[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
MADE IN AMERICA: STRENGTHENING DOMESTIC
MANUFACTURING AND THE HEALTHCARE SUP-
PLY CHAIN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JUNE 11, 2025
__________
Serial No. 119-25
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Published for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
60-898 PDF WASHINGTON : 2026
=======================================================================
COMMITTEE ON ENERGY AND COMMERCE
BRETT GUTHRIE, Kentucky
Chairman
ROBERT E. LATTA, Ohio FRANK PALLONE, Jr., New Jersey
H. MORGAN GRIFFITH, Virginia Ranking Member
GUS M. BILIRAKIS, Florida DIANA DeGETTE, Colorado
RICHARD HUDSON, North Carolina JAN SCHAKOWSKY, Illinois
EARL L. ``BUDDY'' CARTER, Georgia DORIS O. MATSUI, California
GARY J. PALMER, Alabama KATHY CASTOR, Florida
NEAL P. DUNN, Florida PAUL TONKO, New York
DAN CRENSHAW, Texas YVETTE D. CLARKE, New York
JOHN JOYCE, Pennsylvania, Vice RAUL RUIZ, California
Chairman SCOTT H. PETERS, California
RANDY K. WEBER, Sr., Texas DEBBIE DINGELL, Michigan
RICK W. ALLEN, Georgia MARC A. VEASEY, Texas
TROY BALDERSON, Ohio ROBIN L. KELLY, Illinois
RUSS FULCHER, Idaho NANETTE DIAZ BARRAGAN, California
AUGUST PFLUGER, Texas DARREN SOTO, Florida
DIANA HARSHBARGER, Tennessee KIM SCHRIER, Washington
MARIANNETTE MILLER-MEEKS, Iowa LORI TRAHAN, Massachusetts
KAT CAMMACK, Florida LIZZIE FLETCHER, Texas
JAY OBERNOLTE, California ALEXANDRIA OCASIO-CORTEZ, New York
JOHN JAMES, Michigan JAKE AUCHINCLOSS, Massachusetts
CLIFF BENTZ, Oregon TROY A. CARTER, Louisiana
ERIN HOUCHIN, Indiana ROBERT MENENDEZ, New Jersey
RUSSELL FRY, South Carolina KEVIN MULLIN, California
LAUREL M. LEE, Florida GREG LANDSMAN, Ohio
NICHOLAS A. LANGWORTHY, New York JENNIFER L. McCLELLAN, Virginia
THOMAS H. KEAN, Jr., New Jersey
MICHAEL A. RULLI, Ohio
GABE EVANS, Colorado
CRAIG A. GOLDMAN, Texas
JULIE FEDORCHAK, North Dakota
------
Professional Staff
MEGAN JACKSON, Staff Director
SOPHIE KHANAHMADI, Deputy Staff Director
TIFFANY GUARASCIO, Minority Staff Director
Subcommittee on Health
EARL L. ``BUDDY'' CARTER, Georgia
Chairman
NEAL P. DUNN, Florida, Vice DIANA DeGETTE, Colorado
Chairman Ranking Member
H. MORGAN GRIFFITH, Virginia RAUL RUIZ, California
GUS M. BILIRAKIS, Florida DEBBIE DINGELL, Michigan
DAN CRENSHAW, Texas ROBIN L. KELLY, Illinois
JOHN JOYCE, Pennsylvania NANETTE DIAZ BARRAGAN, California
TROY BALDERSON, Ohio KIM SCHRIER, Washington
DIANA HARSHBARGER, Tennessee LORI TRAHAN, Massachusetts
MARIANNETTE MILLER-MEEKS, Iowa MARC A. VEASEY, Texas
KAT CAMMACK, Florida LIZZIE FLETCHER, Texas
JAY OBERNOLTE, California ALEXANDRIA OCASIO-CORTEZ, New York
JOHN JAMES, Michigan JAKE AUCHINCLOSS, Massachusetts
CLIFF BENTZ, Oregon TROY A. CARTER, Louisiana
ERIN HOUCHIN, Indiana GREG LANDSMAN, Ohio
NICHOLAS A. LANGWORTHY, New York FRANK PALLONE, Jr., New Jersey (ex
THOMAS H. KEAN, Jr., New Jersey officio)
MICHAEL A. RULLI, Ohio
BRETT GUTHRIE, Kentucky (ex
officio)
C O N T E N T S
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Page
Hon. Earl L. ``Buddy'' Carter, a Representative in Congress from
the State of Georgia, opening statement........................ 1
Prepared statement........................................... 4
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 10
Prepared statement........................................... 12
Hon. Brett Guthrie, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 14
Prepared statement........................................... 16
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 19
Prepared statement........................................... 21
Witnesses
Patrick Cashman, President, USAntibiotics........................ 23
Prepared statement........................................... 26
Answers to submitted questions............................... 207
John Murphy III, President and Chief Executive Officer,
Association for Accessible Medicines........................... 35
Prepared statement........................................... 37
Answers to submitted questions............................... 211
Ronald T. Piervincenzi, Ph.D., Chief Executive Officer, United
States Pharmacopeia............................................ 45
Prepared statement........................................... 47
Answers to submitted questions............................... 215
Dawn O'Connell, Former Assistant Secretary for Preparedness and
Response, Administration for Strategic Preparedness and
Response, Department of Health................................. 65
Prepared statement........................................... 67
Answers to submitted questions............................... 219
Josh Bolin, Associate Executive Director, Government Affairs and
Innovation, National Association of Boards of Pharmacy......... 72
Prepared statement........................................... 74
Answers to submitted questions............................... 221
Submitted Material
Inclusion of the following was approved by unanimous consent.
List of documents submitted for the record....................... 128
Report by Cencora, ``Addressing generic drug shortages:
Contributing factors and public policy recommendations'' \1\
Letter of June 9, 2025, from Kathryn DiBitetto, Vice President,
Government Affairs, Health Industry Distributors Association,
to Mr. Guthrie, et al.......................................... 129
Statement of the Alliance for Home Dialysis, June 11, 2025....... 131
Statement of StringKing by Jake McCampbell, Cofounder and Chief
Executive Officer, June 11, 2025............................... 134
----------
\1\ The report has been retained in committee files and is included in
the Documents for the Record at https://docs.house.gov/meetings/IF/
IF14/20250611/118366/HHRG-119-IF14-20250611-SD003.pdf.
Article of April 30, 2025, ``No Respect: How Misrepresenting
Compounded Drugs Hurts Patients,'' by Scott Brunner, Chief
Executive Officer, Alliance for Pharmacy Compounding,
InsideSources.com.............................................. 137
Report by the National Association of Boards of Pharmacy,
``Report of the DSCSA State Regulator & Dispenser Tracing Pilot
With the United States Pharmaceutical Supply Chain''........... 141
Report by the National Association of Boards of Pharmacy,
``Serial Number Decommissioning Pilot Report''................. 153
Report by ASOP Global Foundation, ``Americans' Perception and Use
of Online Pharmacies,'' 2023................................... 164
Report by the National Association of Boards of Pharmacy,
``RogueRx Activity Report-Injectable Weight Loss Drugs: How
Illegal Online Drug Sellers Are Taking Advantage of Patients''. 176
Statement of Premier Inc., June 11, 2025......................... 188
Letter of June 11, 2025, from Brian Lehman, Pharmacist, to Mr.
Carter of Georgia, et al....................................... 195
Letter from Eric Axel, Executive Director, American Medical
Manufacturers Association, to Mr. Carter of Georgia and Ms.
DeGette........................................................ 198
Statement of Lynn M. Schuchter, Chair of the Board, Association
for Clinical Oncology, June 11, 2025........................... 200
Statement of the Alliance for mRNA Medicines..................... 203
MADE IN AMERICA: STRENGTHENING DOMESTIC MANUFACTURING AND THE
HEALTHCARE SUPPLY CHAIN
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WEDNESDAY, JUNE 11, 2025
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m., in
the John D. Dingell Room 2123, Rayburn House Office Building,
Hon. Earl L. ``Buddy'' Carter (chairman of the subcommittee)
presiding.
Members present: Representatives Carter of Georgia,
Griffith, Bilirakis, Dunn, Crenshaw, Joyce, Balderson,
Harshbarger, Miller-Meeks, Cammack, Obernolte, James, Bentz,
Houchin, Langworthy, Kean, Guthrie (ex officio), DeGette
(subcommittee ranking member), Ruiz, Dingell, Kelly, Barragan,
Schrier, Veasey, Fletcher, Ocasio-Cortez, Auchincloss, Carter
of Louisiana, Landsman, and Pallone (ex officio).
Staff present: Jessica Donlon, General Counsel; Sydney
Greene, Director of Finance and Logistics; Jay Gulshen, Chief
Counsel, Health; Emily Hale, Staff Assistant; Annabelle
Huffman, Clerk, Health; Megan Jackson, Staff Director; Sophie
Khanahmadi, Deputy Staff Director; Brayden Lacefield, Special
Assistant; Molly (Brimmer) Lolli , Counsel, Health; Sarah
Meier, Counsel and Parliamentarian; Joel Miller, Chief Counsel;
Jake Riith, Staff Assistant; Jackson Rudden, Staff Assistant;
Chris Sarley, Member Services/Stakeholder Director; Emma
Schultheis, Policy Analyst, Health; Matt VanHyfte,
Communications Director; Katie West, Press Secretary; Lydia
Abma, Minority Policy Analyst; Sam Avila, Minority Health
Fellow; Jacquelyn Bolen, Minority Counsel; Keegan Cardman,
Minority Staff Assistant; Waverly Gordon, Minority Deputy Staff
Director and General Counsel; Tiffany Guarascio, Minority Staff
Director; Una Lee, Minority Chief Counsel, Health; and Destiny
Sheppard, Minority Intern.
Mr. Carter of Georgia. The subcommittee will come to order.
The Chair recognizes himself for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. EARL L. ``BUDDY'' CARTER, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA
Welcome, everyone.
Today's hearing is critical in addressing our Nation's
reliance on adversarial countries for essential medications and
healthcare products. This dependence not only jeopardizes our
national security and patient safety but also highlights the
urgent need to increase domestic and friend-shored
manufacturing.
Let me be clear: The United States should never be
dependent on the Chinese Communist Party for the antibiotics
and essential medicines. But that is exactly the dangerous
position we are in today.
In 2002, the United States manufactured 72 percent of the
pharmaceuticals it consumed. By 2023, that number had dropped
to just 37.5 percent. We didn't just outsource manufacturing--
we outsourced the sovereignty and safety of our healthcare
system.
We saw the impacts of this reliance firsthand during the
COVID-19 pandemic. According to a conversation I had with the
Administrator for Strategic Preparedness and Response, or ASPR,
under the Trump administration, the United States saw a
downtick in the amount of PPE and pharmaceuticals coming to our
country from China in the fall of 2019--in the fall of 2019. We
didn't learn about COVID until January of 2020. They knew what
was going on. They started hoarding this stuff and not sending
it to us.
China knew there was an unidentified sickness in its own
country. They concealed it, and then they withheld medical
supplies so the United States was less prepared when COVID-19
hit our shores.
As both a pharmacist and a Member of Congress, I know how
critical these medicines and supplies are, especially for our
national security. Under the Biden-Harris administration, over
323 drugs were in shortage during the first quarter of 2024, an
all-time high, and cancer patients were often forced to switch
treatments, adjust dosage regimens, or, in extreme cases,
unable to receive their life-saving medications. There was no
comprehensive effort to support American manufacturers or
reduce our reliance on foreign supply chains.
That is simply unacceptable.
Thankfully, President Trump is taking meaningful action by
demanding real investment in our domestic production base and
putting it into decades of failed ``America Last'' policies
that left our supply chains hollowed out and put our patients,
constituents, and families at risk.
Under the leadership of President Trump, we are bringing
manufacturing back to America. Since the start of this year,
the start of President Trump's second term, Johnson & Johnson
broke ground on a new $2 billion facility in North Carolina,
Amgen announced a $900 million manufacturing expansion in Ohio,
AbbVie committed $10 billion to invest in the United States,
and Sanofi announced plans to invest at least $20 billion.
And these are just a few examples. This is just the start.
I look forward to hearing from my other colleagues about
the recent investments in their districts and States during
this hearing today, and I am thrilled to see what additional
investments continue to flow and thrive under an administration
focused on unleashing innovation and bringing capacities back
home.
Along those lines, I commend recent efforts by this
administration to bolster domestic production. But we must do
our part in Congress as well.
This hearing will make it clear that more can be done to
eliminate burdensome regulatory barriers, streamline processes
that impede our competitiveness on the global stage, and
establish the proper incentives to ensure we are creating the
environment to allow innovation to flourish.
It is no coincidence that Georgia, my home State, the
number-one State in the Nation to do business, is home to Manus
Bio, which has invested nearly $60 million and created over 100
jobs with the acquisition of a new manufacturing facility in
Augusta. We need more policies at the Federal level that mirror
the progrowth examples we have in the State of Georgia.
That is why House Republicans passed the One Big Beautiful
Bill Act, which incentivizes domestic medical supply production
by rewarding companies that build their products in America,
like USAntibiotics, who is the last remaining end-to-end
domestic U.S. manufacturer of amoxicillin, the most prescribed
antibiotic in the country.
This is about protecting American lives, empowering
American workers, restoring American sovereignty, and
reenforcing U.S. leadership in medical innovation.
China is not our friend. Ladies and gentlemen, China is not
our friend. Every product component that then turns into a vial
of medicine or a piece of medical equipment that is made in
China is a missed opportunity to strengthen our economy and
protect our people.
It is time to act. We need to view pharmaceutical and
healthcare supply chain independence just as we are viewing
energy independence.
I am proud to stand with President Trump and all those
committed to putting America first in our healthcare system,
starting with the medicines we rely on every day.
[The prepared statement of Mr. Carter of Georgia follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Carter of Georgia. I now recognize the gentlelady from
Colorado, Representative DeGette, for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. DIANA DeGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you so much, Mr. Chairman.
I do agree with you that China is not our friend. But,
however, it is hard to take this administration seriously on
this issue when they are firing hard-working public servants
who support generic drug approvals, facility inspections, and
initiatives that help companies make products in America,
because that will just cause a longer delay.
I do want to say the COVID-19 pandemic laid bare the
challenges of our medical supply chain, but, unfortunately, Mr.
Chairman, as you mentioned, our reliance on foreign supply
chains for critical medical products has been a problem for
decades, as you said, much longer since 2020.
We have a system that is great at producing cheap generic
drugs and basic supplies, but we do not have a system that is
great at encouraging a resilient supply chain that we can
always count on.
I believe everybody in this room wants to be serious and
come up with serious solutions to ensure a secure, reliable
medical supply chain.
During the COVID pandemic, everybody in the world needed
the same products at the same time, and manufacturing was
severely disrupted. The problems with COVID put this problem
into sharp relief because there were too many single points of
failure, there was an inability to quickly shift manufacturing
to critical products, and, as you said, there was an
overreliance on unreliable foreign countries among them. That
has all been long simmering.
So I think it is past time we work together to stop the
endless cycle of shortages of critical medicines and ensure
that we will have a reliable supply of medical products.
This committee considered legislation last Congress to
address the supply chain and how it relates to drug shortages.
This includes legislation from the former chairwoman of this
subcommittee, my predecessor, Anna Eshoo, to ensure that we
better understand where the active ingredients for these drugs
are coming from.
The bill, the Drug Origin Transparency Act, is so important
because only 12 percent of active pharmaceutical ingredients
globally are made in the United States.
We also, of course, need to reauthorize the Pandemic and
All-Hazards Preparedness Act, one of the major tools we have to
invest domestically in medical countermeasures.
Some PAHPA-authorized programs, like the Biomedical
Advanced Research and Development Agency, have made it possible
for innovative manufacturers to help the American people
prepare for public health emergencies.
And I know I have friends on the other side of the aisle
who are working very closely to try to get this PAHPA
reauthorization into this committee for hearing and markup and
onto the floor.
And the Strategic National Stockpile can be used to help
support domestic manufacturers and secure the supply chain by
focusing on resiliency.
Our hospitals can also be part of the solution. Hospitals
are major medical supply purchasers, and they need to be at the
table to encourage and reward domestic production and secure
supply chains.
But, frankly, as I mentioned, I am troubled by the
discordance between this committee's other work this Congress
and our work today on supply chains. For example, the more we
squeeze hospitals, particularly rural hospitals, the less they
will be able to do to spend a few extra dollars on buy
American.
If we kick off millions of people from Medicaid under the
Republicans' reconciliation bill, that will result in an
additional $42.4 billion in hospital uncompensated care costs
in 2034.
Let me say that again: If this bill actually passed the way
it passed from this committee in the House, there would be an
additional $42.4 billion in hospital uncompensated care costs
in 2034. That would translate into hundreds of billions of
dollars of care hospitals will have to swallow in the next 10
years.
I don't think that that is going to make hospital
procurement offices more able to consider the source of the
antibiotics they are buying. Instead, what it does is it makes
them even more likely to go with the cheapest option regardless
of where it came from or any downstream consequences.
So I implore my Republican colleagues to consider all of
the consequences of their Medicaid cuts, not just throwing 16
million, or however many, people off of healthcare.
A resilient supply chain will become less popular as we
squeeze care for hard-working Americans, and especially rural
and otherwise underresourced hospitals that provide us with
that care.
So I want to thank you again, Mr. Chairman, for having this
hearing. And I will yield back.
[The prepared statement of Ms. DeGette follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Carter of Georgia. The gentlelady yields.
The Chair now recognizes the chairman of the full
committee, Chairman Guthrie, for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Guthrie. Thank you, Chairman Carter and Ranking Member
DeGette, for this hearing.
I appreciate all the witnesses for being here today.
During this hearing we will be hearing from expert
witnesses regarding the current state of our supply chain and
opportunities and challenges to strengthen our domestic
manufacturing capacities and infrastructure.
Efforts to bring capacity back home to the United States
are critical to protecting our national security as well as
ensuring access to safe, secure, and reliable medicines and
healthcare products for Americans.
Over the years, countries like India and China have
continued to grow more influential in research, development,
and manufacturing of medical products. Globally, this has led
many countries, including the United States, to be reliant on
international sources for the production of certain medicines
and other health products and supplies.
The reasons for this evolution are incredibly complex,
involving both workforce and development and manufacturing cost
considerations, differing incentive structures, strategic
location selections, operational risk, as well as associated
regulatory burdens or corresponding flexibility, just to name a
few.
While the reasons are complex, the staggering reality that
our current domestic supply chain is largely reliant on
international forces is remarkably clear, and one that we must
address.
According to recent data, about half of all the APIs, or
active pharmaceutical ingredients, for prescription medicines
in the U.S. come from India and the European Union. In
addition, India controls the majority of production volume for
most oral tablets and capsules.
Meanwhile, China is an exclusive manufacturer of certain
APIs and essential medicines while remaining a dominant
supplier of key starting materials, the pieces of the puzzle
that often go to contribute to API.
Thus, it is fair to say the U.S. remains reliant on several
international partners for many varied pieces of the supply
chain that eventually come together to produce the products
that land in our medicine cabinets, our doctors' offices, and
are used in our hospitals.
Our healthcare supply chain involves many components and
important players, from the groundbreaking research to the raw
material suppliers, product manufacturers and distributors and
purchasers, all the way to the patient.
We look forward to hearing from the experts in front of us
today to provide their perspective and shed light on the
nuances of this supply chain and the role their entities play,
shed light on vulnerabilities, and discuss possible
opportunities and solutions.
With decreased reliance on China and other nations, we can
help to foster a more sustainable, resilient, and predictable
healthcare supply chain, bolstering our domestic manufacturing
and promoting the safety of our medicines and the security of
our country.
It is important to remember the national advancements in
medicine already being made right here at home. For example,
from 2018 to 2022, the biopharmaceutical industry increased
capital investments in their facilities, equipment, and
infrastructure by more than 72 percent, more than $126 billion
towards U.S. advanced manufacturing.
To put this into perspective, the only industry who
exceeded this was motor vehicles.
In terms of innovation, the biopharmaceutical industry
increased their research and development by more than 58
percent at the same time.
In fact, 46 percent of the 643 novel drugs that have been
approved globally over the last decade are as a result of
American companies' involvement in the discovery, patent, or
clinical research process. This is twice as much as Europe.
I look forward to hopefully hearing more about some of
these district stories from members of the committee as well as
our witnesses, and I look forward to having our witnesses
testify today.
And I yield back.
[The prepared statement of Mr. Guthrie follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Dunn [presiding]. Thank you.
I now recognize the ranking member of the full committee,
Mr. Pallone, for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Today committee Republicans want to discuss healthcare
supply chains while the Trump administration is unleashing
chaos and harm on our public health infrastructure.
The latest dangerous action by this administration came on
Monday when Secretary Kennedy fired all 17 medical experts of
the Advisory Committee for Immunization Practices, the
committee that advises our Nation on immunization practices.
This action puts the health and well-being of the American
people, especially our Nation's children, at extreme risk. It
undermines vaccine safety and politicizes research and also
politicizes science. And it is all being done so RFK, Jr., can
stack the panel with a bunch of antivaccine people.
And also on Monday, 342 of the top scientists at the
National Institutes of Health signed a letter to the NIH
Director detailing unprecedented waste, abuse, and illegality
at NIH under the Trump administration.
The letter also addresses the harmful consequences of these
actions on our Nation's ability to improve and save lives
through scientific breakthroughs.
This was really an unprecedented action by these employees
who must feel they have no other options at this point than to
go public.
Now, each of these actions warrants a hearing here in this
committee, and yet Republicans on the committee remain silent,
blindly following the Trump administration as it decimates our
public health infrastructure.
This committee has yet to hear from the Secretary of HHS.
We have yet to hear from the NIH Director. I know Republicans
plan a budget hearing with Secretary Kennedy later this month,
but he has caused so much destruction at HHS already that one
hearing focused on the budget is not going to be sufficient. He
must answer separately for the dangerous actions he has taken
to undermine vaccines.
And rather than demanding answers of this administration,
congressional Republicans are plowing ahead with their Big Ugly
Bill that rips healthcare away from 16 million people so they
can give giant tax breaks to billionaires.
Committee Republicans want to talk about strengthening
domestic manufacturing and the healthcare supply chain.
However, it is difficult to have a discussion about the supply
chain without acknowledging the disruption, confusion, and
uncertainty that the Trump tariff policies have caused, as well
as the deep budget cuts the administration has proposed to the
FDA.
I don't understand how congressional Republicans intend to
square their desire to onshore manufacturing and bolster the
domestic supply chain while eliminating nearly 2,000 jobs at
FDA and proposing an 11 percent budget cut.
FDA employees are the ones who inspect foreign and domestic
manufacturing facilities, approve branded and generic drugs,
and ensure that medical products are safe and accessible for
the people who rely on them. FDA staff have said the layoffs
have resulted in drug safety work being stalled and inspections
falling behind.
And that is the hearing we should be having. We should be
conducting robust oversight on the implications of these
actions, what it means in the short term for preparedness and
response, what it means in the long term for American
innovation and our ability to lead on a global scale. Both are
threatened under the Trump administration's policies.
And if Republicans are really interested in strengthening
domestic manufacturing and the healthcare supply chain, they
would work with Democrats to ensure FDA has the resources and
authorities it needs to ensure the medical products Americans
rely on are safe, effective, and available.
FDA needs additional tools, resources, and authorities, not
less, to address drug shortages and strengthen the supply
chain.
Now, last Congress, Democrats put forward several bills
that would bring greater transparency and resiliency to the
supply chain, but Republicans refused to act on them. They also
walked away from a bipartisan reauthorization of the Pandemic
and All-Hazards Preparedness Act after Elon Musk blasted the
overall package it was included in.
There is a lot of work to be done here, Mr. Chairman, to
protect our supply chain, mitigate drug shortages, and ensure
we are better prepared for the next pandemic.
However, unless and until the Trump administration chooses
to end its dangerous crusade against public health, against
biomedical research and vaccines, it is not possible to do the
things that supposedly this hearing is about with the supply
chain.
It is time that the administration and Republicans
understand that these policies and solutions are all
intertwined. You can't separate them. You can't talk about the
supply chain and mitigating drug shortages and at the same time
fire people at FDA, limit the resources that go to FDA, and all
the other chaos that this administration is creating.
And with that, I yield back the balance of my time, Mr.
Chairman.
[The prepared statement of Mr. Pallone follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Dunn. This concludes Member opening statements. The
Chair would like to remind Members that, pursuant to committee
rules, all Members' opening statements will be made part of the
record.
We want to thank all of our witnesses for being here today
and taking time to testify before the subcommittee.
Our witnesses today are Mr. Patrick Cashman, president,
USAntibiotics; Mr. John Murphy, president and chief executive
officer of the Association for Accessible Medicines; Dr. Ronald
T. Piervincenzi, chief executive officer, United States
Pharmacopeia; Ms. Dawn O'Connell, former Assistant Secretary
for Preparedness and Response; and Mr. Josh Bolin, associate
executive director, Government Affairs and Innovation, of the
National Association of Boards of Pharmacy.
Per committee custom, each witness will have the
opportunity for a 5-minute opening statement, followed by a
round of questions from Members. The light on the timer in
front of you will turn from green to yellow when you have 1
minute left.
I now recognize Mr. Patrick Cashman for 5 minutes to give
an opening statement.
STATEMENTS OF PATRICK CASHMAN, PRESIDENT, USANTIBIOTICS; JOHN
MURPHY III, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION
FOR ACCESSIBLE MEDICINES; RONALD T. PIERVINCENZI, Ph.D., CHIEF
EXECUTIVE OFFICER, UNITED STATES PHARAMACOPEIA; DAWN O'CONNELL,
FORMER ASSISTANT SECRETARY FOR PREPAREDNESS AND RESPONSE; AND
JOSH BOLIN, ASSOCIATE EXECUTIVE DIRECTOR, GOVERNMENT AFFAIRS
AND INNOVATION, NATIONAL ASSOCIATION OF BOARDS OF PHARMACY
STATEMENT OF PATRICK CASHMAN
Mr. Cashman. Chairman Carter, Ranking Member DeGette,
distinguished members of the subcommittee, thank you for the
opportunity to speak today. My name is Patrick Cashman. I serve
as president of Bristol, Tennessee-based USAntibiotics, which
is the last remaining end-to-end U.S. manufacturer of
amoxicillin.
The facility I lead has supplied life-saving medicine to
American patients for more than 40 years. Until 2008, every
U.S. prescription of amoxicillin was produced at our Bristol
plant. But after years of escalating subsidized competition
from Indian and Chinese generic drugmakers, the facility's
previous owners filed for bankruptcy in 2020. By the time our
production lines went dark that year, the U.S. had become
entirely reliant on foreign-origin amoxicillin.
In 2021, USAntibiotics was rescued from bankruptcy by
private American investors who recognized the national security
imperative of antibiotic production. Since then, we have
created new jobs, invested tens of millions of private capital
into reactivating production lines, and reentered the
commercial market.
I feel privileged to play a role in this important story,
and I look forward to sharing more with you about our
experience.
Without antibiotics, routine surgeries and common
infections can become fatal. Our Nation's health security,
military readiness, and emergency preparedness all hinge on
reliable antibiotic access.
Amoxicillin alone accounts for approximately 50 million
U.S. prescriptions annually, making it the most prescribed
antibiotic. After dropping to zero in market share in 2020,
USAntibiotics now has about 5 percent market share.
If our facility were to shut down permanently, it would
take no less than 5 years and hundreds of millions of dollars
to construct a new facility capable of producing amoxicillin.
That would be at least half a decade in which the U.S. would be
entirely reliant on other countries for the most commonly
prescribed antibiotic.
Our company and other U.S. generic drugmakers like us face
three primary challenges:
One, unfair foreign subsidies, labor practices, and lax
regulatory oversight. One 2022 study found that a lack of
Chinese and Indian regulatory enforcement allows their
drugmakers to cut as much as 25 percent off their cost.
Two, a lack of long-term government purchasing commitment.
Most buyers prioritize cost over reliability or origin. Unlike
defense contractors, which often operate under multiyear
contracts, U.S. drugmakers of critical generic medicines are
vulnerable to market fluctuations.
Three, a lack of recognition for critical drugs' national
security relevance. Generic antibiotics are not treated as
strategic assets like weapon systems or critical minerals. This
means manufacturers cannot access all of the same financing
tools, tax incentives, or industrial base support programs
available to other domestic producers of critical goods.
Today, my colleagues in Bristol will manufacture
approximately 700,000 doses of amoxicillin before their shift
ends, but we operate on razor-thin margins. Despite our
strategic importance, we receive no Federal subsidies, Federal
prime contracts, or protection from predatory pricing.
Since January 2023, the U.S. Government has spent $900,000
on USAntibiotics products through the Federal Supply Schedule
system. However, during roughly the same period, HHS spent
approximately $40 million to purchase foreign-origin
amoxicillin for the Strategic National Stockpile.
To ensure the U.S. is never again dependent on China and
India for amoxicillin, I humbly submit four policy
recommendations for your consideration:
One, incentivize long-term purchasing agreements. To
establish predictable demand companies like USAntibiotics
require to scale and grow, encourage Federal agencies to enter
a multiyear contract with domestic producers of essential
medicines.
Two, implement domestic preference policies. The U.S.
Government should establish a buy-American requirement for
antibiotics purchased with Federal funds when a U.S.
manufacturer exists.
Three, create a strategic antibiotic manufacturing fund.
Provide targeted grants, low-interest loans, and tax incentives
to companies investing in domestic production.
Four, enforce trade rules to counter predatory pricing. The
Department of Commerce and USTR should leverage existing
authorities to penalize unfair trade practices in the
antibiotic sector.
We support the ongoing Section 232 investigation regarding
national security effects of imports of pharmaceuticals and
pharmaceutical ingredients.
USAntibiotics stands ready to play its part to secure the
U.S. antibiotic supply chain for the 21st century. We have the
infrastructure and we have the expertise. But we need this
Congress to act.
Thank you for the opportunity to testify. I look forward to
your questions.
[The prepared statement of Mr. Cashman follows:]
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Mr. Carter of Georgia [presiding]. Thank you, Mr. Cashman.
The Chair now recognizes Mr. John Murphy III for 5 minutes
to give an opening statement.
STATEMENT OF JOHN MURPHY III
Mr. Murphy. Chairman Carter, Ranking Member DeGette,
members of the subcommittee, thank you for inviting me to
discuss how we can strengthen domestic pharmaceutical
manufacturing and secure our supply chain.
My name is John Murphy, president and CEO of the
Association for Accessible Medicines. We represent the
companies that supply more than 90 percent of U.S.
prescriptions to American patients while accounting for just
over 13 percent of total U.S. drug spending.
American families depend on affordable generic and
biosimilar medicines. Yet the supply chain that delivers these
medicines is under increasing pressure and in some parts is
already fracturing.
The total value of sales of generic and biosimilar
medicines has stagnated for more than a decade, and the
economic footprint of U.S. generics has shrunk by $6.5 billion
over the past 5 years despite growth in volume and the
availability of many new medicines.
Production has increasingly evolved globally due to the
competing economies seeking to bolster their own health
security and access and the declining incentive structures and
reimbursement potential here in the United States.
To be more specific, four key challenges face our industry
and its growth in the United States:
We have no comprehensive national strategy or real
incentives for production. The CHIPS Act, as an example,
incentivized domestic manufacturing of semiconductors and
showed what a bold industrial policy looks like.
Reimbursement policies continue to underprice essential
drugs. For sterile injectables in particular, a race-to-the-
bottom competitive environment drives prices for indispensable
medicines below sustainable levels and often rewards higher-
price brands over generics.
We have labor shortages. According to a recent HHS-
sponsored report, the U.S. faces a shortage of workers with the
requisite expertise to work in our sector, and more than half
of specialized manufacturing jobs go unfilled.
Slow permitting and regulatory barriers also add. It can
take 5 to 7 years to build a new plant and 3 to 5 years to add
a single production line.
That is the bad news.
The good news is that Congress can help. Congress can
reverse these trends with commitments built on nine pragmatic
steps:
First, we should create guaranteed purchase contracts for
essential medicines. Fixed-volume, fixed-price agreements,
structured to encourage multiple suppliers, would give
manufacturers the revenue certainty to build or reopen capacity
here in the United States.
Second, we should expand the Strategic National Stockpile
to include finished drugs and other active ingredients.
Third, fund grants to defray relocation and retrofitting
costs of existing dormant capacity.
We should provide targeted tax incentives. A 50 percent
credit on capital costs for domestically producing essential
medicines, a simplified 20 percent R&D tax credit, relief for
bioequivalent studies and FDA user fees, and wage credits for
U.S. production would narrow the cost gap with overseas labor
and energy.
We should streamline FDA regulatory review of new complex
generics and biosimilars.
We should look to invest in domestic API capacity. Many
other countries, like Austria and South Korea, have invested
heavily to support their own API production. The U.S. can and
should pursue similar strategies that cluster suppliers and
reduce barriers to scale.
We should appropriate multiyear funding equal to the
strategic value of medicines to the United States, comparable
to commitments made in the CHIPS Act.
We should look to curb anticompetitive brand patent tactics
that delay generic entry by limiting serial patents and
preserving the ability to reach procompetitive settlements.
And last, we should reform Medicare and PBM practices that
steer patients to higher price brands and protect prolonged
brand monopolies.
These measures are not theoretical. They mirror the tools
that secured domestic production of semiconductors and personal
protective equipment. Applying them to medicines will expand
U.S. manufacturing, enhance national security, and preserve
access to affordable treatments for every patient.
Let me close with two realities.
First, the United States has dormant capacity. With the
right incentives, existing facilities can restart lines faster
than we can build new plants.
Second, rebuilding resilience will require some patience.
Capital investments, ingredient qualification, validation, and
FDA inspections take time. But the sooner we begin, the sooner
patients, hospitals, and our military will benefit.
Generic and biosimilar medicines are not just cost savers,
they are lifelines. With strategic, sustained support, we can
reenforce that lifeline at home, reduce reliance on any single
foreign source, and create skilled jobs across our communities.
I appreciate the subcommittee's attention to this urgent
issue and look forward to working with you to turn these
proposals into law.
Thank you.
[The prepared statement of Mr. Murphy follows:]
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Mr. Carter of Georgia. Thank you, Mr. Murphy.
The Chair now recognizes Dr. Ronald Piervincenzi. Is that
pretty good?
Dr. Piervincenzi. That is pretty good. Thank you.
Mr. Carter of Georgia. You know, I try to get staff to get
Smith and Jones, but they get all these other people here. So I
have directed them, ``Don't have any witnesses unless it is a
Smith or a Jones.''
[Laughter.]
STATEMENT OF RONALD T. PIERVINCENZI, Ph.D.
Dr. Piervincenzi. Thank you, Chairman Carter, and thank
you, Ranking Member DeGette, members of the committee, for this
opportunity to provide testimony on strengthening the domestic
manufacturing and the healthcare supply chain.
I am Ron Piervincenzi, chief executive officer of the
United States Pharmacopeia, better known as USP.
USP is an independent scientific global nonprofit
organization founded on January 1 of 1820 when 11 physicians
concerned about patient safety and poor-quality imported
medicines from England came together to create the first
national pharmacopeia in the world.
Today, USP works with hundreds of independent experts to
set 6,000--over 6,000 quality standards for the entire medicine
supply, including dietary supplements--and also their
ingredients, importantly. In addition, we have developed
verification services to ensure the quality of ingredients, a
program to test the quality of pharmaceutical products from the
marketplace, and initiatives to accelerate adoption of advanced
pharmaceutical manufacturing technologies.
All of this work is in service of USP's mission to help
strengthen the global supply chain so that medicines people
rely on are available when needed and meet quality standards as
expected and required.
USP launched an ambitious initiative in 2019 to map and
analyze the global medicine supply chain. The resulting data
platform, known as the Medicine Supply Map, now tracks 94
percent of U.S. drug products and ingredients wherever they are
manufactured in the world. It identifies vulnerabilities in our
supply chain and helps guide smarter investments by both the
private sector and, hopefully, targeted interventions by
policymakers.
So what have we learned from this extensive mapping?
Globalization has indeed enabled the manufacture of generic
medicines at lower cost, but it has clearly made our supply
chains longer, more fragmented, and more opaque.
So a few facts:
Over 80 percent of key ingredients and raw materials used
in U.S. medicines are manufactured abroad today, and many in
just a handful of locations. India supplies more than a third
of all U.S. prescription drug APIs. But China's API filings
have risen 63 percent just over a 2-year period from 2021 to
2023, now comprising a third of new global filings on a go-
forward basis.
This geographic concentration is one key driver of
vulnerability.
Using our data, USP has identified 100 vulnerable medicines
that are both at high risk for disruption and difficult to
substitute therapeutically. Pharmacists will understand that
one.
Right now, the supply of our most essential medicines,
nearly all of which are generics, remain highly sensitive to
geopolitical tensions, disasters, pandemics, and, importantly,
market dynamics that drive often the most reliable
manufacturers to exit the market for individual drugs.
The result is an increasingly fragile supply chain that
jeopardizes not just patient care but national security.
To reduce these risks and improve resiliency, we have
identified four key recommendations which can also serve as
pillars to guide Congress' support for domestic manufacturing:
The first is to continuously identify the Nation's most
vulnerable medicines, to leverage that data to pinpoint the
factors most responsible for supply risk, and target
interventions where the data shows the risk is most imminent.
The second is supporting the innovation in U.S.
manufacturing technologies, reducing the barriers for new novel
methods for producing pharmaceutical ingredients, including key
starting materials as well as APIs.
The U.S. is actually quite well positioned to lead on
breakthrough technologies, including advanced manufacturing,
and to find alternative synthesis pathways for those APIs. That
can help reduce our reliance on overseas suppliers and enable
us to domestically manufacture medicines and their ingredients
more efficiently and more competitively.
A third is to establish a resiliency benchmark for the
purchase of vulnerable medicines. We must rethink how we value
essential generic drugs, which account for more than 90 percent
of medicines that Americans rely on but represent less than 20
percent of our spending on medicines.
USP and other stakeholders have proposed establishing a
resilience benchmark to help shift the paradigm to empower and
incentivize public- and private-sector purchasers to value
resiliency and predictability.
Fourth, expand the supply chain visibility by leveraging
tools like the USP Medicine Supply Map. Expertise like this is
essential to unravel complicated supply chains and provide the
risk management intelligence. We can pinpoint vulnerabilities
so that we can also pinpoint solutions.
The fragile supply chain is a problem we can and should
solve, and with confidence. In fact, we must work to forge a
more resilient, adaptable, and secure future for America's
medicine supply because the well-being of millions of people
and our Nation's security does depend on it.
USP thanks the committee for convening this discussion on
this urgent issue that affects so many of my fellow Americans
and their healthcare providers.
I look forward to answering your questions. Thank you.
[The prepared statement of Dr. Piervincenzi follows:]
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Mr. Carter of Georgia. Thank you, sir.
The Chair now recognizes Ms. Dawn O'Connell for 5 minutes
for an opening statement.
STATEMENT OF DAWN O'CONNELL
Ms. O'Connell. Thank you, Chairman Carter and Ranking
Member DeGette. I am pleased to have this opportunity to
testify before you today on the need to strengthen domestic
manufacturing and the public health and medical supply chain.
I served in the previous administration as the Assistant
Secretary for Preparedness and Response. My job was to help the
country prepare for, respond to, and recover from public health
emergencies and disasters.
Much of this work was focused on making sure the country
had the tools it needed to respond to whatever emergency was at
hand. As a result, having a resilient public health and medical
supply chain was always a concern of mine, but over the last 4
years it became a mission.
We must never forget what Ranking Member DeGette mentioned,
those early days of COVID when the whole world needed the exact
same medical supplies at the exact same time, and most of them
were manufactured somewhere else.
The Strategic National Stockpile had limited stores of
usable PPE, the last pieces purchased 10 years prior during the
H1N1 outbreak. Also, the amount of PPE manufactured in the
United States was limited, and much of it was manufactured just
in time with little surge capacity.
As a result, our frontline healthcare workers were forced
to wear garbage bags and used empty soda bottles for PPE.
When I began my work at ASPR in 2021, two things were clear
to me.
First, we needed enough supplies in the Strategic National
Stockpile to get the country through the first 90 days of an
emergency.
And second, we needed a manufacturing base in the United
States with enough capacity that could quickly ramp up to meet
demand after those first 90 days.
And so we got to work.
The first Trump administration began the work of investing
in domestic manufacturing of critical PPE and medical supplies.
We continued that work when we came in.
And over the course of the COVID response across both
administrations, ASPR invested in the domestic manufacture of
masks, gloves, gowns, tests, as well as ancillary equipment,
such as swabs and vials.
Under my leadership, I established ASPR's supply chain
office to manage our domestic manufacturing efforts. I elevated
the Strategic National Stockpile to direct report to me, and I
restocked its depleted shelves with domestically manufactured
supplies whenever possible.
As the country emerged from the acute COVID PPE and medical
supply shortages, our team expanded its efforts to invest in
the domestic manufacturing of active pharmaceutical ingredients
and key starting materials for the medicines that are most
needed in public health emergencies.
Expanding the healthcare manufacturing base in the United
States takes time, attention, and a coordinated effort across
the Government. We ran into several challenges that ASPR and
HHS alone could not solve but required the support and
engagement of other parts of government.
And despite our efforts, some of the companies we invested
in were unable to survive the waning demand for PPE that
quickly followed the ending of the acute phase of the COVID
response.
But despite these challenges, I think we have an
opportunity. The previous two administrations initiated much of
their supply chain work during times of emergency and acute
shortage. There is an opportunity now that we are not in a
crisis to take a look at what has worked and what has not and
consider a comprehensive framework for securing our public
health and medical supply chain.
This framework should first clearly identify: What is the
public health and medical supply chain? What is in it that
needs to be available and ready to use on day one of an
emergency?
It should promote investment in the domestic manufacture or
near-shoring of whatever those products are.
It should have a strategy to ensure there is a market for
those products in both peacetime and times of emergency.
And the strategy should take into account government
incentives, thoughtfully applied tariffs, and stockpiles of
vendor-managed inventory, and it should build enough domestic
manufacturing that manufacturers can surge production quickly
in times of emergency.
Ensuring a resilient and secure domestic supply chain is a
nonpartisan issue. In fact, it is a place, despite deep
partisan divisions around public health, where both the Biden
and first Trump administrations found agreement.
We owe it to our frontline healthcare workers to make
progress on this important issue before the next public health
emergency so they never have to wear garbage bags for PPE
again.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. O'Connell follows:]
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Mr. Carter of Georgia. Thank you, Ms. O'Connell.
The Chair now recognizes Mr. Josh Bolin for 5 minutes to
give an opening statement.
STATEMENT OF JOSH BOLIN
Mr. Bolin. Health Subcommittee Chairman Carter, Ranking
Member DeGette, members of the subcommittee, thank you for the
opportunity to testify today about the state of the U.S. drug
supply chain.
NABP is a 501(c)(3) nonprofit association that for over 120
years has protected public health by assisting our member
boards of pharmacy in all 50 States that have the
responsibility for regulating the practice of pharmacy as well
as the prescription drug supply chains within their States.
With my testimony today, I will highlight some of the
emerging safety threats to both the regulated and unregulated
supply chains for products as they move closer to patients.
As the subcommittee is aware, the Drug Supply Chain
Security Act passed into law in 2013 and provided a phased
window of implementation for the pharmaceutical supply chain to
achieve interoperable data sharing and electronic tracing of
products to prevent dangerous products from reaching patients.
The DSCSA provides essential tools that trading partners in
the supply chain and State and Federal regulators can utilize
to detect unsafe medications.
First, products now have to be serialized down to the
individual saleable unit, meaning that there is a unique
identifier for each product, and product packaging contains a
2D barcode that can be scanned.
Once the product is scanned, trading partners and
regulators can ask about the legitimacy of that product's
identifiers or who owned that product previously.
The U.S. supply chain now generates 16 to 20 billion
transactions per year, and given this massive amount of data,
NABP started working with our member boards of pharmacy and all
sectors of the supply chain to conduct pilots that led to the
development of Pulse by NABP, which is NABP's digital platform
for DSCSA that we launched in January.
The best way to think about Pulse is that it is a directory
for all the manufacturers, distributors, and pharmacies in the
supply chain as well as all the products that move through the
supply chain.
Utilizing Pulse, regulators and trading partners can scan
the 2D barcode of a product and ask questions of trading
partners about that product.
NABP is providing the tools to our members and to every
pharmacy in the supply chain at no cost. We are doing so
because the tools of DSCSA only work if they are accessible and
easy to use.
We rolled out Pulse to our member boards in mid-January,
and as it happens, the very first scans that were conducted out
in the field utilizing Pulse helped the Arkansas and
Mississippi Boards of Pharmacy in identifying illegitimate and
counterfeit GLP-1 medications that had actually made their way
into our legitimate supply chain.
From a congressional perspective, DSCSA worked, but it
illustrated that our supply chain is still susceptible to
illegal actors.
Since January, we have nearly 30 States utilizing the tool,
and not just boards of pharmacy but other regulatory
authorities, such as attorneys general and Drug Enforcement
Administration field offices.
While we have made progress, and implementation of DSCSA
helps, we still face challenges and threats to supply chain
security.
First, regarding medications offered over the internet.
NABP has a host of resources we can share about the dangers of
purchased medications over the internet.
But our primary highlight is that in that work we estimate
that 96 percent of online pharmacies in operation at any given
time are illegal and in violation of State and Federal law. And
research shows that the majority of Americans falsely believe
that websites offering prescription medications have been
approved by the FDA or by the boards of pharmacy. People
increasingly trust that medications on the internet are safe
and regulated, but, unfortunately, that is not always the case.
Second. NABP's members have flagged a disturbing trend in
the loosely regulated space of med spas. For example, one State
board uncovered an operation where a med spa had been set up in
an individual's home where compounding--and I use that
loosely--or mixing of purported GLP-1 medications with vitamin
B12 in their bedroom, hardly a sterile environment.
The med spa was compounding, using active pharmaceutical
ingredient that was obtained not from an FDA-registered API
manufacturer but from an international online source
advertising cheap weight loss APIs. The med spa simply mixed
these ingredients, drew it up in syringes, and then mailed them
to individuals in plastic bags.
This is just one example from a State that actually has
authority to regulate these types of entities. And,
unfortunately, we know activities like this are going on in
every State, but most State boards lack the authority to
actually do anything about it.
So while there are absolutely legitimate sources for
obtaining medications over the internet, unfortunately, bad
actors are using internet platforms to peddle medications,
putting profits over safety. And to be clear, legitimate
compounding plays an essential role in our supply chain to
ensure patients have access to medications they need that
aren't commercially available.
But those that are simply mixing medications in their
bedroom or in their bathroom in nonsterile environments and
calling it "compounding" are a threat to legitimate practice.
Given the popularity of certain medications, those who
believe they can make a dollar over demand for a popular
medication will do so irrespective of the harm it causes to
patients.
I would like to once again thank the committee for their
time and attention. I will look forward to your questions.
[The prepared statement of Mr. Bolin follows:]
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Mr. Carter of Georgia. Thank you, Mr. Bolin.
And thank all of you for your testimony.
We will now begin questioning, and I will recognize myself
for 5 minutes of questioning.
As has been established here already, America has found
itself entrenched in an issue that poses a threat to our safety
and our national security. China has become our pharmacist. I
practiced pharmacy for almost 40 years. Now I have been
replaced by China.
Seriously. China has become our pharmacist. China decides
whether Americans have the prescription and over-the-counter
drugs we need to get and stay healthy.
That is why we are having this hearing today, so that we
can examine the policies that bolster our domestic
pharmaceutical supply chain.
Before our committee today is USAntibiotics, who is the
only--the only--U.S. manufacturer of amoxicillin and Augmentin.
Based in Bristol, Tennessee, USAntibiotics operates a
world-class antibiotic production facility with the sole focus
of affording patient access to quality life-saving medications
and antibiotics, securing critical domestic supply chains, and
creating good-paying jobs.
Despite USAntibiotics' critical importance to our supply
chain and national security, previous administrations didn't
prioritize these American-made products. In fact, previous
administrations prioritized foreign-sourced amoxicillin over
American-made amoxicillin.
Thankfully, President Trump has prioritized American-made
medicines and issued an Executive order promoting American-made
pharmaceutical manufacturing to reduce our reliance on
adversarial countries.
Mr. Cashman, in your testimony you mentioned that we should
treat generic drugs the same way as we treat military weapons
systems or critical minerals. Can you explain the rationale for
that?
Mr. Cashman. Thank you, Chairman Carter.
Yes, absolutely. Approximately 45 percent of the global
amoxicillin API production----
Mr. Carter of Georgia. Can you bring that microphone closer
to you?
Mr. Cashman. Excuse me.
Approximately 45 percent of the global amoxicillin API
production capacity is concentrated in China. Even though China
isn't the leading global exporter of our finished form of
amoxicillin, they supply upwards of 70 percent of the
amoxicillin API that Indian drugmakers use.
In addition, one should note that 80 percent of the key
starting materials used for the production of API, amoxicillin
API, is also produced in China.
So China has a stranglehold on amoxicillin production
globally.
Mr. Carter of Georgia. Let me ask you something. There was
a study done in 2025 that found that Indian-made generics were
54 percent more likely to cause severe adverse effects than
made-in-America drugs.
Can you describe any documented quality differences between
domestic- and foreign-manufactured antibiotics?
Mr. Cashman. Yes. In this study that was done by Ohio State
that you mentioned, Chairman Carter, 54 percent effect was--
there were 54 percent more severe adverse events in medications
from China than medications--the same--very same medications
produced in the United States.
In addition, there have been cases of contamination with
carcinogens. In 2019, there was a case of carcinogens being in
blood pressure medications. And there have been numerous other
situations like this.
Mr. Carter of Georgia. And this is one thing we want to
look at in the future on this committee as well--on this
subcommittee and this committee--and that is the FDA
investigating and looking at these foreign manufacturers.
If Congress would act on the recommendations today, how
quickly could we--could our domestic capacity expand? If we
were to act on this, how quickly could we get this up and
running?
Mr. Cashman. With the right policy framework, we could
significantly expand production within 18 to 24 months. And let
me explain that a little bit.
We are currently running three active production lines. We
have two crews on first shift and another crew on second shift.
By simply adding new crews, adding shifts, so we can have three
shifts per day on each line, we could dramatically increase our
production.
In addition, we have over 11 production lines--or excuse
me--nine production lines. So we can add additional new
production lines as well.
So in a time period of 18 to 24 months, we could increase
our production significantly.
Mr. Carter of Georgia. So can we work with our allies to
reduce dependence on China without going totally domestic? I
mean, friend-shoring, offshoring, that would help as well,
correct?
Mr. Cashman. Absolutely that would help. But we have to
keep in mind here that in working with our allies, that many of
them have supply chain vulnerabilities as well. They don't have
the capacities to supply all of the U.S. market as well as the
European market, for example.
Mr. Carter of Georgia. Right.
Mr. Cashman. So those are situations we have to look at
each specific case.
Mr. Carter of Georgia. OK.
I am out of time. Thank you very much for that, Mr.
Cashman.
I now recognize the ranking member of the subcommittee,
Representative DeGette, for 5 minutes of questioning.
Ms. DeGette. Thank you so much, Mr. Chairman.
Well, I have got to say, we are all alarmed about this
issue. I was alarmed to find out that my local hospitals didn't
have IV fluids and other essential medications. And we can
easily see how tenuous this makes our whole healthcare system.
So I want to start with you, Dr. Piervincenzi.
In the 2025 Annual Drug Shortages Report, the USP
identified four factors that contribute to and drive medication
shortage. Can you briefly restate what those risk factors are?
Dr. Piervincenzi. Thank you, Ms. DeGette. I appreciate that
question.
So the report did a retrospective analysis of that broad--
Ms. DeGette. And what the four--briefly--what were those
four areas?
Dr. Piervincenzi. Yes. So first was price. And by first, I
mean the thing that was most highly correlated to supply
disruptions. In this case, of course, low price for generic
drugs, too low of a price.
The second was quality. In this case, it was quality
disruptions. Bad inspections, poor quality medicines that
resulted in discontinuities.
Third was geographic colocation. So this has different
factors, including geopolitical, but also, of course, weather,
weather events. We are familiar with many examples.
And the--excuse me--on the fourth--oh, and of course
complexity. You were mentioning the IV bags. The higher the
complexity, the more things that can go wrong. So,
unsurprisingly, that becomes also highly correlated.
Ms. DeGette. Right.
Dr. Piervincenzi. Now, the last thing I will say is that
the four factors aren't independent, meaning any one of those
perhaps might be OK, but it is when they come together is when
you have really serious risk.
Ms. DeGette. When they all work together.
So does USP call for deregulating domestic pharmaceutical
manufacturing as a solution?
Dr. Piervincenzi. Deregulating?
Ms. DeGette. Deregulating as a solution. That is not in the
four factors you talked about.
Dr. Piervincenzi. Oh. I am sorry. Yes.
So the U.S. FDA's inspections are critical. And we talked
about a couple of the factors, including quality. The assurance
of quality is one of those factors. So deregulating the quality
would, I think, work against the----
Ms. DeGette. So that is not one of your recommendations.
And what about reducing inspections domestically? Would
that help, if we reduce domestic inspections?
Dr. Piervincenzi. Would it help resilience?
Ms. DeGette. Yes. Would it help solve these problems?
Dr. Piervincenzi. So the FDA's role--and this is, we know,
from working with our partners in industry--that strong
inspections result in higher resilience.
Ms. DeGette. Thank you.
Now, so the reason I am asking you these questions, the
Trump Executive order pretty much tells companies they can
avoid inspections if they manufacture in the United States. But
as you said, the FDA's involvement assures quality and safety,
and thereby it averts drug shortages caused by subpar drugs.
I want to move quickly to you, Ms. O'Connell.
You are so right about replenishing the stockpile now
instead of waiting, like we always do, until a crisis. And the
chairman is nodding because he agrees with me.
So I want to ask you, HHS recently canceled $766 million in
contracts with Moderna to develop vaccines against influenza
strains with pandemic potential, including the H5N1 avian flu.
Moderna utilizes mRNA technology that has important
advantages over older methods of vaccine development. This
technology was developed over three decades with $337 million
of Federal Government investment prepandemic. It saved millions
of lives when Operation Warp Speed resulted in multiple safe
and effective vaccines for COVID-19 in less than a year.
So I want to ask you: Can you explain why the strengths of
mRNA technology matter in a pandemic context?
Ms. O'Connell. Absolutely. At this point, the mRNA platform
is the only vaccine that we can use to meet our 100-day
mission. Our biosecurity strategy requires that we are able to,
at the first identification of an outbreak, have a vaccine
ready to go.
The mRNA platform, because it is very flexible and quick to
manufacture, is the only platform at this point that will
provide the country that protection within the first 3 months
of an outbreak.
Ms. DeGette. What would happen if we had a massive bird flu
outbreak or other strain of influenza if we didn't have the
mRNA platform?
Ms. O'Connell. Well, at this point, we do have other
vaccines--egg-based, cell-based--but they take 6 months to
manufacture.
Ms. DeGette. OK. And does Moderna have manufacturing
capacity in the U.S.?
Ms. O'Connell. They do.
Ms. DeGette. OK. And does cancelling this contract help
offshore the medical supply chain?
Ms. O'Connell. No.
Ms. DeGette. The Moderna contract? No.
So I just want to say, is this platform, the mRNA platform,
safe, and is it reviewed?
Ms. O'Connell. Absolutely. It has been studied, as you
mentioned, over 30 years, and it was licensed by FDA and been
through several clinical trials in the process.
Ms. DeGette. Under both----
Ms. O'Connell. Absolutely.
Ms. DeGette [continuing]. Under Republican and Democratic
administrations?
Thank you. I yield back.
Mr. Carter of Georgia. The gentlelady yields.
The Chair now recognizes the chairman of the full
committee, Chairman Guthrie, for 5 minutes of questioning.
Mr. Guthrie. Thank you. Thank you, Mr. Chairman. Thank you
for yielding the time.
And I just want to talk about advanced manufacturing
technologies. Actually, I want to go back. I want to talk about
H.R. 1 for a couple minutes.
So, Mr. Cashman, H.R. 1 has several tax credits involved.
Can you speak to the benefit of the provisions of the
USAntibiotics specifically, and if the Senate were to pass the
bill with these incentives in tax, how quickly could
USAntibiotics expand production to serve more of the American
market?
Mr. Cashman. Thank you, Chairman Guthrie. Great question.
I can only speak to the impact of specific limited
provisions of the legislation on companies like ours.
As stated, we serve only 5 percent of the U.S. amoxicillin
market despite having capacity to scale to serve 100 percent.
The immediate expensing of new product production equipment and
facility improvements, as well as domestic R&D expensing
provisions, could better position us to make capital
investments. So it would help us.
Mr. Guthrie. Thank you.
And so, Mr. Murphy, would you explain how your member
companies could use the provisions in H.R. 1 to move production
back domestically?
Mr. Murphy. Yes. Mr. Chairman, thank you for that question.
We have often talked about the need to have tax credits and
the ability to have flexibility in the tax code to make the
investments necessary in the United States.
I would say we have a significant amount of dormant
capacity in the United States too that could be turned back on,
which would require some capital investments to get things
online. And our members have been very, you know, pleased to
hear that there is more attention being paid to this sector of
the market from a tax perspective that could help the industry.
Mr. Guthrie. If you have open capacity, what is preventing
the price, obviously--what is preventing you from expanding
your capacity?
Mr. Murphy. Yes. So I would say predominantly--and Dr.
Piervincenzi said this as well--price in the generic market is
the primary driver to make more investments. And we have a long
history of working with this committee on solutions to that.
But, ultimately, tax provisions help as well.
Mr. Guthrie. But you have open domestic capacity.
Mr. Murphy. We do. We do.
Mr. Guthrie. Because there is a--I used to do supply chain,
so it is not pharmaceutical but automotive, but--so you have a
couple of things. One, if you are going to try to bring it
back, you got to build a new plant.
You are saying you can bring this back if the--without big
capital investments. You don't have capacity--you have to do
some, I get it, but you just need the right price signal to do
it, which the tax code can help you get there.
Mr. Murphy. The tax code can help, and then the price
signal that, you know, we could work on with PBM reform and
other areas that this committee has worked on could certainly
help.
But, yes, there is finish-fill capacity in the United
States that could be turned on, and as Mr. Cashman said, would
take, you know, far less than the 5 years that it would take to
build a new facility.
Mr. Guthrie. So, Mr. Cashman, you have the capacity as well
or you would have to build new facilities to bring production
back?
Mr. Cashman. Yes, we have significant capacity. We have
over 390,000 square feet, and we are using a fraction of that
at this point.
Mr. Guthrie. So being a supply chain person, as I just
said, if somebody says, ``Hey, we are going to bring this back,
it can be short term or long,'' you said you can do it pretty
quickly if the right pricing or the right investment
opportunity was there, right? Which the tax code gives you
that.
Mr. Cashman. Yes, Chairman Guthrie, with the right pricing
and the right economic incentives, we can bring this production
capacity back online.
Mr. Guthrie. In your testimony, is the current--what we
passed out of the House is sufficient for you to start making
those decisions?
Mr. Cashman. Well, Chairman Guthrie, I am an expert on
production. I live and breathe producing amoxicillin. I believe
it is going to be helpful to us to allow us to deduct these
investments more quickly, yes.
Mr. Guthrie. OK. Thank you. Yes, then if you--yes, the
investment--and some of you just have capacity you have already
invested, so that is a different animal. OK. I understand.
So, Dr. Piervincenzi, I am looking at advanced
manufacturing technologies. Could you provide some examples of
how AMTs, or advanced manufacturing technologies, have been or
could be utilized successfully to modernize and localize and
stabilize your domestic production and, therefore, reduce our
overseas dependence?
Dr. Piervincenzi. Thank you, Chairman Guthrie. And I think
this is a question that maybe goes to the second half, the
first half being dormant capacity. But at some point that runs
out.
The next step is, how do we build new capacity? And I think
that is where the advanced manufacturing comes into play, to
create a system that produces even better, higher-quality
medicines with a lower labor rate and a lower footprint, which
gives it an advantage, especially in countries with higher
income levels.
The second piece to that is that where the U.S. lags the
furthest behind is in API and then even more so in the key
starting materials. And in those spaces, it is probably the
only solution that would be able to domestically increase the
production is through these advanced techniques. And they are
advanced for pharmaceutical industry. They are not really
advanced in the world. The automotive industry has been doing
it for many decades now.
And the last thing I would say is, where is it happening?
It is happening with innovator medicines that have higher
margins and able to make the capital investments. Where it is
not happening is for generic drugs where we see the shortages.
Mr. Guthrie. Right. Thank you.
And my time has expired, and I yield back.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the ranking member of the full
committee, Representative Pallone, for 5 minutes of
questioning.
Mr. Pallone. Thank you, Mr. Chairman.
It is difficult for me to have a discussion about the
medical supply chain in the midst of the chaos and destruction
that the Trump administration and the Republican Big Ugly Bill
is causing to our public health infrastructure.
I mean, the chairman talks about how, you know, the Big
Ugly Bill is going to help manufacturing more drugs, but the
CBO says 16 million--more than 16 million Americans aren't even
going to have health insurance. How are they going to buy any?
How are they going to, you know, get any drugs or get any
healthcare if they have no health insurance? So I don't
understand--you know, these things are intertwined, and you
can't talk about them separately.
I wanted to ask the Former Assistant Secretary O'Connell,
you noted in your testimony that bolstering domestic
manufacturing requires highly competent Federal employees who
understand both economics and healthcare.
I had two questions. Why are highly skilled and trained
Federal workers so critical to this mission, and impact--what
impact does it have when that expertise and experience are
lost? And, second, do the Federal layoffs make us more
vulnerable to shortages or supply chain challenges?
I have more questions, so briefly, if you will.
Ms. O'Connell. Absolutely. Just to say that that is a
highly specialized skill that we had within HHS to be able to
understand market dynamics, economics, push/pull incentives
across the health supply chain, and to have staff that
understood both and are able to work across both and pick the
right investments has been really important and a unique skill
set that we were pleased to have in ASPR and is necessary.
Mr. Pallone. Well, thank you, Ms. O'Connell.
I would also like to briefly touch on the Hospital
Preparedness Program, which is operated by ASPR and is one of
the key preparedness programs typically reauthorized as part of
the Pandemic and All-Hazards Preparedness Act. However, as I
noted earlier, congressional Republicans walked away from an
agreement to reauthorize PAHPA last year.
Hospitals, obviously, play a key role in securing the
supplies, medicines, and equipment necessary to care for
patients--I guess that is pretty obvious--and they are
important actors in the supply chain. However, in just another
example of how the Trump administration is decimating public
health, the fiscal year 2026 budget proposed to eliminate
funding for the Hospital Preparedness Program.
So, again, Ms. O'Connell, can you provide some examples for
how HPP has been utilized in response to past public health
emergencies and disasters, and what would be the impact of
eliminating the Hospital Preparedness Program?
Ms. O'Connell. Well, HPP is the only source of Federal
funding that hospitals and healthcare coalitions have to be
prepared, and they have used that funding to run exercises and
to be prepared for hurricanes, for cyber attacks.
We saw recently in October there was a case of Lassa fever
that was imported to Iowa. The hospital, because it had its
preparedness mechanisms in place, was able to contain the Lassa
to the one patient, and it didn't spread throughout the
hospital or into the community.
So having hospitals that can identify challenging pathogens
is critically important and to know how to respond in those
times. And this healthcare funding, the HPP funding, is the
only source of Federal funds that allows them to do that.
Mr. Pallone. And, of course, I saw this vividly during the
COVID epidemic, right. I mean, I literally--I am sure most
members of this committee on both sides of the aisle spent so
much time trying to, you know, get our hospitals so that they
had the equipment, they had the, you know, supplies that were
necessary which were in such shortage during COVID.
And so, you know, this idea of having no Hospital
Preparedness Program, to me, I can't imagine anything that is
as destructive in the event of a natural disaster or another
epidemic. I mean, to me, it makes absolutely no sense to have a
level of preparedness.
But, again, I go back to the same thing again. We are
talking about the tax implications of this Big Ugly Bill and
how they are going to provide more domestic manufacturing, but
at the same time we are firing people who are going to run the
programs. We are saying that we don't need our hospitals to be
prepared.
You know, what I don't understand--and I know I keep saying
it over and over again--is these hearings--not that there is
anything wrong with the hearing, but you have to recognize that
these things are all intertwined, right. You can't say we are
going to increase supply chains and domestic manufacturing when
you don't have the people available to actually do the work,
you know, to make sure that we are prepared.
And I just--I just--I don't expect you to respond because I
think you already have, but I just--I have to say, Mr.
Chairman, I just don't understand how there is so much silence
on the Republican side to all these concerns about people
losing their health insurance and not being--hospitals not
being prepared. Cuts that come from the Medicaid, Medicare, ACA
cuts that are going to occur with this Big Ugly Bill.
I yield back the balance of my time, Mr. Chairman.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the vice chair of the
subcommittee, Dr. Dunn, for 5 minutes of questioning.
Mr. Dunn. Thank you very much, Mr. Chair, and thank you to
our witnesses for being here today.
Over a 30-year career of medicine, I have become familiar
with the complex healthcare supply chain that produces our
essential drugs and products that Americans rely on. A reliable
domestic supply chain not only serves to ensure the health of
American people, it is a national security priority.
As a member of the House Select Committee on China, I am
very aware of the extent to which Americans become reliant on
foreign entities to supply our country's medical needs. The
Chinese Communist Party has made an intentional and coordinated
effort to become a force in the biomedical production world.
The United States has been a longstanding leader on
research and development, and that did not happen by accident.
It was driven by policy choices that reflect our values, that
promote continued discovery. It is clear to me that those
values also mean that the United States should be a leader in
the production of those critical medicines. We must ensure that
America remains at the forefront in biopharmaceutical
manufacturing to protect our supply chain and bring American
innovative cures to our patients in a safe and reliable manner,
especially at a time when China is fast on our heels.
Mr. Cashman, it seems to me that domestic antibiotic
manufacturing should be a fundamental priority for this
committee. I also believe that the Federal Government can play
a role in ensuring a domestic supply of other critical
products. I find it troubling that under the former
administration the HHS made a $40 million award to a foreign
amoxicillin producer when there was a domestic manufacturer
available.
In your experience, do Federal contractors appropriately
take into account made in America when determining Federal
awards?
Mr. Cashman. Thank you, Vice Chairman Dunn. That is an
excellent question. Let me respond to that.
The focus is primarily on pricing by the Federal
Government, but I think it is something that the Federal
Government has to take a much broader view and look at security
of supply, national security issues, and to ensure America has
access to quality medicines made in the United States.
So I think it is something that needs to be reevaluated,
and perhaps put more emphasis on the sourcing of medications
from manufacturers within this country.
Mr. Dunn. By the way, I want to make a side comment here. I
think the source is important, the supply chain is important,
the control of it, but also the quality is. And I don't think
we do enough independent--and I mean independent, third-party
testing on all these products.
I have seen reports on this--DoD is doing a study on it--
that actually is pretty clever in showing some very wide
disparities in quality, both quantitatively and qualitatively,
in generic drugs that are produced by different manufacturers
and are being sold legally--legally--in this country. So that
is just a side comment.
I also want to make a final comment, if I may, to Ms.
O'Connell. Having previously served as the ASPR, the Assistant
Secretary for Preparedness and Response, and the person in
comment--rather, in charge of the Strategic National Stockpile,
I am troubled, but it was your team in the Biden administration
who chose not to support the last remaining end-to-end domestic
manufacturer of amoxicillin.
It is a story that I heard too many times during the last 4
years in which it looks like we mismanaged the Strategic
National Stockpile, repeatedly misaligned our contract
decisions. And, honestly, I think the Office of ASPR repeatedly
was slow in awarding Federal contracts to delays--you know,
which leads to delays, unreliable supply chains for the
manufacturers.
And I believe our Federal agencies can play a critical role
in ensuring that markets for the key medical products remain
viable. I also believe it is necessary for our safety and our
national security.
I see my time is up. Mr. Chairman, I yield back.
Mr. Carter of Georgia. The gentleman yields.
The Chair now recognizes the gentleman from California, Dr.
Ruiz, for 5 minutes of questioning.
Mr. Ruiz. Thank you, Mr. Chairman.
As an emergency medicine physician, it has always been my
top priority in Congress to improve patient access to high-
quality and affordable healthcare. We have made great strides
towards this goal, but these efforts are moot if we cannot
ensure a readily available supply of medications patients
desperately need.
In the emergency room, I have witnessed firsthand the dire
implications that shortages of key medications have on the
lives of my patients. For patients suffering from infections or
trauma or fighting against cancer, this can be a matter of life
and death.
In fact, I remember times where we have a patient with
respiratory distress after a trauma and we didn't have
succinylcholine, a paralytic that we use to intubate a patient.
And when you are used to using succinylcholine and have to use
another drug that has a higher side-effect profile and more
contraindications, then you have to think for a moment and take
time to assess what you are doing. And in the emergency
department, time is of the essence, as you all know. So it
definitely creates complications.
And even if medications are not in short supply,
affordability remains a significant barrier to care, and safety
is paramount. So that is why we need to act in order to
strengthen the supply chain for critical medications. This
includes bolstering domestic production, but it is crucial that
we do so in a way that will not raise costs for patients and
will not jeopardize the safety of these medications.
It is important to think about geographic diversity in
manufacturing. Let's remember the alarming impact on the
availability of IV fluids back in late 2024 due to the critical
damage the Baxter facility in North Carolina sustained during
Hurricane Helene. Baxter supplies roughly 60 percent of the IV
fluids used in North America. When just one manufacturing
facility was damaged, supply was restricted and hospitals
across the country faced shortages. And I remember speaking to
desperate CEOs of the hospitals in my district very concerned
about patient quality care during that shortage.
Ms. O'Connell, can you share some lessons learned from your
experience as Assistant Secretary for Preparedness and Response
during the aftermath of Hurricane Helene, particularly with
respect to the importance of geographic diversity and
manufacturing critical medical supplies?
Ms. O'Connell. Absolutely. Thank you, Congressman.
So, of course, we were not invested in Baxter. Baxter was a
private company. But when we were making investments in
domestic manufacturing, we made sure that we had regional
diversity in the investments that we made so we weren't putting
the manufacturers of similar products in the same regions that
could potentially be impacted by either a hurricane down South,
ice storm up North, wildfires out West. It was critical that we
had our investments spread out across the country. That was one
of the things that we tried to do.
When it came to Baxter, we did a couple of things. We
helped them import their IV solutions that were manufactured in
other parts of the world. We----
Mr. Ruiz. So what can we do as legislatures to help----
Ms. O'Connell. Right.
Mr. Ruiz [continuing]. With the geographic diversity?
Ms. O'Connell. So I think it would be important to
encourage the private industry, those that we don't have levers
with but that act on their own, to seek geographic diversity.
I think Baxter would absolutely agree--I know they are not
here today--that it would be important moving forward that they
don't have just one plant manufacturing 60 percent.
Mr. Ruiz. OK. So we have talked about the importance of
geographic diversity and safeguarding medical supply chains,
but how do we do that on American soil while also ensuring the
safety and affordability of medications?
So the answer is certainly not dismantling FDA and firing
thousands of Federal workers that support key roles and
responsibilities in ensuring the safety and efficacy of
medications Americans rely on, like the Trump administration
has done. The answer is not slashing protections and
inspections to ensure the safety. And tariffs will raise prices
on the components of the supply chain, vials and tubings, et
cetera, which will raise prices.
So the Trump administration is calling for looser
regulations or weaker protections that are in place to keep
patients safe within that executive order. Inspections and
safety standards are vital to ensuring the safety of medicines
we rely on.
Mr. Murphy, do you believe that we should have fewer
inspections of manufacturing facilities, and how does that lead
to better quality? And does the Association for Accessible
Medicines and your member companies want clear regulatory
guidance from Federal regulators?
Mr. Murphy. Thank you, Dr. Ruiz.
We support a strong FDA with a strong inspections division.
It provides certainty to the marketplace that there is quality
built into the overall inspection process. And so we support
FDA having more resources in the inspection space to do their
work.
Mr. Ruiz. And you do not support reducing the inspections?
Mr. Murphy. Certainly, we--certainly, we understand that
there are different priorities across the agency, but from an
inspections standpoint, that is a very critical component of
our work.
Mr. Ruiz. Thank you. I yield back.
Mr. Dunn [presiding]. The gentleman yields back.
I now recognize the gentleman from Virginia, Mr. Griffith.
Mr. Griffith. Thank you very much, Mr. Chair.
Ms. O'Connell, a nitrile glove manufacturer in my district
is aiming to create the first domestic facility to create both
the base nitrile glove ingredients and production of the final
nitrile glove.
Their initial application was just for glove production,
but it is my understanding from them that HHS and DoD
encouraged them to expand their production capabilities to do
both the final production of gloves and base ingredients for
the glove manufacturer, which they did. However, HHS only
provided a grant for a period of the expanded capabilities cost
and has not provided additional assistance to help with the
completion of the dual project, which is necessary for them in
order to begin production.
Does HHS not view it as their responsibility to see this
project fully through?
Ms. O'Connell. Thank you, Mr. Griffith.
The investments in glove manufacturing were extraordinarily
challenging. The grant that you mentioned was made by the first
Trump administration, and they did it in accordance with an
assisted acquisitions relationship they had with DoD.
So DoD competed and then managed that contract. They set it
up as a firm-fixed-price contract, which means as there were
cost overruns in the development of the manufacturing site, no
additional money could be added to that contract. DoD decided
at the completion of the contract that it was done and
complete, and if we were going to add additional money, we
would have to recompete in an entirely new contract.
We--and I think everybody is aware of this. I have come to
Congress many times to talk about the funding that was needed
in order to make those additional investments.
At this point, the office that is managing our supply chain
has $10 million identified in the next budget. That is not
enough to be able to bring that glove manufacturing on board.
Mr. Griffith. So you will work with me to figure out ways
that we can get that plant finished? Because we have got this
beautiful facility that is not finished, and therefore no jobs
and no real asset for the community.
All right. Thank you.
I truly believe that having a real buy-American policy for
government agencies on masks, gowns, and other PPE will
stimulate American manufacturing and decrease the likelihood of
shortages if we have another situation similar to COVID.
Does any witness disagree with me on that? Raise your hand
if you disagree. I will give you a minute.
All right. I didn't think you would, and I do appreciate
that.
Again, Ms. O'Connell, as we have heard today, the U.S. is
incredibly too reliant for active pharmaceutical ingredients
from foreign countries, specifically China and India. This is a
serious national security threat.
One solution is from a company in the Richmond area named
Phlow--P-H-L-O-W--who is in partnership with the Federal
Government to bring the U.S. to a competitive advantage with
foreign countries to produce fully domestic essential
medicines.
What other incentives and policies can be implemented to
not only support these efforts but also encourage other
companies to follow suit?
Ms. O'Connell. Thank you, Congressman.
So the Phlow contract is one that we spent a lot of time
with and were very pleased with the outcome of what they have
been able to do. I think that is a perfect example of some of
the ways we need to work moving forward.
Bringing the incentives there to Richmond was critical, and
the proposal to have some sort of stockpile of those active
pharmaceutical ingredients, I think, is something that the U.S.
Government should pursue moving forward.
Mr. Griffith. I appreciate that. I am going to switch gears
a little bit on you. Has HHS considered starting a pilot
program where they would ship close to expiring PPE, et cetera,
in the national--in the Strategic National Stockpile to a rural
hospital, so instead of throwing them away, we can actually get
some benefit out of it?
Ms. O'Connell. Well, we looked at that, and I think that is
absolutely right. We are trying to encourage the SNS to think
in innovative ways. Some of what we found was not everybody was
interested in just-about-to-be-expired PPE. They wanted new
PPE. But we continue to push on that.
Of course, I am not in a position to make those decisions
now but would, you know, encourage my former colleagues to
consider it.
Mr. Griffith. I appreciate that greatly.
Mr. Cashman, it is great to see you again. While your
operation is technically in Mrs. Harshbarger's district, I
would suspect that at least 40 percent of your employees are
probably living in my district since you are so close to the
line that you could probably walk from your facility to my
district without any great difficulty.
At the meeting that we had previously, you mentioned how
HHS awarded a company a contract that might not have been a
fully domestic manufacturer. Can you explain that briefly,
because my time is about up?
Mr. Cashman. Congressman Griffith, effectively, yes, you
could walk from our plant to Virginia.
Yes--regarding that contract, yes, the best of our
knowledge, we understand that that company imported API, active
pharmaceutical ingredient, from China, and we don't know where
it was manufactured, but it was effectively the only company
that was awarded a contract for the SNS.
Mr. Griffith. And you don't do that, is that correct? You
don't import your API from China?
Mr. Cashman. No, sir. We import our API from Europe. Thank
you.
Mr. Griffith. All right. I appreciate it. My time is up. I
must yield back.
Mr. Dunn. The gentleman's time has expired.
And I now recognize the gentlelady from California, Ms.
Kelly.
Ms. Kelly. I am from Illinois, but thank you. I am
Illinois.
Thank you, Mr. Chair and Ranking Member DeGette, for
holding today's hearing.
The stability of our healthcare supply chain is not only an
economic issue but one deeply tied to national security and
public health. Health systems, providers, and patients alike
have all felt the strain caused by the waves of drug shortages.
Over the past decade, we have witnessed chronic
underinvestment in public health infrastructure, notably during
both of the Trump administrations. In 2019, the Strategic
National Stockpile faced budget constraints even as warnings
mounted about supply vulnerabilities.
Now, in his second term, under his bill is an attempt to
reduce Food and Drug Administration funding by $200 million.
The Trump administration and RFK are actively undermining our
ability to support supply chain resiliency by gutting the
Federal workforce and dismantling key responsibilities within
the FDA. This uncertainty poses a significant risk to the FDA's
ability to effectively oversee critical functions and threatens
the integrity of our healthcare supply chain.
Ms. O'Connell, thank you for your work on equity and access
to care during your time under the Biden-Harris administration.
Apart from the devastating impact to America's R&D and
innovation, how will cuts to our public health agencies impact
our ability to strengthen our domestic supply chain and reduce
our dependence on China, who is actively supporting R&D and
innovation?
Ms. O'Connell. Well, as we have talked about today,
Congresswoman, the innovation is going to be critical to us
being able to afford to reshore some of the production that has
left our shores over the last 50 years. And in order to invest
in that innovation, we need to have the research and
development in place.
Cuts to the administration--you know, to what we are seeing
in HHS are impactful in a lot of ways in our preparedness and
response efforts. You know, in order for us to have the tools
we need ready to go, we need to be able to invest both in the
advanced research and development of those tools as well as the
stockpile and procurement of those tools. And with limited
funds, we are unable to do what we were able to do before.
I continue to say ``we.'' Of course, it is not ``we''
anymore, it is ``they.'' But just a reflection on what the U.S.
Government is going through right now.
Ms. Kelly. Thank you so much.
A recent Brookings report titled ``The Wild East of
semaglutide'' raised concerns about the safety of compounded
GLP-1 products, particularly those sourced from overseas
manufacturers that have not been inspected by the FDA. Some of
these products were found to contain unidentified impurities
with limited regulatory oversight in place.
Given these findings, can you also speak to the risks those
pose to patient safety and whether stronger safeguards are
needed in the supply chain? Ms. O'Connell.
Ms. O'Connell. I am sorry. Can you please----
Ms. Kelly. What I was asking about is, there was a question
about the safety of compounded GLP-1 products, particularly
those sourced from overseas. How safe are those? Because
there's questions around FDA and their ability to inspect.
Ms. O'Connell. Absolutely. So seeing these FDA cuts is--you
know, one of the impacts of that is that we are not able to
secure and make sure that our products are as safe as they
should be. And I think that is extraordinarily impactful for
the country.
Ms. Kelly. It is very scary. Thank you.
According to the DOGE Terminated Contracts Dashboard, on
April 25, DOGE canceled four major contracts with U.S.-
headquartered genomic sequencing companies who are responsible
for tracking coronavirus variants in the United States and from
25 other nations around the world.
Ms. O'Connell, do you believe that cutting the laboratories
that provide over 80 percent of the CDC's critical data for
public health response enhances our safety and preparedness?
Excuse my voice.
Ms. O'Connell. Making those cuts does not enhance our
safety and preparedness. We need that surveillance to know what
is coming next, and it is critical that we are able to do the
genomic sequencing in order to see what is coming.
Ms. Kelly. Thank you very much. Thanks to the witnesses.
And I yield back.
Mr. Dunn. The gentlelady yields back.
And I recognize the gentleman from the great State of
Florida, Mr. Bilirakis.
Mr. Bilirakis. Thank you very much. Appreciate that, Mr.
Chairman. Thank you again for holding this hearing on this very
critical issue.
The healthcare supply chain is incredibly complex, and we
need to do more to protect our supply chains from
vulnerabilities. This is not only a health issue but a national
security issue. Public health and wellness should not depend on
foreign adversaries, plain and simple.
I am proud to be a founding member of the American-Made
Medicines Caucus with my good friend Chairman Buddy Carter, and
look forward to advancing key policies on this particular
issue.
I am also encouraged to hear that we are already making
progress to invest in domestic manufacturing. Last year, I had
the privilege to visit Med-Nap, a company in my district that
specializes in saline and medical-grade wipes. This company has
recently expanded and has significant plans to expand further
but struggles to compete with China, unfortunately.
We must protect American leadership and innovation with
regulatory and market certainty. I look forward to learning
from you today, the witnesses, and already have.
But the first question is for Dr. Piervincenzi. Your
organization has unique visibility into the domestic
pharmaceutical supply chain. Your testimony mentions, and I
quote, ``a fundamental shift in the market is needed to align
supply and demand forces.''
Can you provide more detail on the types of incentives
needed to make this shift, please?
Dr. Piervincenzi. Thank you, Congressman. I appreciate that
opportunity.
Mr. Bilirakis. Of course.
Dr. Piervincenzi. USP is working in a public-private
partnership to address two sides of this: the incentives that
you describe on the one hand, and then the capacity on the
other.
On the incentives side, the incentives really come back to
the buyers. We need--the buyers need to be incentivized to make
the investments in resilience, which means to purchase
medicines where they can rely on the quality, where they can
have a higher expectation of consistency and not only purchase
on price. However, those buyers today don't have the data that
they need to make that choice, and simply paying more for the
same medicine achieves nothing except wasting patients' money.
And, therefore, what we also need--the second part of
this--are a set of benchmarks that can describe what does
consistent quality look like. How do we consider things
upstream? For example, a manufacturer who buys their API from
trusted sources in Europe or from two locations rather than
from an adversary. These become factors. And a variety of those
factors can result in something that would be rewarded through
a better contract.
So these are the two pieces that we are putting forward
when we talk about our supply chain resilience initiative--
benchmarking initiative, sorry.
Mr. Bilirakis. Thank you. Again, sir, would it be helpful
for the Federal Government to conduct a national security
assessment on the location and volume of APIs and key starting
materials in countries of concern that are used to make drugs
for the U.S. market?
Dr. Piervincenzi. Absolutely. Yes. And, fortunately, we are
in a position to be able to do that now. We wouldn't have been
able to 5 years ago.
USP has already completed mapping nearly all locations for
APIs for 94 percent of U.S. medicine. We are in the process and
only need a few more months to complete the KSM analysis, which
is essentially where are the current key starting materials
coming from for those APIs.
The typical medicine today, if you randomly pick something
off a shelf in a pharmacy, would probably be a solid oral
dosage, a pill, made in India with an API or at least a key
starting material coming from China.
And so this mapping has to go upstream to that last step.
And then--then we are not done. Then we have assessed risk.
Next step, we begin the process of fixing the problem, which
partly could be figuring out different ways to make those APIs.
And so perhaps the only key starting material in the world
for a certain antibiotic is from China. Well, let's make it a
different way. Chemistry will allow different pathways, and new
technologies for manufacturing allow us to use those new
pathways.
And then the final thing is that the benefit of chemistry
is it doesn't change. So we only have to do that work once, and
then we have a permanent database that we can use for the
entire medicine supply to find alternative routes. And this is
within our reach, in a couple of years, for fractions of a
billion, less than 100 million. It is right here, and it is
available today.
Mr. Bilirakis. Very good. Thank you.
I yield back, Mr. Chairman.
Mr. Dunn. The gentleman yields back.
I now recognize the gentlelady from Washington State, Dr.
Schrier.
Ms. Schrier. Thank you, Mr. Chairman. Thank you to all of
our witnesses. This has been such an interesting discussion.
Before I start, I just need to make a couple comments. I
want to open today just about recent news and to voice my deep
frustration with HHS Secretary RFK, Jr., for unilaterally and
just unjustifiably firing all 17 members of the Advisory
Committee on Immunization Practices. And, Mr. Chairman, I would
like to know if you will commit to having a hearing on this
issue.
Mr. Dunn. I will take that up with the chairman.
Ms. Schrier. Thank you. In addition, on the same topic, as
a pediatrician I cannot help to mention that these policies of
RFK, Jr., to discourage vaccinations may well decrease or
eliminate the U.S. production of vaccinations, which I would
consider just as, if not in some cases more, important than
having all medications developed and manufactured here in the
United States. And I just shudder to think about this in the
context of a future pandemic, which will probably not take too
long to arrive on our shores.
And then I also want to mention--because we have been
talking a lot about antibiotic shortages in particular, and I
wanted to tie vaccines to that. Because although there are some
diseases that just cannot be treated--I mean, we are talking
about measles and polio and others--they can't be treated with
medications.
Like, I personally have seen what the Hib, Haemophilus
influenzae B, vaccine has done in terms of preventing not just
ear infections but meningitis and something called
epiglottitis, where the epiglottis swells so much that kids
cannot breathe until they get intubated. That is virtually gone
now. I have never seen a case of that. And that would have
required the antibiotics we are talking about today.
I think about the pneumococcal vaccine and what that has
done. Also for sepsis, meningitis, pneumonia, ear infections,
and how that has not only decreased deaths but has also
decreased our reliance on some of these medications.
So I just had to close that loop and make it clear that
vaccinations also need to be part of our healthcare strategy
and domestic manufacturing.
OK. On the topic that we are talking about today about
having domestic manufacturing and also, you know, we don't want
to depend on our adversaries, I would say nearshoring is
another important strategy when we are talking about this.
And I love the concept of the buy-American incentive. I
think that will work well, especially because Medicaid,
Medicare, VA, TRICARE make up such a big part of our healthcare
system that, if we only did that on the governmental level and
dealt with PBM reform, I think that would go a long way to
achieving what we are all hoping for today.
I also like that you talked about the other incentives, and
I think Operation Warp Speed is really a perfect example of how
government incentivized manufa--research, development,
manufacturing of vaccines that have saved millions of lives. I
think that has been forgotten in this country, but that that
was incredible.
I also will mention that ACIP also vetted those vaccines
and is directly tied to saving millions of lives.
Ms. O'Connell, it is great to see you again. I was
wondering if you could first just discuss how Federal research
over decades led to development of the COVID vaccines in less
than a year, record time?
Ms. O'Connell. Well, that is exactly right. And one of the
things I think people forget is that, when the Trump
administration first started Operation Warp Speed, they
invested in several--an entire suite of candidates of various
platforms, and each of those platforms came through some early
research work that NIH did and some advanced research and
development that BARDA did.
So the Government was critical in helping to see the
success of each of those platforms come through. It turned out
that the mRNA platform was the one that moved us quickly. You
know, you mentioned the one that was done within 11 months.
That was--we were able to--the Trump administration at that
time was able to push that research through and develop that
vaccine, and it did provide significant protection for millions
of Americans.
Ms. Schrier. Thank you. And just to double-click on that,
NIH research over 10 years led to that, and China is currently
seeking access to that technology.
OK. Last, government strategy in terms of having
manufacturing facilities. I found it so interesting that
there's all these retired manufacturing facilities out there
that aren't being used that could be rehabilitated that could
speed this path. And I just wanted to just drill down a little.
Is it possible for, like, a given manufacturing facility to
kind of shift lines to produce different kinds of medications,
and has there been a strategy developed about which facility
could manufacture--what car facility produced ventilators?
Go ahead and answer. Anyone.
Dr. Piervincenzi. Sorry about that, Dr. Schrier.
So to some degree, within a type of medicine--so
physically, rather than how it treats--so solid oral dosage
form, a sterile injectable, saline--these will be quite
different. However, switching from one type of--within a
similar bucket becomes much more feasible and faster.
Ms. Schrier. That is great. I have to yield back, but I
like that reassuring answer. Thank you.
I yield back.
Mr. Dunn. The gentlelady yields back.
I now recognize the gentleman from Pennsylvania, Dr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman. And thank you to our
panel for appearing here today on such an incredibly important
topic.
With President Trump's Executive orders aimed at increasing
domestic manufacturing and more resilient supply chains, we
have seen a multitude of new investment announcements in the
U.S., specifically in the pharmaceutical space. It is for this
reason that I am glad this subcommittee is reviewing the issue
today.
Access to generic drugs is critical to American patients,
as generic medications make up 90 percent of the prescriptions
filled in the U.S. And they are essential to keeping costs down
across the healthcare system.
During the 118th Congress, this committee put forward a
number of ideas to strengthen the supply chain and address drug
shortages. One core provision in that legislation was to
finally fix the Medicaid generic drug inflation penalty. The
incorrect application of an inflation penalty to the generic
drug market has resulted in drug discontinuations, shortages,
and further instability in the generic drug supply chain. This
financial penalty can drive low-margin, essential medicines
into negative territory, forcing manufacturers to leave
markets, which ultimately leaves the patient without the
medicines that they need.
Mr. Murphy, you mentioned this penalty in your testimony.
Can you elaborate on how it creates uncertainty for generic
manufacturers and why reform is necessary in this specific
area?
Mr. Murphy. Well, Dr. Joyce, thank you for the question.
And as, you know, we have said across our testimony, the
generic marketplace has a number of critical factors facing it
that are negative. I would think from a--at a broader level,
though, when we talk about domestic manufacturing, one of the
things we really want to talk more about is how we can move the
markets to more appropriately treat generic medicines in the
reimbursement system.
So we talk about PBM reform, we talk about domestic
manufacturing incentives, because it is really--it is a
critical component of the U.S. market that we don't do enough
for. And so we would love to follow up with your office and
talk more about concrete steps we can take, but I think we look
at the overall picture of this hearing to say there are lots of
structural problems in the market that we need to address, and
we hope to work with Congress collaboratively on a suite of
reforms that we can get to to ultimately make this market a
more predominant force in the U.S. manufacturing base.
Mr. Joyce. And I would welcome that, to open that dialogue,
so we can make those concrete steps forward.
So as we talk about strengthening our pharmaceutical supply
chain, I urge my colleagues to also consider reforms that
address the market challenges in the generic drug supply chain.
We need policies that reflect the realities of the market and
support, not to stifle, access to affordable medications. It is
also important to acknowledge existing barriers that exist to
reshoring manufacturing in this space.
Mr. Murphy, can you walk me through the average timeline
and process to establish and construct a facility in the U.S.,
starting from the initial decision to invest, permitting,
inspection, to fully opening and operating? How long does that
generally take?
Mr. Murphy. So based on our conversations with our
manufacturing members, once you have raised the capital, which
is in and of itself a barrier in the generic market, you are
looking at close to 5 to 7 years if you are going to build a
new facility. And there are State laws that actually come into
play too that we really think we should talk about.
Mr. Joyce. And do you have any estimate on the costs that
are associated with these processes, as well as the
corresponding delays which occur because so many inputs have to
be taken into consideration?
Mr. Murphy. Yes. So what we understand, in new facilities,
right, a new API facility, you are talking a couple hundred
million dollars. And that is, you know, at a small scale. If we
wanted to start really scaling up, you know, it is a
significant investment for our manufacturers.
Mr. Joyce. That is a significant cost, and that is a long
time. I must imagine that these burdens play a role in making
decisions about where companies should invest, especially when
facing those daunting costs.
With my remaining time, Mr. Murphy, what are the top three
regulatory burdens that we in Congress could change to improve
this process?
Mr. Murphy. Yes. Thank you for that question, Dr. Joyce.
So, one, I think we need to streamline the regulatory
review process both on the environmental, the water quality, as
well as the FDA inspections process. It doesn't mean limiting
the safety and effectiveness of FDA but figuring out ways for
more complex generic development to be streamlined and
prioritized at the agency.
I think PBM reform, to try and take the stranglehold over
pricing that is occurring in this country back and put it back
in the driver's seat for generic manufacturers is another.
And then I think also prioritizing generic access once they
become available on the market. Too often products remain in a
predominant position to provide access to patients over top of
generic approvals.
And we could fix all three of those with this committee's
help.
Mr. Joyce. I look forward to beginning this process and to
work with you. This committee is dedicated to making sure our
patients have access to affordable, efficient medications. I
thank the entire panel for presenting here today.
Mr. Chairman, I yield back.
Mr. Dunn. The gentleman yields back.
I now recognize the gentlelady from Michigan, Mrs. Dingell.
Mrs. Dingell. Thank you, Mr. Chair. Thank you for holding
this important hearing.
We have really realized--the COVID-19 pandemic really
showed the world how our supply chains were disrupted
significantly and how we must focus on bringing production
home. It is a public health safety issue and it is a national
security issue, which too many people do not realize.
Congress needs to ensure that we are prepared for what is
to come, increase our ability to onshore healthcare
manufacturing, as we have very clear bipartisan agreement on,
and respond effectively to disruptions.
It is critical to ensure healthcare providers have access
to the medical supplies and the prescription drugs that their
patients rely on. And I think too many people do not understand
how drug shortages in this country are leaving thousands of
patients in distress. No one should have to panic and fight to
find the medications their doctors know are necessary for their
treatment.
We must work, as everybody is talking about, to onshore
pharmaceutical supply chains, incentivize the production of
generics, find ways to ensure we understand why shortages are
happening, getting earlier alerts, helping with broad
distribution and many other issues.
I am going to--so I actually have more questions from some
of your answers, but I will go to my first one that I do want
to say because one of our concerns--my concern is the ability
to achieve these solutions is extremely difficult, if not
impossible, as a result of the drastic reductions in force of
$400 million in budget cuts at the FDA proposed by the Trump
administration. Without a strong FDA workforce, we can't ensure
we are safely and effectively doing the critical work needed to
maintain the safety of our drug supply chain.
So, Mr. Murphy, the Trump administration has made these
drastic reductions in the FDA workforce. How have large-scale
staff reductions affected the ability of the FDA to maintain
this prescription drug supply chain, and what long-term effects
can we anticipate on our drug supply and resulting costs for
American patients?
Mr. Murphy. Thank you for that question, Mrs. Dingell.
We have seen delays already this year in the release of
what are called product-specific guidances, which are the
critical components that generic manufacturers need to develop
the products to get them approved by FDA. And so that was, I
think, the first backlog we saw at a very material level. I
will say, just last week, the FDA did start releasing those
product-specific guidances again, and so we are hopeful that we
will continue to see that backlog eaten away at.
But, you know, I will say as a representative of the
generic industry, every month's delay of a generic drug getting
to market is a month that patients are paying more for branded
drugs than they should be for generic drugs.
Ms. Dingell. I do have a question. And I am probably going
to have to do a lot more questions for the record. I am mainly
concerned about the drug shortages that patients are currently
facing, and some just don't make sense to me.
An example: An asthma drug that many pulmonologists now
want to use has gone to generic, but the generic is taking
months. And you have got--the supply chain is so complicated.
But pulmonologists are talking to me about how their patients
can't get the generic, and the generic is more--I wish I could
remember the name of it. And it doesn't make sense. And yet it
is a real problem. And that is just one. There are about 20
other drugs I could name off the top of my head.
Can you speak to how these cuts to our supply chain
infrastructure will specifically impact the ability to address
existing and prevent future drug shortages?
Mr. Murphy. Yes. So certainly, FDA's inspection capacity is
critical to ensuring that products can get to market. And, you
know, we hope to see, as staff are added back to FDA--which we
understand is occurring--that those inspections will pick up.
But I don't want to discount the fact that, in the drug
shortages space, just for purposes of clarity, that, you know,
price in the generic market is a huge driver of drug shortages,
and that is something we would love to work with the committee
to address.
Ms. Dingell. We would love to get some specific
recommendations on that.
You know, Mr. Chairman, I am down to 29 seconds, so I guess
what I am going to do--I have a lot of questions for the
record, and we will--and this is my partner in PBM reform, so
we both totally agree in a bipartisan way.
Mr. Carter of Georgia [presiding]. Absolutely.
Mrs. Dingell. I will yield back.
Mr. Carter of Georgia. Thank you. The gentlelady yields.
The Chair now recognizes the gentleman from Ohio,
Representative Balderson, for 5 minutes of questioning.
Mr. Balderson. Thank you, Mr. Chairman.
Thank you all for being here today. I am looking forward to
hearing some responses for my questions, and I appreciate the
innovation of quality care that is available to all Americans.
I am proud to represent Ohio. Mr. Bolin talked about Ohio,
a State that continues to support innovation, investment, and
domestic development, clearly impacting the patient community.
Recently I had the privilege of attending a groundbreaking
in my district for Amgen's new advanced manufacturing facility
in New Albany, Ohio. And with Central Ohio being home to
McKesson's largest and most advanced pharmaceutical
distribution center as well, I can proudly say that the world's
leaders in medicine are investing right here at home.
The policies we work on should continue to support
companies we choose to do business here in the United States,
allowing for innovations to be accessible to all Americans.
Mr. Bolin, my first question is for you, and thank you for
being here. And I apologize for running back and forth between
meetings.
I have led bipartisan letters to the FDA twice, raising
question about the industry's ability to comply with the Drug
Chain Supply Security Act and warning of possible drug
shortages and supply chain disruptions if the FDA fails to act
ahead of the enforcement deadline of the DSCSA. I know progress
has been made since the implementation process began, and as of
2024 the FDA announced a set of phased exemption periods that
will expire on different dates this year.
Given your background, I am curious to hear from you about
the importance of this process as well as the importance of
ensuring the supply chain remains uninterrupted as the
exemption periods come to an end.
Mr. Bolin. Sure. Thank you, Congressman.
So as you mentioned, last year FDA has implemented this
more of a phased implementation process for full implementation
of drug traceability throughout the supply chain. The
manufacturer exemption actually just expired less than a month
ago, and so manufacturers now have to fully comply with the
law.
The next expiration period comes up for both distributors
and for pharmacies later this summer. And FDA has been holding
a number of townhall meetings and listening sessions from each
of the sectors to try to understand where each of the sectors
stand moving toward implementation.
The manufacturing community, I think, by and large is and
was ready. Major distributors are well on their way. And there
are going to be some questions about where the pharmacy
community is when it comes to compliance. Many of the larger
chain pharmacies have already, you know, come into compliance,
by and large. The smaller independent community pharmacies are
likely going to be leaning on their small dispensary exemption
that they have, which gives them until next year.
Of course, the concern with that is that the longer it is
for the supply chain to come into full compliance, the more
susceptible it is for illicit products making their way into
the legitimate supply chain, as we have seen with the GLP-1
medications in Arkansas and in Mississippi. And we have seen
more recently HIV--counterfeit HIV medications making their way
into pharmacies in New York.
So the longer the implementation takes, the more concern
there certainly is.
Mr. Balderson. OK. Thank you. Appreciate that.
Dr. Piervincenzi--I hope I said that correctly, sir, I mean
no disrespect--thank you for being here today also.
We know that a recent analysis showed that around half of
the active pharmaceutical ingredients, APIs, for prescription
medications in the U.S. come from India and the EU, with around
12 percent being manufactured domestically here in the U.S.
From your perspective and with your great experience, how
do you believe we can increase this share in a sustainable way?
Dr. Piervincenzi. Thank you, Congressman Balderson, for
that question.
It is two layers to it. I think the first layer is to
increase production of API will require new facilities and
substantial new investments and time. There are shorter-term
ways to bridge the gap and to create a more secure supply
chain, including through friendshoring and other purchasing
opportunities.
And, finally, also considering the potentially even higher
vulnerability to the starting materials upstream of the API,
which may be even more highly concentrated in adversary
countries and coming to us through India and Europe.
So we talked earlier about the good news being there is new
return opportunity and some untapped potential for some
production. But for API production, unfortunately, we are going
to have to do this from--mostly from scratch. And that is why
USP is talking about creating easier access to the advanced
manufacturing technologies, especially for generic companies,
who today are struggling to be able to make any capital
investments like that in the U.S.
Mr. Balderson. OK. Thank you very much.
Mr. Bolin, you got--I had another question. We are out of
time.
Mr. Chairman, I yield back.
Mr. Carter of Georgia. The gentleman yields.
The Chair now recognizes the gentleman from Texas,
Representative Veasey, for 5 minutes of questioning.
Mr. Veasey. Mr. Chairman, thank you very much.
And I am glad that we are here having this conversation
today about this supply chain of drug supplies. I think it is
very important, and I too am worried about the U.S. losing
ground to this area. I don't want to cede anything, whether it
is solar, pharmaceutical drugs, whatever, to the Chinese. I
think that is bad.
And one of the things that worries me and we will fall even
further behind in the race is the fact that the Trump
administration has laid off more than 3,500 FDA employees, and
many of them performed very essential functions, like drug
inspections, generic drug reviews, oversight roles funded
directly through user fees.
And at the same time, the administration is imposing these
sweeping tariffs on these pharmaceutical ingredients and
manufacturing equipment, and we don't even make that
manufacturing equipment, for the most part, here in America. A
lot of this manufacturing equipment, if you have visited any of
these facilities, they come from places like Germany. And it
is--all of these things are going to mean that the American
consumer could end up paying more for these tariff taxes.
And so I wanted to ask Ms. O'Connell, we have seen
firsthand how fragile this pharmaceutical supply chain can be.
How do the current administration's actions, including
unleashing these tariff taxes, serve to further undermine our
pharmaceutical supply chain, and what are some specific
effective ways the Federal Government can strengthen supply
chain resiliency?
Ms. O'Connell. Thank you, Congressman.
I think one of the challenges with, you know, a policy
initiative like the tariffs we have seen is it should be
accompanied by investments in domestic manufacturing. Just
putting tariffs on various products increases the price and
likely decreases access for the American people to those
products.
What is important is that any tariff actions--and, you
know, they are a really good tool to be able to use
thoughtfully. Any tariff action should be accompanied by
investments to make sure that there is adequate domestic
manufacturing so the American people continue to have access to
the products that they need.
Mr. Veasey. Yes. No, absolutely.
Mr. Murphy, you noted in your testimony that there is a
structural challenge that generic manufactures face, including
a lack of significant U.S. Government financial incentives to
encourage domestic production of generic drugs.
Can you expand on how this strategic stockpiling, either at
the national or State level, can help encourage manufacturers
to invest in U.S.-based production even when there are high
costs and market uncertainties that are involved?
Mr. Murphy. Yes. Mr. Veasey, thank you for your question.
Thanks for your support on the stockpiling act that you are
working on.
One of the things we talk with our manufacturers about is
what are creative ways to sustain supply commitments across the
U.S. as we work on market challenges, like PBM reform and
reimbursement. And one of those areas we talked about is, can
the government provide a more stable supply market at a fixed
price for a period of time that gives some certainty to
producers who may be looking to invest in the United States and
could get preference in that regard while we work across the
market to sustain, you know, the overall generic supply chain
in a more holistic way?
So, you know, we view that as a critical interim gap that
both secures the supply chain for American patients by having
some supply at the ready, given pandemic or other challenges,
but also helps bridge the market and gives some certainty to
manufacturers who are producing either, you know, in the U.S.
or friendshore countries while we work on other structural
reforms to the marketplace.
Mr. Veasey. Yeah. No, absolutely. And I really appreciate
you mentioning the bill that I have, the State Strategic
Stockpile Act, which will provide States with financial
assistance to establish, expand, or maintain their own
strategic stockpiles. I think that that would really help in
raising some of the concerns that you have. So I really
appreciate that.
Mr. Chairman, with that, I yield back the remainder of my
time.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the youngest pharmacist in
Congress, Representative Harshbarger, from Tennessee.
Mrs. Harshbarger. Yes. Thanks for that, Mr. Chairman. I
appreciate that. Thank you.
And thank you to the witnesses for being here today.
And I am especially pleased to see you, Mr. Cashman.
He is president of USAntibiotics, and his facility is a
magnificent facility in my district of east Tennessee. And if
you don't know the story of how USAntibiotics was resurrected,
you need to read it--talk to me or talk to Mr. Cashman--because
it is a remarkable story. It is a critical infrastructure
facility.
So thank you for being here.
But before I get to questions, I do want to--I think I need
to talk about--I am a compounding pharmacist, so I want to talk
about strengthening the safety and security and quality of our
healthcare product supply chains.
Talking about compounding, there is an indispensable role
for pharmacy compounding. And for 25 years--I came to the Hill
to beat that drum about my profession and the overburdensome
regulations to where we couldn't get patients the medications
they needed.
And compounding starts with a problem. For whatever reason,
there are a lot of people that can't take mass-produced
medications, and these compounding medications will provide a
solution.
And not all compounders are the same. Let me make that
perfectly clear. But there have been recent reports--wrong
reports, basically--that have referred to compounded drugs as
counterfeit or knockoffs or copycats.
And let me assure you, they are produced legally, they are
regulated, and they serve as a critical lifeline for millions
of patients. And many times have we stepped in when there are
drug shortages and we have to provide that to patients to save
their lives.
So you are going to have bad actors, and you are going to
have those compounders that are lifesavers.
So, Mr. Chairman, for the record, I would like to submit an
article that corrects the record and discusses how
misrepresenting compounded medications hurts patients,
undermines trust, and are a vital part of modern healthcare.
Mr. Carter of Georgia. Without objection.
[The information appears at the conclusion of the hearing.]
Mrs. Harshbarger. Thank you, sir.
Now I will get to the questions, the good stuff.
Mr. Cashman, you said that the U.S. Government needs to
prioritize made-in-America medication acquisitions over and
beyond price comparisons. Do you think this approach will lead
to higher drug prices for American patients and taxpayers?
Mr. Cashman. Thank you, Congresswoman Harshbarger. And good
to see you as well.
It is a valid concern. But I think it is something we
really need to look at more broadly.
When shortages occur, as they did in 2022 and 2023,
physicians are forced to use less effective alternatives--you
know that very well as a pharmacist--leading to longer hospital
stays, the potential for antimicrobial resistance in the case
of antibiotics, treatment failures, and eventually higher
overall healthcare costs.
The economic disruption from supply chain failures far
exceeds any premium for domestic production. More importantly,
we are not asking for subsidies or price guarantees. We are
asking for purchasing policies that factor in more than just
price, things like supply chain security, national security,
public health, and welfare, alongside costs.
A slightly higher upfront price is a small insurance
premium against catastrophic costs of shortages or supply
disruptions.
Mrs. Harshbarger. Yes. To me, it is a national security
issue. When you know that it is really closer to 90 percent of
your APIs come from an adversarial nation and 70 percent of
India's APIs come from China, there is a problem, and there has
been. And that is why I am here.
So you mentioned that USAntibiotics serves about 5 percent
of the market despite having capacity to serve 100 percent of
the market. You got 390,000 square feet. I have been there. And
it is not just your amoxicillin you could do. You could venture
into cephalosporins or other drug therapies within that plant.
So what prevents you from scaling up, sir?
Mr. Cashman. Our plant can produce any beta-lactam
antibiotic, Congresswoman. And what prevents us from scaling up
is really long-term agreements with both commercial and
government buyers.
That would really help our business. It would allow us to
make appropriate business decisions and make investments and
scale up when it is appropriate.
Mrs. Harshbarger. Yes. Because we are hearing from
physicians and healthcare providers all over the country about
antibiotic resistance and things of that nature, and you want
to make sure that those antibiotics you are receiving--in a
finished product, even--is exactly what it says it is. And when
you have healthcare facilities testing their finished product,
that shows you that not everything that says it is, is really
what it says it is.
You mentioned the Government spent 40 million on foreign-
origin amoxicillin while buying less than $1 million from
USAntibiotics. Isn't the Government supposed to take the lowest
bids?
We need those origins of what they are buying. Aren't they
supposed to take the lowest bid? You are only getting a million
dollars worth of a $40 million business, and you are a domestic
manufacturer.
Mr. Cashman. So, Congresswoman, let me understand your
question. Please, can you rephrase the question so I better
understand?
Mrs. Harshbarger. Well, you are a domestic supplier. The
Government spent 40 million on foreign-origin amoxicillin. And
they only--you only--I guess, you have less than a million
dollars spent on your market of amoxicillin.
Is it because of the price? Or why would you be excluded
from that contract?
Mr. Cashman. Thank you, Congresswoman. Now I understand.
Mrs. Harshbarger. OK.
Mr. Cashman. The contract for the SNS was focused on small
businesses. We are not considered a small business because of
our ownership structure. So we weren't allowed to compete for
that contract, that specific contract.
Mrs. Harshbarger. OK. Got you.
Mr. Cashman. Yes, price is part of the Government's
decision, but we would ask that they take a broader view and
look at other factors as well.
Mrs. Harshbarger. Yes.
Mr. Carter of Georgia. The gentlelady's time has expired.
Mrs. Harshbarger. Thank you. I yield back.
Mr. Carter of Georgia. The gentlelady yields back.
The Chair now recognizes the gentlelady from Texas,
Representative Fletcher, for 5 minutes of questioning.
Mrs. Fletcher. Well, thank you, Mr. Chairman.
And thank you to all of our witnesses today for your
testimony. I have appreciated it. And I think that your
prepared testimony and answers to the questions today have been
really helpful on this important topic.
This has long been an area of bipartisan agreement, and I
do hope we can move forward on some of the thoughtful
recommendations and ideas that we have heard, not only today
but over the last several years, about this issue.
But once again, I caution everyone on this committee and
everyone participating that these are not normal times. And we
can't pretend that they are. To the extent that holding this
hearing suggests that they are, we have to acknowledge that
they are not.
Like my colleagues who have spoken before me, I can think
of more than a dozen topics that this subcommittee should be
holding a hearing on about unprecedented and tremendously
damaging recent actions in the Trump administration, like the
announcement that the Secretary of Health and Human Services
just fired all of the members of the Advisory Committee on
Immunization Policies; or the staff reductions and delayed and
canceled research at the National Institutes of Health; or
pauses in funding for grants at institutions that do critical
medical research, undoing decades and decades of work that this
country has invested in to lead the world in medical research
and in scientific research more broadly.
These are just not normal times. And these are huge issues
in my district, where so many people work at the Texas Medical
Center, the largest medical complex in the world, doing the
groundbreaking research that we are talking about in this
country, including development for new vaccines for diseases
threatening people here at home and around the world.
So I appreciate the importance of making our healthcare
supply chains more resilient, but we cannot have this
conversation without acknowledging that the Trump
administration is today taking steps to gut our Federal
agencies that are directly responsible for making these supply
chains function properly and result in safe and effective
medical products for Americans.
It was only 2 months ago that HHS fired 10,000 workers
across the agency, including 3,500 at the FDA. The mass layoffs
were done so haphazardly, as many of us in the room know, that
the FDA had to hire some of those people back because they were
critical to food and drug safety and work at the agency.
Another example: firing all 13 of the Division of Policy
Development staffers in the Office of Generic Drug Policy at
FDA. This team drafts, reviews, approves the policy guidance
that we are talking about, gives instructions on how generic
versions of branded medicines can be developed and brought to
the market, the kinds of things we are talking about today. The
administration is gutting these agencies that do absolutely
critical work.
And so I am glad that the administration realized its
mistake and that some of these FDA employees have been rehired.
But it is another example of a shoot-first-and-ask-questions-
later approach that is a huge threat to our healthcare supply
chain.
So for months, guidance documents outlining the approval of
pathways for generic drugs were put on pause. Mr. Murphy, I
know that your agency--or your organization--put out a press
release expressing concern about this in early April, about the
staffing cuts at FDA.
Can you share with us, how has the confusion from the
firing and rehiring of this team and the subsequent delays in
issuing new guidance impacted generic drug development and
approvals?
Mr. Murphy. Yes. Thank you, Mrs. Fletcher, for the
question.
As you noted, obviously, we view FDA as a very critical
component of the drug supply chain both in ensuring safety and
making sure patients understand what they are getting, it is
effective.
We did see a number of delays this year that thwarted the
ability of manufacturers to request product-specific guidance.
It does appear that that is starting to come back online. And I
think we were very heartened to hear that the agency is
starting to look at the Office of Generic Drugs to rehire
individuals, because it is a component of the agency that I
think could benefit from more capacity versus less capacity.
And so we were glad to see Commissioner Makary announce
they were going to bring those folks back to the Office of
Generic Drug Policy. But we now have a backlog that we have to
work through. And from a generic drug standpoint, that inhibits
the ability to bring more affordable medicines to patients
sooner.
So we hope and we look forward to working with the agency
to try and address that backlog.
Mrs. Fletcher. Well, thank you, Mr. Murphy.
And I just want to reiterate, it doesn't have to be this
way. It doesn't have to work this way. This is an approach the
administration has chosen, and there are other things the
administration has chosen to do.
I am going to submit a question for the record to you, Mr.
Bolin, because another thing that this administration has
chosen to do is impose tariffs on all kinds of imports. We
talked about it a little bit earlier. But I want to ask you and
will submit for the record a question about how those tariffs
are impacting pharmacies.
I am hearing and seeing reports particularly that tariffs
on pharmaceuticals might impact pharmacies, and I know that
that is a concern certainly for our chairman and for all of us
for access to drugs for our constituents.
So I thank you all very much for your work and for your
time today.
And I thank you, Mr. Chairman, for letting me go over just
a minute. And I will yield back.
Mr. Carter of Georgia. The gentlelady yields back.
The Chair now recognizes the gentlelady from Iowa, Dr.
Miller-Meeks, for 5 minutes of questioning.
Mrs. Miller-Meeks. Thank you, Mr. Chair. I will try to stay
on time.
Let me just say that nothing could be more important than
this hearing today. I recall last term that the now-minority
party held up the reauthorization of PAHPA because we didn't
address drug shortages with more regulation on the FDA, which
is certainly not the answer.
This is a pressing issue that impacts all Americans
regardless of demographic and geographic location, which is our
healthcare supply chain. It includes pharmaceuticals, medical
device components, bandages, and other lifesaving products
which everyone in this room has either used, currently uses, or
will use at some point.
And I applaud recent efforts by the Trump administration to
boost American supply chain production, such as the recent
announcement of the opening of a facility in North Carolina to
produce carbon black well ahead of schedule.
Examining our supply chain is essential not just to ensure
patients have the resources they need but also to ensure we are
not too reliant on other countries like China for supplies.
As has already been addressed, only 19 percent of active
pharmaceutical ingredients, for example, are produced in the
United States, 13 percent from China, and 21 percent from
India.
The reliance on other countries for generic drugs, which
comprise the majority of prescriptions filled in the United
States, is even higher, presenting additional and concerning
challenges.
Having robust U.S.-based manufacturing is also essential to
combating drug shortages, which a number of our health systems
in my district are currently facing.
In addition to boosting manufacturing capabilities, there
need to be appropriate incentives to support innovation, which
is why I am concerned about the damage that government price
controls from the Democrats' Inflation Reduction Act has done
to U.S. biopharmaceutical research and development, especially
in areas like orphan drugs and small molecule medicines, and I
have even heard this from pharmaceutical manufacturers abroad.
And, Mr. Murphy, thank you for mentioning PBM reform. My
first PBM reform bill was in 2019 as an Iowa State senator. It
has been a long time coming for PBM reform.
Since 2021, small molecule development has decreased by 70
percent, which led to fewer cures coming to the market, meaning
less new drugs being manufactured and fewer options for
patients who depend on innovation. It is why I also support
fixing the pill penalty, which will support domestic
manufacturing of new and advanced drugs.
Mr. Piervincenzi, do you agree that creating new government
price controls could worsen the harm being done by the IRA in
terms of discouraging more R&D, and if so, by how much?
Dr. Piervincenzi. Thank you, Congresswoman, for the
question.
The important distinction, I think, in the supply chain
resiliency is that between the branded medicines and the
generics. And we are getting a really much better understanding
now. It has been known, I think, to some degree.
On the branded side, what we have is a much higher
production of medicines in the U.S. We also have more onshoring
going on right now, as we have discussed during this hearing.
And this is quite encouraging, and I think this is even more
opportunity.
Unfortunately, on the generic side, just the economics and
the incentives are just not there. And it is solvable. And, in
fact, because the prices are so low, the cost of solving it is
actually reasonable. But we don't have any mechanisms to make
sure that when people maybe pay more or have a better contract
that they are rewarded with something more resilient and they
are not just paying for the same thing with more money.
Mrs. Miller-Meeks. And this question is for you again, or
for Mr. Murphy.
There has been a lot of talk already about active
pharmaceutical ingredients, or APIs, key starting materials, or
KSMs, finished dosage forms, and the like.
I want to make sure we are all on the same page. But
instead of going through what the ingredients are, let me just
say, understanding that there is more to learn based on what we
currently know, where are most KSMs extracted and/or produced?
Either of you.
Dr. Piervincenzi. Yes. I am happy to take that, Mr. Murphy.
So we are very close to being able to actually answer that
question. The worry has been, as we have gone upstream, we have
discussed quite a bit about APIs because we kind of knew that,
and that gave us, I think, some concern. But we had a lot more
concern in discussions with industry in India, in particular,
when we said: Where are you getting your KSMs from for your API
production? And the answer was: mostly from China.
This was a concern even in India, where there are
policies--government policies to incentivize production of KSMs
in office parks in India. And this is one piece of the
solution. But USP believes we should be looking at that in the
U.S. as well to create our own resilience, especially for KSMs.
Mrs. Miller-Meeks. And quickly, where do finished doses
come from, both injectables and solid oral doses?
Dr. Piervincenzi. Yes. So injectable doses we produce much
more as a percentage in the U.S., over 50 percent are U.S.
Mrs. Miller-Meeks. OK. And then, as a whole, what country
or countries are we most reliant on, and which products are
particularly vulnerable?
Dr. Piervincenzi. Yes, the simplest answer to that is that
most medicines for the U.S. come from India.
Mrs. Miller-Meeks. Thank you. I yield back.
Mr. Carter of Georgia. The gentlelady yields back.
The Chair now recognizes the gentlelady from New York,
Representative Ocasio-Cortez, for 5 minutes of questioning.
Ms. Ocasio-Cortez. Thank you so much, Mr. Chair.
And thank you to all of our witnesses for offering your
testimony here today.
I would love to spend some of this time honing in on the
issue of drug shortages. Drug shortages, of course, are more
than just an inconvenience for a lot of people, but they can
have deadly consequences for people in urgent medical
situations.
And one of the most common drugs in the United States right
now facing a shortage is the liquid form of Albuterol, which is
used by hospitals to treat asthma.
Albuterol has been in short supply since 2022, and this is
an issue that hits particularly close to home in my community.
In the South Bronx in particular, we face one of the highest
childhood asthma rates in the United States. And when these
kids and their parents show up at a hospital and they are
unable to breathe, they may not be able to access the medicine
that they need if there is a shortage.
Ms. O'Connell, can you help the general public understand
why is it that in such a common condition such as asthma, and
with such a broadly available drug like Albuterol, how can we
get to a place--and how do we get to a place--where there is a
shortage of it in the United States?
Ms. O'Connell. Thank you so much, Congresswoman.
Albuterol wasn't one of the issues that we dealt with
directly in ASPR, but observationally, I think it is a perfect
example, as you have laid out, of the fragility of the generics
market.
Albuterol is a generic drug, had two manufacturers in the
United States. One of them declared bankruptcy and left the
market. That left a shortage. And there have been very few
incentives, as has been discussed already at the table, to
encourage generic manufacturing of Albuterol in the country.
Ms. Ocasio-Cortez. Thank you.
And I think to kind of disentangle this a little bit more,
there is a lot of talk about incentives. But at the end of the
day, the United States healthcare system is a for-profit
system. And largely, an incentive is about if making it is
profitable.
And in the for-profit system, manufacturers need to know
that their drugs will be profitable. If it is not profitable,
the incentive doesn't exist, it becomes difficult to
manufacture.
But if manufacturers can't afford to operate, they will
leave the market altogether, as you noted, or move their
operations abroad.
Meanwhile, drug shortages are costing hospitals at least
$360 million annually in labor costs alone for making up for
some of these shortages.
And so what all of these pieces put together are pointing
to is a market failure. And, ironically, this market failure is
emerging because the drug is affordable, because the price is
very low.
My understanding is that the Federal Government has
effectively acted in the past to address drug shortages. And in
particular, both Republican and Democratic administrations have
used the Defense Production Act to address past drug shortages.
There has been some discussion today about almost, like, a
strategic reserve of sorts but for medicine.
Ms. O'Connell, what is the Defense Production Act, and has
the Federal Government used it in the past--how has the Federal
Government used it in the past to address drug shortages?
Ms. O'Connell. Absolutely. Thank you so much for the
question.
So the Defense Production Act is an authority that allows
the Government in times to secure the defense of the Nation or
in times of emergency to priority rate contracts to ensure that
the supplies that are in the supply chain go to whatever is
needed to secure the country.
So in a case of shortages, it would go to the manufacturing
of the particular item that is in shortage, to be able to
provide that item to the American people.
We used it multiple times, dozens of times throughout the
COVID response, both the Trump and Biden administrations. And
then outside of the COVID response, we also used it for the
infant formula shortage. And we used it most recently for the
Baxter IV shortage.
Ms. Ocasio-Cortez. Thank you. Yes. And those are all
excellent points because we are hearing talk today of moving
manufacturing to the United States, and it is not to give short
shrift to that point, but some of those examples that you
named--well, Albuterol is manufactured in the United States. IV
fluid, manufactured in the United States. Even a couple of
years ago, baby formula also produced in the United States. All
three of those things are produced in the United States. All
three have had chronic shortages.
Ms. O'Connell, could the Federal Government play a role in
manufacturing some of these drugs where we are seeing
persistent market failures? I am interested in some of your
thoughts to that point.
Ms. O'Connell. Well, this is a question that we always come
back to. Should the Government be responsible for the
manufacture of, say, vaccines? That was a question we asked
ourselves during COVID.
And what it comes down to is a commitment from the
Government to fund both the capacity for the Government to do
the manufacturing as well as the capability for the Government
to do that manufacturing.
And over the course of our analysis in looking into this,
and over many generations of others in similar situations
needing to answer that question, what is needed most is a
sustained commitment in funding. And that has not been
something that has been demonstrated from previous Congresses.
And so we always went to the public-private partnership,
which is a perfect thing that BARDA does, which is invest in
the capacity that the private companies have, reserve that
capacity for the United States, but the United States doesn't
own the actual physical structure and do the manufacturing
itself.
Ms. Ocasio-Cortez. Thank you.
Mr. Carter of Georgia. The gentlelady yields back.
The Chair now recognizes the gentleman from Michigan,
Representative James, for 5 minutes of questioning.
Mr. James. Thank you, Mr. Chairman.
COVID was a clear wake-up call that our Nation for far too
long has been reliant on unstable and adversarial supply chains
for our critical medicine and healthcare supplies. When we are
relying on China for lifesaving supplies to defend against a
Chinese-made virus, something is horribly wrong.
Only 12 percent of active pharmaceutical ingredients, APIs,
for prescription medicines in America are manufactured
domestically. Half our APIs come from India and the European
Union. While China only contributes around 8 percent of APIs,
they are a dominant supplier of the key starting materials
utilized to produce APIs. They are also the exclusive
manufacturer of APIs in essential medicines controlling much of
the antibiotic API production.
While we have been asleep at the wheel, the CCP has engaged
in a concentrated and strategic effort to become the global
leader in biomedicine development and production. I am gravely
concerned over the growing role of the Chinese industry in our
medicinal supply chains. Even India, which has made significant
investments in carving out a major role in the medical supply
chain, is dependent on China, an estimated 70 percent of their
APIs.
The warning lights are flashing red, and it is time for
Congress to take action. The health of our citizens is a
national security imperative, and too many lives are at stake.
We must take action, and we must do it now.
So I appreciate you all being here today. And we are trying
to look at things different. It is a bipartisan issue to
address our medical supply chain, but I believe that Michigan
and the Great Lakes region is in a specific and very special
position to be able to contribute in new and innovative ways.
Given the push for reshoring and diversifying supply
chains, should Congress direct HHS, DOT, and Commerce to study
the feasibility of routing APIs and KSMs through U.S. ports in
the Great Lakes to reduce reliance on congested coastal ports?
Any of you have an opinion?
Yes, sir.
Dr. Piervincenzi. Thank you, Congressman.
It is true we haven't discussed this piece of the supply
chain in particular. And in the USP's Medicine Supply Map, most
of the U.S.' imported medicines come through the East Coast.
And it is something to be considered because that is a
vulnerability itself through weather conditions and others.
And so it is something that, if it is of interest, we could
utilize the data to try to get you some more information about
that.
Mr. James. I would like to follow up with you on that, to
at least have a feasibility study. Coming in through St.
Lawrence and through the Great Lakes, the ports in Ohio and in
Michigan and in Illinois could provide us a very good
opportunity to diversify our risk levels in, say, New York, New
Jersey, with that port, or maybe even further south in
Jacksonville or Atlanta--I am sorry--or Savannah and Charleston
and the like.
Mr. Cashman, as the head of the only U.S.-based
manufacturer of certain critical antibiotics, you understand
logistical hurdles in sourcing both active ingredients and
distributing finished drugs.
This is the time to start considering regional shipping
infrastructure, again, like Port of Detroit. Is there any
targeted investment in port distribution infrastructure that
can help firms like USAntibiotics scale domestic manufacturing
and create a new route to distribute drugs and ingredients to
drug-short areas?
Mr. Cashman. Thank you, Congressman.
I am not an expert on that subject. We route all our
ingredients coming from Europe through an East Coast port as
well. It is something to take a look at. And, again, I am not
an expert on that particular topic, so I will pass.
Mr. James. But additional routes might help with resilience
and potentially lower cost?
Mr. Cashman. Yes, it would help. Definitely.
Mr. James. Perfect.
Dr. Piervincenzi, USP has done a lot of work mapping supply
chain vulnerabilities and drug shortage risks. Has your
analysis explored the concentration of pharmaceutical
transportation channels? And do you see value in restructuring
transport sourcing routes? For example, APIs or KSMs, as we
mentioned.
Could USP's Medicine Supply Map incorporate port of entry
and regional manufacturing hub data to help us understand how
we could mitigate shortages and work through the Midwest?
Dr. Piervincenzi. Thank you, Congressman.
We actually do incorporate, for most products, the port of
entry. But your question opens up something that we would be
very interested to explore, which is that is only one step in
that process.
How else--what are the other links between that the map
does not currently contain? But it is an answerable question.
So I would be interested to follow up on that.
Mr. James. Thank you for your feedback and advice. I look
forward to following up with you.
Mr. Chairman, that is all I have. I yield.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the gentleman from Massachusetts,
Mr. Auchincloss, for 5 minutes of questioning.
Mr. Auchincloss. Thank you, Mr. Chairman. I am going to
change my name to Mr. Jones for you.
I appreciate the expert testimony this afternoon.
Mr. Murphy, I want to engage with you, please, and first
just by stating there is so much debate in Congress--rightfully
so--on expanding access to prescription drugs. And one of the
best answers is staring us right in the face, which is
genericization of drugs. It is the most effective way to ensure
that people have affordable access to medications.
And if I am correct, actually, Americans--unlike with brand
prices--Americans actually pay less for generic drugs than
people overseas.
So it is a real success story. There is debate in this
committee, of course, about maybe the right amount of time
before drugs go generic. But they should go generic without
undue delay. And we want to see a successful generics and
biosimilars sector.
I appreciated the commentary you provided at the front end
of this about maybe an industrial policy surrounding generics
manufacturing.
I will be candid. I am not sure I agreed with the middle
parts of your recommendations, which sound more like subsidies
and tax breaks. But the first and last thing you said I really
liked, and I want to dig into those a little bit.
The first was basically demand signal for enhanced
production of generic drugs, particularly sterile injectables.
Can you talk about proposals that have been made around
having DSH hospitals aggregate as group purchasing
organizations and providing a premium for those sterile
injectables for a sustainable supply chain? What is your view
on those?
Mr. Murphy. Yes, Mr. Auchincloss. Thank you for the
question.
I think the current state of the market demands any
creative solution that will help provide certainty to
manufacturers that there is going to be a market at a
sustainable price for them to invest in the kind of domestic
manufacturing we would like to see.
Mr. Auchincloss. Is that sort of DSH premium approach
something that you would be amenable to?
Mr. Murphy. So I would have to talk with our manufacturer.
I would love to follow up with your office. I haven't explored
that in depth, though.
Mr. Auchincloss. Great. It would build on some examples
that we have already seen with hospitals grouping together in
group purchasing organizations for a sustainable supply chain.
The last thing you talked about was PBMs and, basically,
the role of these intermediaries, these drug-pricing middlemen
in distorting healthy incentives. And I want to dig into that,
particularly on biosimilars, because the biosimilar market has
been working better but not working well enough.
I believe 86 percent of brand biologics that are eligible
for biosimilar competition still don't have a biosimilar under
development. And there are a lot of reasons for that. But that
is a big opportunity cost. That is probably about $100 billion
of spending that could have been genericized.
Talk a little bit about how PBMs are playing the rebate
game to try to keep biosimilars out of the market.
Mr. Murphy. Yes, this is an issue we have studied
extensively because we are missing a lot of opportunity, and we
are ceding ground to Europe, candidly.
The PBM environment has favored those manufacturers that
can afford to pay very large rebates or have a large product
portfolio that is rebatable that can prevent generic access. In
one of the most famous examples of a product right now that has
multiple biosimilar competitors, the brand manufacturer retains
over 80 percent market share multiple years after. And it is
infecting investment in the future.
Mr. Auchincloss. Right. Providing the safe harbor to the
anti-kickback provision does not seem like it was great policy
from the 1990s. Maybe we should rethink that.
Mr. Murphy. We would love to work with the committee on a
number of areas to get that out of the way.
Mr. Auchincloss. Now, the PBMs are also starting to do
their own biosimilar manufacturing. Give us, like, 30 seconds
on that and whether that is a good idea.
Mr. Murphy. So it is challenging because, in the one hand,
we want to promote biosimilar adoption, but we also want to
promote the investment that is necessary to bring new
biosimilars to market. And if standalone generic and biosimilar
manufacturers don't see a signal that investing in that next
generation of biosimilars is going to be worthwhile from a
portfolio standpoint, they will stop investing in that.
And so if we see follow-on products that don't help the
market but in fact favor particular individual companies, it is
going to be a challenge to the overall market.
Mr. Auchincloss. I am not sure I fully tracked on that. Are
you saying that the PBMs running their own biosimilar
manufacturing is a net negative for biosimilar competition?
Mr. Murphy. I think it is a challenge for those folks who
are trying to innovate new biosimilars.
Mr. Auchincloss. Got it.
Quickly, in our last 30 seconds, FDA's role, given the
staffing cuts in biosimilar interchangeability studies.
Mr. Murphy. Yes, so we are pretty much in agreement with
FDA that we need to optimize that process and take costs out of
the system. And we look forward to working with Congress to try
and codify that over the years.
Mr. Auchincloss. Do you have confidence, given the radical
reorganization and cuts at the FDA, that they have the
personnel and expertise to do that?
Mr. Murphy. I think they could always use more support.
Mr. Auchincloss. I yield back.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the gentleman from Oregon, Mr.
Bentz, for 5 minutes of questioning.
Mr. Bentz. Thank you, Mr. Chair.
And thank all of you for being here.
Mr. Cashman, I am interested in balance. And, I guess, the
question is, is there a restriction that we can impose on China
if they choose to impose a restriction on us?
And this is a broad general question because, as I listen
to this, I am trying to figure out whether the issue is fear of
someone withholding stuff or price.
But go ahead and just tell me, are we currently in balance
or out of balance?
Mr. Cashman. Congressman Bentz, that is a very interesting
question. I think we have to think as a nation how much
dependence do we want on a foreign nation like China?
Right now, in the case of amoxicillin, 80 percent of the
starting material used to make the API--it is called 6-APA--
comes from China. We are very, very dependent. And therefore, I
think, things are very much out of balance. We are so dependent
upon China in the case of amoxicillin.
Mr. Bentz. I think you indicated earlier that the challenge
for you is what, in expanding your footprint in that space from
5 percent to something higher? Is it price? You said something
about contracts, and I wasn't quite clear on what the
restriction was when it came to contracts.
Mr. Cashman. One of the challenges we face is contracts,
yes. Contracts give us consistency. It gives us stability. It
allows us to make investments in personnel and in equipment.
So those long-term contracts--and we have had some success
on the commercial side with that, but we haven't had success
yet on the governmental side.
Mr. Bentz. And why not?
Mr. Cashman. I can't explain that, sir.
Mr. Bentz. Does it have something to do with the bid
process preventing long-term contracts? Is it on the Government
side of the equation, or is it on your side of the equation?
Mr. Cashman. I think it is on the Government side of the
equation. The Government's focus is very much on price. There
are some structural issues. For example, in cases they are
looking for purchasing from small business entities and things
like that. Through our organizational structure, we are not a
small business.
Mr. Bentz. Let me hop ahead. The issue--the tradeoff seems
to be price versus everything else. So if China is going to be
subsidizing everything that they do in China, then is our
market system such that we cannot compete because everything is
all about price? Is that what you are really saying?
The only way we can ever get even is if we decide we want
to pay a higher price, because we can certainly get it for less
from China, but we lose the security situation. That is what
you are trying to call out, isn't it?
Mr. Cashman. Well, price is an important aspect and that I
think it affects all of us. And, yes, China and India have
different ways of looking at the economic market than we do.
They made decisions to have much lower prices. And in some
cases, we are dealing with competition that is below our cost
of production.
Mr. Bentz. Right. Well, it seems to me we face this
situation in any space that China chooses to focus upon, which
is a lot of them. Steel is a good one to talk about for a
moment. They can produce steel, what, 30 percent more than
everybody actually needs.
So what I am trying to get at here, the common theme seems
to be if we want to be secure, we are going to have to pay
more. Is that a correct statement?
Mr. Cashman. Congressman, I think in general that is the
case. We will have to pay more.
Mr. Bentz. OK. Let me flip over to Mr. Piervincenzi.
What prevents China right now from withholding stuff that
we actually need? Is it world opinion? We see it happening now
in the context of negotiations with China. They are withholding
rare earth minerals, and we have chips and perhaps certain
types of stuff we use in fracking. So there is kind of a little
bit of a balance there, not much.
But what prevents us from right now being in real trouble
in this space?
Dr. Piervincenzi. I am not sure anything prevents it at the
moment.
I would say that the key starting materials that we talk
about here in medicine are probably the most equivalent to your
rare earth metals. And most of those are probably going to
India for production, but these routes and channels are well
understood if you are the owner of those key starting material
plants.
I would say that here in the U.S. we actually don't know
where these key starting materials are yet. And that is why we
are working on that data source.
We hope to be done with that in the next few months, and we
will finally have the answer as to where we are vulnerable, and
then we can start to try to correct it one drug at a time. I
don't think there is a shortcut to it.
Mr. Bentz. To what do you attribute our current--I don't
want to say lack of preparedness, but it appears that we are.
Are we not prepared?
Dr. Piervincenzi. The key starting material topic is really
chemicals. And the chemicals industry has mostly left the U.S.
decades ago. And while there are also API dependencies, and
that is not without some challenge, it is even more of an issue
upstream, just as Mr. Cashman has described.
Mr. Bentz. Thank you so much. Yield back.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the gentleman from Ohio, Mr.
Landsman, for 5 minutes of questioning.
Mr. Landsman. Thank you, Mr. Chair and to the ranking
member, for today's hearing.
The importance of strengthening domestic manufacturing in
the healthcare supply chain is hugely important to all of us,
certainly in southwest Ohio.
We have--and I want to just share--a company called Emerge
Manufacturing in southwest Ohio. It is led by a woman named
Cynthia Booth. She was this incredible entrepreneur and was
going to retire and then realized that we had this issue during
COVID and that we should be doing more of the PPE manufacturing
here in the United States and, in her mind, in a community
where folks don't really have access to these good-paying jobs.
So she sort of emerged out of what was retirement to build
Emerge Manufacturing, and it is now up and running. They are
producing PPE, all kinds of other things for the healthcare
space.
And it is in a neighborhood called Bond Hill, historically
Black neighborhood, predominantly Black neighborhood where she
grew up, and now they are manufacturing all of this. And the
majority of people who work there are from Bond Hill, which is
just an incredible story, and I wanted to share.
And if you are ever interested in coming and spending time
in Cincinnati and seeing Emerge Manufacturing, we would love to
have you--anyone from the committee too.
She and others rely on the FDA to get their PPE approved.
And that is why the FDA's job, as it relates to the domestic
supply chain, is so important.
In April of 2025, the GAO released a report to Congress
about drug shortages entitled ``HHS Should Implement a
Mechanism to Coordinate Its Activities.'' Makes perfect sense.
In the report, the GAO stated that the FDA, Congress, and
academic experts have reported that collaboration across
Federal agencies is important to address drug shortages and
enhance supply chain resiliency because each agency has a
unique role in the supply chain.
HHS then creates a Supply Chain Resilience and Shortages
Coordinator--not a great name but a great cause, makes all the
sense in the world--somebody who is going to lead the
coordination across the agencies. They do this in 2023,
November 2023, a position within the Office of the Assistant
Secretary for Planning and Evaluation.
It was funded through 2027. Last month, however, the Trump
administration eliminated the role. HHS no longer has the
mechanism to coordinate drug shortage activities across the
Department.
Ms. O'Connell, question: As Assistant Secretary for
Preparedness and Response, how was the office working with
other agencies within HHS, including the FDA, to strengthen the
domestic supply chain?
Ms. O'Connell. Thank you, Congressman.
I think that is a great example of the need to coordinate
within the Department that we always were dealing with.
But the role of the supply chain coordinator was
extraordinarily important during my tenure there. You have lots
of independent agencies within HHS, each having their own
agenda, each having their own constituencies that they are
working towards. We needed someone sitting on top of all of
that, tying the threads together, to ensure that we were moving
forward in the way that we needed to, in a unified way, on
behalf of the Department and on behalf of the White House.
Mr. Landsman. Can anyone on the panel give a reason for why
they would just eliminate the position?
OK. None.
It doesn't seem like it was a smart idea.
But the position is now gone. HHS also has identified
something like 10,000 employees to be fired.
Is the Department equipped to coordinate a response in the
case of a supply chain issue, as we had one several years ago?
Ms. O'Connell. So it is hard for me to know, since I am on
the outside now, what it feels like on the inside. But what I
can say is that the role of the coordinator was important.
And the coordinator didn't just coordinate within the
Department. They coordinated across departments. And there are
lots of other pieces of the supply chain, departments and
agencies throughout the Government, that have roles to play. We
have talked about tariffs and other incentives.
So having somebody sitting on top of all of that was really
important. And we need somebody, I think, who can do that
again.
Mr. Landsman. I agree. And this maybe is something that
this committee could take up. It seems like a simple enough
thing to do, to say, ``Hey, why don't we put the coordinator
back on the job?'' Because we all agree that increasing the
domestic supply and domestic manufacturing is really important.
That is my time. Thank you very much. I yield back.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the gentleman from Texas, Mr.
Crenshaw, for 5 minutes of questioning.
Mr. Crenshaw. Thank you, Mr. Chairman. Thank you for
holding this hearing.
Thank you to our witnesses.
I think too often we don't treat domestic drug
manufacturing like the national security issue it is. But it is
one, especially when we are depending on foreign nations, often
adversarial ones, for critical medicines or their ingredients.
We are handing them leverage. That is not good. It is a
dangerous game to play.
And it leaves us vulnerable when we are in crisis, whether
it is a pandemic, a supply chain disruption, geopolitical
tensions, whatever it is.
And in my district, I am proud to say our citizens are not
waiting around. They are acting. San Jacinto College, Lone Star
College leading the way, training the next generation of
biomanufacturing and biomedical engineering professionals.
These students will fill those gaps in the workforce, help
build the domestic capability that we really should have
prioritized a long time ago.
We are seeing investments too. Bionova is a company that
recently put $100 million into a new plasma DNA manufacturing
facility in my district in The Woodlands.
And it isn't a coincidence. It is a signal. I think
companies are choosing Texas because they see the promise of a
strong, skilled workforce and a business environment that
supports innovation and growth.
But we have got a long way to go. Nearly 80 percent of
biopharma companies, many of them small and emerging biotech
firms, still have to rely on contract manufacturing or contract
manufacturers in China. That should set off a lot of alarm
bells.
If we are serious about building biomanufacturing capacity
here, then we have got to take a hard look at the regulatory
and policy roadblocks that are standing in the way. We have to
fix what is making the U.S. less competitive. And we should do
it now before we are caught flat-footed again in the next
crisis.
Mr. Murphy, we have seen Congress move pretty quickly,
actually, to streamline permitting specifically for
semiconductors under the CHIPS Act, carving them out from the
National Environmental Policy Act, NEPA.
Given the strategic importance of--and I bring that up
because that was a recent bill, and it was something that
Democrats and Republicans came together on, NEPA reform, but
just for this one thing that we can agree on because we need
more chips, OK? Seems like a--that is interesting. That is a
pathway to agreement.
Given the strategic importance of pharmaceutical
manufacturing, do you think similar carve-outs for
pharmaceutical facilities are warranted? Would removing these
regulatory hurdles, while also protecting the environment
through pared-back, I think more efficient review processes--
would that help accelerate domestic buildouts?
Mr. Murphy. Yes, Mr. Crenshaw, thanks for the question.
We certainly agree that permitting is one thing that can
delay significant investments and really stand in the way of
getting our domestic manufacturing base back online,
particularly in the generic pharmaceutical space where cost is
such a significant driver.
And so I think we saw in the President's Executive order
that talked about permitting reform in the medicine space is
something that we could work collaboratively with Congress to
try and ensure that we both protect our environment but also
not let the abnormally long permitting processes stand in the
way of getting that domestic investment online.
Mr. Crenshaw. Yes, I appreciate that. And, again, we have
done it before in a bipartisan way, and I hope we can do it
again in this Congress. Even if we can't get full NEPA reform,
at least we could do it for certain industries.
Dr. Piervincenzi--did I get that? OK.
Dr. Piervincenzi. Thank you.
Mr. Crenshaw. USP has worked on digital quality
infrastructure advancing manufacturing mapping. What
capabilities exist right now today for really understanding and
fully mapping the U.S. pharmaceutical supply chain using that
technology?
Dr. Piervincenzi. So we are a lot closer than 2019 when we
started. Many of the things that--the supply chain is complex,
we don't know what it is. We can answer most of those questions
already today. And in just a few months, we will be able to
talk about that even on down to the level of key starting
materials, which means we are getting very close to having the
information of what is where, and we start to have to do the
next thing, which is what we do about it.
And that is not a dead end, because there are additional
analyses we can do that open up those opportunities for
domestic manufacturing. So how else can we make those
medicines? How else can we produce an API through different key
starting materials that maybe are available either near shore
or domestically?
And they are one at a time. There are solutions. But they
are solvable. They are solvable one time. And then we can think
about the incentives and the other things we have talked about
here today to reduce the barriers to those investments that are
very hard for generic companies today to make those
commitments. We see it, the lack of investment in advanced
manufacturing. It is almost at zero within the generic industry
today.
Mr. Crenshaw. I want to get one more question in for Mr.
Murphy.
Regarding the FDA's current good manufacturing practice
enforcement, what tools, if any, exist within FDA's own
compliance and inspection regime to tip the scales towards
domestic production?
Mr. Murphy. Yes, I mean, certainly, FDA could signal their
willingness to speed up inspections for newly brought online
generic manufacturing facilities in the United States.
I think understanding that that inspection paradigm is on
the horizon and set up stably would give folks the
understanding that that investment has a timeframe at the end
of it which requires FDA inspection is more certain.
Mr. Crenshaw. OK. I appreciate that.
And yield back.
Mr. Carter of Georgia. The gentleman yields back.
The Chair now recognizes the gentleman from Louisiana, my
first cousin, Representative Carter, for 5 minutes of
questioning.
Mr. Carter of Louisiana. Thank you, my dear cousin. Thank
you, Chairman and Ranking Member, for holding this hearing.
Thank you all for being here.
As the only member of the committee from Louisiana, I know
how important a resilient supply chain and resources, like the
Strategic National Stockpile, are for States like mine,
especially during natural disasters and public health
emergencies.
In fact, I am proud to share that Louisiana has been and
continues to be a leader in this space. In 2020, during the
COVID-19 pandemic, Ochsner Health and SafeSource Direct, a
U.S.-based PPE manufacturer, formed a partnership to step up
and address the Nation's shortages of gloves, masks, and other
critical PPE needed to protect our healthcare workers on the
front lines.
Efforts like this and the Federal investments allow to
expand domestic manufacturing and bolster the supply chain to
ensure we are all well prepared for when the next--not if--but
when the next natural disaster or public health emergency hits.
I look forward to hearing from our witnesses today and
discussing how Congress can strengthen our medical supply chain
and expand domestic manufacturing.
Ms. O'Connell, we know that the--from this committee,
Louisiana--and what I have mentioned to you earlier, Louisiana
is paving the way for domestic manufacturing in the healthcare
space through Ochsner and SafeSource Direct. They are also
currently in the process of standing up a rubber facility to
fill the U.S. gap in domestic raw materials, such as rubber,
which is needed to create gloves and PPE.
From your perspective, as someone who previously served at
HHS, how can the Federal Government work to ensure there is a
domestic market to support the sale of domestic raw materials
and end products?
Ms. O'Connell. Congressman, thank you so much for that
question. And I think the SafeSource example is one that we
have been trying to--or that the Federal Government should
think about replicating in other places.
What is important about what SafeSource was able to do,
they were able to solve one of the problems that we continued
to run into in other situations, which was making sure that
there was a market for the PPE that was manufactured even after
the emergency.
And because a hospital system like Ochsner committed to
purchasing SafeSource's PPE, we were able to keep SafeSource in
business, and Ochsner had the high-quality, domestically
manufactured PPE that it needed.
Finding similar hospital partners across the country with
other investments we have made should be a priority of the
current----
Mr. Carter of Louisiana. Proud to have Louisiana leading
the way there.
The Strategic National Stockpile is important to States
like Louisiana. To what extent does the stockpile support and
utilize domestically manufactured products, such as gloves and
PPE?
Ms. O'Connell. Whenever possible, we tried to restock with
domestically manufactured goods. It is important, and as I said
in my opening testimony, that we have 90 days of this emergency
supply to be able to get us through those first early days of
anything that comes next.
Mr. Carter of Louisiana. Thank you.
Ms. O'Connell. Yes.
Mr. Carter of Louisiana. Mr. Murphy, thank you for being
here with us here today and talking about the challenges with
domestically manufactured generic drugs.
As you know, FDA reviewers are tasked with conducting
inspections, and new manufacturing facilities and manufacturers
are required to comply with good manufacturing practices.
How would RIFs at FDA impact the agency's mission to carry
out this work and exacerbate the challenges you shared?
Mr. Murphy. Yes, Mr. Carter, thank you for the question.
And early on, when the initial RIFs were announced, we saw
that it was a lot of support staff in the Inspections Division,
which raised a lot of concern in the industry, because it is
one thing to have qualified inspectors, and a sufficient amount
of them, but you also need that support staff to help FDA
conduct all of the inspections and the logistics associated
with that.
We have been tracking very closely whether or not there
have been deficits in inspections. But I would point out the
fact that, from a foreign inspection standpoint, FDA is still
not getting back to the levels they had pre-COVID of being able
to conduct foreign inspections. And the industry, actually,
would like to see more capacity in that space.
Mr. Carter of Louisiana. So what happens, how does this
continue to slide down the slope if we don't do something
differently?
Mr. Murphy. Yes, so I think right now it is affecting the
ability to get more product in the market at a lower price. I
think we are seeing FDA trying to triage that, but ultimately
we need to see FDA funded at a level that allows it to have a
fully functioning inspection force.
Mr. Carter of Louisiana. Either of you can answer this.
And how have the on-again/off-again tariffs impacted
manufacturing? We will start with you, Mr. Cashman, and then we
will go down, if we can. I have got about 13 seconds, so can
you--whoever wants to answer, answer quickly. You can, if you
are ready, Mr. Murphy.
Mr. Murphy. I will just say it creates uncertainty and it
requires companies to make----
Mr. Carter of Louisiana. And uncertainty kills business,
doesn't if? It hurts our economy. The uncertainty of not
knowing if we are able to do business or not is one of the
leading factors of why businesspeople complain, they don't have
the certainty of being able to conduct business.
My time is over. I yield, Mr. Chairman.
Mrs. Cammack [presiding]. The gentleman yields.
The gentleman from New Jersey, Mr. Kean, is recognized for
5 minutes.
Mr. Kean. Thank you, Madam Chairwoman.
I want to thank our witnesses for being here today. I am
very interested in learning about our medical supply chains,
especially in the biotechnology space.
New Jersey has a thriving biotech industry for both brand-
name and generic drugs. I have been pleased to see several
companies make investments in the Garden State. These include
Ferring, Roche Diagnostics, Amneal, Novartis, and BeOne
Medicines, amongst others.
I am also a member of both the Energy and Commerce
Committee as well as the House Foreign Affairs Committee. In
that committee, we are working on legislation to be--to
reauthorize the State Department.
I look forward to learning if I can use that work to build
resilience and transparency in our medical supply chains.
Mr. Bolin, the med spa case that you cited in your
testimony involved active pharmaceutical ingredients sourced
from an unregulated international online supplier.
What challenges does NABP face in tracking and preventing
the importation of counterfeit or substandard APIs or GLP-1
drugs?
And what can Congress and the U.S. Government do to
strengthen international partnerships, such as with custom
agencies or to better address this issue?
Mr. Bolin. Sure. Thank you for the question, Congressman.
So on the issue of med spas, I will say first there are
legitimate operators that do things the right way and compound
correctly, but our members are seeing that most of the scary
and egregious things that are happening are happening in these
largely unregulated facilities.
So you have instances where you have unlicensed
practitioners that are never inspected, are setting things up
in their homes or, you know, scarily, in their bathtubs. And,
frankly, a lot of the boards of pharmacy actually lack the
jurisdiction to go in and inspect these facilities, so they
will at times have to work with the board of nursing or work
with the medical board or refer to the attorney general's
office.
So from a congressional perspective, any sort of visibility
Congress can continue to shine on this issue will help, because
there are, we believe, thousands of these locations that will
never see a regulator come in the door. And so when you think
about them obtaining this API from unregistered forces, like,
that is really, really scary when you think that people are
injecting these things into their body.
Mr. Kean. Thank you.
Mr. Cashman, my district has a number of pharmaceutical
manufacturers, both brand name and generics space. Can you
speak to the challenges you have faced operating domestically?
And, additionally, what can Congress do to ensure that the
companies that are choosing to do manufacturing domestically
can continue to do so?
Mr. Cashman. Thank you, Congressman. Great question.
I think, you know, I talked about the issue of prices
before. And I just want to emphasize that the difference in
prices between us and many other foreign--foreign generic
suppliers is not very big. It is somewhere between 10 and 20
percent in many cases. And in a few cases in government
contracts where we have checked that, we can actually offer
better prices than the Government paid through the Government
contracting suppliers.
So we could do better on some of the prices, but we do--we
have and we have lost business for 10 cents a bottle on the
commercial side. So that is very challenging but I think one of
the things that would definitely help everyone, I think, in the
generic industry have more stability and have the ability to
have long-term contracts, which will allow us to plan and--plan
our capital and expansion and scale up businesses in an
efficient way.
Mr. Kean. Thank you.
Dr. Piervincenzi and Mr. Murphy, the FDA recently announced
its plans to expand the use of unannounced inspections at
foreign manufacturing facilities. Can you explain how this
policy change will impact efforts to increase supply chain
resilience and even domestic manufacturing?
Mr. Murphy. So thank you for that question, Mr. Kean.
Actually, I think there are net positives in the ability to
ensure that FDA has the flexibility to get in the facilities
overseas and provide the public with assurances of the safety
of the medicine supply chain. So, you know, I think we look
forward to working with the agency to try and expand inspection
capacity both domestically and overseas to help ensure that we
have a stable flow of medicines that come in to patients.
Mr. Kean. Thank you. Doctor?
Dr. Piervincenzi. Thank you for that question. Very much
like FDA, USP has set up facilities with teams in India and in
China for specifically that purpose, which is a risk-based
approach to all assurance of quality medicines. You have to
show up where you think the risks are, and you have got to have
enough resources. Otherwise, you are just inspecting in your
back yard, and that is not only not effective, but it is
actually not fair to domestic manufacturers.
Mr. Kean. Thank you to all the panel of witnesses.
I yield back.
Mrs. Cammack. Thank you. The gentleman yields.
The Chair now recognizes herself for 5 minutes. I know that
is strange.
So by now it has been made clear, as we come to the
conclusion of the hearing, that depending on adversarial
nations like China for lifesaving medicines, it is dangerous.
So I am not going to repeat what has already been said here
today. Instead, I want to talk about some solutions.
So we have American manufacturers ready to produce the
antibiotics, the generics, the APIs that our system depends on,
but they are getting crushed by subsidized competition from
China and India while navigating a U.S. system that buries them
in red tape and rewards the lowest bidder no matter where it is
made. This is a problem.
So if we are serious about fixing this, we need to reward
resilience. That means long-term Federal purchasing contracts
for essential medicines. It means fast-tracking approvals for
domestic facilities, and it means treating pharmaceutical
manufacturing like the national security issue that it is.
And we also need to think bigger. Reshoring can't just mean
the final pill or vial. It has to include the full chain,
starting from key intermediaries and chemical inputs. If we are
still importing the ingredients from China, we are still
vulnerable.
It should be about incentivizing domestic production of
these early-stage materials to truly rebuild them from the
ground up. And that means working closely with trusted allies
as well, especially in Western Europe, to diversify our
sourcing and to build in redundancy, so with one facility going
offline it doesn't mean that we are putting other people at
risk.
The bottom line is that we cannot defend American lives
with a drug supply chain that depends on the goodwill of
Beijing or New Delhi.
So I want to thank you all for being here as witnesses
before this committee and for speaking on what is working, what
is not, so that we can finally get this straight.
Mr. Bolin, you have been highlighting the early successes
of the Pulse platform. Now, as we work to bring pharmaceutical
manufacturing back to the United States and rebuild resilience
into the supply chain, I am very concerned about the
counterfeit and substandard drugs slipping through the cracks,
particularly from overseas sources.
Since Pulse has launched, what are the most alarming trends
that you have seen, whether in product type, origin, or
distribution patterns, and what does that tell you about where
the biggest vulnerabilities lie?
Mr. Bolin. Thank you, Madam Chair. I think the most
disturbing thing that we have seen is the fact that the very
first scans that we conducted utilizing the tool found
illegitimate and counterfeit products. And that is just in a
handful of States that are using the tool so far.
The reality is that where there is money to be made, bad
actors are going to find ways to insert things into the supply
chain. So it is going to require vigilance on the part of the
State boards of pharmacy as well as the pharmacies themselves
to really think about where they are purchasing their
medications.
I think one of the other challenges is when you have--you
know, we have talked today a lot about what happens as products
are being manufactured. We still have issues within the supply
chain from the point a product enters the supply chain to the
point it is dispensed. There is not a lot of visibility and
transparency in the supply chain.
And so I would encourage Congress to think about ways that
you can start to unlock some of the capabilities that do exist.
The fact that this law--and you can track a product down to the
saleable unit, that unlocks the ability to really trace
medications and address issues like drug shortages, keeping
illicit medications out of the supply chain.
So I think let's leverage the investments that has already
been made. That would be what I would recommend for Congress.
Mrs. Cammack. And you mentioned the States that have
adopted it. What are the States that are currently utilizing
the platform?
Mr. Bolin. So we have over 30 States that are currently
utilizing the platform.
Mrs. Cammack. I am not going to make you name them all.
Mr. Bolin. Thank you for that. But we are finding good and
early success with that, so we are going to continue to help
support our members so that they--and provide additional tools
to help them detect counterfeit medication.
Mrs. Cammack. OK. In the interest of time--I have got about
a minute left. So you talked about the--needing transparency in
the supply chain, and you said Congress needs to do more in
that space.
So as we are effectively working to reshore the production
and reinforce the supply chain, how can we ensure that some of
the regulatory tools, like Pulse, don't detect--that just don't
detect threats but actually help eliminate them as well?
Mr. Bolin. And so when you speak about that supply chain
visibility, it is really getting members of the supply chain to
be more transparent and communicate with each other. There is
so much information that is moving from the point of
manufacture to distribution to dispensing, but no one shares
that. It is only when they have to share it.
And so I think the supply chain being incentivized to
actually do something, like the national control tower that
existed back during COVID, that was some of the most widespread
visibility that the supply chains had after the point of
manufacture, and I think that is another opportunity to
consider.
Mrs. Cammack. I would have more for you that I would like
to follow up on, but I have run out of time. So my time has
expired.
I yield to the gentleman from California, Mr. Obernolte.
You are recognized for 5 minutes.
Mr. Obernolte. Thank you very much. I want to thank our
witnesses. This has been a really valuable hearing for me.
I represent, obviously, a district in California. But
because of all the biopharmaceutical research and innovation
that occurs in California, particularly at our public
institutions, it is obviously of critical interest that we make
sure that our supply chains are resilient.
If I could start with Mr. Cashman, I was really interested
in your testimony about how to make our supply chains more
resilient. And I thought it was poignant, you know, the story
that you told about when we allow our supply chains to be
opaque and complex, how when we have an unforeseen shortage,
those supply chains can't respond. And you offered, I thought,
some really meaningful suggestions for improving that
situation.
But one of the things I was curious about, it seems like--
as a free market guy myself, it would seem like market
reactions would catalyze some of the solution to that problem.
For example, one of the things you suggested was long-term
supply contracts. But if you are someone that has consistent
demand for a drug like amoxicillin and you have experienced a
situation where supply is constrained and, therefore, the
market reacts by raising prices up to astronomical levels, you
would think that would incentivize you, just from a financial
perspective, to diversify your supply chains.
Why is that not the case?
Mr. Cashman. Congressman, it is exactly that. We have had
commercial--people in the commercial market, customers of ours,
approach us for long-term contracts because of the instability
of supply during 2022 and 2023. Those are, I think, very
knowledgeable and innovative people who want to avoid problems
for a critical drug like amoxicillin.
Unfortunately, much of the market is still very much
focused on price. And as I said earlier, 10 cents a bottle for
a product that sells for $3.40, sometimes people walk away from
us as a U.S. supplier for a foreign supplier.
Mr. Obernolte. It would just seem to me that there is a
commercial incentive to not do that when you are aware that
locking yourself into a foreign supply might mean a lack of
availability, and paying just a couple cents more now for a
long-term contract would ensure that that doesn't happen, just
from a dollars and cents standpoint would seem like people
would be incentivized. But thank you for the response.
Dr. Piervincenzi, one of the things that I thought was
really interesting about your testimony is the criticality of
manufacturing innovation here in the United States and,
obviously, that is something that would make our domestic
manufacturers more competitive, it would simplify our supply
chains, it would incentivize domestic production.
But, I mean, just to play devil's advocate for a moment,
even if we came up with innovation here, in short order, isn't
that going to be duplicated elsewhere in the country? It
doesn't seem to me like--although it is a desirable thing, it
doesn't seem to me like that is a long-term solution to the
problem.
Dr. Piervincenzi. So 100 percent, we should assume so. I
think that is safe to say for just about any innovation
anywhere ever. However, the advantage of advanced manufacturing
in the U.S., it is a bigger advantage in the U.S. domestically,
meaning it offers you lower environmental footprint, it works
with lower labor costs. These are bigger advantages here than
they will be in a lower-cost environment.
And so, while it is just as useful a technology, the
benefit compared to the older technology is higher in the U.S.
Mr. Obernolte. Interesting. So it gets right at some of the
things that make U.S. manufacturers uncompetitive. That is
interesting.
Dr. Piervincenzi. It is true. And if I might just add one
thing. The challenges at the facilities that we currently have,
they are 20-, 25-year lifespans. The cost of a new facility,
including for advanced manufacturing, doesn't seem extremely
high when you look at an innovator drug and the potential for
revenue. But for generic companies, it is out of reach at the
moment.
And so USP, we are working with some other partners to try
to reduce that barrier at least somewhat, but it is going to
take something more. It is going to take some incentives to get
over that hurdle--
Mr. Obernolte. Sure. I think Mr. Cashman was talking about
hundreds of millions of dollars.
Mr. Murphy, if I could end with you. In your testimony, you
said that one of the things that is constraining domestic--our
domestic ability to create supply, to manufacture supply, is
labor shortage. What can we do about that?
Mr. Murphy. Yes, that is the most long-term problem that we
have, right, because we have to start imbuing more STEM
education and more embodiment of trade-type education into our
system.
I mean, I don't like always talking about that, because it
is the one that is the most difficult to address. We had a long
discussion in this country earlier last year about H-1B visas
because we realized so much high-skilled manufacturing was
necessary, and we didn't have the supply. But I think we need a
mobilization of how we educate and how we prioritize the
education that is in the United States to show what the job of
the future will look like.
Mr. Obernolte. Right. I completely agree. And it is not
just pharmaceutical manufacturing that is suffering with this
problem, it is lots of different fields that we want to keep
America at the forefront of.
I want to thank everyone for their testimony. I have really
enjoyed the hearing.
I yield back.
Mrs. Cammack. The gentleman yields.
The Chair will yield to the ranking member for a few brief
comments.
Ms. DeGette. Thank you. It looks like we are about to end.
I really want to thank you, Madam Chair, and also the actual
chair of the subcommittee, Mr. Carter.
Listening to this panel, it is really clear that these are
issues, they have always been bipartisan issues, they are
American issues, and I think we can all work together to solve
them. We need to recognize the situation we are being faced
with right now and then work on that.
I just do want to expand on the record a minute. The
gentlelady from Iowa talked about a North Carolina facility
that is being built right now, and that is for pipette tips.
That was funded with $79.9 million from the American Rescue
Plan. And so we all think that there is a role for government
in this, and we should really work together to figure out how
we can make it happen.
And I yield back.
Mrs. Cammack. The ranking member yields.
At this time, I ask unanimous consent to enter into the
record documents included on the staff hearing document list.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mrs. Cammack. And I would like to thank again all our
witnesses for being here today. Members may have additional
written questions for you all.
I will remind Members that they have 10 business days to
submit questions for the record, which really means staff. And
I ask the witnesses to respond to the questions promptly.
Members should submit their questions by the close of business
Wednesday, June 25.
So without objection, the subcommittee is adjourned.
[Whereupon, at 1:12 p.m., the subcommittee was adjourned.]
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