[Senate Hearing 119-188]
[From the U.S. Government Publishing Office]
S. Hrg. 119-188
BAD MEDICINE: CLOSING LOOPHOLES
THAT KILL AMERICAN PATIENTS
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
OCTOBER 8, 2025
__________
Serial No. 119-15
Printed for the use of the Special Committee on Aging
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
61-877 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
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McKinley Lewis, Majority Staff Director
Claire Descamps, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Rick Scott, Chairman................ 1
Opening Statement of Senator Kirsten E. Gillibrand, Ranking
Member......................................................... 4
PANEL OF WITNESSES
Tony Sardella, Founder and Chair, API Innovation Center,
Distinguished Fellow of Health Innovation, Washington
University in St. Louis Olin Business School, Chesterfield,
Missouri....................................................... 5
Tony Paquin, President and Chief Executive Officer iRemedy
Healthcare, Inc., Stuart, Florida.............................. 7
Andrew Rechenberg, Economist, Coalition for a Prosperous America,
Washington, DC................................................. 9
Marta E. Wosinska, Ph.D., Senior Fellow, Center on Health Policy,
The Brookings Institution, Washington, DC...................... 10
APPENDIX
Prepared Witness Statements
Tony Sardella, Founder and Chair, API Innovation Center,
Distinguished Fellow of Health Innovation, Washington
University in St. Louis Olin Business School, Chesterfield,
Missouri....................................................... 36
Tony Paquin, President and Chief Executive Officer iRemedy
Healthcare, Inc., Stuart, Florida.............................. 45
Andrew Rechenberg, Economist, Coalition for a Prosperous America,
Washington, DC................................................. 70
Marta E. Wosinska, Ph.D., Senior Fellow, Center on Health Policy,
The Brookings Institution, Washington, DC...................... 101
Questions for the Record
Tony Sardella, Founder and Chair, API Innovation Center,
Distinguished Fellow of Health Innovation, Washington
University in St. Louis Olin Business School, Chesterfield,
Missouri....................................................... 119
Tony Paquin, President and Chief Executive Officer iRemedy
Healthcare, Inc., Stuart, Florida.............................. 130
Andrew Rechenberg, Economist, Coalition for a Prosperous America,
Washington, DC................................................. 137
Marta E. Wosinska, Ph.D., Senior Fellow, Center on Health Policy,
The Brookings Institution, Washington, DC...................... 141
Statements for the Record
Association for Accessible Medicines Statement................... 149
American Hospital Association Statement.......................... 156
American Society of Health-System Pharmacists Statement.......... 160
Continuus Pharmaceuticals Statement.............................. 165
Doctors for America Statement.................................... 179
Lupin Statement.................................................. 181
Lupin - Coral Springs, FL Statement.............................. 183
National Taxpayers Union......................................... 185
Teva Pharmaceuticals Statement................................... 191
BAD MEDICINE: CLOSING LOOPHOLES
THAT KILL AMERICAN PATIENTS
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Wednesday, October 8, 2025
U.S. Senate
Special Committee on Aging
Washington, DC.
The Committee met, pursuant to notice, at 3:27 p.m., Room
216, Hart Senate Office Building, Hon. Rick Scott, Chairman of
the Committee, presiding.
Present: Senator Scott, Tuberville, Johnson, Moody,
Gillibrand, Warren, and Kim.
OPENING STATEMENT OF SENATOR
RICK SCOTT, CHAIRMAN
The Chairman. The U.S. Senate Special Committee on Aging
will now come to order. Last month, this Committee held a
hearing about the dangers older Americans face due to unsafe
foreign generic drugs. We exposed not only the threat posed by
poor quality, generic drugs that can hurt or even kill American
seniors, but also how dependent the United States is on
dangerous supply chains that threaten shortages, keeping life-
saving drugs from getting to those who need them.
The terrifying reality we face is that our Nation is
completely beholden to Communist China and India for the vast
majority of our generic drugs and their ingredients. Communist
China is the world's largest producer of active prescription
drug ingredients, and India, relies on Communist China for
approximately 80 percent of the active drug ingredients it uses
in drug manufacturing.
A study from one of our witnesses, Mr. Tony Sardella, found
that 83 percent of the top 100 generic drugs consumed by U.S.
citizens have no U.S.-based source of active drug ingredients.
Another 11 percent have only one domestic source of active drug
ingredients.
We also learned in our last hearing that if Communist China
or India shut off the flow of these essential drugs, the U.S.
would only have months of prescription drug supply, forcing us
to begin rationing drugs and turn away all but then the most in
need within a matter of weeks. Let me say that again. If
Communist China, our adversary, or India decided to shut off
supply and generic prescription drugs to the United States, we
would run out of prescription drugs in a matter of months and
be forced to begin rationing drugs and turning away all but the
most desperately in need within a matter of weeks.
I think everyone here remembers the supply shortages we
faced during the COVID-19 pandemic; PPE supplies and even baby
formula. Think about the catastrophic scenario we would face if
millions of Americans didn't have the prescription drugs they
need to survive.
The health of older Americans is too important to leave to
chance. Congress has to work with the Trump Administration, and
now, to make sure that Americans have safe and high-quality
drugs, and secure the prescription drug supply chain. Ninety-
one percent of prescriptions filled in the United States are
for generic drugs. It's essential that the quality and safety
of generic prescription drugs meet the same high standards of
brand name drugs.
A study showed that serious adverse events like
hospitalization, even death, were 54 percent more likely for
foreign generic drugs compared to American-made generic drugs.
I'm not exaggerating when I say that people are dying in
America today because of bad medicine from under-regulated
markets in India and Communist China.
When I asked Peter Baker, a former FDA inspector, if he
would allow himself or his family to take generic drugs made in
India or Communist China, he said not. He told us that he
believed that Americans were being killed every day from
foreign-made generic drugs. I want to say that again. A former
FDA inspector who worked in China and India, told this
Committee that he believes Americans are being killed every day
from dangerous foreign-made generic drugs.
Mr. Baker also told a heartbreaking story of having to go
to multiple pharmacies with his elderly grandmother to find a
safe generic drug for her prescription, only to be forced to
accept an Indian-made drug that paid a massive settlement to
the U.S. Department of Justice for falsifying quality testing.
Peter knew that the drug in his grandmother's prescription was
potentially dangerous, but had no other options.
No American should ever have to deal with what Peter talked
about, and be worried that a family member will be hurt or
killed by the medicine that is supposed to heal or treat them.
It's unacceptable for that to be happening in our country.
Every American needs to get loud and demand change.
Everyone knows that how I feel about Communist China, but
I'm not the only one concerned about the dangers of foreign,
major generic drugs. The BBC reported earlier, earlier this
year that doctors in Communist China are worried about the
quality of their generic drugs. One doctor said that
antibiotics coming out almost entirely from Communist China
were causing allergies and elevated blood pressure.
Unsurprisingly, the Chinese Communist Party downplays these
reports just like they've denied using slave labor, but this is
a real problem and we cannot rely on low quality, ineffective
generic drugs from Communist China.
In our last hearing, our witnesses underscored quality
issues that present real dangers to the health of patients. In
2007 and 2008, heparin that sourced contaminated ingredients
from Communist China killed up to 100 people in the United
States. These problems continue to happen nearly 20 years
later. In 2023, contaminated eye drops from India, killed four
people, and caused adverse events in at least 55 patients. The
Federal Government needs to ensure access to safe and high-
quality drugs today.
Following our hearing last month, Ranking Member Gillibrand
and I sent a letter to the FDA asking what steps they're taking
to stop dangerous drugs from coming into our country. I also
met with FDA Commissioner Makary and he talked about his fight
to fix the issues we have highlighted. I applaud his attention
to the issue, and the Trump Administration's work to increase
the amount of unannounced foreign inspections, a crucial first
step to holding foreign manufacturers accountable to the same
standards we hold American manufacturers.
When it comes to solutions, I believe one of the most
important things we can do is to establish a federal buyer's
market. The Federal Government is the largest purchaser of
drugs in the United States, accounting for 40 percent of
outpatient prescription drugs purchased as of 2018.
On the Senate Armed Services Committee, I have pushed for
the Department of War to leverage its buying power to
prioritize purchasing drugs made in America, using American
ingredients. Senator Warren held a hearing last year on this
same issue. If no American option is available, then the
Federal Government should prioritize drugs and ingredients from
allies and Trade Act-compliant countries.
The buying power of the Federal Government can move the
needle and bring manufacturing for essential drugs back to the
United States. The national security risk of relying on
Communist China for essential drugs and drug ingredients are
unacceptable. The same risk risks are unacceptable for seniors
who trust they will have access to the drugs they need. In
2024, the U.S. manufactured 37 percent of its consumed drugs.
This number is down from 2002 when it was 83 percent. In just
20 years, we have seeded control of our medical supply chain to
Communist China and India.
Even if we start prioritizing certain drugs or types of
drugs like antibiotics which come as China's supplies, 90
percent of the ingredients for globally, we'd be making our
medical supply chains much safer, not just for seniors, but for
all Americans.
I will continue fighting for the Federal Government to
purchase American-manufactured drugs. We cannot rely on
Communist China for something as important as the health of
Americans. Every American deserves to know where the drugs
their purchasing came from. That is why I support mapping our
supply chains as well as our country-of-origin labeling.
I've introduced the Country of Origin Labeling Online Act
to require country of origin labeling for consumer products.
Consumers deserve to know where items they purchase are made,
and for something as important as the medications you take,
that information is crucial. I will be introducing legislation
on country of origin labeling for prescription drugs that would
require drug labels include the country where each drug
ingredient and the finished drugs are manufactured, processed,
or compounded.
We've already seen Communist China place export
restrictions on rare earth elements as part of trade
negotiation, and there's no reason why they won't do the same
for medicines. Agencies like the Department of War and Veterans
Affairs stepping in to purchase American made drugs could bring
industry back and create a steady supply of important
medications and ingredients for the American people.
Other steps like the Department of Commerce Section 232
investigation could level the playing field for American
manufacturers. Section 232 tariffs are for goods that impact
our national security, and I can't think of anything more
crucial to health of our seniors than generic drugs. On Friday,
I sent a letter to Secretary Lutnick and U.S. Trade
Representative Greer, encouraging them to immediately place
Section 232 tariffs on generic drugs.
This is a national security and a public health issue for
seniors and all Americans. I look forward to this discussion
with our witnesses on how we can make sure Americans never have
to worry about missing a dose of their medication or the
quality of drugs in their medicine cabinet. I'd like to turn it
over to Ranking Member Gillibrand for her opening statement.
OPENING STATEMENT OF SENATOR
KIRSTEN E. GILLIBRAND, RANKING MEMBER
Senator Gillibrand. Thank you, Chairman Scott, for today's
hearing. Thank you to all our witnesses for being here today.
We really appreciate you. I'm looking forward to continuing our
robust discussion on ways to improve and secure our domestic
generic drug supply, which includes ensuring that
pharmaceuticals entering the United States are of the highest
quality and standard.
During our previous hearing, we heard about some of the
problems that consistently plague the generic drug industry and
some proposals to begin to help to address the issues. Today,
we will dig deeper into some bipartisan solutions that this
Committee and other committees of jurisdiction can work on
together to ensure Americans can access high-quality drugs that
they need when they need them.
Currently, too many active pharmaceutical ingredients and
key starting materials are made outside the United States.
Given recent instability in geopolitics and international trade
policy, this reliance increases the risk that Americans may not
have access to life-saving drugs in times of crisis,
threatening our national security.
However, we must approach strengthening and reforming this
extremely complex supply chain thoughtfully and thoroughly.
Generic drug manufacturers cannot simply flip a switch and move
all components of production to the U.S. or other allied
nations. To ensure Americans have a reliable supply of safe and
affordable drugs, Congress will need to work to make more
targeted investments in biotechnology, research, and
infrastructure, to create long-term support and stability for
this critical industry in our Nation.
We must examine the underlying economic dynamics in the
current marketplace and adjust incentives to fix the "race to
the bottom" in generic drug pricing, which can create drug
quality issues, drive manufacturing outside of the U.S., or
cause companies to stop production of certain drugs altogether.
Additionally, we must strengthen the ability of federal
agencies to ensure strict oversight of foreign manufacturing
facilities, to strengthen the supply chain and enable patients
to access the quality medicines they need. As we look to
address these issues, we must make sure drugs remain affordable
for our constituents, particularly our seniors, many of whom
are on fixed incomes.
Americans are already struggling with high costs across the
board, and I'm committed to working with Chairman Scott and my
colleagues across the aisle to find solutions that serve our
constituents by strengthening the generic supply chain,
promoting quality domestic production, and protecting our
national security.
I look forward to this robust discussion, as well as the
future potential bipartisan legislation on the issue.
The Chairman. Thank you, Ranking Member Gillibrand. Now,
I'd like to welcome our witnesses who are here to talk about
their work to bring drug manufacturing of essential drugs back
to the United States, and making sure the American people have
access to the drugs they need.
First, I'd like to recognize Tony Sardella. Mr. Sardella is
the founder and chair of the API Innovation Center, a non-
profit that establishes public-private partnerships to secure a
drug supply chain. He is a distinguished fellow for health
innovation at the Olin Business School at Washington University
in St. Louis. Thank you for the critical work you do and for
being here today. Please begin your testimony.
STATEMENT OF TONY SARDELLA, FOUNDER & CHAIR, API
INNOVATION CENTER, DISTINGUISHED FELLOW OF HEALTH
INNOVATION, WASHINGTON UNIVERSITY IN ST. LOUIS OLIN
BUSINESS SCHOOL, CHESTERFIELD, MISSOURI
Mr. Sardella. Thank you. Good afternoon, Chairman Scott,
Ranking Member Gillibrand, and members of the Committee. As
chairman indicated, I'm the founder and chairperson of the API
Innovation Center, dedicated to building health security of our
generic drug supply chain. I'm honored to be here this
afternoon and share how our work at the API Innovation Center
is addressing the severe challenge of a vulnerable U.S. generic
pharmaceutical supply chain.
There are three key things that I want to share with you
today. The first, is the U.S. generic drug supply chain is
over-reliant on foreign manufacturers, and specifically placing
our seniors and veterans at severe risk. Second, the API
Innovation Center's private-public partnership model is showing
promise in addressing this complex issue and the economic roots
that drove the dependency. Third, policy instruments can foster
increased U.S. private sector investment and production to
address our vulnerabilities.
Our over reliance on foreign sources to meet our Nation's
needs are quite stark. As Chairman Scott mentioned, research
we've done found 83 percent of the top 100 generic medicines
prescribed to Americans have no U.S. source. I'd like to share
some new research we just conducted on behalf of the Committee.
Our mapping of generic supply chain reveals that for 10 of
the most frequently prescribed medications for our elderly and
veterans, 95 percent of those medicines have no U.S. API
source. Even more stark, 84 have no finished drug production
and they're dependent primarily on China.
This continues with the research we provided before that
mapped our generic supply chain from drug all the way to key
starter materials, and showed that for 40 critical medicines
that we identified for our Nation to have its own secure
supply, that the key starter materials were exclusively 100
percent dependent on China. For half of them, half of those
critical medicines and nation require.
The API Innovation Center focuses on addressing this
national security. It emphasizes modernizing existing idle
domestic manufacturing that we uncovered through our research
with manufacturers and doing so to ensure our resiliency and
stable supply chain.
The model has three key components. First, investment of
public funds that APEC has received from the State of Missouri,
as well as from the bio map as per federal program. That
capital modernizes the production methods to produce these
medicines.
We not just bring back production, but we're producing it
in modern, advanced, more efficient manners and also using new
technologies, many of which have been developed here in the
United States by equipment manufacturers. We take the
investment in the new modern techniques and we contract
existing idle FDA facilities that exist already to produce
these modern methods of production.
Third, we partner with long-term agreements with end
healthcare systems, national retail pharmacies, as well as drug
production companies to be able to ensure predictable demand
and supply for the entire network.
The approach is delivering promising results. Over 70 U.S.-
based manufacturers are collaborating and entering into
agreements with APIIC to build an end-to-end domestic supply
chain capable of sourcing, developing, producing, and
distributing cost-competitive, U.S.-made medicines, with a
near-term focus on 25 priority medicines that we've itemized,
and a long-term goal of 300 medicines made here in the United
States.
The partnership enables the U.S.-based API and drug
manufacturers to gain certainty of their demand and economic
viability to produce in the U.S. It gives healthcare systems
and national retail pharmacies certainty of supply and
stability of cost, and our citizens and seniors gain a drug
supply resiliency and we as a nation gain national security.
While innovative partnerships are essential, policy plays a
decisive role. There's a need, a critical need to clarify and
harmonize the definition of made in America. For
pharmaceuticals, current procurement rules allow drugs
assembled in America, but comprised of foreign APIs to be
labeled as USA-made. Second, the Federal Government's
purchasing power can be leveraged. Last, sustained public-
private investment to modernize idle facilities. The
vulnerabilities are significant but solutions visible.
Thank you for the opportunity to share our research and
perspective.
The Chairman. Thank you, Mr. Sardella. Now, I'd like to
introduce Tony Paquin, the co-founder, president, and CEO of
iRemedy, a company from my home State of Florida, working to
provide buyers with American made medical products. Mr.
Paquin's company worked tirelessly to supply the Federal
Government with medical supplies during COVID, and he brings a
wealth of expertise into the medical supply chain.
Mr. Paquin, thank you for being here today. Please begin
your testimony.
STATEMENT OF TONY PAQUIN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
IREMEDY HEALTHCARE, INC., STUART, FLORIDA
Mr. Paquin. Chairman Scott, Ranking Member Gillibrand, and
members of the Committee. Thank you for the opportunity to
testify.
For over 25 years, I've worked in the healthcare
technology, logistics, and distribution. At iRemedy Healthcare,
we manage an artificial intelligence procurement platform that
supports manufacturers worldwide. My experience includes
building software, scaling networks, partnering with hospitals,
manufacturers, and government agencies, all of which has given
me a clear view of how our supply chain actually functions on
the ground.
That vantage point has revealed two urgent truths. First,
that far too much of our production of essential medicines has
been ceded to China and India, leaving our Nation dangerously
exposed to weak oversight, counterfeit risks, and most
importantly, price manipulation. Second, then an unintended
consequence of that globalization is the concentration of our
supply chain into a small group of intermediaries that
restricts the flow of drugs into American hospitals, locking
providers into contracts, and stifling supply chain and market
innovation. Combined, these two truths are deadly.
I grew up in Flint, Michigan, and have seen firsthand the
prosperity of an active manufacturing economy as well as the
devastation when industries are hollowed out. Today, I'm here
to say bluntly, we must end our dependences on foreign
adversaries, and restore control of our medical supply chain to
the United States.
During Operation Warp Speed, my company was a key supplier
of needles and syringes. We delivered more than one billion
items for the country's needs. What I witnessed during that
period was alarming. At one point the Chinese Communist Party
seized 40 percent of our China-based inventory awaiting
shipment. We routinely dealt with bad actors attempting to
bribe dock workers and factory managers peddling fake FDA
510(k) certifications.
As you know, the vast majority of prescription medicines
are generic, yet those drugs overwhelmingly come from high-risk
overseas suppliers. When supply lines are disrupted, we quickly
see shortages of life sustaining medicines for conditions like
diabetes, heart disease, and cancer oversight is essential for
immediate relief.
We must enforce unannounced FDA inspections overseas as we
do here in the U.S. We must require a clear country of origin
labeling, and independently validate imported shipments for
quality.
These are Band-Aid fixes that do bring transparency and
deter quality failures, but they won't fix the problem. The
only real cure is to reshore the supply chain, and I'm here to
report that we can do so. First, APIs nearly all come from
overseas, especially China. We must invest in new technologies
and fast track permits for factories. We must treat this as the
national security issue that it is and prevent bureaucratic
delays.
Second, generic drug manufacturing. Here's the truth. The
technology already exists in this country to make generics
profitably without raising costs for consumers. What we lack is
fair competition. Generics are often a commodity, and foreign
governments have learned how to weaponize commodity pricing
against us. Until we level that playing field, American
manufacturers will never have a chance to compete.
Let me give you a real-world example. Oxford Pharmaceutical
is an Alabama-based generic drug manufacturer with the
capability to produce life-giving medicines domestically.
They're a high-quality modern U.S.-owned example of American
manufacturing excellence. They make drugs here in America
efficiently, safely, and at scale.
What stands in their way is a market that has been
deliberately tilted against domestic producers. Even when
companies like Oxford can produce at competitive costs, they're
forced to compete against artificially subsidized Chinese and
Indian importers that are all too often unfairly awarded U.S.
Government contracts. Shockingly, this happened to Oxford just
a few months ago.
That system has to end. We must protect American producers
with targeted licensing and trade enforcement. We must use
artificial intelligence to overhaul the drug marketplace, and
reform federal procurement so that U.S.-made drugs are the
default, not the exception. If given fair access, domestic
manufacturers can compete and win. If not, we remain captive to
adversaries abroad.
President Trump has shown leadership with executive orders
to prioritize American made medicines, but we need an all-
government response involving regulation, legislation, and
procurement. We must act now. First, apply the immediate Band-
Aid fixes; unannounced FDA inspections overseas, clear country
of origin, labeling and randomized testing on imported drugs.
These bias transparency, and time, then cure the disease
reshore API production with new technology manufacture
domestics generics domestically with fair trade protections
free from foreign price manipulation, and use the full weight
of government purchasing power to put resilience above cheap
imports.
Members of the Committee, this is not just economics. This
is sovereignty. This is national security. It is needed to
protect our seniors, our soldiers, and our families when the
next crisis strikes.
Thank you, Mr. Chairman, for your leadership, and to the
Committee for this opportunity.
The Chairman. Thank you, Mr. Paquin. Next, I'd like to
introduce Andrew Rechenberg, with the Coalition for Prosperous
America, a nonprofit organization that represents American
manufacturers and producers across a number of industries and
sectors, to support domestic industry and protect our national
security. Mr. Rechenberg has experience with the Department of
War, as well as the Department of Commerce, and is an expert in
trade industrial policy.
Mr. Rechenberg, thank you for being here today. You may
begin your testimony.
STATEMENT OF ANDREW RECHENBERG, ECONOMIST,
COALITION FOR A PROSPEROUS AMERICA, WASHINGTON, DC
Mr. Rechenberg. Chairman, Ranking Member, and members of
the Committee, thank you for the opportunity to testify here
today. My name is Andrew Rechenberg, and I'm an economist with
the Coalition for Prosperous America, leading analysis on
pharmaceutical supply chains and domestic manufacturing.
America's medicine supply chain is in a crisis. Two decades
of offshoring have caused domestic pharmaceutical production to
fall from 84 percent of the U.S. market in 2002 to just 37
percent today, leaving 80 percent of active pharmaceutical
ingredients with no U.S. source whatsoever. India and China
have captured the market by undercutting American producers,
not through efficiency, but through state subsidies, poor labor
standards, and safety shortcuts.
This dependence has consequences. As U.S. production
collapsed, drug shortages tripled from 88 in 2002 to more than
300 in 2024, driving 300 to 500 percent price hikes that erased
any supposed cost savings. This is because 40 percent of our
essential drugs rely on only a single manufacturer.
When I was in Pharmaceuticals in India and was shut down in
2023 for falsified data and safety failures, U.S. hospitals had
to ration chemotherapy because one factory made half of our
cisplatin supply. These failures show what happens when we
chase the cheapest offshore medicine instead of safe American
production. That is not resilience. It is a national security
breach at the heart of America's healthcare system.
It can be fixed. At CPA, we've developed a five-pillar
strategy to rebuild pharmaceutical independence. Pillar 1, the
tariff rate quota system restores control. The TRQ allows a
limited volume of imports from trusted countries at zero tariff
rates. Imports above that quota volume or from high-risk
nations face steep tariffs. Quota volumes are based on the gap
between total U.S. demand and current U.S. production, then
adjusted each year as capacity grows.
Trusted in-quota countries would be limited to those with
equivalent FDA-recognized safety standards. This TRQ system
rebuilds capacity steadily without disrupting short-term
supply.
Strengthening domestic production directly is just as
vital. Pillar 2, the PILLS Act, provides production and
investment tax credits for U.S. made generics, active
pharmaceutical ingredients and biosimilars, plus a domestic
content bonus for U.S. sourcing. This creates the conditions
for sustained growth in U.S. pharmaceutical manufacturing.
Rebuilding does take time. Pillar 3, FDA reform, ensures
the safety of current imports. Ninety percent of foreign FDA
inspections are pre-announced, and many plants go five years or
more without review. When inspections do occur, they often
reveal falsified tests and unsafe conditions, reflected in
studies showing that generics made in India have a 54 percent
higher rate of severe adverse events.
Yet, for imports, the FDA still relies on company paperwork
instead of independent testing. We can address all of this by
requiring independent batch testing for imported drugs in U.S.
labs, regular unannounced foreign FDA inspections, and strict
penalties for offenders, including import bans.
Next, Pillar 4, federal purchasing realignment treats
medicine procurement as a matter of national security. It
ensures that federal programs prioritize reliable U.S.-made
medicines. This aligns directly with the pharmaceutical supply
chain, Defense and Enhancement Act to strengthen domestic
resilience and minimize reliance on risky and adversarial
nations.
Finally, we must look to the frontier of medicine. Pillar
5, biotechnology leadership. The U.S. must invest heavily in
NIH and biotech startup innovation, and raise clinical trial
standards that protect U.S. patients and ensure drug quality.
These steps will ensure the next generation of cures is
discovered and made here at home.
These five pillars are how we end shortages, ensure safety,
and restore America's capacity to make the medicines our people
depend on. America's medicine system is fragile by design, but
it does not have to stay that way. Congress can act now to
rebuild what was lost, and ensure that never again will our
patients, our hospitals or our troops depend on foreign supply
for life itself. Thank you.
The Chairman. Thank you, Mr. Rechenberg. Now, I'll turn it
over to Ranking Member Gillibrand to introduce our next
witness.
Senator Gillibrand. Thank you, Chairman Scott. I want to
move to introduce our next witness, Dr. Marta Wosinska. Dr.
Wosinska is a senior fellow at the Brookings Institution Center
on Health Policy, with expertise in prescription drugs and
pharmaceutical supply chains. Dr. Wosinska previously served in
the Federal Trade Commission, in the Office of Inspector
General at the U.S. Department of Health and Human Services,
and the U.S. Food and Drug Administration Center for Drug
Evaluation and Research. She's also served as economic advisor
to the U.S. Senate Finance Committee. You may begin.
STATEMENT OF DR. MARTA E. WOSINSKA, PH.D.,
SENIOR FELLOW, CENTER ON HEALTH POLICY,
THE BROOKINGS INSTITUTION, WASHINGTON, DC
Dr. Wosinska. Chairman Scott, Ranking Member Gillibrand,
and distinguished members of the Committee, thank you for the
opportunity to testify at this important hearing. My name is
Marta Wosinska, and I'm a senior fellow at the Brookings
Institution. Today, I speak in my personal capacity, reflecting
nearly 15 years of studying drug supply chain issues from
within the government and outside, and with no financial stake
in the outcome.
Over all these years, I have observed what policy solutions
catch the interest of lawmakers. I have seen that many of the
solutions that resonate sound good, but they don't address the
problem that lawmakers claim they want to solve.
Today, as we talk about solutions, I urge you to ask the
following questions; What specific problem is the solution
meant to address? What else is needed for this solution to
succeed? How do we handle the unintended consequences? Is this
the most effective and efficient cost effective and efficient
path? Only when you ask these questions, you will be best
prepared to design policies that not only do the job well for
patients, but also assured that taxpayer dollars are used
wisely.
For instance, if persistent drug shortages in hospitals are
the top priority, durable solutions require shifting hospital
incentives so that reliability, not just low cost is valued.
Transparency to hospitals around supply chain reliability will
be important, and you will want to keep far away from tariffs
unless you fix various payment systems.
If the concern centers on China, then the focus should be
on antibiotics and, _for pretty much any other drug_ the focus
should shift upstream away from pharmaceutical production steps
and toward chemicals that are not regulated by FDA. You will
also want to think about how to leverage India in de-risking
from China.
If the objective is to increase domestic drug
manufacturing, which by the way, is a solution to supply
concerns, not the problem, then any new facility counts as
progress, regardless of whether it addresses areas of critical
need or shortage risk. If domestic manufacturing is the goal,
then you may not pay as much attention to whether policies
designed to promote onshoring like tariffs could destabilize
supply.
What if we're concerned that weak FDA oversight abroad
creates opportunities for defective drugs making their way to
American patients? Onshoring could help because we will be
building newer, more automated facilities, and FDA would have
an easier access to these facilities.
Let's be realistic. Onshoring will require government
support to undo the economic forces that moved production
offshore. In fact, a lot of government support. With
constrained budgets, this means policymakers should prioritize.
I would urge you to consider that essential medicines and choke
holds with China are much more pressing onshoring targets than
Indian-made statins or blood pressure medications.
Fortunately, we do have other options for addressing
product defect risks in commonly used medications. FDA can
create greater quality assurance by increasing unannounced
inspections, and Congress can support FDA by providing more
resources, but we would need to do more because many industry
observers and compliance professionals tell me that the current
inspection-based model for oversight is not enough.
This is where I urge the Committee to consider the proposal
I published this morning, which would require every importer to
designate a qualified person based in the U.S. with personal
responsibility for verifying that each batch meets quality
standards. Mandatory product testing would be part of that
process. This system is already working for drugs in Europe and
has precedent in U.S. drug regulations and other U.S. sectors
like finance, where CFOs must personally certify financial
disclosures.
To conclude, let me reiterate that lasting policy must
focus on clearly defining the problem, aligning incentives, so
the right behaviors follow, and adapting proven practical
solutions from other settings facing similar challenges. When
reforms are grounded in clear objectives and match to the
challenge, they will best protect patients and ensure prudent
use of public resources.
Thank you again for inviting me to participate. I look
forward to your questions, and to this Committee's leadership
in advancing meaningful reforms that will enhance both the
quality and reliability of America's drug supply.
The Chairman. Thank you, Dr. Wosinska. Now, we'll turn it
over to questions we'll start with coach Tuberville.
Senator Tuberville. Thank you, Mr. Chairman, and thanks for
the panel being here today. I'm going to ask the obvious
question, Mr. Rechenberg. If we closed our borders, do we have
the ability, and the assets, and the chemicals that we could
mine to make every drug that we need in this country?
Mr. Rechenberg. No, not currently. That's why in the TRQ
plan that I'm proposing, we do work with trusted countries with
regulatory standards equivalent to our own. The FDA already
recognizes this through mutual recognition agreements with the
European Union, the United Kingdom, and Switzerland as well. We
do have enough capacity when working with trusted equivalent
regulatory nations like that, but currently on our own, no, we
do not. That's why we need to rebuild this capacity.
Senator Tuberville. Would we have to use China at all?
Mr. Rechenberg. No, we would not.
Senator Tuberville. Okay. Good. Mr. Paquin, when you talk
about how companies like Oxford Pharmaceuticals should be used
as an example of how it is possible to own shore drug
manufacturing in a competitive environment?
Mr. Paquin. That's correct, Senator. They are a very well
run, significantly sized, highly automated production facility
in Birmingham, Alabama. They really can produce pretty
competitively. I think sometimes, we sort of misunderstand a
little bit of the cost factor of these drugs.
Amlodipine, for example, costs about two cents a dose to
manufacture, but it is reimbursed by Medicare Part D at 10
cents. Actually, the manufacturing cost is a very small part of
the total cost that ends up going to the consumer or to the
payer. The manufacturers like Oxford Pharmaceutical here in the
United States can operate pretty competitively if they're not
at target of unfair competitive practices coming out of India.
Senator Tuberville. What changes do you think we need to
make to have Oxford and other companies to be on a level
playing field? What do we need to do?
Mr. Paquin. Well, I think there's really two main things we
can do, but there's two immediate actions that we could be
looking at. I think Andrew and the Coalition for Prosperous
America made a good recommendation about, you know, quotas
based on the marketplace, and not allowing a country like India
to overwhelm our supply, thereby driving down the value of
those drugs.
Second, the VA and the U.S. Government should really
prioritize domestic manufacturing over foreign manufacturing,
and that is something that can be done without any major
additional cost to the government and is not happening
currently.
Senator Tuberville. You mentioned in your testimony that
Oxford has modern FDA-approved facilities, but still loses
contracts to virtual importers tied to China and India. Can you
explain what that says about the way our current system works?
Mr. Paquin. Well, first off, I would say it doesn't work
very well in terms of recognizing the national security
implications and just the good sense of supporting a domestic
manufacturer. Those contracts that they recently lost were
probably a lowest price, technically acceptable type of
contract.
I think what's happening there is the VA is really not
applying the right way to think of technically acceptable. All
generic drugs, I would argue, are not equivalent. A generic
drug manufactured in Birmingham, Alabama, is probably going to
be much higher quality and reliable than a drug made somewhere
in India where we don't have good access to surveillance of
that manufacturer.
I think that--and then also, when we look at technically
acceptable, we should consider resilience issues, investing in
our domestic manufacturing capability should be one of the
considerations when somebody like the VA is putting a contract
out for bid.
Senator Tuberville. Thank you. Mr. Rechenberg as we saw
during COVID, United States is way too relying on China, we
mentioned that, and India. How can a well-designed tariff rate
quota system be used to strengthen domestic production and
mitigate shocks or supply shortages in the U.S. market?
Mr. Rechenberg. Yes. The main cause of the supply shortages
in the market right now is disruptions to these very few sole
manufacturers in China and India. We're very much reliant on
the single source vulnerabilities, but if we give the market
space for U.S. producers through a tariff rate quota system, it
very much encourages companies to reinvest in the U.S. and
bring production because there's this guaranteed market space
that domestic producers can capture.
Over time, it will bring back and diversify our supply
base, which will lead to less shortages over time as we have
more backup options and more U.S. domestic supply.
Senator Tuberville. Thank you. Thank you, Mr. Chairman.
The Chairman. Ranking Member Gillibrand.
Senator Gillibrand. Senator Kim.
Senator Kim. Thank you. Dr. Wosinska, I wanted to just
start with you. I was intrigued by what you raised in terms of
that idea about the EU-qualified persons. I guess I just wanted
to start by just asking, does the framework like that model
already exist in other sectors in the United States? I felt
like you said something about on the finance side and others,
but I just wanted to get a little bit more clarity from you
just how novel of an idea this is.
Dr. Wosinska. It's actually not a novel idea. I mean, for
one, it has been used in Europe for decades, but in the United
States, in terms of FDA and something that FDA is already
familiar with during when FSMA passed, so the Food Security
Modernization Act, there are a couple of programs for drug
importers.
I discuss in the paper that I published earlier today where
the importer is an extra layer of verification that the product
that is being imported into the United States, they have to do
a certain set of checks, and in a sense, verify. There's a
person who is responsible for verifying and signing off that
everything meets the standards that are expected.
We have that, we have it in the Sarbanes-Oxley Act. It's
the same general concept that somebody takes on personal
responsibility for what is being put forward. It also exists in
an of other professions where there is actually this kind of
accountability that's added.
Senator Kim. Given your knowledge about, you know, our
markets and our structures here in terms of this industry, how
challenging would it be to be able to implement this? How
significant of a change would this create?
Dr. Wosinska. You would have to modify legislation. You
would have to--the HELP Committee would need to make changes to
the Food Drug and Cosmetic Act. That would be necessary.
In terms of how big of a shift it would be, it would depend
how it would be designed. I don't think we have enough time to
kind of go into the details about what are the levers, but for
example, the qualified person framework in Europe applies to
every manufacturer, including domestic European manufacturers.
Here, the idea is to, in a sense, complement what FDA is
already doing, complement the areas where they are struggling
much more, which is with countries that don't have comparable
regulatory systems, and so, you could narrow it down in that
particular way.
You know, there's a question, do you do it? There's
mandatory testing that Europe does, and the product actually
have to make it into Europe first before it gets tested. It
sits there in warehouses. Would that be necessary? It adds to
cost, but then it also adds a certain level of assurance.
One thing I would like to mention is that there are
different ways of trying to solve this and level the playing
field. If you were to ask me, I would prefer to level the
playing field in a way where we actually have this kind of
quality assurance, because overnight, we're not going to be
able to switch away from our reliance, especially on India.
India in 2024 produced 61 percent of solid oral dose
products that we sell in the United States, and the full market
is 187 billion pills, and India makes 60-61 percent of them.
We're talking about 180 different facilities. We're talking
about API facilities of probably over 200, well over 200. The
size of this is massive, and I think we need to prioritize. One
way for us to deal with that is to save onshoring for
priorities and figure out some other ways to deal with
manufacturing quality.
Senator Kim. Well, I think the idea is that we can have
multiple tools that don't have to run sequentially----
Dr. Wosinska. That's right.
Senator Kim [continuing]. but simultaneously. Mr.
Rechenberg, you raised the issue about independent batch
testing and things that are somewhat similar to what we just
heard. I don't know how familiar you are with this qualified
person model. What's your sort of initial reaction to that, and
what else can we be thinking about in terms of independent
batch testing?
Mr. Rechenberg. Yes, I think that this is also a critical
point for anything that we're currently importing needs to be
verified for quality. Because a lot of the time, in the U.S.
currently, we're getting drugs that are imported, and we only
find out after the fact that they have these bad tests, and
then they're recalled, and U.S. patients have already taken
them.
If we adopt a more European-style model where we have this
independent batch testing that in order to have these drugs
released into the U.S. market, they have to be tested and
verified that they are quality drugs, that they work for what
they say they're going to work for. Then this will greatly
reduce the risk. This is an essential first step.
Senator Kim. You think it's worth exploring these different
ideas that are out there?
Mr. Rechenberg. Absolutely.
Senator Kim. Okay. Well, thank you so much, and with that,
I'll yield back.
The Chairman. Senator Johnson.
Senator Johnson.
Thank you, Mr. Chairman. You know, having supplied the
medical device industry for close to 30 years, I mean, this is
just quality control 101 we're talking about here. It's
actually shocking it's not in place. Chairman knows I'm big
into data, so I want to understand the raw material supply
chain here. We talk about precursor chemicals. Approximately,
how many precursor chemicals do you need? What's the universe
of that? I'll ask you, Mr. Paquin, or whoever knows it.
Mr. Sardella. I could say within one dimension. We looked
at 40 critical medicines. They were based on seven foundational
chemistries, so seven to make the 40 started with raw
chemistry, seven raw chemicals, they got converted into key
starter materials. Those got converted to active pharmaceutical
ingredients and then drug. The ratio is not of magnitudes of
order that's insurmountable. It's achievable.
Senator Johnson. How many total drugs are we--how many
total drugs? Anybody have a number?
Mr. Sardella. It is 3,200 approved drugs for use in the
United States.
Senator Johnson. Over 3,000?
Mr. Sardella. Correct.
Senator Johnson. How many active pharmaceutical ingredients
comprise those 3,000 drugs?
Mr. Sardella. We don't have specific data on it, but I
would say in the hundreds, not thousands, by any means.
Dr. Wosinska. For API it would be the same number. Because
a drug is the API. It would be the same number, but the
question is how many intermediates, or reagents, or solvents,
or key starting materials, that will be less.
Senator Johnson. Again, I'm just--so are there 100
precursor chemicals, or is that overstating the case?
Mr. Sardella. Probably, a little higher than 100 as raw
chemicals. I mean, within magnitude of order.
Senator Johnson. Almost all those are produced in China.
Mr. Sardella. A predominant number of those are produced in
China. Our chemical manufacturing base moved to China many
decades ago, and they control that.
Senator Johnson. If you're getting a brand name drug, are
those precursor chemicals for the brand name drugs produced
here in America?
Mr. Sardella. No. They would be likely also produced
elsewhere. Keeping in mind that most of our new branded drugs
are biologicals, and we're talking about drugs that are called
small molecules. They're chemically derived.
Senator Johnson. We are highly deficient in the base raw
material, right, the precursor chemicals. Most in China, even
with brand name drugs, that's a precursor chemical coming in
from China. Is it easier to quality control than the active
pharmaceutical ingredients?
Mr. Sardella. The key starter materials from a control
standpoint still have issues in regards to their quality. If
you want to say, like, impurities still exist in those key
chemicals----
Senator Johnson. Because we're taking those precursors
chemicals now for brand drug, are they also getting the API
then primarily?
Mr. Sardella. That is correct.
Senator Johnson. Then, they're just stamping the pill. Dr.
Wosinska, you're shaking your head.
Dr. Wosinska. API is largely for branded drugs, is largely
made in the United States and Europe.
Senator Johnson. Okay, say that over again?
Dr. Wosinska. For branded drugs, API is overwhelmingly made
in the United States and Europe, but using----
Senator Johnson. Not in China, but using precursor
chemicals primarily from China.
Dr. Wosinska. Only if they are small molecules. Back to the
point that Tony made, if you have biologics, the ones--and a
lot of the branded drugs are biologics, those are made with an
entirely different process. That's not chemical. You actually
grow them in cells.
Senator Johnson. Okay. Then that's done here in the U.S.?
Dr. Wosinska. That would be done in U.S. and in Europe.
Senator Johnson. The precursor chemicals, that's a
frightening process, requires permitting. Why was that off
shored? Because of permitting process? Or is there any kind
of--I wouldn't think in big man, you know, large refining
process, you're going to have much cost advantage due to
offshore. Is it a primary problem of permitting?
Mr. Sardella. No, the genesis of that offshoring had
multitude of factors. One was regulatory oversight in the
United States for those facilities versus foreign, the cost of
labor in foreign countries versus the United States.
Senator Johnson. Refining, you got a lot of equipment, and
there's not many people hanging around a refinery plant.
Mr. Sardella. Well, and the third part was this a desire
not to have those facilities here or near populations in the
United States
Senator Johnson. Because it's a dirty manufacturing
process.
Mr. Sardella. Just large emissions, large facilities.
Senator Johnson. Correct. We're going to first have to
overcome that. There're basic and precursor chemicals, and we
have to have that honest discussion.
By the way, Dr. Wosinska, you know, we are staying on the
same hymnal here. You know, solve a problem. You had to first
properly define it. That's why I'm--again, I've only got five
minutes. I'm basically out of time here. We need to properly
define this problem. We need to understand the raw material
supply chain. We need to understand volumes. We need to
understand how many--what we're talking about. Before we leap
to a solution that's mistargeted, but let's get all this data
down. Again, this, Mr. Chairman, I really appreciate this
hearing. This is extremely important. We need to fully
understand this. We need more data.
Mr. Sardella. If I could add to it, one of the things I'd
mentioned was the fact that we're not just reshoring, we're
using advanced technology. The ability to convert those large
facilities into equipment that fits on this table is a critical
added value. Bringing it to United States with advanced
technologies, advanced equipment that allow us to make those
facilities smaller, cleaner, and more efficient.
Senator Johnson. But let me, final point. Doing a QC check
on even imported drugs, this is not rocket science. Now people
can cheat on it, it needs regulatory oversight. This should not
be hard. It's shocking that it's not already in place. It shows
the failure of our federal health agencies. Truthfully, it's
the utter failure that this is happening today.
The Chairman. Well, the fact that we don't have, we don't
have a supply chain, we don't have a map, right? There was no--
we haven't thought about having a map. We've allowed ourselves
to be so dependent, it doesn't make any sense.
Senator Johnson. We've known about these drug shortages for
a long time and we've done nothing about it. Thank you, Mr.
Chairman.
The Chairman. Ranking Member.
Senator Gillibrand. Thank you, Mr. Chairman. I welcome this
Committee's eager efforts on this issue, because I think we can
make a difference on a bipartisan basis on this.
Dr. Wosinska. Let's talk a little bit more about China,
specifically. You mentioned your concerns about antibiotics,
and that should be prioritized. Tell us what else you think
should be prioritized. What specific medicines do you believe
are most vulnerable to dependency? Lay the out the risk for us.
Dr. Wosinska. Thank you for this question. I think every
one of us here at this table would agree that antibiotics are
by far the most vulnerable. If you actually look at India and
what the Indian government is concerned about, they are also
themselves very nervous about their own reliance on China,
especially around antibiotics.
A lot of the subsidies that they are doing is to actually
de-risk their own supply chains, actually on our behalf to a
large extent, so, this is great because they're invest, they're
making these investments without the American consumers having
to pay, for taxpayers to pay for this, but there's this concern
about antibiotics. That's by far the most concerning. I think
it's much more difficult back to the mapping exactly which
drugs have the largest exposure to China other than that.
I would say is, that we don't have to figure that
antibiotics need support and we need to move on other things.
We do need to do more homework and understand it. I will say
that in terms of mapping, I am a little wary about mapping it
for everything. I would much rather start with: here are the
essential medicines, and here, let's figure out where they come
from, because those are the ones that we know we will be able
to secure
I would probably start prioritizing drugs first in terms of
their importance, and then really in detail mapping, because
it's not just figuring out where the KSM comes from. The key
starting material is only one of the chemicals that you use.
You need reagents and you need solvents. Those are largely made
in China.
You need to know all the pieces. If you try to do this for
3,000 drugs, we're going to be stuck in analysis paralysis for
a really long time. I would say yes, absolutely mapping, but
let's prioritize where we map first.
Senator Gillibrand. Does anyone want to add to that answer
from their perspective?
Mr. Sardella. I do. On the mapping, one of the things we've
found is we have worked to map several hundred, is that there's
purposeful obfuscation of where the supply comes from and so
on.
Senator Gillibrand. By whom?
Mr. Sardella. By companies in China, who in other areas
where they don't----
Senator Gillibrand. They pretend they're from the United
States.
Mr. Sardella. Correct. They are many different versions of
a company. You can't quite track back to is it produced in a
China facility? It could be a multitude of reasons. It could be
that maybe the facility has some sort of FDA warning. It could
be just based on business and ownership structure that they
don't want it to be known who owns which company. It's very
difficult.
We've found that although we're working through it, there
are data sets that allow you to identify where those sources of
are coming from, from beginning to end.
Senator Gillibrand. Tony or Andrew, do you have anything
you want to add to the China problem?
Mr. Paquin. Yes, I would just add that I think it
underscores our inability, ultimately, to have oversight into
China, and to really understand what the problem and the
sourcing is. I agree that we should focus on essential
medicines. That's a definable problem. We can zero in on that.
I think the strategy is to then move that into domestic
manufacturing as quick as possible. Then we have control of the
supply chain.
Mr. Sardella. If I could add to that. We've also taken a
lens on not only essentials because some of these are very,
very low-cost medicines, but also what do the healthcare
systems need? What do national retailers need? What does the
government need? What makes economic sense to produce here in
the United States with advanced technology? When we put those
lists together, we did come together with a prioritized list
where it makes economic sense. There's demand for those
medicines, there's a need for them and they can be a
sustainable investment by the us.
Senator Gillibrand. Have you submitted that list to us?
Mr. Sardella. We've submitted it in collaboration with
ASPR, and be happy to submit those as well.
Senator Gillibrand. Please submit it to the Committee.
Mr. Sardella. I'll be happy to.
Senator Gillibrand. Andrew?
Mr. Rechenberg. Yes. The final part that I would add is
that this does have to be a drug-by-drug approach, especially
for a program like the TRQ. I agree that the antibiotics are
one of the most critical and one of the most urgent to start
on. These are going to have different solutions because they
have different supply chains.
Additionally, I would say that India is not necessarily a
de-risking from China. India has plenty of its own problems,
whether it's safety issues, FDA flags that have been in Indian
facilities. As on top of that, India had the same problems
during COVID. They cutoff some of their supply to the United
States, not because of any adversarial, geopolitical reasons,
but they have their own population they're trying to supply.
The more we can bring back to the U.S., the safer our supply
chain will be.
Senator Gillibrand. Thank you, Mr. Chairman.
The Chairman. Senator Moody.
Senator Moody. Thank you, Chairman Scott. Thank you to our
witnesses for being here today, especially a great Floridian.
Always appreciate seeing a fellow Floridian.
You know, I think during the COVID years, a lot of things
came to light that maybe Americans weren't paying attention to,
even those in the industry. Dependencies for our drug supply
chains on these four nations, I think, really started hitting
home for a lot of people.
I don't think most Americans know that more than 50 percent
of the manufacturers supplying our market, it's coming from
overseas. I don't think they know that. I don't think that they
know that, one of you mentioned, 80 percent of active
pharmaceutical ingredients are manufactured overseas, or that
China and India combined, make up 85 percent of active API
filings. I don't think Americans understand that.
Just for having this hearing, I think, Chairman Scott, does
Americans a service in shining a light on this specifically
when you look at the fact that drug and API manufacturers in
China and India receive the most FDA warning letters for
violations, which can mean carcinogens and medicines
destroying, or falsifying data and non-sterile manufacturing.
Everybody's shaking their head, correct.
I mean, how long has this been prevalent, that we've been
seeing these types of violations? Has that increased as our
dependencies on these foreign nations has increased?
Mr. Paquin. I think this is a, you know, unintended
consequence of the globalization activity over the last 20
years. Senator, and I think you make a very good point. COVID
really created the awareness because it broke the global supply
chain, and then we all experienced what you're referring to. I
think that the average person in America is not really aware of
this problem.
I do believe that there is a growing awareness that we
didn't have maybe five or ten years ago. You know, when we talk
about the various actions to take place, and obviously, I keep
going back to the idea of bringing supply back to domesticating
here, the United States. The idea of country of origin labeling
on a medication would probably do a lot toward what you're
describing, and that is making the average consumer, and by
that, I mean not just patients, but also the doctors, and
pharmacists, and healthcare professionals aware of this risk,
and that'll probably serve us well as we try and correct the
problem.
Mr. Sardella. I wanted to add, when we commenced the
initiative informed the API Innovation Center, it's only been
three years in existence. The first study we did was a
perception gap study, and that study looked at the perception
of our reliance, of shortages, versus real data around the
shortages.
What was striking at that time was the two most important
stakeholders in our country underestimated the risk scientists
and government. I really commend these hearings to expose that
both from a government and a scientific community. By nation,
we greatly underestimated the risk of shortages and
overreliance compared to other nations like China, India, and
Europe.
That perception gap is starting to close thanks to these
types of sessions and the interest. We're working effortly to
continue with our publications to close those gaps.
Senator Moody. I have to imagine that if consumers had the
information and the choice, knowing where about the increase in
violations, I mean at this point is are consumers ever informed
that where the main ingredients and the drugs that they're
taking are manufactured?
Mr. Sardella. Very unlikely. There's no transparency. This
is a very interesting concept. This is an industry like any
other supply chain. Any other supply chain, you can look and
understand where the product comes from, what the ingredients
are, and where it's sourced. Not our pharmaceuticals.
Any other product that you procure has clarity where you
can compare quality of that product. You cannot compare the
quality of the pharmaceuticals as a result. One in every four
prescriptions in the United States is from a facility that has
an FDA violation. A quarter of the prescriptions have a
violation. I don't want to create alarm. Some of them are
simple procedural violations, but nonetheless, it means a
quarter are being prescribed that have some sort of violation
on the FDA. It is not known.
What's also striking is while we overestimate the cost when
we work with manufacturers, we're talking like less than a
penny to have a U.S. existing manufacturer manufacture that
medicine here in the United States with the highest quality of
manufacturing standards.
Senator Moody. I'm out of time, but I hope you will
explore, Mr. Chairman, as you do your questioning, the national
security implications for a failure in that supply chain. Thank
you.
The Chairman. Thank you, Senator. Senator Warren.
Senator Warren. Thank you, Mr. Chairman, and thank you
Ranking Member for holding this hearing today. We're talking
about a broken supply chain, and I was looking at the numbers
on this.
The U.S. imports seven times the amount of drugs that we
were importing in the year 2000. That's how much this has gone
up, and you-all are discussing how our reliance on foreign-made
pharmaceuticals exposes Americans to drug shortages, to safety
risks, and exposes seniors more than anyone.
For years I've been working with my colleagues to try to
advance reforms, establishing stronger transparency rules,
closing loopholes in the Buy American requirements. I just want
to say we've gotten a lot of pushback from people who make a
lot of money by keeping all of this opaque, and maximizing
their profits, and minimizing safety for the American people.
Today, I want to hit on something that you all have
mentioned, and that is how we get more drugs manufactured
domestically. How do we move our supply chain here to the
United States. Mr. Rechenberg, you're an expert on drug supply
chains. You know that other countries are subsidizing the
manufacturer of prescription drugs. How does that affect our
ability to make these drugs here in the United States?
Mr. Rechenberg. Yes, and this is one of the main problems;
that these foreign companies are being subsidized by their own
governments. They're able to severely underprice U.S. producers
and drive them out of the market.
We really need a comprehensive approach here, starting with
something like a tariff rate quota system to create a space in
the market for U.S. producers. We need to supplement that with
direct production incentives for companies, whether through an
act like the PILLS Act or through federal procurement. Federal
procurement can be a huge part of this, and incentivizing and
prioritizing American-made medicine.
Senator Warren. Let's talk a little bit about buying here
in the United States. The Federal Government could make it
easier and less risky for manufacturers to make their products
in the U.S. if we would just leverage the power of our federal
contracts.
That means the government makes a deal with the
manufacturer, and says, we guarantee we will buy a certain
volume of drugs over the next several years. That makes it
better for you. Make the investments, you get out there, you
produce the drugs.
Now, the DOD actually has contracts for essential
medicines, because for obvious reasons, it is important to make
sure that our service members have the drugs they need as a
national security issue. I have been pushing DOD to make those
contracts, domestic production advances.
Mr. Sardella, you lead the API Innovation Center, and
you've actually looked in to how many critical drugs rely on
ingredients manufactured exclusively in China, I think you were
talking about this earlier. Would it help national security to
expand federal contracting programs at DOD and other agencies
and focus them on domestic drug manufacturing?
Mr. Sardella. Absolutely. It would be a significant lever
to bring back a strong U.S. industrial base for manufacturing.
I commend all the incredible work you've done in this area.
Then second, one of the elements that would be also very
effective is shifting the contracting vehicle from what is an
IDIQ, indefinite demand, indefinite quantity, in business.
Indefinite demand and indefinite quantity does not reduce
the risk. There's no certainty you could lose a contract or
volume turning that into a certainty of demand and volume and
even cost or price so that a manufacturer can make an
investment. We have a small business in Missouri where we've
placed two medicines for manufacturing for a healthcare system.
We've provided them our technology that we developed. They are
now making investments to expand their facility because they
have certainty that the healthcare system is giving them a
long-term agreement. If the newest government did the same, we
expect the same.
Senator Warren. You and I are in the same place on this;
that more robust federal contracting can create the kind of
sustained demand that manufacturers need so that we can
eliminate these supply chain vulnerabilities and protect our
national security.
For me, that is reason enough to implement them. Some
critics have warned that, oh, if you shift to American-made
drugs, it will be too expensive. On the other hand, we're
paying a price, A for vulnerability, and B, if our seniors end
up taking drugs that are ineffective and so they are sicker,
they stay sick, or if our hospitals are getting price gouged
during shortages.
Mr. Rechenberg, do you think that shifting to more domestic
manufacturing of pharmaceuticals would over the long run cost
more money or save more money?
Mr. Rechenberg. It would save far more money. We've seen,
as I mentioned in my opening statement, 300 to 500 percent
price hikes during a shortage. That's one way we would save
money, but also, we're paying a lot more every time the
medicine's not there, and the PE have to be in the hospital
longer, or you have to have substandard medicine or the
hospitals have to pay extra staff to take care of people. Over
the long run, you save much more money than you would otherwise
because you stop these shortages and you guarantee safer, more
effective medicine.
Senator Warren. Thank you. You know, Americans shouldn't
have to worry about the quality of their prescriptions, whether
they're safe to be able to take, whether they're effective,
what will happen if the supply chain breaks. For me, that's
reason enough to manufacture right here in the United States
and using federal contracts to lower those production costs.
I think there are a lot more benefits for doing this. That
is why I have a bill, the Pharmaceutical Supply Chain Defense
Enhancement Act that would do just that. I hope we can get some
bipartisan support and get that moving. Thank you very much.
Again, thank you Mr. Chairman for holding this hearing today.
The Chairman. Thanks. Senator Warren, we served on a
subcommittee together, Subcommittee on Armed Services. We had
she had a hearing and the individual from DOD tried to explain
that he couldn't buy American because there's regulation that
required him to buy foreign, and then, we found out that there
was no regulation.
Senator Gillibrand. I think there's a regulation that says
to buy the cheapest. There's always a cheap thing, and that's
the problem that we talked about.
The Chairman: He couldn't explain.
Senator Gillibrand. He probably didn't know.
Mr. Sardella. We have analyzed those costs for specific
molecules among our industrial base, and we verify that they
can be produced by U.S. manufacturers an equivalent price.
What's preventing that is certainty that they will have a long-
term agreement to supply it so that they can make the
investment.
Then, second, we submitted data for the Congressional
Budget Office based on this bill that showed one must and think
of it as one temporal point in time where an adversarial
country or a foreign manufacturer purposely to drive out, all
U.S. manufacturers put the price way below the cost.
If you look at it on a five-year average, as Andrew said,
you would save significant dollars because once they drive
every U.S. manufacturer out, they increase the price, massive
volatility. It has to be looked at from a budgeting office on a
five-year average basis. That's not even, to bring in what
Andrew said, it costs over tens of millions of dollars per
shortage of drug within a healthcare system. They're incurring
significant costs of those shortages as well.
The Chairman. You know, and I just get followup----
Senator Warren. I was just going to say, I get really
frustrated on this, that people treat risk as if it's free. We
are paying a price for risk, for the fact that yes, we got it
right down to the tightest nickel on how to purchase this
stuff. It's a very fragile system for way, just pay for another
way. That's a cost.
The Chairman. We'll go back to what Senator Warren was
bringing up. If we had--if we took the DOD and we took the VA,
right, if we just took those two and they--I'll just take their
drug buying, would that be enough volume to move volume?
Mr. Sardella. You would transform the U.S. generic supply
chain, and you would also cause a force function for private
markets to then also now procure from U.S. manufacturers,
because of the reasons we just said, you don't want a quarter
of your pharmaceuticals in an FDA violation site. You want to
have certainty in local response time resiliency. You would
fundamentally transform our generic supply chain.
The Chairman. What percent of the generic drugs that the--
if the DOD and VA did just their generics, what percent of the
volume that come into the country, would that be you? Just
like, is that of 100 percent of generics sold? What percentage
does DOD of that 100 percent and VA together.
Mr. Sardella. Oh, I don't have specifically those numbers,
but it from a standpoint of moving the market and creating an
industrial base, 200, 300 medicines into generic would cause a
significant resiliency base and a U.S. manufacturing base.
The Chairman. All right. Then Mr. Sardella, so you've
worked with companies that have opened up plants----
Mr. Sardella. Expanded.
The Chairman [continuing]. so have they been able to make
the price almost equivalent to what's being bought from
overseas?
Mr. Sardella. Correct. With new technology. We're not just
saying make it the same way. We're through the private
investment in public from State of Missouri and ASPR, they're
making it in modernized methods. I give the example, it's like
they currently make them in batches, the size of this room.
Now, they make them in equipment that's the size of this table.
The Chairman. Do you have what the return on investment is?
Do you know if--so if you were going to invest, how much would
it take to open up a plant and how, what would be the how long
would it take to get your money back? Do you have any idea yet?
Mr. Sardella. On some of the drugs, because we're focused
on expansion because there's 30 billion doses of idle capacity
in the United States, 30 billion just sitting there. We're
focused on taking those idle facilities that are already FDA-
approved. What it means is they can get the drug commercialized
in less than five years and they get a return on investment in
three years.
The Chairman. Three years. Okay. We actually don't have to
invest money--I'm a business guy. If you gave me a three-year
return, I'll do that every day. Right?
Mr. Sardella. Absolutely.
The Chairman. I mean, so, okay, so number one, we can get
the cost down and number two, we can get the investor gets a
return.
Mr. Sardella. Correct. The return's so strong that our
partners are going and getting their own loans to be able to
expand facilities.
The Chairman. What we got to do is go back to what Senator
Warren said; we got to commit volume.
Mr. Sardella. Correct.
The Chairman. If just DOD and VA did it, and that's it.
Mr. Sardella. It'd be transformational.
Dr. Wosinska. Can I just add? It's in maybe 10 percent of
total volume. I mean, it absolutely would bring some domestic
manufacturing to the U.S., it would help secure supplies for
VA, but it's too small of a fraction to really create change in
the rest of the market. It's not to do it, I absolutely
encourage you to do it. This is a perfect thing to that, you
know, very sensible thing to do. We need to think beyond that
because we need to sort of change the dynamics in the rest of
the markets in the 90 or so percent, in the markets, to change
how those markets operate and what they value.
The Chairman. Just a caution, I ran a hospital company, and
I was two percent of the entire healthcare dollar. I focused
on, you know, I could move all the volume in the whole country,
I could force everybody to change based on buying, based on
quality. Everybody had to change. I would just even--because
nobody would, there's no--I was the biggest committed buyer in
the VA. I think you're--what you said makes sense, but reality
is most people are not committed buyers. That's why if we have
really committed buyers, then I think it'd have a bigger
impact.
Dr. Wosinska. I'm sorry that Senator Warren left because
Senate Finance actually has a proposal on that that was put
forward last year, that exactly does this; the idea for the
most vulnerable supply chains, which are a lot of the generic
sterile injectables is to create committed contracts, and then
have add-on payments for choosing reliable manufacturers.
Absolutely, the same concept. It really would be great to see
movement on that side.
The Chairman. Have any of you done business with the DOD or
VA?
Mr. Paquin. Yes, we've done business with the DOD and the
VA.
The Chairman. Did they care about quality?
Mr. Paquin. No. You know, I was going to bring that up. I
commented earlier about technically acceptable, and I think
that's a mis defined term in this circumstance. They're not
considering resilience. For example, they're not considering
the benefits of supply chain, and they're viewing that drug
overseas as equivalent to the drug domestically made. I think
that's the big mistake. I would say that what we could use
would be a DOD set aside requirement for American made for
example. I completely agree that the VA could lead the charge.
I think you'll find that private hospitals or the
commercial hospital business that you're familiar with would
actually follow that lead. I think they're ready to recognize
the need for resiliency and stability in the supply chain. You
need that big buyer to step up and start the process. I think
that's the VA and the DOD.
Mr. Sardella. I can confirm what Tony is saying, because we
are aggregating demand with healthcare systems and retail
pharmacies knowing that this is a national priority for our
Nation. They are willing, as he said, and that would give a
further indication to aggregate demand across their systems to
procure U.S.-based supply for the benefit of the system.
The Chairman. For each of you, if you had a choice, there's
two different, same drug, and you had one little bottle that
said, "Made in the United States," okay. The other bottle said,
"Made in China." How many of you would buy same price? Look,
they both look really nice. Same little, pretty bottle. How
many of you would buy China?
Mr. Sardella. I might want to disclose that my original
background is as a toxicologist in this context, I would
absolutely buy the U.S. medicine.
The Chairman. Anybody buy China? No? What if it added on
there that whether American or Chinese, that it's under an FDA
violation, however small. There's some website that you can go
to see what it was. Would that have an impact on you?
Mr. Paquin. Yes. Clearly, we would avoid buying anything
that had an FDA violation. You know, when you think about
something so sensitive as a drug, right, we're not buying a toy
or a vitamin. We're buying something that affects our health in
a very personal way. We'd buy quality.
The Chairman. The thing about the buyers in this country,
Federal Government, hospitals, nursing homes, GPOs, doctors,
pharmaceutical chains, have you known any of them that
required--they did it based on quality?
Mr. Paquin. No, I regularly do business with all those
entities, and they don't really require--they may want to, but
there isn't a method for them to assess that quality as we've
been describing. There's really no independent way to measure a
report.
The Chairman. Good, but Tony, they could say, "I'm not
doing it. If you haven't had an FDA inspection within three
years, I won't do it."
Mr. Paquin. They could do it for sure.
Dr. Wosinska. Can I add something?
The Chairman. Sure.
Dr. Wosinska. I have studied generic sterile injectable
shortages really for 15 years. Transparency often comes up that
we don't know which manufacturer is reliable, but at the end of
the day, it's the lack of incentives, and the fact that
hospitals and GPOs do not fully internalize the harm that comes
with it. The numbers that Andrew commented on----
The Chairman. Can you go through--when you say the harm,
how would you define the harm?
Dr. Wosinska. Yes. The amount of money that hospitals--and
there was a study, $360 million from additional costs resulting
from shortages. It seems like a large number. This comes out--
--
The Chairman. Just because of costs.
Dr. Wosinska. Right. They have to have additional staff and
whatnot that comes out to $60,000 per year. That's nothing for
a hospital. That $60,000 is nothing for a hospital. If you look
at how much for a day----
The Chairman. That's for a day, by the way,
Dr. Wosinska. This is for a year, right?
The Chairman. I know.
Dr. Wosinska. If that's the level of the cost, you know,
hospitals are very strongly incentivized to buy the cheapest.
In a sense, it makes sense. These drugs are therapeutically
equivalent. You're paying for quality, right?
The Chairman. We're not paying for quality.
Dr. Wosinska. We are not paying for quality. We're not
paying for quality. I will say that I have to disagree with
Andrew here. I don't think there's free lunch. If we want to
have reliability, if we want to have resilience, if we have to
want to have quality, we will have to pay for it. I think it's
a--you know, we have to ask ourselves how much are we willing
to pay for it? But there are ways to do it, but you have to
change incentives.
I think, you know, Civica Rx, I don't know if you're
familiar with that organization, right? They do a lot of
homework around where the drugs are made. They have stockpiles,
they have long-term contracts. Hospitals are not signing up for
these contracts. They're really wary about this because, oh, my
goodness, they might actually end up paying more, right? We
have to change the fundamental incentives, and shift sort of
how hospitals are thinking about it.
The Chairman. Well, the problem--I used to be in the
business, I just say nobody came to my hospital because I
served Pepsi over Coke. Nobody came because I did this, you
know, I had this drug or that drug, or I bought my drugs in the
United States, or I bought my drugs someplace else.
Dr. Wosinska. There isn't accountability for hospitals
either. If they have a shortage, they point as the
manufacturer, right? It ultimately ends up with the patient,
unfortunately.
The Chairman. Andrew, when you say that it pays for it,
have you been able to do a study of what the additional costs,
additional hospitalization, blah blah blah, any of those
things? Have you done that?
Mr. Rechenberg. Yes. We're currently working on a study to
get an exact number here. From all the research that we've done
so far, looking at the productivity costs, the shortage costs,
and as well as just the worst patient outcomes, whether it's
delayed care, rationed care, or getting substandard treatment,
the cost vastly outweighs.
We're currently in the process of making a study to get an
exact number on this, but it is clear already that the long-
term cost is much, much more savings than it would be by paying
the marginally more rates in the beginning.
Then on top of that, I'll add for this buyer's side, for
the hospital, because we don't have this mandatory country of
origin labeling, the hospitals themselves often don't know what
the supply chain risks are
The Chairman. Even if they wanted to do the right thing.
Mr. Rechenberg. Exactly. Especially when it comes back to
the API. They have so little visibility into the quality side,
they have to go for the price, and that inevitably pushes
things more offshore.
Dr. Wosinska. I can tell you that where it really does pay
off is for the patient. There was one study that looked at one
particular shortage, one shortage of a drug, and the fact that
more patients ended up dying of septic shock because the
alternative was not available. When you looked at the cost of
life, and you calculated the number of patients that died, that
single shortage cost over $13 billion.
Senator Gillibrand. The hospital doesn't pay that cost.
Dr. Wosinska. Exactly. The hospital does not pay that cost.
There's a big gap between the----
The Chairman. It's worse.
Senator Gillibrand. You pay the hospital.
The Chairman. That's right. The worst is that we don't pay
for results like we should pay. We should pay different. Like,
if somebody doesn't do your car, fix your car, right, you don't
pay, but every healthcare provider thinks, well, you still have
to pay. Why?
Senator Gillibrand. The problem is, you're talking about
dynamic scoring, which is not how the hospitals balance their
budgets. When you do your analysis, you say it's only costing
them $60,000 a year because they're not obligated to factor in
all the costs and harm caused to the patient, or to society, or
to any other stakeholder outside of their bottom line. That's
the problem. Like, the costs are spread to us. The profits are
given to the provider.
When they're doing their cost-based analysis, they're
saying, "Well, we are going to go with the cheaper drug." The
DOD is the same. Every purchaser in the system today has
multiple factors, but cost is almost always the factor. I
believe----
The Chairman. It's the decision today, not the long-term
cost.
Senator Gillibrand. Correct. No one does dynamic scoring.
No one actually wants to bear the full brunt of the cost. I
think part of this Committee's job is to really do all the
pieces that you've all suggested; country of origin labeling,
making sure we know the quality upfront, have an incentive as
you say, to do the quality testing, make sure that the cost, as
you've decided, Andrew is documented to the world, to the
patient, to the United States.
Then to the other piece of national security that's not
even you calculable. You can't calculate what will happen if
we're at war. The risk if we're at war with China and you can't
get antibiotics into this country and how many millions of
people die, the cost of that is trillions of dollars. It's
incomprehensible.
The truth is, this is a reason why no one's done this work
before because the cost is incalculable. I'm really excited
about the work this Committee's doing, and I think it's
important.
The Chairman. It seems like if you go through the process
to make movement, the easiest thing is because they report to
us, DOD and VA, right, if they started buying based on buying
American, that would move the needle, right? That would move it
the fastest. The other is why doesn't--we talk about these
violations, FDA, or the FDA knowing that we only have one
supplier. Why aren't they doing something?
Mr. Sardella. In regards to diversifying?
The Chairman. Yes, I mean, why wouldn't they? I mean if
they're responsible for us staying safe, right?
Mr. Sardella. Well, their mandate is to ensure that
manufacturers comply with CGMP manufacturing practices, and
that before they even produce those medicines, that they've
been vetted through analysis of them. Going beyond as to
managing the supply chain itself and saying how many, that
would be outside their bounds in regards to what they would
work on. I would also ask----
Dr. Wosinska. Yes----
Mr. Sardella. I would also say that--sorry Marta. Just one
line. I would also say that that strategy also does something
very different as well. It's a strategy of redirecting as
opposed to countering, right, as opposed to countering and
trying to counter India and counter China, which will be very
resourceful, right? Being able to start with redirecting
manufacturer through procurement U.S.-based requirements, U.S.-
based prioritization.
Which by the way, we're the only nation that does not
prioritize their domestic manufacturing source over foreign.
The ability to do that is a far more higher probability of
success because you're redirecting, you're not countering,
which is difficult.
The Chairman. Did you want to say something? Okay. Just off
the top of our head, we can think about the VA, DOD, we should
have some sort of map. Even if we start, like you said, you
can't start big, you should even if we start small and then we
should have higher expectations for all of our buyers.
Senator Gillibrand. Demand transparency, I definitely think
that can require transparency.
The Chairman. Sorry, go ahead.
Senator Gillibrand. We should require transparency. We
should require labeling. We should require information. Then,
that also can move a market because you can shame people into
not--like if they're not caring where their drugs are coming
from, and they're not caring about the outcome to their
patients, you can shame them into better participation.
Then, if the DOD and the VA can be the standard bearer or
the hallmark of success, and show that long-term their costs
aren't going skyrocketing high, they can then make the case you
should do these long-term investments, get the quality drugs
you need.
Then pushing Governors and pushing Presidents to invest
domestically, because the other point you all raised up is that
most of our adversaries and most of our competitors, they do
domestic investment. I mean every company in China is wholly
owned by China. Like, they will do all the baseline
investments.
We can create an investment fund that actually invests in
domestic production to incentivize it. Even if we don't want to
create a pot of money, we certainly can create massive tax
incentives. There's many ways to create carrots.
The Chairman. Well, and what if Tony said it's right,
there's a three-year payback. I mean you don't have to invest a
dime.
Mr. Sardella. Especially, if you're using existing
facilities, and that's the key.
The Chairman. At least short-term, we have plenty of
capacity.
Mr. Sardella. We have over 30 billion doses of capacity.
Senator Gillibrand. Also, you can use the Defense
Production Act to require us to use that capacity.
Mr. Sardella. That is correct.
Senator Gillibrand. Once we map capacity, if you've already
done that, we can publish that to say we will then ask the DOD,
and the VA, and the President to ask each of these
manufacturers to use all their capacity to begin to ramp up
domestic production of the top 10 required generic drugs for
our safety and survival.
Mr. Sardella. You have facilities that are highly
experienced at producing these medicines. They should be
leveraged first and foremost because they're experts in these
areas, like the companies that Tony brought up. Before even
starting up new facilities, we will need, ideally--hopefully,
we'll be able to open new facilities. Leveraging the incredible
experience we already have in this industrial manufacturing
base that is elite and being able to provide them new
technologies, that's where the investment, I believe, is the
greatest place.
It's about investing and allowing for sustainable
independence by these manufacturers. We don't want the
government to continue to have to invest in them, modernize
their facility, leverage their expertise. Let them invest
themselves now that there's a market and allow them to be
sustainable long-term economically to produce these medicines.
You've created the demand. Demand investment in
modernization so they can compete so long-term we don't have to
revisit this and have to continue to fund it. The industries
themselves can do it.
The Chairman. Great. Okay, go ahead.
Dr. Wosinska. Can I comment on transparency? I think it's
really, really critical. The way I think about transparency is
who needs what information and what are they going to do with
it? I think it's really, really critical to ask that question
because some transparency for the sake of transparency is not
going to get you anywhere. Transparency can actually sometimes
backfire.
I am a very big proponent about the government having
transparency. This is how you decide what to prioritize, where
to invest. This is why it's important for FDA to know that
manufacturers might have a problem and this buys them time. For
example, hospitals really want an early warning system of
shortages. You know what that means? That means that they
basically have a sign to a stockpile really early, and then FDA
actually has much less time to try to fix the problem.
Where I get really nervous is transparency to consumers.
I'll tell you why. I actually have a story very similar to
Peter Baker's story, and it actually involves my mother, if I
would be allowed to share this story. I've never shared it
publicly.
My mother was diagnosed with cancer in early 2020, and she
needed to get radiation, and chemotherapy, and it was going to
be oral chemotherapy. It was a 60-day supply of a pill, and it
was going to be an old generic, and knowing what I know, I got
very nervous. I started to--I basically thought; if my mom
doesn't respond well to this therapy, I will never forgive
myself because what if that product was not made to
specification?
I actually have access to a lot of information, and I
looked at who the manufacturer is for this NDC, and I looked,
you know, where it might be manufactured and what are the
alternatives. It was really difficult for me, and I have access
to really top information. You would think that I would be the
first person to say, "We need to fix it."
You know, what I learned from this experience is the
complete opposite because of what happened next. I went to one
pharmacy, and I said, "Can you dispense me this NDC?" They
said, "No, we don't do special orders." I went to another
pharmacy, I got the same answer. Pharmacies are reimbursed in
exactly the same way. It's a low business margin.
You have one option when you go to a pharmacy. Unless we
were to fix how pharmacies are reimbursed and how pharmacies
stock, the patient only has one choice; to pick it up or not
pick it up. This is not like going to a store where you have
five shirts and you get to choose one. They don't have a
choice.
By giving this information to consumers where there's
absolutely no (financial) incentive for a pharmacy to do
anything about it and respond, that is a recipe for a lot of
non-adherence. Yes, I would prefer to choose the non-Chinese
drug over a Chinese drug, but in a pharmacy, I'm not going to
have that option. It's really, really, really important that we
either fix the pharmacy reimbursement policy or look for
solutions elsewhere.
The Chairman. Let me give you my response. I really believe
in transparency, and I'll give you a story. I've run a bunch of
companies, and you know what every employee wants, they want
every hospital in the network. That means you get no discounts,
right? The reality is if I had two plans, and everybody's
included in a plan that's cheaper with just one hospital,
include a smaller network.
Some people would pick one because they know it, but some
people would pick a bit more expensive. I actually really
believe that people, they'll look at it and look, is it going
to be perfect? No. People buy bad, ugly sweaters sometimes, but
I believe over time it'll force whoever the pharmacy is.
If I walked in, and I had one, and it said if I would
just--I'd start bugging them. We see it now. We see it with
people buying America. You know, you can even get on Amazon,
which still doesn't disclose all country of origin, but you go
to Amazon now and they have sections. I can tell you, I've
talked to people that make it America, they put the label on
made the America, their revenues go up.
I believe it's--I agree with you, it's not going to be
easy. It's not going to be perfect. The information never is
perfect, if we do it all, it will force people to change. They
will change. I've seen it in too many businesses. Do you want
to add anything?
Senator Gillibrand. No, you can close us out.
The Chairman. I want to thank everybody for being here
today and participating. I look forward to continue working
with members across the aisle, down the dais. If any Senator
has additional questions for the witnesses or statements to be
added, the hearing record will be open until next Wednesday at
5:00 p.m.
I want to thank each of you for being here, and if you have
any suggestions for either one of us going forward, we are
going to get this fixed. Thank you.
[Whereupon, at 5:01 p.m., the hearing was adjourned.]
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APPENDIX
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Prepared Witness Statements
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Prepared Witness Statements
Tony Sardella
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Prepared Witness Statements
Tony Paquin
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Prepared Witness Statements
Andrew Rechenberg
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Prepared Witness Statements
Dr. Marta E. Wosinska
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Questions for the Record
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Questions for the Record
Tony Sardella
Ranking Member Kirsten E. Gillibrand
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Questions for the Record
Dr. Marta E. Wosinska
Ranking Member Kirsten E. Gillibrand
Question:
You have written about how federal transparency initiatives
will fall short of their goals if purchasers, such as
hospitals, have no economic or institutional motivation to act
on such information.
How can hospitals be incentivized to consider quality and
reliability over the cost of drugs?What are some of the
potential downsides of transparency initiatives should they not
be executed alongside other initiatives, such as reforming
economic incentives?
Response:
Transparency initiatives in drug manufacturing often fail
to achieve their intended goals-not because the information is
wrong, but because they lack the right incentive structures to
motivate action. Simply making information available is not
enough; those who receive it must be both motivated and
equipped to act on it in ways that align with broader economic
incentives or institutional structures. Without this alignment,
transparency efforts become costly nice-to-haves, and may even
produce unintended consequences that worsen the very problems
they were designed to solve.
To understand which transparency approaches are most likely
to succeed, it is useful to first examine the main types of
transparency initiatives and how they interact with underlying
economic incentives-which often diverge from what serves
patients best. There are three main types of transparency
initiatives:
1.Government-facing initiatives
2.Patient-facing initiatives
3.Institutional buyer initiatives
Existing government-facing initiatives primarily focus on
mapping supply chains to identify geopolitical exposure and
with it identify which drugs require alternative sources in
which production stages of supply chains. Incentives to act on
this information will be driven, to a large extent, by Congress
(by setting out the tools and directives as well as
appropriating funds to follow through) and the administration
(by identifying which existing tools they can deploy).
Patient-facing initiatives include adding to the pharmacy
label either the Country of Origin or a rating of product
quality. The goal of these efforts is to shift markets through
patients as they begin to shop for versions that presumably are
less likely to have product defects. There are two intertwined
reasons, however, why such initiatives could go astray. First,
without reforms for how pharmacies are reimbursed, patients
have limited options in how they respond to sourcing
information, other than deciding not to fill the prescription.
Second, neither measure is strongly correlated with actual
product quality, making potential misinterpretation by patients
particularly concerning.
When it comes to institutional buyers, efforts have focused
largely on creating transparency in the hospital and clinic
sector, not the retail pharmacy sector (where the consumer-
facing measures seem to have gotten more attention). In the
hospital space, there are two main types of transparency
initiatives:
Supply chain reliability assessments and;
Early warning systems.
The data needed to support these transparency initiatives
varies depending on the goal. Supply chain reliability
assessments focus on evaluating the long-term dependability of
a manufacturer's supply chain over the duration of a multi-year
contract, using indicators such as plant redundancy, inventory
controls, raw material sourcing, risk management practices, and
historical shortage records. In contrast, early warning systems
aim to detect abrupt risks or disruptions in the near term-
drawing on real-time signals like new shortage posts on the
ASHP website, reports of product discontinuations, sudden order
limits from any wholesaler, newly announced adverse FDA
inspection findings, recalls, or reports of supply
interruptions in global logistics. The economic incentives for
these two transparency approaches diverge sharply.
Early warning systems enable hospitals to continue
prioritizing low-cost procurement without regard for long-term
supply reliability, only shifting tactics and rapidly
increasing orders at the first hint of trouble. This dynamic
offers clear advantages to well-resourced institutions equipped
to act quickly, which in turn has driven commercial vendors to
develop various rapid alert tools. Yet this competitive
hoarding erodes the advance notice intended for regulators,
limits FDA's ability to intervene, and accelerates the very
shortages these transparency initiatives are supposed to help
prevent.
In turn, purchasing in times of relative stability-whether
through spot buys or contracts-is dominated by the strong
incentive to choose the lowest-cost option. There is little to
push hospitals or group purchasing organizations toward
factoring in supply chain reliability or resilience, as most do
not directly bear the costs when a disruption occurs. While
there are tools and frameworks available to inform more
resilience-focused procurement, hospitals have options but
typically lack a meaningful reason to use them, absent clear
financial rewards or contractual requirements.
Policymakers would be wise not to fuel early warning
systems for hospitals but to support supply chain reliability
efforts in two ways: by supporting the related transparency
efforts and by creating economic incentives.
Policymakers can promote supply chain reliability in drug
procurement by ensuring purchasers have access to meaningful,
actionable information. Changes to current reporting
requirements-such as requiring suppliers to specify not only
who a drug is "manufactured for" but also who it is
"manufactured by"-would make it far easier to track products to
facilities that do not have a good compliance record.
Supporting FDA's Quality Management Maturity (QMM) initiative
is another foundational step, as public disclosure of QMM
ratings would highlight manufacturers that invest in robust
quality and operational practices, allowing buyers to consider
reliability and performance in addition to price during
contract negotiations.
Policymakers should complement transparency efforts by
pursuing payment and contracting policies that create
meaningful economic incentives for hospitals and manufacturers
to prioritize supply chain reliability. Current proposals-such
as those from the Senate Finance Committee and HHS-would
authorize financial rewards or penalties based on a buyer's or
supplier's record of ensuring supply continuity, product
quality, or timely response during shortages. By tying payment
rates directly to reliable performance-or imposing
disincentives for repeated supply failures-these initiatives
aim to move the market beyond cost alone, encouraging long-term
investments in resilience throughout the supply chain.
Question:
In your research you recommend a broad strategy when it
comes to deciding which drug supply chain resiliency efforts to
prioritize and support. More specifically, you recommend that
the Administration for Strategic Preparedness and Response
shift from a fixed list of essential drugs toward a longer list
that stratifies drugs by how critical they are, their reach,
and how vulnerable they are to disruption.
Could you say more about how this longer, stratified list
would better enable the federal government to support
resilience efforts?
Response:
When it comes to supporting drug supply chain resilience
efforts, setting priorities is important because of the scale
and complexity of the drug supply chain. There are well over
2,000 approved prescription drugs, spanning a large array of
ingredients, manufacturing technologies, and production sites
that collectively produced 187 billion tablets and capsules for
American patients in 2024, not counting other dosage forms. The
lack of economic incentives in the market coupled with the
magnitude of what it would take to secure all drug supply
chains requires that the government prioritizes where to
engage.
Prioritization is not only needed but possible because not
all drugs are equally important. For example, some drugs are
lifesaving in emergencies, such as epinephrine auto-injectors
for severe allergic reactions or insulin for patients with type
1 diabetes. Others, like certain chemotherapy agents or
antibiotics, are critical for treating serious infections and
cancers. Drugs for chronic conditions, such as
antihypertensives and statins, affect large patient populations
but interruptions are not generally life threatening,
especially in the short term.
U.S. government prioritization began with the FDA's list,
created under a 2020 Executive Order, which identified over 220
drugs and medical countermeasures most needed for immediate and
life-saving medical use in hospitals. The Administration for
Strategic Preparedness and Response (ASPR) subsequently
narrowed this to 86 drugs, focusing more tightly on those
deemed essential for acute care. Most recently, at the
direction of the administration, ASPR further narrowed the
target to about 26 drugs, selecting those for strategic
stockpiling initiatives.
Budget and time constraints have made this narrowing
process unavoidable. With limited new funds appropriated by
Congress for comprehensive supply chain resilience, the
administration's current efforts are focused on building and
maintaining a six-month supply of active pharmaceutical
ingredients (APIs) for this small subset of drugs. If
policymakers pursue costlier or more complex resilience
strategies such as supporting new domestic manufacturing of API
and all its inputs, not even all 26 may be covered, and
prioritization within this short list would become necessary
under a limited budget.
A broader, stratified list would give policymakers
flexibility to adjust investments as resources change. If
Congress allocates additional funds, efforts could expand
without reworking the prioritization framework. Such a list
would guide readiness planning, clarify what additional money
could achieve, and allow for a quick response as budget
realities evolve.
In practice, criticality and reach remain fairly stable for
most products unless major therapeutic advances occur;
vulnerability can change quickly. Initial reviews should focus
on identifying drugs with the greatest health impact and reach.
Detailed, regularly updated vulnerability assessments can then
be reserved for a larger list of higher-priority drugs,
concentrating resources where they matter most and avoiding
exhaustive analysis of less critical products.
To build a practical, ranked drug framework, it is also
essential to factor in resilience-building cost and capacity
constraints. The main cost drivers are often tied not to the
price of the drug itself, but to the logistics of production-
such as the potency of the active pharmaceutical ingredient
(affecting how much can be handled in existing facilities if
capacity is limited) and the specialization required of
manufacturing processes. These realities can force tradeoffs,
requiring policymakers to choose between covering more drugs
that fit within common, flexible plant capacity, or
prioritizing medicines that do not demand highly specialized
production setups and supply chains.
Question:
Your work highlights why drug manufacturers outsource
chemical synthesis for drug manufacturing to China. Chemical
synthesis can create toxic materials and could be quite harmful
to the environment. You recommend that the U.S. fund chemical
industrial parks as part of onshoring efforts.
Could you say more about how funding domestic industrial
parks could help to reduce American reliance on chemicals
synthesized in China?
Response:
Efforts to derisk pharmaceutical supply chains from China
require developing alternative sources for critical chemical
inputs. Diversification does not necessarily mean full
onshoring; establishing production capacity in allied, cost-
competitive countries can often achieve greater efficiency
while mitigating geopolitical risk. However, for strategically
sensitive or high-risk materials, selective onshoring can
enhance national resilience.
An important part of derisking supply chains from China is
at the earliest, unregulated steps: key starting materials,
intermediates, and auxiliary chemicals like reagents and
solvents used in synthesis. This is where U.S. drug supply
chain exposure is the greatest.
The reliance is driven by Chinese firms' strong cost
advantage through significant economies of scale coupled with
lower labor, energy, and transportation costs. Historically, a
lax regulatory framework allowed Chinese producers to operate
with higher environmental and workplace risks than Western and
Indian competitors, enabling their cost advantage. Following
the Beijing Olympics, China began to reckon with environmental
pollution and began raising standards and investing in greener
manufacturing methods.
The question is then, how should the U.S. respond if it
chooses to onshore chemical manufacturing. Environmental
deregulation alone will not succeed in shifting production to
America because China will continue to hold an insurmountable
cost advantage driven by lower energy, lower labor, and deep
economies of scale. In fact, a race to the bottom on
environmental standards would require the U.S. to set
regulations lower than even India and China are willing to
accept-countries that have already rejected the dirtiest
manufacturing practices as economically and socially
unsustainable.
The future of chemical manufacturing lies in advanced green
chemistry technologies that represent the next generation of
global competitive advantage. These approaches are more
efficient, create higher value-added products, and generate
more skilled, higher-paying jobs than legacy chemical
processes.
Chemical industrial parks offer a more sustainable and
scalable alternative to traditional one-company-at-a-time
funding. By co-locating multiple manufacturers within shared
infrastructure-centralized wastewater treatment, utilities,
analytical testing facilities, and logistics-these parks
significantly lower the per-unit overhead for each producer.
This model is widely used in Europe, India, and certain U.S.
states.
Parks also create resilience: if one tenant exits, another
can step in using the same infrastructure, protecting the
government's investment and maintaining supply continuity. For
policymakers working within budget constraints, industrial
parks provide a mechanism to support multiple products and
processes simultaneously, rather than betting on individual
companies or isolated facilities.
Centralized environmental controls-shared wastewater
treatment plants equipped to handle toxic intermediates, air
quality monitoring, and hazardous waste management-enable cost-
efficient pollution control far more effective than individual
facilities can achieve. This allows domestic chemical
production to meet U.S. environmental standards without
imposing prohibitive costs on each manufacturer, reversing the
historical trend of exporting pollution alongside production.
Senator Raphael Warnock
Question:
Rural health providers in Georgia rely on access to
affordable drugs to treat patients, including older Americans.
Due to financial vulnerability, rural providers have limited
capacity to build a stockpile of drugs in preparation for
supply shortages.
How can Congress work to ensure rural hospitals and clinics
can provide affordable and safe drugs to seniors in times of a
drug shortage crisis?
What kind of policy changes would incentivize domestic drug
suppliers to develop generic drugs and improve aging rural
populations' access to prescription drugs?
Response:
It is indeed the case that rural providers, especially
those not part of a large health system, have severely limited
ability to withstand supply disruptions. This stems partly from
scale: they often lack staff dedicated to supply chain
management, operate on thin financial margins that leave little
room for inventory investment, and cannot leverage the
purchasing power of larger systems. Independent rural
facilities face a particularly acute challenge: unlike small
hospitals within integrated systems that can at least access
their parent organization's negotiating leverage and shared
contracts, truly independent rural providers must navigate
procurement entirely on their own.
A 2023 STAT article illustrated this dynamic during the
national shortage of carboplatin and cisplatin. Large health
systems weathered the disruption easily, using their purchasing
power and strong supplier relationships to stockpile supplies.
Small, often rural, independent oncology clinics could not-they
lacked these advantages and were sidelined by allocation
systems favoring historical bulk orders. Many small clinics had
to ration care, send patients to distant centers, or delay
lifesaving treatment altogether, intensifying distress and
risking poorer outcomes for vulnerable populations. The
shortage exposed systemic flaws in drug procurement practices
and underscored the urgent need for reforms to ensure more
equitable access to essential drugs.
Analytics and data systems play a major role in the
disparities seen during chemotherapy drug shortages because
large hospital systems typically have sophisticated analytics
tools that allow them to monitor drug inventory, predict
shortages, and swiftly respond by stockpiling or reallocating
supplies across their networks. These systems provide
actionable data on usage rates, inventory levels, and shortage
signals, enabling proactive strategies like early purchasing or
redistribution before official shortage notifications are
issued. In contrast, small independent clinics often lack
access to such analytics and automation, making it difficult
for them to anticipate shortages or compete for limited supply-
further widening the gap in access during crises like the
carboplatin and cisplatin shortage.
Expanding the use of advanced analytics with small
providers has the potential to help these providers better
anticipate drug shortages, optimize inventory, and negotiate
more effectively with suppliers, reducing vulnerability during
supply chain disruptions. However, the cost, technical
complexity, and need for specialized staff pose significant
obstacles. Many small clinics operate with tight budgets and
limited personnel, making it difficult to adopt and maintain
sophisticated data systems even if the technology itself is
available. They will always be behind the curve and therefore
last in line.
For most small and rural clinics, greater resilience may
come from direct preparedness strategies, such as regional
stockpiling programs, collaborative purchasing efforts, and
supportive policy reforms that redistribute essential drugs
during crises.
One such recent effort was CMS establishing a separate
payment system for small independent facilities, many of them
rural, to help them create and maintain a buffer inventory of
essential medicines. This authority is based on the same legal
mechanism used for N95 mask stockpiling during the pandemic.
The program allows qualifying hospitals to receive targeted
Medicare payments specifically for the costs of purchasing and
storing a reserve supply of designated drugs, with eligibility
focused on hospitals most likely to face financial and
logistical barriers to stockpiling.
However, this authority is limited by statutory language
that restricts reimbursement to only "reasonable costs." The
"reasonable costs" constraint ties reimbursement only to
Medicare's share of a hospital's business, meaning that
hospitals must maintain buffer inventory sufficient to serve
their entire patient population-including Medicaid, uninsured,
and commercially insured patients-but can only be reimbursed
for the Medicare portion of those inventory costs.
Additionally, the costs of tracking, monitoring, and reporting
on buffer stock inventory are not reimbursed under the program.
These limitations mean that the payments offered may not fully
cover the financial and operational burdens of creating and
maintaining a substantial buffer stock, limiting participation.
To address these limitations, Congress should strengthen
the existing CMS framework by amending the statutory authority
that currently restricts reimbursement to "reasonable costs"
tied only to Medicare's share of hospital business.
Specifically, Congress should authorize CMS to provide full
reimbursement for buffer stock costs regardless of payer mix,
recognizing that hospitals must maintain inventory for all
patients, not just Medicare beneficiaries.
Additionally, the statute should be amended to support a
fixed payment model rather than the current submit-a-bill
approach, which would reduce administrative burden and make
participation more attractive to resource-constrained rural
hospitals. The fixed payment should also cover the costs of
tracking, monitoring, and reporting on buffer stock inventory-
costs currently excluded from reimbursement.
Congress and CMS can also influence how wholesalers
allocate scarce products during shortages. Wholesalers
typically allocate based on historical purchasing patterns over
a short lookback period (often 3-6 months), which
systematically disadvantages small rural providers with
variable ordering patterns. A rural hospital that orders 100
units of a critical drug every 12 months may receive zero
allocation if the lookback period captures only the months
between orders. Meanwhile, large integrated health systems have
a significant advantage: they can bypass wholesalers entirely
and purchase directly from manufacturers during shortages,
securing supply outside the allocation system altogether-an
option unavailable to small independent hospitals.
To level the playing field, CMS could mandate that
wholesalers use longer, smoothed lookback periods as a
condition of participation in Medicare or Medicaid programs-for
example, calculating allocations based on 12-24 month rolling
averages rather than recent 3-6 month snapshots. Additionally,
Congress could direct FDA or CMS to establish minimum fairness
standards for allocation methodologies during shortages,
similar to how other federal agencies regulate allocation of
scarce resources. Finally, allocation formulas should be
reformed to use objective metrics tied to patient population
served, licensed bed capacity, or facility size, rather than
pure historical purchasing volume.
Beyond influencing allocation during shortages, Congress
can also make the entire pharmaceutical supply chain more
reliable by reducing the risk and frequency of supply
disruptions themselves. Legislative actions may include
requiring redundancy and diversification among manufacturers,
strengthening federal oversight for manufacturing quality and
inspections, incentivizing domestic production, and supporting
proactive stockpiling at the national level. These measures
would help prevent supply shocks from occurring and limit their
scale, ensuring that small rural hospitals are not perpetually
vulnerable to access disparities even when major disruptions
occur.
Question:
Hurricane Helene shut down Baxter International's North
Carolina facility and caused a nationwide intravenous (IV)
fluid shortage. Hospitals across the country were forced to
ration their IV fluids until the company restored its
manufacturing capability. I sent a letter to the Food and Drug
Administration and the Department of Health and Human Services
leadership pushing them to provide relief during this crisis.
How could Congress leverage technology like predictive
analytics to strengthen the resilience of domestic drug supply
chains in times of natural disasters?
Response:
Predictive analytics can be an invaluable tool for
monitoring supply chains and anticipating shortages, but their
use during a crisis-such as the IV fluid shortage following
Hurricane Helene-can compound existing vulnerabilities. When
predictive analytics signal an emerging scarcity, large health
systems often respond by accelerating stockpiling or bulk
purchasing, which can deplete inventory faster and outcompete
smaller hospitals for limited resources. This dynamic can leave
rural and independent providers even more exposed, intensifying
the very shortages that technology is aiming to mitigate.
Better, real-time tracking of saline usage at both
inventory and patient levels would significantly improve a
hospital system's ability to allocate scarce resources during a
shortage. Saline and other IV fluids are FDA-approved drugs,
yet many hospitals treat them as supplies rather than
medications. This classification outside the pharmacy system
means administrations and usage are often not barcode-scanned
or tracked like medications, making it difficult for health
systems to know where the product is being used or how much.
To address this tracking problem, CMS could require health
systems to reclassify and track IV fluids as FDA-approved drugs
rather than allowing them to be handled outside pharmacies as
untracked supplies. Enhanced analytics could identify which
units or patients have the greatest clinical need, optimize
distribution, and reduce waste or unnecessary stockpiling
throughout the network.
While real-time tracking and robust analytics enable
smarter, more equitable allocation of supplies during a
shortage, hospitals also need practical and systemic strategies
to prepare for major disruptions. For high-volume products like
saline, maintaining a buffer inventory is particularly
challenging given the heavy usage, physical volume, and cost of
storage. Hospitals must adopt additional safeguards and
diversify their approaches beyond stockpiling to prepare for
potential shortages.
For hospitals, avoiding sole-source contracts is a key
step. Reliance on a single supplier for saline or other
essential fluids can dramatically widen the impact of any
supply disruption, whereas maintaining relationships with
multiple vendors lessens vulnerability-enabling continued
provision of urgent services even during supply chain shocks.
Recent shortages have exposed disparities based on with which
manufacturer a hospital contracts. During the 2024 saline
shortage following Hurricane Helene, hospitals contracting with
Baxter received only 40-60% of normal allocations, while those
using B. Braun experienced minimal disruption as B. Braun's
facilities were unaffected.
Manufacturers can help by investing in more flexible or
'fungible' production systems that allow rapid pivots to
different bag sizes or formulations as market demand and
regulatory priorities shift. Facilities able to quickly change
production lines or scale outputs for alternative product sizes
improve overall supply chain resilience, reducing the risk and
magnitude of shortages from specific disruptions. Encouraging
manufacturers to adopt these adaptive capabilities can increase
redundancy and responsiveness, ultimately protecting the entire
healthcare system during crises.
Congress and the administration can play vital roles in
supporting alternative hospital preparedness strategies for
saline shortages-using both regulatory "sticks" and financial
"carrots." On the regulatory side, policymakers could
strengthen antitrust enforcement and oversight to discourage
anticompetitive practices, such as exclusive or sole-source
contracts that undermine supply resilience and limit access
during disruptions. On the incentive side, Congress could
expand payment models or grant programs to encourage hospitals
to diversify suppliers and invest in logistics for alternative
sourcing.
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Statements for the Record
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
Association for Accessible Medicines Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
American Hospital Association Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
American Society of Health-System Pharmacists Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
Continuus Pharmaceuticals Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
Doctors For America Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
Lupin Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
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Statements for the Record
Lupin - Coral Springs, FL Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
National Taxpayers Union Statement
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U.S. Senate Special Committee on Aging
"Bad Medicine: Closing Loopholes That Kill American Patients"
October 8, 2025
Statements for the Record
Teva Statement
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[all]