatory work--which, the letter acknowledged, it didn't. The
letter said Valisure hadn't documented the ``accuracy'' and
``repeatability'' of its results, among other concerns. The
FDA's Kahn said the agency isn't opposed to additional
screening of drugs but added that such measures must be
``backed by validated testing methods, scientific research and
expertise.''
In the view of some current and former staffers, who
requested anonymity to protect their careers, the episode
amounted to a hit job meant to clip the momentum of a company
whose tests had called into question the regulator's
effectiveness. Others who have raised concerns about drugs say
they've often been met with silence. ``The FDA has a story and
the story is: `We're the FDA, we know what we're doing. Trust
us,' '' said Joe Graedon, co-founder of the People's Pharmacy,
a consumer health organization that publishes complaints about
generics. ``Anything that interferes with that story or
criticizes that story is generally not welcome.''
All of this helps to explain why independent testing, and
Victor Suarez's collaboration with Valisure at the Department
of Defense in particular, touched off such an intense
bureaucratic struggle this year.
As tension with China has increased, India, which accounts
for one-fifth of the world's generic drug exports, is seen by
US officials as a more secure source of supply. ``We've done a
big push with India,'' said Neera Tanden, President Joe Biden's
domestic policy adviser. After Modi met with Biden at the White
House in June, they issued a joint statement welcoming ``deeper
collaboration'' in pharmaceuticals and calling their two
countries ``among the closest partners in the world.''
The relationship has survived some recent stress. A year
ago, FDA inspectors issued a 36-page report describing the
efforts of employees at the first Intas factory they visited to
hide test results from them. One employee ``rushed and tore
apart'' printouts and threw them into a trash bag, then poured
acid onto them.
The company makes about 50 percent of the US supply of
cisplatin, a widely used chemotherapy drug. After Intas ceased
production at that factory to address issues raised by the
inspectors, it led to a shortage of both cisplatin and another
chemotherapy drug called carboplatin. That left cancer patients
across the country scrambling to find hospitals able to secure
the drugs, or even delaying treatment.
The shortages have embarrassed an administration that
promised an ambitious ``cancer moonshot'' to cut death rates in
half and now finds itself simply trying to ensure access to
existing drugs. Early this year, Biden officials led by Susan
Rice, then his domestic policy adviser, began crafting a $25
billion package to restore US drug manufacturing and improve
visibility into supplies, modeled on the CHIPS Act for
semiconductors, according to people familiar with the matter
who asked for anonymity to share plans that were not public.
Among the steps to improve quality, they consulted with the FDA
about implementing third-party testing of the type Valisure
does.
After Bloomberg later reported the Pentagon's plans to test
drugs with Valisure, FDA officials told the White House they
felt betrayed, according to these people. The agency's
leadership suggested that the testing, though still only a
pilot, was a direct assault on its reputation and performance,
sowing distrust in the products it clears, the people said. It
was an awkward moment because Rice, the official who'd been
most focused on policing supplies from India and China, had
just left her post. Momentum for sweeping action stalled. Rice
didn't respond to requests for comment.
Tanden, who replaced Rice in the role, said the
administration continues working with the FDA to ensure the
availability and quality of medicines and is open to various
ideas, including different measures of quality. She added that
the White House tried to interest lawmakers in investing
billions to shore up the pharmaceutical supply chain, but
congressional interest waned. The FDA's Kahn said it's open to
``meaningful solutions'' in ``collaboration with our cross-
government partners.''
In August, Suarez, 50, went on stage with Valisure's Light
at a conference of medical supply experts in Orlando. Congress
had told the Pentagon a year ago to identify threats to its
pharmaceutical supplies. Suarez got involved in the project as
something of a swan song to a career of supporting vaccine
development and managing medical acquisition and logistics for
25 military facilities. He retired last week and is now a
consultant who advises health-care clients on product and
supply chain issues. As Suarez announced the pact with Light
that day in Orlando, he said it would help end what's in effect
an ``honor system'' that leaves consumers in the dark.
That same month, Suarez said, he heard of blowback through
his command chain. Califf met with one of his superiors,
Assistant Secretary of Defense for Health Affairs Lester
Martinez-Lopez, and raised concerns about the Pentagon study
and Valisure's testing methods. Martinez-Lopez informed Califf
the Pentagon would move forward, according to Suarez. Nicole
Schwegman, a Defense Department spokesperson, said it
``appreciates the FDA's insight'' and noted that Martinez-Lopez
is required to report on risks to the pharmaceutical supply
chain. The FDA's Kahn didn't respond to questions about the
meeting.
To sustain support, Suarez also briefed Pentagon leaders
about Valisure's preliminary results for a few medications,
including the flawed tacrolimus. A chart that compared prices
alongside quality scores showed how cheap isn't always best.
``It was just a jaw-dropping moment,'' he said. The Valisure
pilot is testing a dozen drugs, each with multiple
manufacturers, among them blood pressure medicines and
antidepressants. The lab uses commercial samples obtained from
distributors, not manufacturers. The tests measure dosages, as
well as potential contaminants. Results are graded by an
outside panel of experts, who assign quality scores.
Doctors had expressed doubts about some generic versions of
tacrolimus soon after they were introduced in 2009. The FDA
responded 2 years later by designating it a ``narrow
therapeutic index drug,'' signaling that small differences in
dosages can have a big impact on patients. Over the next
several years, the agency has said, it funded ``a number of
studies'' to continue investigating. Finally, in September, the
agency said the Intas version isn't equivalent--but let it stay
on the market.
Last month, the Pentagon gave the Valisure project another
vote of confidence by transferring it to the Uniformed Services
University of the Health Sciences, which conducts research for
the military. The institution will add dozens of additional
medicines to the study and analyze the results over the next 2
years. Suarez said he hopes big drug buyers like Medicare and
the Veterans Administration adopt the same approach--which
might finally change the economics of the generic drug market
to reward quality. ``Hopefully the FDA will become part of
that,'' Valisure's Light said, ``but it's happening without
them anyway.''
In the European Union, independent testing has long been
standard, with a network of 70 labs that sample medications
both before they're released and after they're in use. The
FDA's Woodcock said European authorities also rely on
inspections and work closely with the FDA. Tests might motivate
``certain manufacturers to make sure their products at least
pass,'' she wrote in an email. ``But people who know a lot
about this will tell you that testing per se is not a magic
bullet.''
After abandoning pursuit of the $25 billion legislative
package, the Biden administration last week tapped the Defense
Production Act to enable some domestic investment in essential
medicines, starting with $35 million for sterile injectable
drugs. It also added a new post outside the FDA for a ``supply
chain resilience and shortage coordinator.'' Biden adviser
Tanden said the administration is exploring other ways of using
the clout of the US Government ``as a giant purchaser of
drugs'' to encourage manufacturers to prioritize quality and
availability. Prompted by Congress, the FDA resumed unannounced
inspections in India last year and China more recently.
What's missing is a shift in the mindset of the regulator.
Not long after FDA commissioner Califf returned from India, he
spoke at an October conference for the generic drug industry in
North Bethesda, Maryland. Asked about the idea of health
systems doing independent tests, he responded: ``I might say
there are better ways to spend your money.''
-With assistance from Laura Bejder Jensen, Ike Swetlitz,
and Swati Gupta