    [Senate Hearing 119-166]
    [From the U.S. Government Publishing Office]

                                                         S. Hrg. 119-166

                           PRESCRIPTION FOR TROUBLE:
                        DRUG SAFETY, SUPPLY CHAINS, AND
                          THE RISK TO AGING AMERICANS
    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                               SEPTEMBER 17, 2025

                                   __________

                               Serial No. 119-14

             Printed for the use of the Special Committee on Aging

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    61-634 PDF                 WASHINGTON : 2026
    =======================================================================

                           SPECIAL COMMITTEE ON AGING

                         RICK SCOTT, Florida, Chairman

    DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York
    JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts
    TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona
    RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia
    ASHLEY MOODY, Florida                ANDY KIM, New Jersey
    JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland
                                  ----------
                    McKinley Lewis, Majority Staff Director
                    Claire Descamps, Minority Staff Director

                             C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

    Opening Statement of Senator Rick Scott, Chairman................     1
    Opening Statement of Senator Kirsten E. Gillibrand, Ranking
      Member.........................................................     3

                               PANEL OF WITNESSES

    Peter Baker, Former FDA Inspector, President, Live Oak Quality
      Assurance, Austin, Texas.......................................     4
    George Ball, Ph.d, Associate Professor and Weimer Faculty Fellow,
      Kelley School of Business, Indiana University, Bloomington,
      Indiana........................................................     6
    Brandon Daniels, CEO, Exiger, Washington, D.C....................     8
    Ronald Piervincenzi, Ph.D, CEO, U.S. Pharmacopeia, Washington,
      D.C............................................................    10

                                    APPENDIX
                          Prepared Witness Statements

    Peter Baker, Former FDA Inspector, President, Live Oak Quality
      Assurance, Austin, Texas.......................................    42
    George Ball, Ph.d, Associate Professor and Weimer Faculty Fellow,
      Kelley School of Business, Indiana University, Bloomington,
      Indiana........................................................    47
    Brandon Daniels, CEO, Exiger, Washington, D.C....................    55
    Ronald Piervincenzi, Ph.D, CEO, U.S. Pharmacopeia, Washington,
      D.C............................................................    61

                            Questions for the Record

    Peter Baker, Former FDA Inspector, President, Live Oak Quality
      Assurance, Austin, Texas.......................................    76
    George Ball, Ph.d, Associate Professor and Weimer Faculty Fellow,
      Kelley School of Business, Indiana University, Bloomington,
      Indiana........................................................    80
    Brandon Daniels, CEO, Exiger, Washington, D.C....................    83
    Ronald Piervincenzi, Ph.D, CEO, U.S. Pharmacopeia, Washington,
      D.C............................................................    85

                           Statements for the Record

    AARP Statement...................................................    99
    American Society of Health-System Pharmacists (ASHP) Statement...   101
    Amneal Pharmaceuticals LLC Statement.............................   106
    Association for Accessible Medicines Statement...................   109
    Indian Pharmaceutical Allicance (IPA) Statement..................   122
    National Consumers League Statement..............................   130
    Partnership for Safe Medicines Statement.........................   132

                           PRESCRIPTION FOR TROUBLE:
                        DRUG SAFETY, SUPPLY CHAINS, AND
                          THE RISK TO AGING AMERICANS

                                  ----------

                         Wednesday, September 17, 2025

                                            U.S. Senate
                                     Special Committee on Aging
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:24 p.m., Room
    216, Dirksen Senate Office Building, Hon. Rick Scott, Chairman
    of the Committee, presiding.
        Present: Senator Scott, McCormick, Johnson, Moody,
    Gillibrand, Kim, and Alsobrooks.

                     OPENING STATEMENT OF SENATOR
                          RICK SCOTT, CHAIRMAN

        The Chairman. Nearly everyone will be prescribed a
    medication at some point. Whether it be an antibiotic for an
    infection or a treatment for a chronic condition, people depend
    on access to safe and high-quality medications. This is
    especially true for seniors.
        In 2021, a federal study found that 88.6 percent of older
    Americans surveyed reported having been prescribed at least one
    medication in the past 12 months. Ninety-one percent of
    prescriptions filled are for generic drugs. The problem is the
    United States relies disproportionately on foreign made generic
    drugs from communist China and India.
        The U.S. currently depends on overseas manufacturers for
    about 75 percent of its essential, essential drug supply.
    Communist China is not our friend. They are the world's largest
    producers of the active pharmaceutical ingredients, and India
    relies on Communist China for approximately 80 percent of the
    active pharmaceutical ingredients they use.
        A study from Washington University in St. Louis found that
    83 percent of the top 100 generic drugs consumed by U.S.
    citizens have no U.S. based active source--U.S. based source of
    active ingredients. Not only is the U.S. over-dependent on
    foreign drugs, but these foreign drugs are often lower quality
    and more dangerous than drugs manufactured in the United
    States.
        Earlier this year, a study showed that serious adverse
    events like hospitalization and death were 54 percent more
    likely for foreign generic drugs compared to American made
    drugs. Bad drug quality doesn't just mean that a drug is less
    effective--it can kill. In 2007, 2008, the medication Heparin
    had contaminated ingredients from Communist China, killing
    nearly 100 people.
        Deaths from unsafe medications like these, contaminated
    Heparin, devastated families. LeRoy Hubley lost his wife of 48
    years, Bonnie, and his son, Randy, just weeks apart. Bonnie and
    Randy died due to contaminated Heparin that they needed for
    their dialysis treatment. They were undergoing due to a genetic
    kidney disease. People who relied on their medication, and
    trusted that it was safe, died. This was an absolute tragedy
    and must never happen again.
        Almost 20 years later, we are still seeing many of the same
    problems and quality issues that existed back then. There is
    still no routine testing done by the FDA and no incentive for
    quality. In 2023, contaminated eye drops from India killed four
    people and caused adverse events in at least 55 patients.
        Foreign drug manufacturing plants simply aren't subject to
    the same level of oversight as manufacturing plants here in the
    United States, and Americans are--that doesn't make sense to
    any American. Inspections of drug manufacturing facilities in
    the Unites States--they are unannounced.
        In Communist China and India, many inspections are pre-
    announced up to weeks in advance, giving manufacturers time to
    present false conditions or conceal non-sterile and unsafe
    manufacturing practices. While many quality issues present an
    immediate threat to the lives of seniors and their loved ones,
    supply chain vulnerabilities presents an existential threat to
    the country.
        I know my remarks paint a very dark picture of the reality
    we face, but it gets much worse. Think about this, if Communist
    China or India want to shut down the supply of prescription
    drugs to the United States, they can do so at any moment, and
    currently the United State does not have a backup plan.
        Let me say that again. If the Communist China or India
    decide to stop supplying the United States with prescription
    drugs, we will run out of prescription drugs very quickly and
    people will die. Let that sink in. Millions of Americans will
    not have life-saving drugs available to them. Americans will
    get sick. Americans will die. We have seen China place expert
    restrictions on rare earth elements over trade negotiations,
    and there is no reason they can't do that for drugs.
        Additionally, during the COVID-19 pandemic, we saw India
    block the export of critical ingredients. Many of the
    disruptions were prompted by supply chain disruptions from
    Communist China, the birthplace of the COVID-19 pandemic. We
    simply cannot rely on other countries, especially those who
    want to destroy us like Communist China for something as vital
    as essential medicines.
        Yet, despite these dangers, we still depend almost entirely
    on Communist China and India for generic medications, and their
    grip on the market continues to grow. As of 2021, Communist
    China and India accounted for 85 percent of active drug master
    file submissions--85 percent--applications submitted to the FDA
    by companies that want to supply drug ingredients to another
    company.
        In 2000, that accounted for just 24 percent. The
    Administration for Strategic Preparedness and Response, the
    federal agency that oversees the Strategic National Stockpile,
    ensures the Nation has medical countermeasures ready for public
    health emergency, lacks the data to understand the supply chain
    of the key starting materials or critical building blocks for
    pharmaceuticals.
        Communist China has a stranglehold on antibiotics, with 90
    percent of global antibiotics being of Chinese origin. While
    Communist China and India have dominated the market, American
    manufacturing has just withered away. A 2024 report from the
    API Innovation Center stated that in the past decade, the
    number of facilities located in the U.S. that produce active
    pharmaceutical ingredients has decreased by 61 percent.
        In 2024, the U.S. manufactured 37 percent of its consumed
    pharmaceuticals. Just over 20 years ago, in 2002, that figure
    was 83 percent. Over 40 percent of generic drugs sold in the
    U.S. have just one FDA approved manufacturer. I am a business
    guy. You would never rely on one supplier.
        This means in the event of a shortage, the FDA must
    scramble to find an alternative. In 2023, the chemotherapy drug
    Cisplatin went into shortage due to the FDA placing import
    restrictions on the manufacturer that accounted for 50 percent
    of the market. There was no FDA approved alternative, which
    forced the FDA to turn--unapproved Chinese drug company to fill
    in the gap. The supply chain is unacceptably vulnerable, and we
    can't just hope that shortages won't occur.
        If we can't solve this problem, our public health and
    national security are in grave danger and people will die. We
    will soon hold another hearing to discuss the solutions to
    these problems, but the American people deserve to know the
    dangers of bad quality medications and a vulnerable supply
    chain.
        Now, let me turn it over to the Ranking Member Gillibrand
    for her opening statement.

                     OPENING STATEMENT OF SENATOR
                 KIRSTEN E. GILLIBRAND, RANKING MEMBER

        Senator Gillibrand. Thank you, Chairman Scott, for calling
    today's hearing. I really appreciate it. Thank you to our
    witnesses for being here today. Combating drug shortages and
    supporting high quality generic drug production is one of the
    most important issues facing Congress today.
        In 2023, I heard from countless New York constituents who
    struggled with access to chemotherapy treatment due to
    shortages of essential generic cancer drugs, including
    Cisplatin and Carboplatin. When you are fighting a disease as
    devastating as cancer, the last thing you want to worry about
    is whether the life-saving drug you need is available.
        Another issue that is extremely concerning is the quality
    of generic drugs, especially those that we import from
    overseas. I have heard time and time again the difficulties the
    FDA foreign inspectors face when they are inspecting these
    foreign facilities. This can include basic logistical support
    or a third-party translator.
        When an inspector is abroad for months in a place where
    they may not speak the language, it can be very disheartening.
    Inspectors can also be put in a position where they must
    recommend the closure of a facility, but this can have a
    cascading effect of domestic generic shortages.
        The FDA needs adequate funding and support from Congress to
    ensure that they cannot only conduct these inspections but also
    enforce violations to protect the health and safety of the
    American public. We also need to work on solutions that promote
    transparency and quality benchmarks in the generic drug supply
    chain. The pharmaceutical supply chain can be very long and
    opaque, where several countries and companies are manufacturing
    various ingredients at various levels of quality.
        Purchasers need to be incentivized to purchase high-quality
    drugs that have proven reliability and a proven reliable supply
    chain. Hospitals and practitioners are spending millions of
    dollars a year due to drug shortages.
        Ultimately, it is the health and safety of our patients and
    our constituents that are being put at risk. I am looking
    forward to working on bipartisan solutions to promote safe and
    reliable supply chains for generic drugs. Thank you, Mr.
    Chairman.
        The Chairman. Thank you, Ranking Member. I would like to
    welcome our witnesses, experts who are here to talk about why
    dangerous, low-quality drugs have been allowed to enter the
    U.S. market and just how reliant we are on foreign countries
    for the medications we need. First, I would like to recognize
    Peter Baker.
        Mr. Baker is a former FDA Inspector who spent time in both
    India and Communist China. As an Inspector, he witnessed
    firsthand the unsafe manufacturing conditions and tactics used
    by manufacturers to deceive and even obstruct the FDA from
    conducting proper investigations of manufacturing facilities.
        Mr. Baker, thank you for being here today and I look
    forward to hearing your testimony.

            STATEMENT OF PETER BAKER, FORMER FDA INSPECTOR,
          PRESIDENT, LIVE OAK QUALITY ASSURANCE, AUSTIN, TEXAS

        Mr. Baker. Chairman Scott, Ranking Member Gillibrand,
    members of the Committee, thank you for the opportunity to
    testify today. I want to thank you for this bipartisan focus on
    enhancing the security of our generic pharmaceutical supply
    chain.
        When a patient, especially those most vulnerable, such as
    the young and old, fill a prescription which has a 91 percent
    chance of being generic here in the U.S., there could be no
    doubt about the safety and efficacy of the medicine, or if the
    generic will perform as well as the brand name.
        There are too many uncontrollable variables to allow this
    one to play any role. The FDA has a long history of protecting
    and promoting public health and performs extremely challenging
    work around the world on a daily basis to achieve that goal
    through site inspections, often in remote corners of the world
    that do not have internationally recognized regulatory bodies,
    which I will refer to as unregulated markets.
        FDA investigators often have to deal with demanding travel
    conditions and can fall ill due to other unsafe conditions,
    such as drinking untreated water, a contaminated meal,
    communicable and non-communicable diseases, or fall prey to
    other risks often present in still developing nations.
        The majority of our overseas pharmaceutical inspections are
    pre-announced, often up to two months in advance of our
    arrival. In my experience, upon arrival for the inspection, a
    strong smell of paint is in the air, fresh paint. The
    landscaping is immaculate. All garbage cans are empty.
        Potential problematic operations are all shut down, some
    employees are sent home, and critical operations are
    choreographed as if performing on a stage. Those of us who
    performed foreign inspections refer to this as the dog and pony
    show, which is frustrating because this is serious business.
        How do I know this to be true? Having spent seven years in
    three different FDA foreign offices starting in 2012, based out
    of our embassies strategically located around the world, we
    were tasked with developing inspection techniques capable of
    identifying if products exported to the U.S. from unregulated
    markets were really meeting our standards because things seemed
    too good to be truth. No rejected batches. No issues at all,
    really.
        We knew the quality of products being manufactured in Ohio
    but really had no idea what was happening outside of our
    borders, especially in unregulated markets. We spent countless
    hours reviewing computer records, dug through piles of garbage,
    and showed up at times unannounced.
        Booking our travel through Expedia versus the embassy
    travel portal to alleviate any concerns, someone would tip off
    the sites to our plans. What we found was terrifying. This
    testimony only addresses the tip of a massive iceberg. Fake
    laboratories pumping out hundreds of results a day that
    certified products as 100 percent pure when in fact the product
    was never tested.
        For those products that did get tested, any failing result
    was simply ignored and replaced by a fabricated passing value.
    We identified filthy registered shadow facilities that would
    funnel their drugs through modern and clean registered sites
    which we refer to as the show facility.
        We found fabricated manufacturing and quality records,
    painting a picture of a site in total compliance, when in fact
    substandard or fake medicines were being shipped to the U.S. by
    the tens of thousands a day. Following these experiences, I
    have no doubt that adverse events, including death happen on a
    daily basis here in the U.S. as a result of substandard generic
    products from unregulated markets.
        The true culprit of these preventable adverse reactions
    lies in shortcuts and fraud. Shocking inspection reports
    continue to roll in on a monthly basis. The bad players list is
    no secret, and they continue to avoid any significant
    consequences. Meanwhile, those most vulnerable in our society
    taking these drugs have no idea of the games being played and
    certainly no idea that the game as designed today can never be
    won.
        Personally, if I had a choice, I would never consume a drug
    product produced in an unregulated market, and any experienced
    FDA investigator will give you the same answer. When my 91-
    year-old grandma was alive, we would go pharmacy hopping around
    our rural Oregon hometown in hopes of finding a batch that was
    made by a reliable producer. Sometimes we succeeded and
    sometimes not.
        I remember one time having to settle for a product
    manufactured by Rambaxi, who had just settled with the DOJ for
    $500 million for faking countless data points used to
    demonstrate their products were safe. I tried to stay positive
    because causing her panic wasn't going to help, but inside I
    felt sick, and I was not the one receiving cancer treatment.
        I urge this Committee to consider these four points. One,
    harsher penalties for companies who engage in illegal practices
    via the existing authority within FDA and DOJ. Two, changes to
    labeling so that patients can see where their medications were
    made and put pressure on supply chain decisionmakers to prevent
    them from taking a pill made from an unregulated market.
        Three, independent third-party testing of every batch of
    every product arriving from an unrelated market. The European
    Union already does this, and it is a proven model. Four,
    resources to support the foreign pharmaceutical inspection
    program.
        The FDA has made great progress to increase the number of
    unannounced inspections they are conducting, but they need
    additional resources to be directed to expand the number and
    quality of unannounced inspections as already outlined by
    Commissioner Makary's public statements. Thank you for your
    time and attention to this important matter. I welcome your
    questions.
        The Chairman. Thank you, Mr. Baker. Next, I would like to
    introduce Dr. George Ball from Indiana University, where his
    teaching and research focus on operations, supply chains, and
    regulatory compliance in the drug industry.
        Dr. Ball has been at the forefront of generic drug quality
    research, analyzing the intersection of global manufacturing,
    FDA oversight, and patient safety.
        His work provides critical insights into how supply chain
    vulnerabilities translate into risk for American consumers. In
    a study published this past February, he and his colleagues
    found that generic drugs manufactured in India have higher
    rates of adverse events compared to those made here in the
    United States.
        This research highlights in measurable terms what other
    witnesses have seen firsthand. Weaknesses in oversight of
    foreign manufacturing can directly affect the safety and
    quality of medicines reaching American patients. Dr. Ball,
    thank you for being here. I look forward to your testimonie.

          STATEMENT OF GEORGE BALL, PH.D, ASSOCIATE PROFESSOR

              AND WEIMER FACULTY FELLOW, KELLEY SCHOOL OF

           BUSINESS, INDIANA UNIVERSITY, BLOOMINGTON, INDIANA

        Dr. Ball. Thank you, Chairman Scott, Ranking Member
    Gillibrand, and members of the Committee for the invitation to
    speak with you. As Chairman Scott mentioned, I am an Operations
    Management Professor at the Kelly School of Business at Indiana
    University.
        For the last 15 years, I have researched causes of product
    quality problems in FDA regulated industries. Prior to that, I
    spent a decade as a medical device manufacturing manager. Most
    recently, my research has examined generic drug quality and FDA
    policy. These topics are the focus of my detailed submitted
    written testimony, which I will briefly overview now.
        In my view, the root cause of the generic drug quality
    problem is the original design of the generic drug marketplace.
    While the Hatch-Waxman Act lowered health care costs via
    affordable generic drugs, it relies on an unrealistic
    assumption. That is, if an original drug is safe and of high
    quality, then its generic counterparts will be as well,
    requiring little quality verification and no transparency.
        Why is this unrealistic? The answer lies in operations
    research regarding cost and quality, as well as sources of
    defects. First, quality is not free. Higher quality products
    normally require higher production costs. Further, quality
    defects originate from two primary sources, design and
    manufacturing. While the design of a generic drug must be
    equivalent to that of the original, two equivalently designed
    drugs can be made in vastly different ways.
        One can use well-trained employees, sophisticated
    equipment, and mature suppliers that make premium raw
    materials. Another can be made using poorly trained employees,
    cheap equipment, and corner cutting suppliers. In a market
    where quality is assumed to be high, while it is unverified and
    opaque, the rational economic choice is to focus solely on
    cost. This will nearly guarantee poorly manufactured drugs.
        This assertion, however, has remained predominantly
    theoretical because identifying where a drug is made, which
    allows one to study plant, firm, or country level factors that
    may influence drug quality is quite onerous. As mentioned, a
    team of colleagues and I have recently published a study
    referenced in my submitted testimony that begins to address
    this gap.
        We exactly match generic drugs made in the U.S. against
    equivalently designed generic drugs made India. We find that
    generic drugs made in India, particularly older ones that have
    lower profit margins with greater incentives to cut costs, have
    significantly more serious adverse events than equivalent
    generics made in U.S. Two working papers that our team has
    under review, also referenced in my testimony, provide two
    policy changes that may help mitigate this problem.
        Transparency is first and foremost. In an experimental
    study with thousands of subjects, we find that consumers and
    pharmacists are unconvinced by FDA messaging that generic drug
    quality is to be trusted regardless of where it is made. We see
    a strong preference for U.S. and Canada made drugs over China
    and India made ones when we only reveal manufacturing location.
        However, when location and quality are both made
    transparent, quality tempers these location effects. High
    quality China or India made drugs are preferred over lower but
    moderate quality U.S. or Canada made drugs. When comparing
    equally high-quality drugs however, subjects continue to prefer
    U.S. and Canada over China and India.
        Drug quality and location transparency can enable market
    forces to reward firms for high quality regardless of where
    they are made while simultaneously incentivizing high quality
    onshoring and near shoring of generic manufacturing. Second to
    this is aligning FDA's inspection strategy across the globe.
        As has already been mentioned, the FDA inspects China and
    India plants after giving weeks or months of advance notice
    versus conducting them unannounced in the U.S. In another
    working paper that we have under review, we have examined newly
    available data from an FDA unannounced inspection pilot
    conducted in India. We conclude that pre-announcing inspections
    hinders the FDA's ability to assess the true state of quality
    at foreign manufacturing plants.
        We show that such inspection obscurity aggravates the cost
    only focused on harming generic drug quality. I advocate for
    drug quality and location transparency, as well as global FDA
    inspection parity. Our research indicates these two changes
    should help to meaningfully improve generic drug quality. Thank
    you.
        The Chairman. Thank you, Dr. Ball. I would like to
    introduce Brandon Daniels. Mr. Daniels is the Chief Executive
    Officer of Exiger, a global leader in supply chain risk
    management, transparency, and compliance.
        With decades of experience in regulatory compliance and
    technology, Mr. Daniels has led efforts to help Governments and
    private industry strengthen the security and integrity of
    critical supply chains, including those in pharmaceuticals,
    defense, and healthcare.
        At Exiger, he has overseen the development of innovative
    tools that identify vulnerabilities, improve visibility, and
    help ensure that products and medicines reaching American
    consumers are safe, reliable, and free from hidden risk. Mr.
    Daniels, thank you for being here, and I look forward to your
    testimonie.

                     STATEMENT OF BRANDON DANIELS,
                     CEO, EXIGER, WASHINGTON, D.C.

        Mr. Daniels. Chairman Scott, Ranking Member Gillibrand, and
    distinguished members of the Committee, thank you for the
    opportunity to testify today.
        For 20 years, I have worked with pharmaceutical and medical
    device companies supporting them through some of the most
    significant crisis management and litigation matters affecting
    their product development, research, and supply chains.
        During the COVID-19 pandemic, I served on the White House's
    Joint Acquisition Task Force where I worked alongside federal
    partners to secure PPE, medical devices, and life-saving
    pharmaceuticals.
        That experience underscored for me the fragility of our
    pharmaceutical supply chains and the urgent need for reform. In
    my role at Exiger, I am leading the development of artificial
    intelligence to map supply chains down to their raw material
    origins.
        This work reveals, in precise detail, the vulnerabilities
    hidden in our healthcare system. The scope of this problem is
    enormous. America's medicine cabinet is no longer made in
    America.
        Nearly three-quarters of the essential medicines used in
    the United States are sourced overseas. India now supplies
    about half of the generic drugs we consume, but 80 percent of
    the active pharmaceutical ingredients that make those drugs
    possible come from China.
        In Fiscal Year 2024, Chinese firms supplied 77 percent of
    India's penicillin G and 94 percent of its 6-APA, which is the
    indispensable intermediate for penicillin-derived antibiotics.
    This concentration creates a dangerous single point of failure
    for drugs that every hospital, clinic, and pharmacy in this
    country depend on.
        That means a Medicaid prescription filled in Ohio, or a
    Medicare prescription processed in Florida can often be traced
    back to a Chinese supplier. The choke points for our most basic
    medicines are controlled by Beijing, and we are not just
    dependent, we are actively financing that dependency.
        In 2024, Medicaid reimbursed more than $150 million to a
    single generic drug company that sourced ingredients from at
    least six Chinese firms tied to forced labor and national
    security concerns. Dual eligible patients who represent just
    about 14 percent of Medicaid enrollment, but consume more than
    a third of its spending, are the most exposed to this fragile
    system.
        Every taxpayer dollar spent on these medicines strengthens
    the leverage Beijing has over our health care system. The
    consequences for seniors and all American citizens cannot be
    ignored. As Chairman Scott mentioned, contaminated eye drops
    from India have left American seniors permanently blind.
        Blood pressure and diabetes medications imported from Asia
    have been recalled after testing positive for carcinogenic
    impurities. These are not outliers. Over 30 percent of recent
    FDA import alerts involve Chinese producers, and another 16
    percent involve Indian suppliers. These are the very countries
    we rely on most.
        Even more troubling, our data shows that forced labor is
    woven into these pharmaceutical supply chains. Chinese state-
    owned enterprises with documented links to Uyghur forced labor
    in Xinjiang supply raw materials and active ingredients that
    ultimately find their way into drugs consumed by Americans.
        This creates both an economic competitiveness barrier
    through labor arbitrage and a quality hazard for U.S.
    pharmaceutical supply chains. The weakness in our medicine
    cabinet is also a weakness in international security. More than
    54 percent of the Department of War's pharmaceutical supply
    chain is classified as high or very high risk because of
    reliance on foreign suppliers.
        Chinese State media has openly suggested that drug exports
    could be withheld as a weapon in conflict. In that scenario,
    the most basic medicines in our hospitals, our pharmacies, our
    military stockpiles could become tools of coercion. No
    adversary needs to fire a shot if they can choke off our access
    to antibiotics or insulin. The path forward will not be simple,
    but it is clear.
        We must expand domestic production of critical medicines,
    particularly antibiotics and essential generics. We must
    diversify supply chains to trusted allies and ensure no federal
    program relies on a single country. We must enforce forced
    labor laws so that no American patient consumes medicine
    produced through coercion.
        We must demand transparency at every level, using modern
    mapping and monitoring to stress test these supply chains
    before they fail.
        The stakes could not be higher. Every time a senior fills a
    prescription, every time the service member receives treatment,
    every time our children and grandchildren need to fight an ear
    infection, there is a real chance the supply chain leads back
    to a potentially compromised source.
        Thank you for your time this afternoon. I look forward to
    answering any questions you may have.
        The Chairman. Thank you, Mr. Daniels. Now we are going to
    hear from the Ranking Member to introduce the next witness.
        Senator Gillibrand. Thank you, Chairman Scott. I want to
    move to introduce our next witness, Dr. Ronald Piervincenzi. As
    Chief Executive Officer of U.S. Pharmacopeia, Dr. Piervincenzi
    is responsible for providing strategic leadership to his global
    staff of over 1,300 employees.
        Dr. Piervincenzi has helped USP modernize and expand its
    operations, including in the areas of digital medicine,
    advanced biologics, quality manufacturing, consulting, and
    education. You may begin.

              STATEMENT OF RONALD PIERVINCENZI, PH.D, CEO,
                  U.S. PHARMACOPEIA, WASHINGTON, D.C.

        Dr. Piervincenzi. Thank you, Ranking Member Gillibrand, and
    Chairman Scott, and members of the Committee for the
    opportunity to provide the testimony here today about the
    United States medicine supply chain that our Nation's seniors
    rely on.
        As CEO of the United State Pharmacopeia, sometimes I have
    to describe who we are, and USP is an independent scientific
    nonprofit organization founded on the 1st of January in 1820
    when 11 physicians gathered together in the old Senate chamber
    concerned about the safety and quality of imported medicines to
    the then new United States. On that day, they formed the
    world's first national Pharmacopeia.
        Today, the 1,200 employees work with hundreds of scientific
    experts to set thousands of quality standards for medicines.
    USP also offers ingredient verification, product quality
    testing, and programs to advance the adoption of pharmaceutical
    advanced manufacturing technologies.
        USP works to strengthen medicine supply chains to ensure
    that patients, and especially older Americans managing their
    chronic conditions, can access the generic medicines they need,
    when they need them, and very importantly, to trust in their
    consistent quality.
        Low-cost generic drugs, which account for over 90 percent
    of the U.S. medicine supply, have grown quantitatively and
    increasingly vulnerable due to geopolitical tensions, natural
    disasters, pandemics, and importantly, market pressures. The
    globalization has expanded capacity and lowered costs, but it
    has also made the supply chains longer, more fragmented, and
    less transparent, jeopardizing both patient care and national
    security.
        Since launching the medicine supply map in 2019 to gain
    insight into an opaque supply chain, USP now analyzes 94
    percent of U.S. prescription drugs, providing an unprecedented
    visibility into key public health and national security
    vulnerabilities. USP's work quantitatively points to four
    interconnected drivers of our vulnerability. The first is a
    continual downward pricing pressure on generic drugs that
    creates an unsustainable market for these essential medicines.
        The vulnerability number two, is manufacturing complexity,
    which is limiting capacity and causing an even greater risk.
    Third vulnerability is geographic concentration, exposing
    supply to single points of failure wherever those might be, and
    finally, the fourth vulnerability are quality disruptions,
    which destabilize the supply.
        These four factors combine to create an environment that
    undervalues resilience, constrains abilities to build
    redundancy, and discourages reinvestment in quality systems.
    This leaves patients, especially vulnerable seniors, at risk of
    delayed access or reliant on less effective secondary
    treatments. It is simply unacceptable when we know practical
    solutions exist.
        No one stakeholder is to blame for the current supply--for
    the current state of our supply chain, but our hurdle is rather
    our willingness to take this first step together. Solution must
    uphold quality, incentivize greater stewardship of our supplied
    chain, and preserve the savings that generic medicines have
    delivered to patients and seniors.
        I commend the chair and the ranking member for their
    holistic approach and respectfully urge the Committee to
    consider the following solution in three parts. Part one is to
    improve the supply chain visibility, identifying key
    vulnerabilities and updating this assessment continuously.
        Tools like the medicine supply map provide the intelligence
    needed for proactive risk management. Understanding risk starts
    with increasing visibility into our current blind spots such as
    the vulnerable essential medicines, widely used excipients, and
    single-sourced key starting materials. We recommend authorizing
    an annual assessment that provides insights into our most
    significant vulnerabilities and makes recommendations for
    mitigation.
        These insights could help guide commercial investment to
    shore up risky supply lines, certainly involve and inform
    policymaking, and direct agency attention and funding where it
    matters most.
        Part two of the solution is to create pathways for America
    to innovate and scale new methods for manufacturing essential
    medicines. Advanced manufacturing, alternative synthesis
    routes, and new biology-based methods are no longer
    theoretical.
        USP is partnering with ARPA-H today to explore wheat germ
    extract as a U.S. based method for producing a critical API,
    thymidine, an example of how the U.S. Government might leverage
    advanced manufacturing to reduce reliance on foreign sources
    for key ingredients, and part three, establish a benchmark for
    a stronger, more resilient medicine supply.
        The most important factor underlying the fragility of the
    U.S. medicine supply chain is the unsustainable U.S. generics
    market. Pricing pressure on low-cost essential medicines drives
    generic drug purchases below sustainable production costs,
    discouraging investment in quality systems and pushing
    manufacturing offshore. Shifting the paradigm to reward a more
    resilient supply of medicines is central to promoting an
    environment that values reliability, reinvestment in quality
    systems, and a competitive domestic industrial base.
        Specifically, we propose a resiliency benchmark for
    manufacturers of important medicines prepared with incentives
    for purchasers to prioritize those who need it, encouraging
    sustainable procurement and investment in quality systems,
    surge capacity, diversified supply, and greater domestic
    production.
        To help ensure that America's seniors have consistent
    access to quality, the Government should leverage Medicare's
    significant purchasing power, along with the DOD-NVA to
    incentivize the resilience. Strengthening the supply is a
    national security imperative and critical to millions of
    seniors.
        Together we can and must forge a more secure future for
    America's medicine supply. The well-being of millions depends
    on it, and I thank you for this opportunity.
        The Chairman. Thank you, Dr. Piervincenzi. Now, we will go
    to questions. I will turn it over to Senator Ron Johnson.
        Senator Johnson. Thank you, Mr. Chairman. Thank you for
    holding this hearing. This may be the most important hearing of
    this Congress, and maybe many Congresses. Now, it is not
    getting much attention, but it needs to.
        I first became aware of our vulnerability in February 2020,
    my first hearing as Chairman of Homeland Security about the
    pandemic, and I had Scott Gottlieb, Judy Gerberding there. I
    had no idea that we were so dependent on advanced--or API and
    the precursor chemicals on China and India's.
        Have we done anything about it? No. We passed a one and a
    quarter-trillion-dollar infrastructure bill and didn't even
    address it. I think the issue is how do you bring the
    manufacturing back to the U.S. where it can be inspected
    properly, right. It is not an easy task, but part of the
    problem is the precursors chemicals, that is refining and that
    needs permitting.
        That is expensive to do in America, which is why we have
    offshored it to China, so you know, how do we do it? What I
    like, and this was Mr. Ball's suggestion here, and I would love
    to co-sponsor this bill with you, just simply requiring
    labeling in terms of where the drug comes from. They are
    putting tremendous pressure on the companies to reshore these
    things.
        It is not going to happen overnight, but, you know,
    Government edicts--you know, spending money to bring, you
    know--what you could do potentially is just not tax somebody
    who brings a refinery over here, but you got to be able to
    permit it. I mean, there is so many impediments to this.
        This is a very complex issue, but we have got to start
    doing the basics first. But the first one is, again,
    understanding the problem, acknowledging we have it.
    Understanding how vulnerable we truly are. You know, things
    like Heparin. We have known about this for years and we have
    literally done nothing about it.
        Again, I am looking for really the most practical first
    steps we can take. I mean, we can talk about all kinds of, you
    know, complex solutions but would you agree that just the
    labeling itself--I mean, that would be a pretty easy bill to
    pass. It will be interesting to see if we could.
        I guess I want from all four of you, what is your number
    one single first step that we could take here to address this?
    By the way, first it starts with the information, and we need a
    lot more information. Again, there is all this--you have all
    mentioned the pricing pressure, right. You are all beating up
    on drug companies over pricing.
        Well, the fact is, on generics, it is probably underpriced
    is what you are telling us. Let's just go down the list and
    just give me kind of the one thing that you--you know, the
    first step we ought to take.
        Mr. Baker. From my perspective, I think enforcing the
    existing laws, as they are already written through the
    authority of the FDA and DOJ, would let the good players know
    that it is going to be a level playing field for them.
        Senator Johnson. We have laws that are not being enforced.
    Why? I mean, how would you enforce them?
        Mr. Baker. It is difficult to enforce them at the moment
    because of the issue of drug shortages. When issues are
    uncovered at some of these factories, they are allowed to--they
    carved out the ability to keep supplying these drugs, because
    if they were prevented from entering the U.S., then we would
    have a supply chain issue, a shortage issue, so it is going to
    have to be weaning off of that situation, but it is going to
    have to start with letting everybody know that the laws are
    going to be enforced, and it is going to----
        Senator Johnson. You know, one thing Congress relies on is
    whistleblowers. I have been trying to pull information out of
    Government agencies for many years now. They don't give up
    their secrets very well. Will there be whistleblowers that
    would tell us of those instances where there is a quality
    problem here and FDA just looked the other way? I mean, we are
    going to need examples of that.
        Mr. Baker. Absolutely. FDA works with whistleblowers all
    over the world pretty much on a daily or a weekly basis.
        Senator Johnson. I guess I would encourage whistleblowers
    to come forward to this Committee or Permanent Subcommittee on
    Investigations. Tell us your story so we can highlight that, so
    we can expose it, so we actually start enforcing our laws. Mr.
    Ball, I already used yours, but if you got a better one.
        Dr. Ball. Well, I agree with you, obviously, because it was
    something I talked about. It is the only marketplace where
    firms do not reveal their quality and consumers that purchase a
    product cannot assess it.
        The marketplace is not allowed to work properly for generic
    drugs. If quality and location are transparent, the market
    would fix, in my view and from research we have done, quite a
    bit of the problem. Because market forces would then start to
    reward high quality manufacturers and punish low quality ones.
        It is a relatively inexpensive solution because it is--
    somewhat the invisible hand of the market would fix this issue
    if the market was no longer opaque. When it is opaque, the
    market is broken, and we have thought long and hard about other
    comparable markets like this, and there are very few.
        I think transparency of both quality and location is the
    answer.
        Senator Johnson. I used that when I said it is about
    information. The consumers need information which we don't have
    right now. Mr. Daniels.
        Mr. Daniels. I think the biggest thing from my perspective
    is right now we have economic coercion on the other side that
    is keeping these key starting materials in particular at
    artificially low prices. That is not actually how much they
    cost to manufacture. They are significantly subsidized. They
    are in free economic zones.
        In many cases, they are using labor that is insufficient in
    order to conduct these operations. There has got to be an
    economic disincentive, some sort of ADCVD against the KSMs that
    China is dumping into the market in order to create a U.S.
    domestic market that is available and viable, and there are
    today, whether it is in fermentation for critical key starting
    materials for antibiotics or it is for drugs like Heparin,
    there are continuous flow manufacturing capabilities that we
    could bring to the United States.
        Everyone thinks it is going to take some huge delta between
    the current price and the future price to bring investment into
    a market. It is not. I mean, you remember in 2008 we had gas
    prices spike.
        IKEA brought Swedwood, furniture manufacturing, back to
    Danville, North Carolina because of the small additional cost
    that sat on the top of every piece of furniture. They brought
    their entire manufacturing capability back.
        Senator Johnson. As long as you can permit it.
        Mr. Daniels. Yes, the permitting is a big piece.
        Senator Johnson. I suggest to all of you, help us identify
    those drugs or drug that we need to start with. You start with
    one, you know, succeed in that and then move forward. Mr.
    Piervincenzi, actually--I think I got that right. Close?
        Dr. Piervincenzi. Perfectly. Thank you. I appreciate that.
    I would suggest a market based resiliency benchmark, which is a
    positive incentive. It would need to be market-based. It would
    absolutely require the Government to kick-start it, and this
    would reward the resiliency of having a secure facility with
    past inspections on a consistent basis.
        All the things we know, and in fact, we created a draft of
    these types of benchmarks and just about every factor that was
    shared, very much including location of production, your own
    supply chain, and from that, even if we were to start, let's
    say in hospital systems for hospital use drugs as a starting
    point, although I am not saying it is the whole solution, and
    then put a hook on that where hospitals have to reward this
    through a better contract, a slightly better price.
        These are the cheapest medicines, which means a better
    price is still not going to break the bank.
        Senator Johnson. I think hospitals are still going to be
    opaque. I think it has got to be consumers, and if you have too
    many elements in that benchmark, again, it is going to
    difficult to pass. That is why I am kind of looking at how much
    just country of origin as a starting point.
        Mr. Chairman, honestly, this is an incredibly important
    hearing. I want to work very closely with you and your
    witnesses and other experts on this, and we need
    whistleblowers.
        The only way this gets passed in Congress is the American
    public has to understand how vulnerable we are and what risk
    they are at, but thank you for this hearing.
        The Chairman. Thank you. Ranking Member Gillibrand.
        Senator Gillibrand. I would like to turn it over to Senator
    Kim.
        Senator Kim. Thank you, Chairman and Ranking Member. I
    agree, this is an incredibly important issue, and I hope that
    this is something that can spur us to work in a bipartisan way.
        You know, certainly from my State of New Jersey, a lot of
    what we need to be thinking about in terms of what comes next
    when it comes to medicine, pharmaceuticals, but recognizing
    that we need to do a lot more when it come to the manufacturing
    and the supply chain side to make us more resilient.
        I think resilient is the right word, because we see not
    just with the national security side, but you know, a lot when
    it comes to just the economic competitiveness of the United
    States and understanding where we need to be going to on a
    number of different fronts. I would like to just pick up where
    my colleague left off.
        You know, Dr. Piervincenzi, I just wanted to get a little
    bit more of a sense of this market-based resilience benchmark I
    think you framed. Is there a comparable example or is there
    something that is being used in other industries or sectors
    that can help us kind of understand how this might come about
    and how it might be structured?
        Dr. Piervincenzi. Thank you for that question, and yes, in
    fact, you don't have to leave the pharmaceutical industry.
    Let's take a sophisticated multinational company, generic or
    innovator, they do this themselves on the goods that they
    purchase.
        Let's say you are a large innovator pharma company, and you
    are looking to ensure that your multi-billion-dollar product is
    never short because you have a huge economic incentive to do
    so. What you do in your own supply chain is you would never buy
    all your key ingredients from one place.
        You will have two sources for every ingredient. In
    addition, you will send your team to inspect their facilities
    and make sure they meet your own quality standards. You will
    create a contract which is a long enough term that the supplier
    is committed to you just as you are committed to them.
        This is normal. Everybody does this. This is nothing
    innovative. That process I just described, it works. It is why
    innovator drugs are not on the shortage list except for unusual
    demand spikes, which we know are something entirely different.
        Senator Kim. Then, how do we then take that type of model
    though at a societal level? When we are not talking about just
    a company looking out for its own bottom line, and in
    particular, you know, what is the role of Government? What can
    Government do that others can't do so that we can understand
    how to fit this all together?
        Dr. Piervincenzi. The key here is that the buyer, in the
    case I just described, is one single company with a rational
    reason to create a resilient supply.
        The challenge we have in the U.S. is there are thousands
    and thousands of buyers who all wish this to be true, don't
    feel empowered to do so, and actually don't have the mechanism
    to even pay more money because they don't know what they are
    paying for.
        Then the answer would have to be both, the creation of the
    benchmark, so they no longer have the excuse that they don't
    know how to pay for quality, and once you have that, then you
    have to create an incentive, or perhaps force, there to be
    contracts that reward people from scoring high on those
    benchmarks.
        There are different parts of our drug supply which will be
    harder in some than others, but we believe that where you see
    the most drug shortages today, which are in hospital
    administered drugs, is actually probably one of the easier
    places for leverage, especially because the Federal Government
    has its own leverage for how it purchases medicines, and you
    see this in quality of care, the tools that can be used. I am
    not saying it is extremely easy, but it is not unprecedented,
    even in health care.
        Senator Kim. Thank you for that. Dr. Ball, I wanted to just
    pick up on something you said, which is about that quality
    assessment and being able to have that alongside the
    geographic. Can you give me a better sense of how that quality
    assessment could be done at the scale of what we are talking
    about here?
        Dr. Ball. Absolutely. The paper I referred to assumes that
    the FDA's site selection model scores, which are risk adjusted
    scores that the FDA uses both at the drug and plant level to
    determine when to inspect a plant, that some form of those
    would be amalgamated into a five-star rating on a drug, and
    that a five star would be the lowest risk facility, three star
    would moderate risk, and that is what we used in this study.
    The FDA has this data. They would be very resistant, I believe
    from my experience in discussing this with them, to give it out
    and use it, but it is at least a starting point, and it is a
    combination of adverse events, recalls, inspection scores.
    Anything that has happened at the plant or the drug that is a
    negative experience creates a higher risk drug and that would
    be used to put a score on the label.
        Senator Kim. I see. Mr. Baker, I just want to end with you
    here. You know, in your testimony, you highlighted how FDA
    investigators often have to deal with demanding travel
    schedules and conditions, can fall ill. How, you know, in many
    parts--and many of these inspections are taking place in
    locations where English may not be a primary language spoken,
    yet there is no requirement for independent translators. I
    wanted to just get a little bit more of a sense from you. What
    steps do you think Congress should prioritize to ensure that we
    are giving our FDA workforce the support that they need? Also
    just thinking through, are there other steps like better
    strengthening our collaboration with foreign regulators and
    other steps that we can do to try to address these needs?
        Mr. Baker. Yes, thanks for that question. I think one of
    the things that can be done is to increase the level of
    investment in the FDA investigators. A lot of disruption
    happened in the FDA during the COVID times where a lot of, for
    example, for onsite training and hands-on training was sort of
    moved to remote, and that isn't as effective. You know, prior
    to that, it would take two or three years to get qualified, so
    to speak, to do a foreign inspection. Whereas now, due to
    resource constraints, you may be tasked with doing those
    inspections, those challenging inspections that you just
    mentioned, in like two months after getting hired. You may not
    have the skills and the training necessary to do those
    effectively. It is very challenging. You will fly into an
    airport and then you get in it--especially if you are trying to
    do it unannounced. You are going to get in a car, taxi, with
    someone you don't know, and drive four to six hours to get to
    your hotel that may or may not air conditioning. It is very
    difficult and challenging. They need additional support to
    really enhance this existing program that they know works.
    Those unannounced inspections have about a four time greater
    chance of identifying a problem that is going to cause harm to
    a human versus an announced. That is what the data shows. They
    are very effective, so investment in that area is worth the
    effort.
        Senator Kim. Thank you, and with that, I will yield back.
        The Chairman. Thank you, Senator Kim. Mr. Baker, as a
    former FDA Inspector, are you confident in the quality and
    safety of generic drugs coming from foreign countries like
    China and India?
        Mr. Baker. Thanks for that question. The answer is going to
    be no. I am not confident about the quality. I am confident in
    the sites that I have been to, and I have seen world-class
    sites everywhere in the world, manufacturing drugs, and I am
    confident in taking those products. But for the majority, I
    would say no.
        The Chairman. Dr. Ball, what types of adverse events,
    deaths, did you find foreign medications caused in your
    research?
        Dr. Ball. We found examples of cardiac arrests,
    gastrointestinal hemorrhage, delirium, cellulitis, acidosis.
    Those were just a random sample I took this morning of the
    adverse events in our study. There are millions of adverse
    events that get reported to the FDA's adverse event reporting
    system. These are just a few.
        They are serious, and in this paper, we only counted those
    adverse events that were caused by the drug, reported by the
    manufacturer, mandatorily reported, and caused serious health
    outcomes, and there is still millions of those.
        The Chairman. Do you think they might be under-reported?
        Dr. Ball. I think underreporting is a problem for recalls
    and adverse events, and it leverages a lot of what Peter
    mentioned. The more FDA is present in a facility in an
    unannounced manner, the less likely an un-reporting will go,
    because you can discover unreported events in these
    inspections, but not if they are announced weeks or months in
    advance.
        Those are exactly the type of things that a firm is likely
    to hide if they have advanced notice. If they don't, it is very
    hard to hide those things. The FDA inspection strategy goes
    hand in hand with reducing these adverse events.
        The Chairman. Mr. Daniels, how much supply of drugs do we
    have if Communist China shuts supply off to the United States?
        Mr. Daniels. Thank you for the question, Chairman. The
    supply chains are interwoven, and I think that is the biggest
    issue because you will have specialty pharmaceuticals that are
    untouched for six or nine months.
        Then when you start to get to the end of that supply chain
    and that manufacturing process, you might have severe runs on
    the key starting materials or the precursors that are necessary
    to support that drug manufacturing.
        In the context of generics, and specifically critical
    generics like antibiotics, heart medications, insulin, you
    could see all supply outside of what is used in emergency rooms
    shut down within months if China decided to stop supply to the
    United States, especially if they decided to stop supply chains
    on a supply chain like sanction, like we have done on forced
    labor prevention in China.
        If they stopped the sort of intermediaries from selling us
    the goods that are manufactured utilizing their materials, it
    could be a severe constraint that would look cataclysmic.
        The Chairman. Dr. Piramvincenzi, USP is a global
    organization with labs and operations abroad. From your
    perspective, are foreign made drugs consistently meeting USP
    standards, or do you see widespread quality failures?
        Dr. Piervincenzi. Thank you, Senator. I may also just maybe
    build a bit on Mr. Daniel's comment. The quantifying the if
    China were to cutoff supply, what would the impact be is
    challenging, but in the next two months or so, USP will issue a
    report that covers about 90 percent of our generic supply, so
    not all of it, but a vast majority, that will map down to the
    key starting material and location of origin.
        It will actually be the first time ever I will be able to
    answer it. A rough number though, just because we have to start
    with something. Half our medicines come from India. Seventy or
    eighty percent of their starting materials come from China.
        You start to do the math, it is not going to be a majority,
    but it is going to be a very large percentage of U.S. medicines
    that would become highly vulnerable. Some completely, but many
    highly, highly disrupted in short.
        The Chairman. Do you have any feel for how much is in the
    supply chain that is already in the United States? I mean, I
    can't imagine that people that--I used to run a hospital
    company. I don't think we sat there and said, let's have one
    year supply of drugs just in case something happens. Do you
    have any feel for what a typical doctor's office, a group
    purchasing organization, or hospital would have in inventory?
        Dr. Piervincenzi. At the very end of the supply chain is
    extremely little but if you were to say what is onshore in the
    United States at a distributor and such, of course it varies,
    but it is months, not years, and not weeks--it is months.
        If you continue down to your starting materials in your
    API, it gets a little longer, and that matters because it makes
    it hard for us to get signals. Something might happen, the
    manufacturer stops producing, and everything seems fine for a
    while. Nine months goes by and suddenly we have a shortage. It
    is not really sudden, but it appears sudden at the end because
    it takes a while for the chain, and since we don't have good
    transparency, we are not watching this happen as it comes
    along.
        Months is the answer. However, as soon as somebody knows it
    has been cutoff, hoarding behavior begins, and the shortage
    would take a matter of days in real life. In real life, you
    would know if a hurricane hit a plant and everyone knows there
    is a problem, everything would be bought up within hours.
        The Chairman. Those stores are empty in hours, actually.
    Yes.
        Dr. Piervincenzi. If nobody knows it happened, of course,
    then it would be months. But odds are it is going to leak,
    right.
        The Chairman. All right. Let me turn it over to Ranking
    Member Gillibrand.
        Senator Gillibrand. Thank you. For Mr. Piervincenzi, what
    are the risks of relying solely on the United States for
    production of drugs, and what precautions can we take against
    such risks?
        Dr. Piervincenzi. Thank you, Senator. One of the four
    drivers of resilience was the geographic concentration. That is
    agnostic to location. There are different issues about quality
    that we are also talking about. Some of the most acute drug
    shortages the U.S. has had in the last few years have been
    actually on the U.S. shores with an unfortunate hurricane and
    other things.
        Natural disasters--just things can happen, and they do. It
    is possible to create diversification even within the United
    States, as long as you don't have all your plants in one place,
    and so, there is a nuance to this, what geographic diversity
    looks like. If you have two plants in North Carolina across the
    street from each other, I would argue that is not very
    resilient. If one was on the West Coast and one on the East
    Coast, you might be in pretty good shape.
        Senator Gillibrand. In your testimony, you indicate the
    importance of aligning supply and demand forces so that
    American patients have more predictable, sustainable, and
    quality supply chain. How can the Federal Government promote a
    coordinated effort amongst different stakeholders to move
    toward a resilient supply chain?
        Dr. Piervincenzi. The simple answer is somebody has to pay
    for it. I think you have heard four different versions of that
    same thing here, is that somebody has to be not just willing
    to, but able to, so a willingness says, I am willing to pay
    $0.13 rather than $0.10 for a pill.
        Just about everyone is willing to do that. The problem
    today is no one has any evidence of how do I do that? If I can
    pay $0.13 for the same pill, I don't--it doesn't buy me more
    resilience, so this is where a large organization, including--
    very much including the U.S. Government, has that power.
        To say, for now on, especially for a certain set of drugs
    as we know are vulnerable, we will only pay with resilience.
    Meaning, this is what we expect, and you will get this price.
    The market solution like that means if somebody doesn't meet
    those benchmarks, they will be less preferred, so the market
    can fill in. It won't force it because it is not a binary
    decision.
        Because margins are so small, just extending--having a
    small, tiny bit paying just a bit more or having a slightly
    longer contract could make an enormous difference. I think that
    is the benefit of this problem, is that it can be solved with
    much less money than if these were expensive medicines.
        Senator Gillibrand. Mr. Daniels, in your written testimony,
    you recommend the Federal Government conduct regular stress
    tests of the pharmaceutical supply chain to stimulate worst
    case scenarios and identify weak points before failure. Can you
    speak a bit more about how the Federal Government could address
    identified weak points from these stress tests?
        Mr. Daniels. Absolutely, and thank you, Ranking member
    Gillibrand, so two things. One, just to speak about what Dr.
    Piervincenzi just mentioned. There are multiple ways to reduce
    the cost of these drugs as we reshore them. One of them is also
    relying on the innovation of our allies, right.
        I mean, there is a global market for pharmaceuticals, and
    as we start to look at that market, we do need to diversify
    both location, but also, we need to diversity end platforms,
    and so, in many cases, there are multiple areas in the supply
    chain where we are advising our customers, which are the
    Fortune 500, we are advising our customers to find two or three
    suppliers downstream to purchase metals, to purchase chemicals,
    to purchase goods from.
        They can do two things at that point. They can, one,
    utilize their purchasing power to actually reduce the cost of
    the underlying chemicals, precursors, whatever it might be, key
    starting materials. Two, they can give back some of that. Our
    customers, when they do what is called a directed or embedded
    spend program, they typically save between seven to twenty-two
    percent on landed cost on the end goods.
        They can actually share back some of that to get to a
    resilient supply chain and to get a supplier that is willing to
    agree to ethical quality standards, so these programs exist
    today. They exist in other industries. They are not as common
    in pharmaceutical supply chains, but there are pharma companies
    in Europe that we are working with today that are engaged in
    these activities, and they are doing it specifically to address
    CSDDD.
        To get to your second question, which is on these stress
    tests. We have been working across a number of different
    federal agencies, DLA, FDA, to map the 227 critical medicines
    within our supply chains and to understand what are the
    consequences of whether it is disruption, like the hurricane
    which knocked out our IV fluids capacity in the United States,
    or it is major shortages in war gaming due to conflicts with
    near peer adversaries, or if it is due to significant changes
    in availability of underlying materials. When we are doing this
    analysis, it is simple supply chain planning.
        Companies do this all the time. Now, what we have to do is
    we have to work probably across a consortium with companies
    like Exiger and Pharmacopeia to create a complete view of the
    supply chain, and that complete view the supply chain doesn't
    stop at sort of the specialty pharma or the innovative pharma
    company or the generic pharma companies and their suppliers.
        It has to go all the way down, and what we have to see is
    that reverberating impact. Because Dr. Piervincenzi said, it is
    true that many companies have 15 suppliers of the same product
    at that next year, and then they have four suppliers at the
    next year, and then it goes back to one.
        Just no one knows it. That is what happened with
    ventilators during the COVID-19 pandemic. All of our solenoid
    valves went back to one company in Italy, and so, even though
    Ford and GM and everybody stood up to make more ventilators, we
    couldn't truly make more because there was only one company
    that had that solenoids valve for the commodity ventilators.
        We actually have to make sure that mapping is complete, and
    then we have to makes sure that we are assessing all of the
    risks that can actually impact to that environment, whether it
    is geopolitical, it is natural disasters, or it is material
    shortages.
        The Chairman. Thank you. Senator McCormick.
        Senator McCormick. Thank you all for being here. Mr. Baker,
    can you describe what level of transparency already exists for
    American health care consumers with regard to what country a
    medicine or its APIs are from, and what improvements could be
    made to ensure Americans have better insight and understanding
    on the origins of their medicines?
        Mr. Baker. Yes. At the moment the transparency in the
    supply chain, as far as patients know about where their
    medications are made, is virtually nonexistent. There could be
    some improvements in the labeling. It is a complicated issue,
    because there is many players in the supply chain as outlined
    already, from the key starting materials all the way to the
    finished drug.
        We would have to take a risk-based approach, where the most
    critical step--like for example if it is an aseptically filled
    product that is intended for injection, the step in a supply
    chain at which that product was aseptically filled in a sterile
    environment would be on the label.
        It is not a perfect solution, but it is the best we can do
    to help increase transparency and let the market fix the issues
    as already outlined by my colleagues.
        Senator McCormick. Thank you. Mr. Daniels, how can
    technology and AI be deployed for hospitals and others to map
    their supply chains? I know you touched on this at some level,
    and what can be done to advance any reshoring or near-shoring
    of drugs and APIs?
        Mr. Daniels. Thank you, Senator McCormick, for the
    question, so first, hospitals are mapping their supply chains.
    We work with multiple hospitals across the United States to map
    their supply chains.
        They also, in large part, go back to large distributors,
    right, that are intermediaries between those hospitals and the
    actual drug manufacturers or medical device manufacturers or
    PPE manufacturers. The key first step is to use artificial
    intelligence to actually break down that bill of material of
    each of those pharmaceuticals and then tie those back to the
    literal suppliers that those pharmaceutical are coming from.s
        The thing is, you can't just map the products you are
    buying. You should be mapping the products you are not buying,
    and what I mean by that is, you should be--you should
    understand the spectrum or the panoply of alternative suppliers
    that you have available to you prior to a major disaster--the
    customers of ours--we are endorsed by the American Hospital
    Association as the key risk management technology company for
    all U.S. hospitals.
        The customers of ours that had our software deployed knew
    almost a month in advance that IV fluids would be subject to
    disruption due to Hurricane Helene, and so, that kind of
    visibility, of course, it can lead to the stockpiling point
    that we just made, but it also can save American lives,
    especially in operating rooms.
        The second question you had was on the reshoring. I mean,
    first, Senator Johnson brought up this point. One of the
    biggest issues we have is permitting. We have a huge backlog
    and delays in permitting of new facilities and capabilities.
    The other thing is a lot of this stuff is pretty dirty to make.
        Acetaminophen, just taking as an example, creates a waste
    broth that the EPA would not allow us to dispose of in the way
    that India or China does today. One of the things that we have
    to look at is that there are novel ways to actually manufacture
    these. These aren't novel ways that are not taken to scale yet
    through BARDA and multiple other programs that are looking for
    advanced research and development capabilities in emerging
    biotechnology.
        In BARDA, we have actually taken some of the continuous
    flow manufacturing capabilities to scale, so first, if we can
    permit, we can actually make it cost effective, and then the
    second thing is, with AI and automation in the actual
    manufacturing line, we take away the single and only
    differentiation between us and emerging markets in
    manufacturing pharmaceuticals at scale, which is labor
    arbitrage.
        Implementing AI and automation inside of the pharmaceutical
    manufacturing process--I mean, there are places in North Texas
    that are cheaper than places in Shenzhen, right. We can start
    building these factories and actually start, you know,
    competing on a global basis.
        Senator McCormick. Thank you. Mr. Chairman, Ranking Member,
    thank you for having this hearing. Great, great topic. Thank
    you.
        The Chairman. Senator Alsobrooks.
        Senator Alsobrooks. Thank you. Thank you so much, Chair
    Scott. Thank you so much, Ranking Member Gillibrand, for
    hosting today's hearing, and thank you so much as well to our
    witnesses for being here.
        What we know is far too many seniors still face the cruel
    reality of needing medication that they can't reliably access
    or afford. High drug prices, unexpected shortages, and now
    Secretary Kennedy's policies are preventing Americans from
    accessing the medicine and vaccines that will keep them safe
    and healthy. This couldn't be a more relevant topic.
        In the past few weeks, I have heard from my constituents,
    so many seniors across our state who are eligible for the
    latest COVID vaccine, and they are now being turned away
    because of the confusion caused by Secretary Kennedy's new
    guidelines, and others are being told that their local pharmacy
    is struggling to stock the vaccine because of a lag between FDA
    approval and the forthcoming recommendations from the Advisory
    Committee on Immunization Practices.
        When it comes to vaccines, we know that so much doubt is
    being cast on life-saving vaccines, as well as dismantling our
    public health infrastructure, and that is why this conversation
    is so critical. Seniors deserve not just reliable medications,
    but a health system that they can trust to put science and
    safety above politics. My first question is for Dr.
    Piervincenzi.
        I would like to ask you, when we see how fragile our drug
    supply chains can be when it comes to medicines that seniors
    rely on, and vaccines we know are no different, this is a time,
    as I have mentioned, when Secretary Kennedy, I believe, is
    really destabilizing public trust in vaccines.
        Older Americans can't afford disruptions to flu, RSV, or
    COVID. I would like to know, how has the confusion regarding
    vaccine approvals and recommendations this year made seniors
    across the country less safe?
        Dr. Piervincenzi. Thank you, Senator. An interesting fact
    on the vaccines, as compared to many of the low-cost generics,
    there are quite a few manufactured in the United States.
        If you consider United States, Europe, Canada, there is a
    disproportionately high quantity, so there is the ability for
    FDA to do more robust inspections, including surprise for
    majority of vaccine sites, and so, the public should have more
    confidence, if anything, that they are able to rely on the
    quality of the vaccines. As a complex biologic, there are
    linkages to the complex generics that are the ones showing up
    on the shortage lists the most.
        Because they are the kind of medicines used in hospitals,
    just for that reason alone, they are impacting two groups the
    most--the most senior, especially in oncology, and the
    youngest, the pediatric population. Also tending to be oncology
    but not only, and these two populations have been most
    affected. There is an extra layer to this problem is that these
    are the medicines that are least substitutable--it is an art
    form to try to treat these cancers.
        We haven't cured cancer, so the best we can do is slow it
    down in many cases. But a small change from one chemotherapy to
    another and the progression advances, it is the person's life
    that is at stake, so the vulnerability isn't just about the
    medicine, but about the patient and essentially what the next
    best alternative is.
        From a quality standpoint, items like vaccines are very
    different because they are given, of course, to a healthy
    patient, so you are measuring it in two very different ways.
    However, a poor quality vaccine, you are only going to test
    that perhaps 30 or 40 years later when you are exposed to a
    disease.
        You think about when you need to rely on quality, I can't
    think of a medicine more important than vaccines. Thank you.
        Senator Alsobrooks. Thank you. Now, I have one other
    question regarding--or two actually. The next question is
    regarding transparency, and what we know is for seniors in
    particular, and this is for any witness, it is not just about
    how the drug or where the drug is manufactured, but it is
    whether or not they can trust that what is in their pill bottle
    is safe, effective, and available when they need it.
        Too often our system reacts after a crisis, instead of
    putting preventive measures in place, leaving seniors and their
    caregivers to find out too late that their medication is
    suddenly unavailable.
        How should we be thinking about transparency, not just as a
    tool for regulators and industry, but as a preventive measure
    that empowers patients, especially seniors, to make informed
    choices about their medications and avoid being blindsided by
    shortages? That is for any witness.
        Dr. Piervincenzi. I will be brief to allow others time as
    well. I would emphasize pharmacy, if I might, so there is a big
    gap to the patient in knowledge and understanding, but we have
    an army of hundreds of thousands of health care practitioners
    called pharmacists out across our country who are unusually
    close to patients, have access on essentially a prescription by
    prescription basis.
        That is a huge positive. There is an opportunity to have
    them play a more active role when it comes to supply chain and
    quality. It is not typically a topic that they touch. I think
    if we want to be able to help empower patients, we are going to
    have to solve this through partnership with pharmacy and
    pharmacy organizations that I know are very open and willing to
    have this conversation. Thank you.
        Senator Alsobrooks. Thank you.
        Dr. Ball. Thank you for the question on transparency, so
    this is something I have spent a lot of time working on, and
    when our paper that I talked about in my introduction got
    published, our author team started getting random emails from
    the public, scared emails about how can I find out where my
    drug is made?
        We know know how to figure this out, so this is something
    that we were able to do in this study we published, but it is
    very difficult, and this is why we advocate for forcing firms
    to put the country, the location on the label so that it is
    transparent for everyone. We have developed a website that we
    are hoping to launch where you can type in a national drug code
    number and a flag will pop up to tell the consumer this is
    where it is made.
        Even developing that website by this author team that we
    worked on this paper has been very hard for us because it is a
    difficult step to go from a national code, which is on every
    drug label, to a country manufacturer, which is very hard to
    find out.
        Senator Alsobrooks. Thank you.
        The Chairman. Thank you, Senator Alsobrooks. Mr. Baker, in
    your testimony, you mentioned that Indian generic drug
    manufacturers using fake labs to pump out fake results to show
    a product was never tested. Can you talk us through what is
    supposed to be happening, and what you found and how you found
    it?
        Mr. Baker. Thanks for the question. Yes, what is supposed
    to be happening is that the FDA publishes manufacturing
    standards and the Code of Federal Regulations that they are
    supposed to follow says when you test something, for example,
    you are supposed report all the results that you generate.
        You can't just pick one or two that you like and then use
    that as the data to release the product. That is what is
    supposed to happen. What we found when we started the
    unannounced inspection pilot back in 2012 and 2013 is that
    those standards aren't being always followed. Some players are
    following those standards, but some aren't.
        It is difficult because the ones that want to follow the
    rules oftentimes won't be able to win a contract to ship those
    products to the U.S. because they can't compete with the folks
    that aren't actually testing it. Because as already mentioned,
    it does cost a few more cents to do it right, but not a lot.
    That makes a difference when the margins are so small.
        The Chairman. Mr. Baker, in the book, A Bottle of Lies, it
    talks about how foreign companies plan guided tours, but you
    rejected that, instead wanting to go directly to the quality
    control labs. Can you talk about your experiences with foreign
    companies? Why did they start with the tour?
        Why did you decide to change things up and go directly to
    quality control instead? How has that changed the inspection
    process? Were you the only one doing that? Do other inspectors
    do similar things?
        Mr. Baker. I remember the moment that we decided to focus
    on the unannounced inspection pilot, and, you know, I had been
    trained to do inspections here in the U.S., and we did those
    before I got deployed into New Delhi.
        Fraud happens here, too, but it is much more limited, like
    one person or a small group. I remember that moment being over
    there, and I was with a co-inspector, and I just remember like
    we looked at each other and we thought, actually, this is--
    everybody is involved in this. It is not just a single person
    or a small group. It comes from the top down, and it was kind
    of like an aha moment.
        It is like, have we got to do something about this. We went
    back and worked with folks at the embassy to develop ways where
    we could gain further insight into what is actually happening,
    and that involved showing up unannounced, which hadn't been
    done prior to that.
        We would arrive unannounced, and we would skip the
    conference room presentation and go straight to the lab, and
    what we found, like for example, I can think of one that really
    just sticks out, one of the larger aseptically filling sites in
    the entire world. I mean, some of these are the size of a small
    town, and instead of going to the conference room, we went
    straight to the microbiology laboratory where they do the
    sterility testing. I mean this is a life or death test.
        We walked in and there was only one microbiologist on
    staff. That was unusual, right. We walked into the chambers
    where they are supposed to be testing all these products, and
    they were all there, but they were all unlabeled, and so, we
    are like, well, where is the sample number on all these samples
    that you are supposed to be testing?
        All the paperwork was completed, you know, no growth, no
    growth, it is sterile, it is sterile, but in reality, none of
    the products were getting tested, and once we sort of caught on
    that this was happening, that program expanded and continues to
    today, and again, like I mentioned, when those inspections are
    performed, they result in an ability to find those problems
    that are causing these adverse events.
        About 40 percent of the time we find issues. Whereas on an
    announced inspection, where we show up and the dog and pony
    show continues, that is about a five to ten percent chance of
    finding those problems, because it is so much more difficult.
        We don't do announced inspections in the U.S. Why would you
    do that? You show up unannounced and you want to see what is
    the real quality of the product. You know, this is shown that
    maybe the playing field isn't so level.
        The Chairman. You mentioned that the bad players list is no
    secret, and these bad companies continue to avoid any
    significant consequences. That is telling me that the FDA knows
    which are the problem companies, but they aren't being
    inspected frequently enough or are still being allowed to
    import drugs. Does the FDA have a list of bad companies? What
    consequences should these companies be facing?
        Mr. Baker. Yes, that list exists. Yes, I mean, I could just
    look into the data base and see if which--if I was going to
    fill a prescription, which provider I would like to choose, and
    I will do that pharmacy hopping to find it, and--sorry, what
    was the second part of your question?
        The Chairman. Well, what consequences should they--?
        Mr. Baker. Oh, yes. The consequences should be, if you are
    caught breaking the law, you know, as outlined in the
    regulations, you should be prevented from shipping products to
    the United States.
        The Chairman. They have got a list----
        Mr. Baker. Yes.
        The Chairman. There is no consequences.
        Mr. Baker. Very little consequences. When the FDA takes
    action, what they will do is they will just shift those
    products to another facility in their network, and so, it is
    this cat and mouse game, right.
        Then this facility gets shut down, so now they are shipping
    out of this one. Then FDA goes over here, but by this time--by
    that time, this one is already back in the market, you know,
    because they will go back two years later.
        It will sometimes be an announced inspection and the game
    resets. It is just I go here, I go here, and so, you know, just
    enforcing the law and saying, if you break the laws, you are
    not going to be allowed to participate, could go a long way.
        The Chairman. Then we put that in our bodies.
        Mr. Baker. That is correct, yes.
        The Chairman. Ranking Member.
        Senator Gillibrand. Very depressing. Dr. Ball, you have
    studied the impact of five-star quality ratings and country of
    origin labeling on consumer choice. As you know, not everybody
    has the skill set that Mr. Baker described of being able to
    know which vendor is actually safe.
        Patients don't have much choice in choosing which medicines
    their pharmacies or hospitals or nursing homes choose to stock,
    and they arguably don't have the level of sophistication they
    would need to be able to choose anyway. In hospitals and some
    nursing homes, patients may not have access to containers where
    the five-star quality rating or country of origin labels would
    be placed.
        How can a five-star quality rating system and country of
    origin label promote the use of high-quality drugs when
    patients often don't have much choice? How can this proposal
    incentivize hospitals and other purchasers to purchase high-
    quality drugs when institutions often face pressures to keep
    costs low?
        Third, how would you recommend that the FDA conduct
    inspections and update their five-star quality ratings?
        Dr. Ball. Thank you Senator for the great questions. Our
    solution that we have tested in our paper is a first step. The
    first step is--and I have had my parents and elderly family
    members ask me, how do I know where this drug is made and if it
    is safe. If you arm the person at the pharmacy desk or the
    patient to look at a bottle and say, now, why is this a three-
    star drug?
        That question in and of itself could make a big difference
    because groups like the AARP could all of a sudden have a voice
    to say, why are we selling three-star or two-star drugs to our
    constituents? You are correct that it wouldn't fix everything
    overnight. That hospitals, when they buy it in group packaging,
    may not have the stars on them until the solution get properly
    fixed there. That group purchasing organizations may be less
    sensitive.
        The notion is that if it becomes transparent for every
    level of the supply chain, the manufacturers are no longer able
    to hide, and they have to somehow figure out a way to compete
    on quality.
        It wouldn't fix the problem overnight, but it would also
    allow group purchasing organizations who change suppliers based
    on pennies, which is often the case that we hear in our
    research, to look at this and say, yes, we may save a penny,
    but this is going from a three star drug to a two star drug.
        That has consequences for the people that are in the
    insurance program that they serve, or the elderly person that
    picks it up at CVS and asks their pharmacist, why are you
    giving me a two-star drug? That conversation is the starting
    point to put pressure on firms. It is not perfect, but it is
    the beginning, and it is much better than what we have now.
        Senator Gillibrand. Thank you. Mr. Baker, off of Dr. Ball's
    answers, how should country of origin labeling be implemented
    to take into account the origins of a generic drug's components
    versus the manufacturing site of the generic in its final form?
        Mr. Baker. Yes, I have been thinking a lot about that
    because over the years, having seen the sites and thinking
    about transparency, that this would eventually come based on
    what we were uncovering.
        There is no real perfect solution, but there are some--for
    each different type of drug, if you are talking about a solid
    oral product or an injectable product, there are--at least one
    step that is very critical to quality, for the purity and in
    some cases, sterility.
        Putting that on the label would force companies to take
    that step seriously, and also possibly diversify supply chain
    for those critical steps to have those in areas that are
    reliable, and so, for example, an aseptically filled product,
    where is that bottle being filled? Because that is, again--
    there are other players, but that one is the most critical.
        Senator Gillibrand. Dr. Piervincenzi, your written
    testimony indicated the United States relies heavily on Indian
    and China, and I think the chairman's questions about those two
    countries have been very insightful.
        The majority of these KSMs are produced in China. You also
    highlighted how one KSM, thymidine, is produced only in China.
    Can you speak to why the United State is currently unable to
    produce certain key starting materials, beyond the
    environmental impacts of the manufacturing process?
        Dr. Piervincenzi. Yes, so thank you, Senator. The key
    starting material is a fancy term, I think Senator Scott you
    sort of said this earlier, that is only relevant to its use in
    a pharmaceutical arena.
        What the rest of the world will call them is chemicals.
    They are chemicals. The chemical industry left the U.S., for
    the most part, a long time ago, before pharma. In fact, that is
    how pharma started in the U.S. It followed the chemical
    industry in New Jersey--it became pharma.
        There is no mystery as to why it left the U.S.--for
    environmental reasons and just cost and all the reasons we
    know. There is something unique about medicines is that they
    are very light users of very expensive chemicals. What I mean
    is--and many of the chemicals used in drugs are used for lots
    of other industrial and other purposes, but in much, much
    larger quantities.
        That the chemical company--so they are very rarely to have
    a key starting material company, because most of them are
    chemical companies who sell some key starting materials. They
    therefore are a small portion of their business.
        This further complicates the supply chain, because later
    on--we are talking about medicines all the way along, API,
    finished dose, regulated by FDA, but these chemical companies,
    they are not even in the medical business, so the incentive or
    to think about how do we secure our key starting materials, it
    is not only in the area of greatest risk.
        It is what we least have in the U.S., or even among U.S.'s
    allies. It is also the hardest of the three pieces to solve,
    and we think we have to look at the KSM model, your chemicals,
    and think, well, how do we start to source it? Where else in
    the world--I think we need to be more flexible about the world
    and think about it.
        We may consider more onshoring on API, but we have to be
    pretty flexible on the key starting materials, but the current
    model is unsustainable, but we will have some real numbers in a
    couple of months. I think it is about even less than two months
    where we can start to look at them as tangible.
        Senator Scott, to your point earlier, we have to be able to
    have some data. Otherwise, it is very hard to get action going,
    and hopefully, this will be the first time we have data on
    specifically what key starting materials, where, and then we
    have the very important next conversation, is how else can we
    make them.
        Maybe just to wrap up there, but there are some cases we
    can make them a different way that doesn't follow the chemical
    industry but uses biotech processes, and that we could do in
    the U.S.
        Senator Gillibrand. That is good. Thank you, Mr. Chairman.
    Great hearing.
        The Chairman. Mr. Baker, you highlighted the story of your
    grandmother. What was your experience pharmacy shopping? How
    many pharmacies did you visit? Did you find that they had the
    same drug from the same company? Was there diversity in
    manufacturers?
        Mr. Baker. Yes, I come from a pretty small town in Oregon
    called Lebanon, and there is about three pharmacies in the
    area, and so, we went to all three, and each one actually had
    the same product by the same manufacturer, so we reluctantly
    made that choice, and I felt bad because already then--at the
    first pharmacy, I had already sort of hinted that this was not
    going to go well, and so, you know, it is an experience that is
    going to stay with me for the rest of my life because it
    shouldn't be like that. I think we can do better.
        The Chairman. How would you feel buying a drug from a
    company that just settled with the DOJ for faking lab data?
        Mr. Baker. Yes, it was a tough decision, and again, as I
    mentioned, trying to stay positive is the one thing because you
    don't want to cause unnecessary panic in someone, and, you
    know, a lot of people ask me before they will take it. They
    will give me a call or send me an email, like, hey, what do you
    think about this one?
        I will give them advice, and to be honest, over the years,
    sometimes I have to fake that advice because I know there is no
    alternative, and I will have to just send a positive email when
    in fact inside I know that that is not the truth.
        The Chairman. How do you do it when you buy drugs for
    yourself?
        Mr. Baker. For myself, I would do the same thing. I live
    now in Austin, so I have more choices there and try to do my
    best to shop around or even consider like an online pharmacy if
    I can call them and find out where--you know, what manufacturer
    they are going to use to fill that prescription.
        The Chairman. Do you believe Americans are dying because of
    poor oversight done at foreign generic drug manufacturing
    facilities?
        Mr. Baker. Not poor oversight, but poor enforcement, but
    again, it is complicated to enforce because of the drug
    shortage issue. Again, it is not one person or one
    organization's fault. It is just--it is the system.
        The Chairman. Why did the FDA set up this foreign
    surveillance system the way they did?
        Mr. Baker. It was a collaboration with embassy, and FDA,
    and folks at HHS to sort of evaluate--to tell the story. You
    know, what we were finding in our initial times when those
    foreign--you mentioned Heparin earlier.
        That was the reason, one of the reasons, but I think the
    main one why the foreign offices were established in strategic
    locations around the world was to be that sort of rapid
    response and gain further insight into what was happening with
    our supply chain. I think, you know, 15 years later, the
    picture is pretty clear.
        The Chairman. Dr. Ball, so what causes--if they are all FDA
    approved, what are some of the things that causes one to be
    different than the other one?
        Dr. Ball. I think the notion that if it has the same active
    pharmaceutical ingredient dosage form and route of
    administration, which is kind of what a generic equates to an
    original, if you match those, the drug will work. That
    discounts all of the manufacturing influence on quality.
        These are subtle changes, and my intuition is that they are
    often not on purpose. If I was in a market where I was only
    competing on cost, I would find the very cheapest place to make
    my product, the cheapest labor, the cheapest equipment, the
    cheapest suppliers. It is the rational thing to do.
        When Peter says it is the system, it truly is, because I
    believe these manufacturers are acting very rationally. If you
    cannot judge quality and it is opaque, cost is the only thing
    that matters, that will inevitably reduce quality. It actually
    must. It is like a scientific fact.
        If you cut the corner in every part of making a product, if
    quality doesn't suffer, something is wrong. You haven't cut
    corners enough, so quality will suffer eventually. It is in
    every aspect of the supply chain.
        The Chairman. Mr. Baker, when you did a foreign site
    inspection, did the FDA or the foreign facility pay for your
    translator? Is that a problem either way?
        Mr. Baker. Yes, so in my experience, most of the
    translation is provided by the sales department within that
    company, who oftentimes has the best English because of their
    job. They don't know much about manufacturing, but they know
    they are supposed to tell the story well. That is oftentimes
    what I experienced.
        Luckily for me, I had studied Mandarin for about 15 years
    prior to going to China, so I could sort of overcome those
    challenges, but yes, that is the norm. Not always. Sometimes
    they will provide an independent translator, but it is
    voluntary.
        The Chairman. Mr. Baker, when you went to China, did they
    let you just go anywhere you want?
        Mr. Baker. Yes.
        The Chairman. You could go, but the Government would let
    you go anywhere, and you could walk in any facility--and you
    can walk around any facility you wanted?
        Mr. Baker. Oh, yes. Yes, we had a very good working
    relationship with what they would call CFDA at that time, and
    they would shadow us on a lot of our inspections to learn our
    techniques.
        The Chairman. Why would they shadow you?
        Mr. Baker. To learn how we uncovered the issues that we
    were finding using forensic computer inspection techniques,
    things like that.
        The Chairman. What would be--what would--give me an example
    of a facility that you were most disappointed.
        Mr. Baker. Most disappointed, I think, are the ones where--
    there is multiple, but you would show up at the show--I
    mentioned this in the five-minute testimony where you would up
    at show facility. This is the clean one. We knew, like showing
    up, you knew that there is no way they are making the amount of
    products that I can see on the customs import list, right.
        There is just no way, and so, what you will do is you will
    try to find--you will show up midnight and just watch
    operations, you know, from the outside and try to out what is
    going on, and then you will eventually uncover like a shadow
    facility. It could be like next door, or it can be somewhere
    else you will watch trucks come in, right.
        When you find that shadow facility, that is I think one of
    the most concerning things because those are totally off the
    radar. I mentioned the problems with announced inspections, but
    just exponentially worse when you don't do any inspections
    there, and so, that is the--and I think when we were there we
    probably figured that 10 percent of the API getting exported to
    the U.S. was from shadow facilities.
        I have no data to support that. That was just a rough
    number that we sort of came up with, and compounding pharmacies
    are really suffering as a result of this because they are
    importing products, and they really don't have any ability to
    determine where they are coming from.
        The Chairman. How long could the facility that was doing
    the wrong thing stay in business before they are shut down?
        Mr. Baker. A long time, especially if they had any drug
    that was on the shortage list, and so, you could prevent some
    of their products from reaching the U.S., but they would
    continue to ship a couple that we called them carve-outs,
    right, because we just couldn't prevent the supply, and then
    they will ask for a re-inspection in about one to two years.
        It will--FDA will go back, and oftentimes that will be
    announced because it is resource intensive to do unannounced
    all the time, and then that would be a choreographed inspection
    and the clock resets. They can hang on for years because we are
    addicted to these sites.
        The Chairman. Dr. Ball, you reviewed adverse event data
    that the FDA had cross-referenced to drugs made in India,
    right?
        Dr. Ball. Correct.
        The Chairman. Okay. Where does the adverse event data come
    from? What did you consider to be an adverse event? What
    conditions were eliminated as an adverse event?
        Dr. Ball. An adverse event--we used FDA's FAERS data base,
    and they make the determination. The manufacturer must report
    an event that occurs, that they hear about, where a consumer
    was injured, hospitalized, or died because of a drug, and then
    through the FDA's analysis of these adverse events, there are
    flags that are put on to the adverse event. Things like a drug
    characterization field.
        That field means that the drug is the likely cause of the
    event, and a de-challenged field. The de-challenged field means
    that if the patient was taken off the drug, the problem that is
    discovered went away.
        We tested just the de-challenged drugs, which was very
    convincing for us as an author team, we are really onto
    something here because our effects still hold on the de-
    challenged drugs on those that cause death, hospitalization, or
    injury. To answer your very first question, the firm must
    report it when they hear about it. It is mandatory.
        The Chairman. The firm, who is that?
        Dr. Ball. The manufacturer. The manufacturer hears about
    adverse events from patients, from physicians, from lawyers.
        The Chairman. There is no obligation that a patient says
    it?
        Dr. Ball. Correct.
        The Chairman. There is no obligation to the hospital, and
    there is no obligations that a doctor?
        Dr. Ball. Correct. In the order you just gave though, the
    nurses and physicians are much more attuned to how the system
    works than patients, and so, from our experience, like
    physicians and hospitals know that this FAERS data base is
    there and that they need to report what they have found, but
    there is no obligation.
        There is a selection bias there. It must be under-reported.
    It has to be because it is not forced, but this does come back
    to the FDA's enforcement authority because these reports come
    into firms, and these firms maintain complaint data bases.
        When you can access those complaint data bases on an
    unannounced inspection, you are going to get a real honest look
    into how the quality of the firm is operating, versus if you
    give them even a week's notice, the look may not be the same.
        The Chairman. How many--what is the total list of adverse
    reactions? Do you have a list of how many?
        Dr. Ball. I can get that to you. It is incredibly long.
        The Chairman. A half a million?
        Dr. Ball. I know it is in the thousands. It is a very long
    list.
        The Chairman. Why do you think it is different in the
    United States if it is manufactured in the United States versus
    India or China?
        Dr. Ball. This is speculation somewhat because in the study
    we were not able to get at that core mechanism.
        Theoretically it makes a lot of logical sense that when you
    source a product in the lowest cost place where you are
    furthest from the regulator, the temptation to cut corners that
    will affect quality just goes up and up, and then to accentuate
    that temptation, if quality is assumed to be high, as soon as
    you get FDA approval, you have that stamp of approval, you no
    longer have to worry about quality.
        The difference I think lies in the fact that in the United
    States, you are much closer to the FDA, their authority is much
    more felt, and the costs of the suppliers and the raw
    materials, they are more, and as soon you get that far away,
    the FDA's authority is more distant and the cost of everything
    is lower, and that lower cost will come through in lower
    quality.
        The Chairman. You don't have oversight.
        Dr. Ball. The oversight is much more distant. It is much
    more distant. I don't envy the FDA. It is much harder to
    enforce their standards there.
        The Chairman. If I understand correctly, according to your
    study, generic drugs manufactured in India have a 54 percent
    higher chance of an adverse event, which hospitalization,
    disability, and death compared, to similar drug made in the
    U.S., right?
        Dr. Ball. It is more precise to say that the predicted
    number of serious adverse events for older generic drugs made
    in India (those generics that have been on the market for eight
    years or more) is more than 54 percent higher than the number
    of serious adverse events for equivalent, older generic drugs
    made in the U.S.
        The Chairman. Let's say you are going to buy two of
    anything. Let's say, you are going to buy two cars. If you knew
    if you bought one of them, you bought like one car, you had a
    54 percent chance of something bad happening to you, so, what
    would you do?
        Dr. Ball. Well, because cars have quality ratings, like
    J.D. Powers, I would buy the higher quality rated car, but that
    can't be done in drugs, but if I knew the difference, then I
    would spend the money to buy the higher quality product.
        The Chairman. You think the National Highway Traffic Safety
    Administration would let a car that was 54 percent more
    dangerous on the road?
        Dr. Ball. See, and the regulator--NHTSA doesn't have to
    worry too much about that because car quality is accessible to
    the consumer before they buy it, and that is the difference
    between that and the pharmaceutical industry.
        It is inaccessible before you buy it and oftentimes even
    after you buy. This adverse event increase is hidden in
    millions of adverse events. That is what makes studies like
    this so difficult. There is so many data points that it is easy
    for these types of increases to hide.
        The Chairman. What was the FDA's reaction to your study?
        Dr. Ball. While I have worked with the FDA before, since we
    published that paper, I have not had a lot of interaction with
    the FDA, and in the last several months, some of my contacts
    have left, and so, I don't honestly know what the FDA's
    reaction is.
        The Chairman. Did your studies show a difference in quality
    between generic drugs made in developed nations like Canada or
    the EU compared to India?
        Dr. Ball. There is an overall difference between emerging
    economies and advanced economies, but when we took that
    difference and we broke it out by country, the only country
    that showed a difference was India to U.S.
        No, there wasn't a difference between U.S and Canada.
    However, the volume of drugs in our study was overwhelmingly
    advanced economy drugs were U.S., and overwhelmingly emerging
    economy drugs are India.
        The volume helped make the difference findable, but it was
    something that we didn't see when we compared like us to Canada
    for instance.
        The Chairman. What was the landscape of generic drugs that
    you looked at? Did you limit it to sterile injectables, or did
    you try to look at everything?
        Dr. Ball. We looked at everything that we could get label
    data on.
        The Chairman. Statins, antibodies--antibiotics, and blood
    pressure medicine?
        Dr. Ball. All of those. Everything that had a label on the
    data base we used, we measured it.
        The Chairman. Why do you think the FDA doesn't put in,
    require, you know, country of origin of ingredients and country
    of origins of manufacturing? Why don't they do it?
        Dr. Ball. This is speculation, of course, but I believe
    that there is a few reasons. I have heard that through some of
    our discussions with them that if they were to put quality or
    country labeling, it could cause some unexpected market
    reactions. It could cause shortages, for instance, because if
    you look at a drug and there is----
        The Chairman. People might buy American first?
        Dr. Ball. If the supply isn't there, then all of a sudden
    we have overnight shortages because we have made the market
    transparent. That is one of the concerns I have heard. The
    other is that I believe, and this is speculation, that the FDA
    doesn't think they have the authority to force the manufacturer
    to put the country on there.
        They believe that is company confidential information, and
    then the quality rating is something that we have taken from
    data that they possess, and we have come up with a measure that
    we believe they could translate it to, but it is not something
    that is immediately available right now.
        The Chairman. Mr. Daniels, I think you said that challenge
    supplies about 90 percent of antibiotic APIs consumed in the
    U.S. Can you talk about how you figured this out?
        Mr. Daniels. Yes. What we found was that 90 percent of the
    antibiotic APIs used by India, and India being the vast
    majority of the generic antibiotics that we were getting, were
    manufactured in China, and the way that we mapped this, we took
    every single, critical medicine that we had in our study. We
    built a bill of materials for each of them.
        Every single component of that pharmaceutical, of that
    drug, and what we did was we, once we had that bill of
    material, we identified each supplier, each supplier that was
    connected to every single one of those components. Once we
    identified the supplier, we knew how much of the active
    ingredient was in every dose, and we could see the doses that
    were being consumed in the United States.
        We mapped that up to supplier capacity, supplier volumes
    coming into those companies, which we have proprietary data and
    customs, trade, shipping, invoicing data that informs us as to
    what is happening between those two companies, and we can see
    where the next company was sourcing their key starting
    materials, excipients, whatever it might have been, at that
    next level.
        We just kept tracing down the line to the facility, so we
    knew which facility was actually producing which chemical
    compounds. Once we got down to that facility, we cross-
    referenced the data that we had pulled through with their
    certification levels, their employee information, their square
    footage to ensure that that capacity was visible and to
    identify things like shadow facilities, which there certainly
    is a significant volume of that kind of product coming through.
        Then we rolled that all the way back up to the supply chain
    and identified that essentially these manufacturers in India
    were using this significant cost differential between the
    locally made goods and what was being made in China and were
    utilizing that to accelerate and to expand margins and the
    goods being sent to the United States.
        The Chairman. Are there other drugs that you are aware of
    that we have such acute dependency on, on Communist China or
    another adversarial country?
        Mr. Daniels. Yes, about 50 percent of our critical
    medicines are in that category.
        The Chairman. Do you think this is a national security
    risk?
        Mr. Daniels. It 100 percent is.
        The Chairman. I am a grandfather. Kids usually get ear
    infections and strep throat, so if China were to drop liability
    and limit antibiotic-related APIs from being exported, would it
    impact us?
        Mr. Daniels. Yes. You would see at least 50 percent of the
    antibiotics that your kids have access to evaporate. In fact,
    the next time one of your grandchildren gets a strep throat or
    an ear infection, I encourage you to look at it. I bet you
    dollars to doughnuts, it is made by Aurobindo, which is an
    Indian manufacturer using Chinese KSMs and APIs.
        The Chairman. Do you think this could create a public
    health emergency?
        Mr. Daniels. It almost did during COVID. I experienced it.
    I was working with Ellen Lord, Honorable Ellen Lord and Jen
    Santos and Stacey Cummings, and when they said they were going
    to drown us in a sea of COVID--I mean, those calls really did
    happen.
        The Chairman. How long do you think--if they shut it off
    tomorrow, how long you think our supply is for?
        Mr. Daniels. I mean, it is months. As Dr. Piervincenzi
    said, it is months. It is month with severe constraints. I mean
    you would probably be treating--you know, you would be treating
    people in sepsis. Kids would have to weather through, and that
    could be very dangerous.
        The Chairman. Are there any sole source drugs, which, you
    know, there was only one supplier?
        Mr. Daniels. There are.
        The Chairman. They are relying on Communist China or India?
        Mr. Daniels. There are--I don't have the names off the top
    of my head, but I remember looking in the study, there were
    significant volumes.
        The Chairman. Let me make sure I got this right, 95 percent
    of ibuprofen is imported from China?
        Mr. Daniels. Ninety-five percent of ibuprofen, so there is
    a key starting material that is--that 95 percent of it I
    believe is pulled from China, is sourced from China, and that
    ingredient then goes into ibuprofen.
        There are other ways in which to source that same material.
    The same goes for acetaminophen. There are other ways to source
    that material, but they are not cost advantageous and so
    therefore are not used.
        The Chairman. Ninety-one percent of hydrocortisone is
    imported from China. Does that sound right?
        Mr. Daniels. That sounds right.
        The Chairman. Ingredients. Half of U.S. Penicillin and
    Heparin are imported from China?
        Mr. Daniels. Yes.
        The Chairman. The Federal Government knows this and has
    done absolutely nothing about it.
        Mr. Daniels. At the moment, after COVID, there was a huge
    fervor. It died. We started studying the problem and stopped
    executing against the reshoring and strategic activities, and,
    you know, I am hopeful that HHS, particularly the FDA picks
    this up, but as of right now, we are not actively policing
    these supply chains.
        The Chairman. Are you familiar with the Uyghur Forced Labor
    Prevention Act?
        Mr. Daniels. I am, Chairman, yes.
        The Chairman. Do you think that is being complied with?
        Mr. Daniels. I do not believe we are conducting significant
    or thorough investigations in this pharmaceutical space, and at
    the beginning of the year, there was a significant drop in
    detentions that would indicate a lower volume of enforcement.
    Those have since rebounded, Chairman Scott. I think we could
    significantly stiffen and significantly strengthen our policing
    of that law.
        The Chairman. Have you tracked the Department of Defense's
    reliance on China for drugs?
        Mr. Daniels. I have, yes.
        The Chairman. Do we have our own source, so our military is
    never dependent on China?
        Mr. Daniels. We do not.
        The Chairman. Why wouldn't we?
        Mr. Daniels. We, in many areas, are reliant on--it is kind
    of like we have in critical minerals and in magnets, Chairman
    Scott, where the commercial markets have so deeply been usurped
    by China that we don't have the investment capital coming in to
    offset it.
        Just like we are doing in MP materials and neodymium, iron,
    boron magnets and things like that for our weapons systems, we
    have to make those same kind of investments in our
    pharmaceutical supply chains.
        The Chairman. If China invades Taiwan or continues to
    attack the sovereignty of the Philippines and we go to their
    defense, do you think they will keep shipping us drugs?
        Mr. Daniels. I think Chairman Scott, it would be a key
    tactic to stop doing this.
        The Chairman. Do you think it would be safe for our
    military to continue taking Chinese drugs?
        Mr. Daniels. No, sir.
        The Chairman. Can you explain the role that Chinese
    Communist Party and the People's Liberation Army links play
    into the generic drug supply chain, and how federal programs
    like Medicare and Medicaid are paying for it?
        Mr. Daniels. Yes, Chairman Scott. The PLA is infused into
    the Chinese economy. It is called the military-civil fusion,
    and in many cases, and as we have pointed out in the Bitter
    Pill Report, several of the organizations that are producing
    these active pharmaceutical ingredients or KSMs are actually
    sponsored and funded by PLA-funded entities are directly by the
    PLA.
        Those situations create a significant amount of command and
    control, what we call foreign ownership control and influence
    risk, in those companies, and make them essentially beholden to
    not only the CCP, but the PLA.
        The Chairman. Would you say that the U.S. health care
    system is entirely beholden to the Communist Party of China?
        Mr. Daniels. At the moment, yes, sir.
        The Chairman. Dr. Piervincenzi, how many sole-sourced APIs
    come from Communist China?
        Dr. Piervincenzi. Thank you, Senator. We are aware of 11
    that are directly coming from China, but that is not the real
    answer. The real answer is the APIs are coming from China to
    India, and we know that is where 95 percent of our challenges.
    I think antibiotics are a unique case, and it is real, and it
    was strategic.
        It was a choice in China many years ago, in fact, 15 years
    ago to have that as a strategic asset, and it was successful,
    while the world wasn't really paying attention, but that is a
    bit of an outlier. I think the vast majority of reliance on
    China is coming back to the starting materials, the chemicals,
    in some cases the excipients as well--less often, but in some
    case.
        The Chairman. How many generic drugs use key starting
    materials from China?
        Dr. Piervincenzi. We are going to have a real answer for
    that, but it is going to be somewhere in the range of 20 to 40
    percent would be my guess, but give me about two more months
    and we will have a better answer for you.
        The Chairman. How about brand name drugs? Do they use APIs
    from India or China?
        Dr. Piervincenzi. Rarely, and it just goes to the different
    incentives. It is not that they couldn't. It is just that it is
    not necessary. The incentive is high value product. We need to
    have a very reliable supply chain.
        Their finished dose is rarely in those countries. They
    don't want to have a big, complicated supply chain halfway
    around the world, so they try to simplify, and so, therefore,
    you see the APIs manufactured mostly in U.S., Europe, Canada.
    If you think of those, that is going to be your majority. A bit
    more in Europe than the U.S. in this case.
        The Chairman. What sort of random testing of generics drugs
    happen in our marketplace?
        Dr. Piervincenzi. The U.S. market is a bit unique in the
    world today. There is a risk-based approach at FDA, which is
    taking into account known issues and that drives testing, and
    FDA has its own labs and of course can outsource testing as
    well.
        There is very little random testing, and currently today
    there really is no private sector solution to do so. This is
    relatively common practice in most markets including in Europe,
    but in middle-income countries as well. It is generally called
    post-market surveillance, which is a fancy way to say you buy
    something from the pharmacy and you test it.
        The Chairman. Does USP track how many drugs Americans are
    taking that rely on Chinese APIs?
        Dr. Piervincenzi. Yes.
        The Chairman. Does that present a risk to our supply chain?
        Dr. Piervincenzi. If you believe that China supplying our
    drugs is a risk, then the answer would be yes.
        The Chairman. How many of you would buy a generic drug made
    in India or China if you knew there was American-made drug
    available?
        Dr. Piervincenzi. Senator, if I have an offer, I would if I
    had the assurance on the front end of the system. The system as
    we described is tilted today and that is the issue, and that it
    is an important nuance to me because that is where the solution
    lies, is that un-tilting and I think that is a consistency that
    you hear from us.
        The Chairman. I think, if you listen today, based on the
    testimony, Americans, we have hospitalizations, we have illness
    and death because of adverse effects from some foreign-made
    generic drugs.
        Does anybody disagree with that? Bad drug quality doesn't
    just mean drugs are less effective, which it could be, right?
    Also make you sick or could kill you, so every American
    senior--see if you agree with this, every American Senior needs
    to look into their medicine cabinet and ask this question, am I
    confident that the generic drugs I am taking are truly safe?
        Do you believe today they could say that? Do they have any
    ability to say that? Do any of you think they have any ability
    to that today that if they look in their medicine cabinet, or
    they go to their pharmacy, they can say it is safe? I talked
    about LeRoy Hubley, lost his wife at 48 years, Bonnie and his
    son, Randy, just weeks apart due to contaminated Heparin that
    they needed for their dialysis treatment. It is horrible.
        This should never happen in this country. If Americans
    don't know where the generic drugs are taken or made, if there
    is no measurement system, there is nowhere they can feel
    confident, they can feel safe. It is clear that we have a big
    problem.
        I am from Florida. I was the Governor. We have hurricanes.
    At least in hurricanes, in contrast to some other things, at
    least you can get out of the way, or you should. I always tell
    people that you can rebuild a house, but you can't rebuild your
    life, and you tell people to get prepared.
        It seems like we are number one, even if we didn't have the
    concern about the way that Communist China acts, we say to
    ourselves, it is crazy that we are not focused on quality and
    focused on supply.
        On top of that, we know that we have Communist China that
    is threatening Taiwan and threatening the Philippines, and why
    in God's great Earth would we ever allow our country to be
    dependent, whether you are talking about anybody that takes a
    generic drug, including our seniors, or why would we ever, ever
    put our military in that position? It just doesn't make any
    sense.
        I think the bottom line is we have no choice, but we have
    to make significant changes. I hope the new head of the FDA
    will take this seriously and hope we will see change. I think
    we are going to see change is if the American public demands
    it.
        My experience as Governor of Florida, my experience in this
    job is that if people demand it, then it is going to happen.
    People continue to be complacent, it is not going to happen. I
    would like to thank everyone for being here today and
    participating. I look forward to continuing to work with
    members across the aisle.
        If any Senators have additional questions for the witnesses
    or statements to be added, the hearing will be open until next
    Wednesday at 5:00 p.m. Anything else anybody wants to add? [No
    response.]
        The Chairman. Thanks, everybody. Thanks for being here.
        [Whereupon, at 05:23 p.m., the hearing was adjourned.]
    =======================================================================

                                    APPENDIX

    =======================================================================

                          Prepared Witness Statements

    =======================================================================

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                          Prepared Witness Statements

                                  Peter Baker
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                          Prepared Witness Statements

                                Dr. George Ball
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                          Prepared Witness Statements

                                Brandon Daniels
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                          Prepared Witness Statements

                            Dr. Ronald Piervincenzi
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    =======================================================================

                            Questions for the Record

    =======================================================================
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                     U.S. Senate Special Committee on Aging

    "Prescription for Trouble: Drug Safety, Supply Chains, and the Risk to
                                Aging Americans"

                               September 17, 2025

                            Questions for the Record

                                Brandon Daniels

                            Senator Elizabeth Warren

    Questions:

    How would requiring drug manufacturers to disclose the source
    of active pharmaceutical ingredients (APIs) and key starting
    materials (KSMs) used to make drugs consumed in the U.S.
    increase the supply of safe and effective drugs for U.S.
    consumers?

    During the hearing, you explained that supply chain mapping can
    help to anticipate supply chain disruptions and critical drug
    shortages. Would requiring pharmaceutical manufacturers to
    report API and KSM sources to the federal government improve
    supply chain mapping?

    Would a federal database with this information help avoid
    supply chain disruptions and critical drug shortages?

    Based on your experience at Exiger, which components of the
    pharmaceutical supply chain need the greatest scrutiny or
    investment to increase the supply of safe and effective
    pharmaceuticals?

          a.What are the most significant barriers preventing the
    United States from onshoring more pharmaceutical manufacturing
    that Congress should prioritize addressing?

          b.How would you suggest Congress address these barriers?

    In your testimony, you highlighted that there are national
    security risks to the Department of Defense (DoD) being
    overreliant on foreign pharmaceutical manufacturing. How do
    these risks undermine military readiness?

    How do U.S. national security risks increase with higher rates
    of unsafe, foreign pharmaceutical manufacturing?

    Which essential medicines should DoD prioritize securing safe,
    reliable access to for service members?

    As you noted in your testimony, DoD revealed that "54% of the
    DoD pharmaceutical supply chain is considered either high or
    very high risk, with dependency on non-[TAA] compliant
    suppliers, sourcing from China, or unknown." What would be the
    impact on the military readiness if DoD lost access to 54% of
    the supply chain?

    Can you provide examples of how DoD has been adversely impacted
    by pharmaceutical supply chain disruptions?

    Can you provide examples of how DoD has been adversely impacted
    by drug shortages?

    Can you provide examples of how DoD has been adversely impacted
    by unsafe pharmaceuticals?

    How do DoD pharmaceutical supply chain challenges, drug
    shortages, or access to unsafe pharmaceuticals result in direct
    additional health care expenditure?

    What types of indirect costs result from higher rates of
    illness if DoD experiences pharmaceutical supply chain
    challenges, drug shortages, or access to unsafe
    pharmaceuticals?

    What other costs to DoD occur as a result of supply chain
    challenges, drug shortages, or access to unsafe
    pharmaceuticals?

    How would DoD benefit from domestic manufacturing of
    pharmaceuticals?

    What are the dangers of DoD being overreliant upon a single
    supplier for pharmaceutical products?

    How would DoD benefit from government-owned, contractor-
    operated pharmaceutical manufacturing facilities? Please
    provide relevant examples.

    How would DoD benefit from government-owned, government-
    operated pharmaceutical manufacturing facilities? Please
    provide relevant examples.

    How would the civilian population benefit from government-
    owned, contractor-operated pharmaceutical manufacturing
    facilities? Please provide relevant examples.

    How would the civilian population benefit from government-
    owned, government-operated pharmaceutical manufacturing
    facilities? Please provide relevant examples.

    What are the dangers of DoD being forced to purchase drugs or
    medical countermeasures considered less secure under the
    Defense Logistic Agency hierarchy of drug security due to
    shortages or supply chain challenges? Please provide examples
    of when this has occurred.

    What are the dangers of DoD being forced to adjust dosages or
    dispensing of drugs and medical countermeasures due to
    shortages or supply chain challenges? Please provide examples
    of when this has occurred.

    What are the dangers of DoD being forced to pay a higher cost
    for pharmaceuticals and medical countermeasures due to
    shortages or supply chain challenges? Please provide examples
    of when this has occurred.

    What are the dangers of DoD being forced to use different,
    less-optimal medication due to shortages or supply chain
    challenges? Please provide examples of when this has occurred.

    What challenges could DoD face in finding enough adequate and
    cost-efficient suppliers for pharmaceuticals and medical
    countermeasures in instances where DoD represents all or nearly
    all of the U.S. commercial marketplace for that drug or medical
    countermeasure?

    Response:

    Responses were not available at the time of printing. Please
    contact the Committee if there are questions.

                            Senator Raphael Warnock

    Questions:

    In your testimony, you emphasized the role of advanced data
    analytics in identifying vulnerabilities before crises occur as
    well as the importance of "stress testing" the pharmaceutical
    supply chain.

    Looking back at Hurricane Helene, could predictive modeling
    have flagged Baxter's IV fluid facility as a single point of
    failure for the U.S. health system, and how can Congress better
    leverage supply chain mapping to prevent similar crises?

    What would a meaningful stress test look like in practice,
    particularly for scenarios such as a natural disaster or
    international trade disruption, including a Chinese export ban?

    In Georgia, we have both a rapidly aging population and one of
    the nation's largest Veteran populations. Veterans represent a
    uniquely vulnerable population in the U.S. drug supply chain-
    not only because they are aging, but also because they often
    need a greater number of medicines to manage service-connected
    injuries, Post-Traumatic Stress Disorder (PTSD), and other
    chronic conditions. When shortages occur, as we saw after
    Hurricane Helene with IV fluids, Department of Veterans Affairs
    facilities could be forced to ration care.

    How should Congress ensure that resilience planning and
    procurement contracts specifically account for the higher
    medication needs of Veterans, especially aging Veterans, so
    that this population is never left behind in a crisis?

    Transparency into where and how medicines are made is critical
    for both patient safety and supply chain security.

    How would requiring country of origin or manufacturing facility
    information on labels improve the security of our drug supply
    chain, particularly for seniors in states like Georgia?

    What steps should Congress take to enforce existing reporting
    requirements and ensure greater transparency overall?

    Response:

    Responses were not available at the time of printing. Please
    contact the Committee if there are questions.
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                           Statements for the Record

    =======================================================================

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                                 AARP Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

         American Society of Health-System Pharmacists (ASHP) Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                      Amneal Pharmaceuticals LLC Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                 Association for Accessible Medicines Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                Indian Pharmaceutical Allicance (IPA) Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                      National Consumers League Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

             "Prescription for Trouble: Drug Safety, Supply Chains,
                        and the Risk to Aging Americans"

                               September 17, 2025

                           Statements for the Record

                    Partnership for Safe Medicines Statement
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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