    [Senate Hearing 119-263]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 119-263

                           MADE IN AMERICA: RESTORING
                             TRUST IN OUR MEDICINES
    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                               NOVEMBER 19, 2025

                                   __________

                               Serial No. 119-19

             Printed for the use of the Special Committee on Aging

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    62-492 PDF                  WASHINGTON : 2026

    -----------------------------------------------------------------------------------

                           SPECIAL COMMITTEE ON AGING

                         RICK SCOTT, Florida, Chairman

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

                            C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

    Opening Statement of Senator Rick Scott, Chairman................     1
    Opening Statement of Senator Kirsten E. Gillibrand, Ranking
      Member.........................................................     2

                               PANEL OF WITNESSES

    Allan Coukell, Chief Government Affairs & Public Policy Officer,
      CivicaRx, Lehi, Utah...........................................     4
    Tom Neely, Chairman of the Board, Oxford Pharmaceuticals,
      Birmingham, Alabama............................................     6
    Patrick Cashman, President, USAntibiotics, LLC, Bristol,
      Tennessee......................................................     7
    Eric Edwards, MD, Ph.D, CEO, PHLOW-USA, Richmond, Virginia.......     9

                                    APPENDIX
                          Prepared Witness Statements

    Allan Coukell, Chief Government Affairs & Public Policy Officer,
      CivicaRx, Lehi, Utah...........................................    29
    Tom Neely, Chairman of the Board, Oxford Pharmaceuticals,
      Birmingham, Alabama............................................    33
    Patrick Cashman, President, USAntibiotics, LLC, Bristol,
      Tennessee......................................................    41
    Eric Edwards, MD, Ph.D, CEO, PHLOW-USA, Richmond, Virginia.......    51

                            Questions for the Record

    Allan Coukell, Chief Government Affairs & Public Policy Officer,
      CivicaRx, Lehi, Utah...........................................    57
    Tom Neely, Chairman of the Board, Oxford Pharmaceuticals,
      Birmingham, Alabama............................................    59

                           Statements for the Record

    Composition of OSCS contaminated heparin occuring in 2008
      Statement......................................................    63
    Heparin at the Center of the Storm Statement.....................    69
    National Consumers League Statement..............................    71
    White Paper: The 2008 Heparin Contamination Crisis Statement.....    73

                           MADE IN AMERICA: RESTORING
                             TRUST IN OUR MEDICINES

                                  ----------

                          Wednesday, November 19, 2025

                                            U.S. Senate
                                     Special Committee on Aging
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:41 p.m., in
    Room 216, Hart Senate Office Building, Hon. Rick Scott,
    Chairman of the Committee, presiding.
        Present: Senator Scott, Tuberville, Johnson, Moody,
    Gillibrand, and Alsobrooks.

                     OPENING STATEMENT OF SENATOR
                          RICK SCOTT, CHAIRMAN

        The Chairman. The U.S. Senate Special Committee on Aging
    will now come to order. This hearing is about something we've
    all used, and every American relies on - access to safe,
    affordable, and high-quality medicines. Generic drugs are a
    lifeline for millions of Americans and are a market miracle
    that allows for accessible treatments. That is why it is so
    important that we have transparency into their supply chains
    and full confidence in their production.
        As we know from the FDA's own people, they have allowed
    importation of drugs from facilities that are noncompliant
    simply because the potential for shortage--which we should be
    making these drugs here in this country in the first place. In
    our previous two hearings on this topic, witnesses have
    highlighted the ways that we can bring back domestic production
    in an affordable, market driven way.
        Today, nearly 80 percent of the active ingredients in our
    prescription drugs come from foreign sources. That is foolish.
    That means we depend on our adversaries for the very medicines
    our families and seniors need to survive. It is not England. It
    is not Germany. It is not Japan. It is our adversaries.
        Consumers, pharmacies, and big buyers like hospitals don't
    even know the full extent of where those drugs are made or what
    is happening inside the plants that make them because we don't
    have country of origin labeling requirements. We have seen the
    results of that dependence in contaminated drugs, dangerous
    recalls, and shortages that force doctors and patients to
    ration care.
        It is unacceptable that the most advanced country in the
    world can't ensure a steady, safe supply in basic medicines for
    its own citizens. The solution for this is very simple, we must
    make drugs in America again. The health and safety of Americans
    is too important to leave in the hands of other nations,
    especially our adversaries that like Communist China. When we
    manufacture here at home, we can control quality, strengthen
    oversight, and protect patients.
        We also get the benefit of creating good paying jobs and
    growing our economy. Today's witnesses are proof that American
    manufacturing works. These companies show that it is possible
    and profitable to make safe, affordable medicines in the U.S.
    However, they also face challenges that Washington has helped
    create.
        Red tape at the FDA delays approvals and drives up costs,
    something I and many of our colleagues are interested in
    fixing. By the way, I want to thank the Ranking Member,
    Gillibrand, because she has been a complete partner in the
    report we put out, in these hearings to make sure we get
    change. Current procurement rules for Government agencies,
    large purchasers of generic drugs reward the cheapest overseas
    bidder rather than the safest or the most reliable product to
    the detriment of American manufacturing.
        The difference in cost is often negligible, and foreign
    governments manipulate their pricing to undercut American
    manufacturers. The result, a broken system that leaves our
    patients vulnerable and our businesses at a disadvantage.
        The Federal Government should lead by example. The VA,
    Medicare, and our military health programs should prioritize
    American made medicines. Unfortunately, they don't. Taxpayer
    dollars should support our American workers, not fund companies
    in China with ties to forced labor and that don't meet our
    safety standards.
        This isn't just an economic issue. It is a matter of
    national security. Americans should never have to wonder
    whether their blood pressure medication, their insulin, or
    antibiotic was made safely. We can do better, and we must do
    better. Together we can build a stronger, safer, more self-
    reliant medicine system here in America.
        I now would like to recognize Ranking Member Gillibrand for
    her opening statement, and again, I want to thank her for being
    a complete partner in getting this report out and these
    hearings.

                     OPENING STATEMENT OF SENATOR
                 KIRSTEN E. GILLIBRAND, RANKING MEMBER

        Senator Gillibrand. Thank you, Mr. Chairman. Thanks for
    calling the hearing, and thank you to our witnesses for
    testifying today. We are very grateful for your contribution. I
    look forward to continuing our conversation about how we can
    improve the quality and reliability of our generic drug supply.
        This is an essential issue for our Committee to examine as
    many aging Americans, including over 53 million Medicare Part D
    enrollees, rely on at least one generic drug to treat a wide
    range of medical conditions. Unfortunately, the supply chain
    for these crucial drugs remains vulnerable to disruption, and
    we consistently witness issues with the quality of foreign drug
    products causing key medicines to go into shortage. It is
    unacceptable.
        Every American should have access to safe and affordable
    generic drugs. Particularly, as older adults navigate the
    complex, difficult health conditions that they face, they
    shouldn't have to cope with worsening symptoms, skipping doses,
    or trying to stretch medicines further because they can't
    afford them. This is an existential issue for a lot of older
    Americans and for New Yorkers.
        I have heard from many New Yorkers about this issue. One of
    my constituents from Brooklyn told me: "for the past month and
    a half, I have been unable to receive my generic medication
    because of shortages. Much of my day is spent going back and
    forth between pharmacies and my doctor's office playing phone
    tag when I should be doing my actual job. I have even had to
    spend money on third party services to help me find my
    medication when I am unable to. The entire process is
    exhausting, demoralizing, and dehumanizing."
        A key factor driving up these supply chain disruptions is
    that due to the extreme cost pressures and concentrated
    sourcing, key starting materials, active pharmaceutical
    ingredients, and finished dosage form generic drug products are
    increasingly made outside the United States. We have seen the
    number of U.S. facilities that formulate generic drugs fall by
    27 percent since 2013.
        In the same timeframe, we have seen a 38 percent decrease
    in the number of domestic facilities producing active
    pharmaceutical ingredients. In fact, 83 percent of the top 100
    generic drugs taken by American consumers now have no U.S.
    based source of API, and another 11 percent only have one
    domestic source of API.
        This means we increasingly depend on countries like India
    and China, where the industry has grown for these upstream
    materials that represent the most vulnerable chokepoint in the
    supply chain. This is particularly a problem because recent
    instability in geopolitics and global trade practices is
    compounding our already limited operational oversight and
    control over foreign sourcing and manufacturing of these key
    materials.
        The U.S. decline in manufacturing has not only led to
    domestic job losses, but it also represents vulnerability in
    the supply chain and increasingly poses a risk to our Nation's
    public health preparedness and national security.
        To ensure Americans have a reliable supply of safe and
    affordable drugs, Congress will need to work to make targeted
    investments in biotechnology research and infrastructure to
    manufacture these key ingredients in the United States.
        In addition, we have to examine the underlying economic
    dynamics in the current marketplace and adjust incentives to
    fix the race to the bottom problem in generic drug pricing,
    which can drive manufacturing outside the U.S. and cause
    companies to stop production of certain drugs and chemicals
    altogether.
        I look forward to hearing from our witnesses today to
    discuss these challenges and the barriers facing this industry.
    I am eager to work with Chairman Scott and the Committees of
    jurisdiction as we address these issues, strengthen our generic
    drug supply, and bolster our public health preparedness and
    national security.
        The Chairman. Thank you, Ranking Member. I would like to
    welcome our witnesses, all of whom are leaders in the efforts
    to bring drug manufacturing back to the United States, ensure
    that every medicine we take is safe, affordable, and made to
    the highest standards, so now let me turn it over to the
    Ranking Member to introduce our first witness.
        Senator Gillibrand. Thank you, Chairman Scott. I want to
    move to introduce Allan Coukell. Mr. Coukell is the Chief
    Government Affairs and Public Policy Officer at CivicaRx, a
    not-for-profit organization. CivicaRx was created by the U.S.
    health systems in 2018 to address drug shortages by
    manufacturing quality, essential medicines at sustainable
    prices.
        Mr. Coukell served on the board of the Reagan Udall
    Foundation for the FDA and was a Founding Board Member and Vice
    Chair of the Medical Device Innovation Consortium. Mr. Coukell,
    you may begin your testimony.

              STATEMENT OF ALLAN COUKELL, CHIEF GOVERNMENT
         AFFAIRS & PUBLIC POLICY OFFICER, CIVICARX, LEHI, UTAH

        Mr. Coukell. Thank you. Chairman Scott, Ranking Member
    Gillibrand, and members of the Committee, I appreciate the
    opportunity to speak with you today. My name is Allan Coukell.
    I am a pharmacist, and I lead public policy for CivicaRx.
        Civica is a nonprofit generic drug company created to
    prevent drug shortages and to ensure that American patients
    have a reliable supply of essential medicines. We currently
    supply 60 health systems around the country with more than 50
    injectable drugs. Over seven years, we have shipped more than
    240 million vials.
        To do this, we work with a range of manufacturing partners,
    giving preference to U.S. sourcing. Civica has a rigorous
    quality oversight process for its suppliers involving in-person
    facility audits and ongoing quality reviews. This is a unique
    feature of our supply model.
        Also unique is that we maintain a 6-month buffer inventory
    of every drug, and we offer the same price to every purchaser.
    Civica's own newly built manufacturing facility is in
    Petersburg, Virginia, funded partly with U.S. Government
    support, this is a state-of-the-art facility for manufacturing
    sterile injectable drugs with the ability to make about 90
    million vials a year.
        We have dozens of generic drugs in development for this
    facility. Civica has a no China policy in our supply chain,
    both for finished drugs and for active ingredient, unless there
    is no other supply available.
        Civica drugs are chosen by pharmacists and physicians from
    participating hospitals, and they are chosen because they are
    at high risk of shortage. These are products that are the
    bedrock of inpatient care, and surgery, and emergency medicine,
    antibiotics, anesthetics, blood thinners, sedatives, pain
    medications.
        While these are essential medications, they also tend to be
    very low cost. It is precisely because generic drugs are so
    inexpensive that manufacturing has been steadily moving to
    India and China. Make no mistake, low prices are the principal
    barrier to onshoring generic drug manufacturing.
        It costs millions of dollars to bring a generic injectable
    drug to market, and it takes several years. It requires a
    costly manufacturing facility and teams of people, R&D
    manufacturing, laboratory quality, and so on. With many
    injectable drugs selling for less than a dollar a vial, U.S
    production awfully--isn't simply financially viable.
        If we want sustainable domestic production, we have to be
    comfortable that it is worth paying slightly more to have a
    safe and secure domestic industry. We should provide extra
    payments to hospitals that take quality into account, along
    with domestic sourcing and buffer inventory.
        A bipartisan Senate Finance Committee discussion draft
    takes this approach, and since generic drugs account for one or
    two percent of hospital spending, such a program would have a
    negligible impact on overall health costs.
        In combination with these long-term market fixes, Congress
    should invest now in an insurance policy so that we can deliver
    these drugs as soon as they are needed. Because it takes years
    to bring a product to market, we shouldn't wait until after a
    foreign supplier fails or cuts us off to start developing the
    drugs we need.
        We also can't expect companies to invest in products if
    they won't recover their costs. Report language in the Senate
    Fiscal Year 2026 Labor H Bill instructs ASPR to partner with
    the private sector for this purpose, and Congress should fund
    this activity.
        For a modest one-time expense, we can ensure that domestic
    manufacturers are ready to go as soon as they are needed. You
    may note here that I have been talking more about finished drug
    products, vials or tablets, than about active pharmaceutical
    ingredients.
        Sometimes, we focus on API because that is where our
    dependence on China is greatest, but it won't do us any good to
    bring API back to the U.S. if we don't have a viable market for
    domestic finished drugs.
        We have to get that part right. I want to point out that
    developing a drug for an existing manufacturing facility is
    faster and cheaper than building an entirely new facility, but
    when new facilities are needed, and they will be for certain
    antibiotics and cancer drugs, it will require investments of
    hundreds of millions of dollars and probably Government support
    with capital, as well as some assurance of sustained demand.
        With modest changes to the current system, generic drugs
    can be produced cheaply and at scale in the United States, but
    we have to commit to making a market that works. Thank you for
    your attention and welcome your questions.
        The Chairman. Thank you for your testimony. Now, I would
    like to turn it over to Senator Tuberville to introduce the
    next witness.
        Senator Tuberville. Thank you, Mr. Chairman. I am proud to
    introduce our--my witness here, one of my constituents, Mr. Tom
    Neely, the Chairman of Oxford Pharmaceuticals based in
    Birmingham, Alabama. Mr. Neely is also partner at Prost
    Companies, a family investment firm located in Huntsville,
    Alabama, where he is directly responsible for the strategic
    direction and daily management of Oxford.
        He is also involved in the firm's real estate investment,
    including Broadwest, and the firm's manufacturing business,
    including Dorsey Trailer Manufacturing Company, located in
    Elba, Alabama, Mico Boat Trailer Company, located in Braidon,
    Florida, and Brown Precision Company in Huntsville.
        Tom has extensive experience in executive management,
    strategic planning, mergers and acquisitions activity, and
    financial oversight, and by the way, did I mention he is a
    graduate of Auburn University? War Eagle--go ahead.

            STATEMENT OF TOM NEELY, CHAIRMAN OF THE BOARD,
              OXFORD PHARMACEUTICALS, BIRMINGHAM, ALABAMA

        Mr. Neely. Thank you, Chairman Scott, Ranking Member
    Gillibrand, and distinguished members of the Committee. I
    appreciate this hearing very much.
        My name is Tom Neely, and I am Chairman of Oxford
    Pharmaceuticals, a Birmingham, Alabama based manufacturer of
    low cost, high quality, solid dose generic medicines taken
    daily by millions of our seniors. This is a personal matter for
    me. My wife has mid-stage Parkinson's disease. Oxford
    manufactures one of her generic medicines, but we cannot
    purchase it in Birmingham. Hers is manufactured by Chinese
    company.
        Oxford broke ground on a world-class facility in 2015 and
    began selling generics into the U.S. market in 2019. This
    period was marked by U.S. generic drug makers going out of
    business, but we invested $130 million.
        At Oxford, we feel that high-quality generic drugs can and
    should be manufactured domestically. We currently make 13
    generic management drugs for conditions including blood
    pressure, mental health, and mild pain relief. When I say we
    manufacture these medicines, that is indeed true. We transform
    our raw ingredients into finished oral tablets. We weigh,
    blend, compress, coat, package the tablet while adhering to an
    end-to-end, very comprehensive CGMP compliant quality process.
        Unfortunately, in today's domestic market, offshore
    manufacturing of these generic medications has dangerously
    weakened our supply chain, with China and India controlling the
    market. These foreign competitors are heavily subsidized by
    their governments, and studies repeatedly have shown quality of
    their finished products is inferior to domestic produced
    generics.
        In addition, the three big distributors, PBMs, and
    insurance companies care nothing about quality but focus on
    price. Ten of our drugs have no other U.S. owned and operated
    manufacturer, and three are classified as essential medicines.
    These proven generic drugs have been on the market for decades.
        On a weighted average of Oxford products, we sell 100
    tablets for $1.50. Medicare reimbursement for the same quantity
    and product set averages $13.25, most of which the middleman
    captures. India and China are aggressive with subsidies. Tax
    rebates, lower land and labor costs, expedited approvals, and
    billions in grants give India and China companies a distinct
    price advantage.
        U.S. plants operate under continued FDA inspection, and we
    welcome inspections because American patients live and die on
    the quality of our products. We believe that it is our moral
    obligation to produce the highest quality generic medicines
    possible. Many foreign plants go years without inspection.
        When FDA inspectors do visit foreign facilities, they found
    appalling practices which would have shut down a U.S.
    manufacturer. At one India generic maker, staff destroyed
    documents with acid and shredders to hide falsified safety
    data. It is within these constraints that Oxford is only
    operating at 55 percent of our capacity.
        We could easily quadruple our monthly output and double our
    workforce if we also--and we also have land and technical
    capability to build an onsite integrated API facility, but we
    need policy certainty, and most importantly, committed demand.
    Federal policy can help create the environment that we need to
    undertake this expansion. I urge the Committee to support four
    concrete and practical actions.
        First, affirm generic pharmaceuticals as a national
    security industry under Section 232 investigation. Second, give
    the procurement priority to legitimate domestic manufacturers
    through the VA, DOD, and Medicare programs. Reward end-to-end
    domestic manufacturing through long-term Government contracts.
        Third, support investment in domestic pharmaceutical
    manufacturing and API production through targeted grants and
    tax incentives, and fourth, require complete country of origin
    information on labeling. Patients deserve to know where their
    medicines are manufactured.
        Managing mid-stage Parkinson's is hard enough without
    worrying about the safety of my wife's medications. The four
    solutions mentioned will be vital in changing the landscape of
    generic pharmaceutical manufacturing in this country. Thank
    you.
        The Chairman. Thank you, Mr. Neely. Now, I would like to
    introduce Patrick Cashman. Mr. Cashman is the President of
    USAntibiotics, the last domestic manufacturer of amoxicillin.
        Mr. Cashman has decades of experience in the pharmaceutical
    industry, leveraging international partnerships and holding
    senior leadership positions at globally recognized
    pharmaceutical brands.
        Based in Tennessee, he oversees the R&D, quality,
    manufacturing, regulatory affairs, and other teams that work to
    provide the American people with a life--with lifesaving
    antibiotics. Please begin your testimony.

               STATEMENT OF PATRICK CASHMAN, PRESIDENT,
                 USANTIBIOTICS, LLC, BRISTOL, TENNESSEE

        Mr. Cashman. Chairman Scott, Ranking Member Gillibrand,
    distinguished members of the Committee, thank you for the
    opportunity to testify. My name is Patrick Cashman, and I serve
    as President of USAntibiotics, headquartered in Bristol,
    Tennessee. We are the last remaining domestic manufacturer of
    amoxicillin, the most prescribed antibiotic in the United
    States.
        My colleagues and I are in the business of the three Fs,
    formulating, finishing, and filling the highest quality
    amoxicillin in the United States. We never import finished form
    drugs, and we have never and will never purchase our active
    pharmaceutical ingredients from China or India. Our facility
    has supplied this critical medicine to American patients for
    more than 40 years.
        Until 2008, every dose of amoxicillin came--in this country
    was produced at our Bristol plant. Then came the years of
    escalating subsidized competition from Indian and Chinese drug
    makers. By 2020, our production lines had gone dark, our assets
    were in bankruptcy, and the United States had become entirely
    dependent on foreign sources for the most prescribed antibiotic
    in America.
        In 2021, private American investors rescued the facility
    because they recognized the national security imperative of
    domestic antibiotic production. Over the past four years, we
    have revived the plant, rehired and expanded our workforce, and
    restored America's ability to manufacture this lifesaving
    medicine.
        Seniors account for a disproportionate share of antibiotic
    prescriptions. Adults over 65 receive antibiotics at rates 50
    percent higher than younger Americans. Hip replacements,
    cardiac procedures, cancer surgeries, all life extending
    interventions that depend on reliable antibiotic access.
    Pneumonia alone causes over 50,000 Americans annually, with
    seniors representing the overwhelming majority of deaths.
        Without antibiotics, routine surgeries become lethal
    gambles, and common infections become death sentences. Yet the
    U.S. remains dangerously exposed. China produces approximately
    45 percent of the active pharmaceutical ingredients used in
    amoxicillin today and supplies the majority of API used by
    Indian manufacturers. The result is most amoxicillin on
    pharmacy shelves represents Chinese chemistry with Indian
    finishing.
        We source exclusively from trade agreement compliant
    European partners, but we control only about five percent of
    the U.S. market, despite having capacity to meet 100 percent of
    the national demand as we once did. If our facility were to
    close permanently, it would take at least five years and
    hundreds of millions of dollars to rebuild domestic capacity.
        That timeline assumes favorable regulatory and economic
    conditions that are far from guaranteed. More realistically,
    rebuilding could take a decade. Here is the paradox that
    brought me before you today. In 2021, our amoxicillin facility
    was rescued from bankruptcy by Jackson Healthcare, one of the
    largest healthcare staffing firms in the country.
        They have invested tens of millions in private capital to
    restore domestic manufacturing capacity. Because of that
    ownership structure, USAntibiotics is now excluded from
    competing as a prime contractor for federal amoxicillin
    contracts structured as small business set asides.
        Since January 2023, we have sold roughly $1 million to the
    Federal Government through the federal supply schedule. During
    that same period, the Department of Health and Human Services
    spent approximately $40 million on foreign origin amoxicillin.
    That contract was structured as a small business set aside,
    thereby excluding America's only domestic manufacturer from
    competing. The irony is devastating.
        The company that saved domestic capacity cannot sell to the
    Government that claims to prioritize supply chain security.
    Meanwhile, small business re-packagers import Chinese and
    Indian drugs and slap American labels on the bottles. To
    revitalize domestic manufacturing of generic antibiotics and to
    protect our healthcare supply chain, I respectfully offer the
    following recommendations.
        First, create procurement pathways that allow domestic
    manufacturers of critical medicines to compete regardless of
    parent company size. Second, define domestic manufacturing to
    exclude simple repackaging of foreign products. Third,
    establish a strategic national stockpile procurement preference
    for genuine domestic manufacturers.
        Fourth, provide long-term purchasing agreements that enable
    capital investment and workforce retention. We are not asking
    for subsidies or handouts. We are asking that when the
    Government buys antibiotics, it prioritizes genuine American
    manufacturing.
        USAntibiotics stands ready to secure America's antibiotic
    supply chain. We have the infrastructure, we have the
    expertise, and the commitment, but we need Congress to align
    procurement policy with national security reality. Thank you
    for attention. I welcome your questions.
        The Chairman. Thank you, Mr. Cashman. Next, I would like to
    introduce our final witness, Dr. Eric Edwards. Dr. Edwards is
    the CEO of Phlow, a domestic drug ingredient manufacturer
    working to secure the supply chain for medications. With
    extensive experience in the pharmaceutical industry, Dr.
    Edwards understands the Nation's acute reliance on foreign
    generic medications.
        As CEO of Phlow, Dr. Edwards has spearheaded Phlow's
    partnerships with federal agencies like the Department of
    Health and Human Services and Department of War to shore up our
    supply chains and address the critical need for drug ingredient
    manufacturing in the United States. You may give begin your
    testimony. Thanks for being here.

                 STATEMENT OF ERIC EDWARDS, MD, PH.D,
                  CEO, PHLOW CORP., RICHMOND, VIRGINIA

        Dr. Edwards. Chairman Scott, Ranking Member Gillibrand, and
    distinguished members of the Committee, thank you for the
    opportunity to testify on a matter that directly impacts the
    health and well-being of millions of Americans, namely our
    Nation's growing dependence on fragile foreign pharmaceutical
    supply chains and resulting drug shortages that continue to
    threaten patient safety, public health, and national security.
    My name is Eric Edwards.
        I am a physician, scientist, and co-founder of Phlow Corp,
    a leading American pharmaceutical company created to advance
    the domestic development and manufacturing of critical
    medicines and help reshore our medicine supply chain. I also
    continue to serve as a volunteer paramedic in Virginia,
    providing care in my local community where, during an
    emergency, the consequences of drug shortages are most acutely
    felt.
        In my own clinical experience, there have been moments when
    critical drugs, such as epinephrine for allergic emergencies,
    were simply unavailable. Substituting or improvising can mean
    the difference between life and death. Our pharmaceutical
    dependence is not just a public health concern, but rather a
    national security threat.
        If conflict disrupt Asian trade routes or trigger export
    bans, the U.S. could lose access to medicine ingredients needed
    for critical care, for oncology, for infectious disease
    treatments. Furthermore, military readiness could be severely
    compromised by disruptions in the supply chain as purposeful
    adulteration or export bans on key drug ingredients could also
    leave our warfighters without vital medicines.
        Over the past few years, Congress has taken significant
    steps to secure the rare earth mineral industrial base,
    including by expanding the national defense stockpile. That
    level of urgency is required for APIs. Just as rare earths
    underpin critical technologies, APIs underpin the entire pharma
    supply chain, and without them, we cannot make a single
    critical medicine.
        Phlow was created to help solve this problem. In
    partnership with the U.S. Government, we have built a state-of-
    the-art advanced manufacturing campus in Virginia designed to
    domestically produce APIs at both small and large scale.
    Through our groundbreaking partnership with the Administration
    for Strategic Preparedness and Response, Phlow is developing
    and supplying a broad catalog of essential APIs.
        For each program, Phlow reconstructs the chemistry, sources
    starting materials domestically or from allied nations, and
    leverages state-of-the-art in development and manufacturing
    approaches such as continuous manufacturing to drive efficient,
    higher yielding production, cost competitiveness, and a
    reduction of our environmental impact, all on U.S. soil.
        To date, we have completed five API development programs,
    filed four drug master files with the FDA, and have a dozen
    additional API programs in various stages of development. We
    are also proud to support the DoD/DOW in strengthening the
    warfighter supply chain. Importantly, we worked with the U.S.
    Government to conceive of and build the Nation's first
    strategic active pharmaceutical ingredient reserve, or SAPIR
    Program, designed to function as a national security buffer for
    medicine supply chains.
        Through SAPIR, we are working to maintain an inventory of
    ingredients for the most essential medicines and precursor
    chemicals identified by the Federal Government, helping to
    protect Americans during future public health emergencies until
    we can make these medicines on U.S. soil once again.
        Despite considerable progress, the onshoring movement
    remains fragile. For this transformation to succeed, certainty,
    focus, and sustainability are essential. No company, no matter
    how mission driven, can sustain long-term domestic production
    without predictable demand and multi-year commitments.
        America must invest in additional advanced manufacturing
    capacity. Several key policy enablers are also required. First,
    to prevent future shortages and secure our supply chain, the
    Government must create a comprehensive long-term plan, as well
    as support a centralized authority to align policy and funding,
    while bringing stability for patients and predictability for
    manufacturers.
        Second, the market will not shift back to the U.S. if
    buyers of essential medicines remain structurally rewarded for
    choosing the lowest immediate cost, even when those savings
    come at the expense of long-term security and patient safety.
        Third, to build enduring resilience, the Administration and
    Congress must resource these programs with multi-year
    contracts, similar to how we support defense and energy
    infrastructure. This allows U.S. manufacturers to plan, to
    invest, and to scale with confidence.
        Fourth, we must level the playing field and ensure that
    domestic manufacturers can compete fairly against foreign
    producers who benefit from heavy tax subsidies, lacks of
    environmental and labor standards, and currency manipulation,
    advantages that artificially suppress prices and distort global
    markets.
        Finally, as previously recommended by this Committee, it is
    critical that Congress prioritizes work to close the Acetris
    loophole. This loophole breaks the connection between made in
    America and the actual location of pharmaceutical ingredient
    manufacturing, enabling continued dependence on foreign API
    supply chains--even in federal purchasing programs intended to
    prioritize domestic production.
        If we fail to act decisively, the next crisis will not be
    hypothetical. The shortages our great nation has been coping
    with have shown us the harm they can cause. However, if we
    succeed in creating a durable, competitive, and secure domestic
    pharmaceutical manufacturing industrial base, we will have
    restored one of the most critical pillars of national
    resilience.
        I thank this Committee for your leadership and shining
    light on this issue. Pharmaceutical supply chain
    vulnerabilities are not inevitable. They are a product of
    choice. Together, we can choose to build a safer, more
    resilient, and more self-reliant future for all Americans.
    Thank you, and I welcome additional questions.
        The Chairman. Thank you. I am comfortable that we are going
    to see big change. I mean, we are going to--you know, we are
    going to see a plan, a supply chain plan, and we are also going
    to get legislation passed that is going to require a country of
    origin for ingredients and for manufacturing, so let me turn it
    over to questions. We will start with Senator Johnson.
        Senator Johnson. Thank you, Mr. Chairman. Again, I just
    want to applaud you for holding these hearings. I think they
    are probably, you know, if not the most important, some of the
    most important hearings we are holding in this Congress. I want
    to thank the witnesses for the solid testimony and solid
    recommendations.
        Now, it is interesting I met with Dr. Patrick Soon-Shiong
    yesterday, a man of incredible accomplishment, but one of the
    things he did, he is the founder of American Pharmaceutical
    Partners. I mentioned this hearing, and he said, well that is
    you know, similar to what happened in 2008 with heparin.
        This is not a new issue. We had contaminated heparin back
    in 2008 coming from China. It was on purpose. It was
    contaminated with a cheaper ingredient that could not be
    detected by normal measurements, and I see one of our witnesses
    shaking their head, but I will ask you about it, but I would
    like to enter into the record.
        I have got a white paper I think written by API--APP. One
    by the American Health and Drug Benefits, and then one from the
    Science Director, European Journal of Pharmaceutical Sciences,
    which we have talked about this.
        Senator Johnson. Mr. Coukell, you were shaking your head.
    What--describe this. Again, this is nothing new. This happened
    in 2008 and here we are in 2025. We are describing the same
    problem which we have not addressed.
        Mr. Coukell. You are exactly correct, Senator. In 2007,
    2008, somebody in China figured out how they could spoof the
    standard test for the active ingredient in heparin. They did so
    for economic reasons.
        We call it economically motivated adulteration, and they
    sold defective drug into the United States. That led to a kind
    of realization about how dependent we are on those foreign
    supply chains. FDA was given new authorities, the inspectional
    framework was rejiggered, but structurally----
        Senator Johnson. We solved the problem, right? We fixed it?
        Mr. Coukell. Structurally we are still headed in the wrong
    direction. Civica actually has heparin with U.S. API. Most of
    the heparin comes originally from the intestinal mucosa of
    pigs. China has a big swine herd and most of the world's
    heparin comes from China.
        Civica has heparin API from the U.S., but it is more
    expensive than the Chinese heparin, so you know, if we are
    going to fix the problem, we have to be willing to source from
    the U.S.
        Senator Johnson. Let's talk because I want to go back to
    the precursor chemicals. A new term I have--the key starting
    materials. Is that the same thing?
        Dr. Edwards. Yes. Precursor chemicals, even going back all
    the way to petrochemicals, are the chemical starting materials
    that feed into the intermediates and ultimately the active
    pharmaceutical ingredients.
        Senator Johnson. How many of those key starting materials,
    precursor chemicals are there? I mean, are we talking about
    hundreds? Are we talking about a few dozen?
        Dr. Edwards. No, thousands and they are--the majority are
    made in China.
        Senator Johnson. That is a refining process?
        Dr. Edwards. Correct----
        Senator Johnson. There are literally thousands. I mean, are
    there a smaller batch of general categories and then specific
    types within those categories?
        Dr. Edwards. I think it is important to note for this
    Committee--and thank you, Senator, for raising this--that there
    are thousands of drugs in our supply chain themselves, and it
    is really critical for us as a nation to prioritize. We must
    focus. We cannot boil the ocean. We must secure our industrial
    base, focusing on those critical essential medicines that are
    prioritized by criticality, vulnerability, and reach.
        I would say there is a smaller subset that we can identify
    linked to a smaller group of active ingredients that are
    necessary to sustain the health of our population, because
    there are some medicines that have no therapeutic alternative,
    and others where we are not as concerned about the supply chain
    failing because alternatives are readily available.
        Senator Johnson. You know, so one of the key precursor
    chemicals is oil itself, correct? Then we have plant based.
    Would that be considered, you know, things that are extracted
    from plants, or from bacteria, or from algae, or from--I mean,
    can you just describe that chain starting from the most basic
    all the way up to API and then to the final drugs?
        Dr. Edwards. Sure. Certain key starting materials are
    derived from the petrochemical industry. Some, ironically, are
    derived from the rare earth mineral industry. There is a
    connection there.
        Some of these starting materials are synthesized to create
    solvents or reagents like toluene or benzene that we require in
    order to manufacture these active ingredients. Still others can
    be built leveraging synthetic biology, to your point, Senator.
        For example, one of our active pharmaceutical ingredients
    where we could not source the key starting material in any
    domestic location, we partnered with a company to leverage a
    synthetic biology approach or fermentation to help actually
    manufacture that starting material, which is one way to do it
    more cost competitively, so across the spectrum, there is a
    variety of chemical sources.
        Some are synthetically derived. Some are biotechnologically
    derived. Regardless, it starts with mapping and knowing where
    they are coming from and focusing and prioritizing in order to
    ensure that we get a start somewhere.
        Senator Johnson. If I could just real quick, Mr. Chairman,
    because I want to go quick to Tom Neely. What are your raw
    materials? Because you said you wanted to create the capability
    to produce API, so your raw materials are still API from where?
        Mr. Neely. Well, the one I am speaking of comes from China.
    Of the 13 product families that we produce, two come from
    China, and everyone else comes from outside the United States,
    but it is Europe mainly.
        Senator Johnson. Again, because you are compounding these
    things or you are turning them into drugs, probably have a
    greater sense of quality control, unless they are doing
    something like they did with the heparin, where they disguised
    the adulteration.
        Mr. Neely. To me, it is all about vertical integration and
    the synergies you get from vertical integration. If you are
    able to build an API plant right next to a manufacturing plant,
    you are going to have some cost savings. That is what it is
    going to take because China is so cheap.
        Senator Johnson. Again, my guess, I know, Mr. Chairman, you
    are all over this, is we require labeling to know exactly where
    not just the API comes from but precursor chemicals.
        I think that will radically change because people will
    demand complete U.S. supply chain for their drugs. They will
    demand it, and they will pay a higher price. By the way, drugs
    are not--particularly generic drugs are not that high a spend
    in terms of our overall medical bill, price tag, so.
        Mr. Neely. Senator Johnson, you are hitting the nail on the
    head because if I am buying an API from Europe, for example,
    but they are getting their precursor from China, it defeats the
    purpose.
        Senator Johnson. Right. Thank you, witnesses. Thank you,
    Mr. Chairman.
        The Chairman. Ranking Member Gillibrand.
        Senator Gillibrand. Thank you, Mr. Chairman. In this series
    of hearings, we have heard about a variety of incentives to
    help support domestic manufacturing, such as targeted grants,
    low interest loans, tax incentives.
        From your company's perspective, what is the most impactful
    economic incentive that would determine how you choose to
    invest and operate in the U.S.? What is the most significant
    factor currently limiting your ability to operate in the U.S.?
    How do current procurement rules shape the market as a race to
    the bottom?
        How would purchasing and procurement signals from the
    Federal Government impact domestic manufacturing capability? We
    can start with Tom and go across.
        Mr. Neely. Thank you, Ranking Member Gillibrand. For me, it
    is all about volume. Keep in mind that one dose at the factory
    that we work in costs a penny and a half. We have to add
    volume, not price. Price is secondary, but it is really to
    maximize the capacity of our plant.
        We have to operate 24/7. Today, we have the capability of
    producing 1.8 billion doses annually, and what right now we are
    doing is one billion, and because the distributors are focused
    just on price, so there needs to be a little bit of a break
    there, and in my mind, and I am not an economist, but in my
    mind, if we had a system very similar to sugar, for example,
    because we cannot produce today all the domestic demand.
        If we had a carve out, a marketplace where you had
    priority, and if we are producing in the United States and we
    fulfill our total demand, that would help us tremendously.
        Senator Gillibrand. Interesting. Allan.
        Mr. Coukell. Thank you, Senator. I mentioned that we have a
    couple of dozen generic drugs in development for our facility.
    Some of those are products that are selling right now at prices
    that frankly in the U.S. you couldn't buy an empty glass vial
    and fill it with sterile water for that price.
        We are developing these products, but we don't expect to
    sell them unless and until there is a drug shortage. As Mr.
    Neely says, if you have a pharmaceutical manufacturing
    facility, you would like to run it full. That makes it
    efficient and amortizes the cost of all of your personnel and
    quality over more units.
        There are a lot of drugs that at today's prices we can make
    competitively in the U.S., but for those very low cost drugs,
    which are also some of the most essential products, we have got
    to create a consistent demand for U.S. products.
        Senator Gillibrand. Mr. Cashman.
        Mr. Cashman. Thank you, Senator Gillibrand. The Federal
    Government, in the case of amoxicillin, has structured all
    recent contracts as small business set asides, and this policy
    exists for good reasons, helping small businesses compete
    against larger corporations.
        When applied to critical medicines with severe supply chain
    vulnerabilities, it produces negative consequences for
    industry, taxpayers, and patients. USAntibiotics would have
    closed permanently without Jackson Healthcare's rescue from
    bankruptcy in 2021. No one else stepped up.
        No private equity firm saw a profitable opportunity. No
    pharmaceutical company wanted to enter a low margin generic
    antibiotics market. Jackson Healthcare viewed this acquisition
    as a national security imperative, not a money making
    proposition. Because now with this patriotic investment, we are
    effectively barred from selling to the Federal Government as a
    prime contractor.
        The Government's rules prevent only American manufacturers
    from competing while allowing foreign competitors, often
    subsidized by their own government, to dominate federal
    procurements.
        Senator Gillibrand. Dr. Edwards.
        Dr. Edwards. Thank you, Ranking Member Gillibrand, for this
    question. First and foremost, you all may have seen today the
    U.S., China, and Economic Security Review Commission finally
    released their annual report calling for exactly what Senator
    Johnson spoke to relating to urging the disclosure of country
    of origin for all APIs and key starting materials.
        I think that is really, really important from a policy
    perspective, but the central obstacle in restoring the
    reliability of our pharmaceutical supply chain is not a lack of
    data here. It is actually a lack of aligned incentives.
        The market will not shift back to the United States if the
    buyers of essential medicines, including hospitals, clinics,
    wholesaler intermediates, GPOs, remain structurally rewarded
    for choosing the lowest immediate cost, even when those savings
    come at the expense of long-term security and patient safety.
        Candidly, information about quality sourcing and supply
    chain fragility is important, it is critical, but it is little
    more than a warning label if purchasers are neither financially
    supported nor contractually required to act on those labels.
        To change outcomes, federal entities should adopt
    procurement policies that value supply chain reliability and
    quality. Strategic investment in domestic sourcing helps save
    lives by strengthening national health security, reducing drug
    shortages, and mitigating the potential future for the wide
    disruptions they can cause.
        Senator Gillibrand. Thank you. Thank you, Mr. Chairman.
        The Chairman. Senator Tuberville.
        Senator Tuberville. Thank you, Mr. Chairman. Gentlemen,
    thanks for being here. Mr. Neely, you mentioned in your
    testimony the need for federal procurement reform. Do you
    currently sell to the VA or the DOD?
        Mr. Neely. We do, but it is a slow process right now. We
    need to see a lot of growth in that area. It is a very
    important channel for our products. It starts, I believe, with
    the 232, and then it migrates into changes in a few policies of
    the VA, and DOD, and Medicare, quite frankly, so that we can
    source the VA and the DOD effectively. At the same time, we
    maximize the capacity of our operation.
        Senator Tuberville. Is this a bid process?
        Mr. Neely. There is two parts to it. There is FSS, which is
    the Federal Supply Schedule, and we have seen growth there.
    Now, we have bid unsuccessfully on several opportunities.
        We have been shut out to date. The last bid we got shut out
    by a firm that is Chinese American, and that is partnered with
    India American. Now, they followed the policy, so I am not
    saying that they didn't. There is gray area in the policy, but
    if it could be clearer and give us the opportunity, and level
    the playing field, we would have won that bid.
        Senator Tuberville. You said that in your opening statement
    that you could quadruple your production. You know, what would
    you need to do that?
        Mr. Neely. We have a facility set up so that all we would
    need is about $18 million of capital expenditure and equipment.
    The plant is available for additional packaging lines and
    granulation processing.
        All we need is $18 million. Now, we have $130 million
    invested in the plant right now, but it comes down to a
    business decision and a return on investment.
        If we could get to that point, we would increase our
    capacity from 180 million doses a month to over 600 million
    doses a month, but right now all we are doing is selling 100
    million doses a month because the distributors all care about
    just cost. That is it.
        Senator Tuberville. Thank you. Mr. Coukell. Is that how you
    pronounce that?
        Mr. Coukell. Senator, Coukell.
        Senator Tuberville. Coukell, okay. Your commitment to
    domestic manufacturing is a no China policy, is that correct?
        Mr. Coukell. Unless the product is not available anywhere
    else.
        Senator Tuberville. Yes. What changes to the market price
    do you think are the most important to make U.S. generic drug
    production financially viable?
        Mr. Coukell. Thank you, Senator. As I mentioned, there are
    some injectable drugs that with today's prices are financially
    viable now. There are drugs that are selling at, you know, at
    $0.30, $0.40, and those aren't financially viable in the U.S.
        We need some system where purchasers select for quality,
    select for domestic manufacturers, and if that costs a little
    bit more, we probably need to make them whole for that cost.
        Senator Tuberville. Thanks, Mr. Chairman.
        The Chairman. Thank you, Senator Tuberville. Mr. Neely
    let's talk about inspections, so do they--does the FDA tell you
    when they are going to inspect you?
        Mr. Neely. No.
        The Chairman. Okay. What if they walked in and found a
    violation, what would happen?
        Mr. Neely. Depending on the severity of that violation, if
    we received a 483, we would be closed, and a 483 is against the
    law. John Schultz, our President, and I would probably be
    indicted.
        The Chairman. The FDA often announces foreign inspection
    weeks in advance. It gives manufacturers plenty of time to
    prepare. Just recently, the FDA found an Indian facility in
    violation citing flying birds, skittering lizards, and roaming
    cats in the right of the manufacturing plant. If that happened
    to you, what would happen?
        Mr. Neely. We would be closed. The difference is right now
    in India, since we receive so much generic product from India,
    that all they do is either they move their operation to another
    plant and swap the different medications produced, or they
    threaten the United States by saying if you close this plant,
    you are going to incur a shortage of product. That is the
    national security issue that we face today.
        The Chairman. Have you ever heard of the FDA waiving a
    violation? Would they waive a violation for you if it was going
    to cause a shortage?
        Mr. Neely. No, sir.
        The Chairman. Have you heard them ever waive a violation
    for a foreign manufacturer?
        Mr. Neely. Anecdotally, I have heard it in the press.
        The Chairman. Mr. Coukell, how does Civica's model serve to
    limit shortages?
        Mr. Coukell. Thank you, Senator. We do a number of things
    that are different from the traditional generic supply chain.
    It starts with long-term commitments. The hospitals that
    partner with Civica commit to multi-year fixed-volume
    contracts. We in turn provide that commitment to our suppliers.
    That creates a level of stability that doesn't usually exist in
    the generic drug business.
        The Chairman. You have to commit to price to that.
        Mr. Coukell. We commit to price as well.
        The Chairman. Yes----
        Mr. Coukell. That is right. That lets companies know that
    they are going to have market share, lets them invest in
    quality. That gives them a commitment to that product. Another
    thing that we do that is unique is we target a six-month buffer
    inventory of every drug.
        The reason we do that is if somebody drops out of the
    market, then we can draw down on that inventory while somebody
    is making new batches, because it takes a while for companies
    to ramp up production, even if they have FDA approval to make
    that drug. We also do a really rigorous quality oversight
    process of our suppliers.
        We are going out actually visiting their facilities,
    walking the floors, doing an audit, looking at their records,
    and then we do that on an ongoing basis to ensure that we are
    choosing suppliers that are less likely to have a failure to
    supply in the future.
        The Chairman. Thank you. Mr. Cashman, what would happen to
    our Nation's supply of antibiotics if your plant were closed?
        Mr. Cashman. Chairman Scott, we would be completely
    dependent on Indian and China. All of the API comes from either
    China or India, with the exception of one producer in--well,
    several producers in Europe. With our plant closing, there
    would be no finished dosage forms whatsoever produced in the
    United States.
        The Chairman. How many months or years of supply of
    amoxicillin do we have in the country? Do you have any idea?
        Mr. Cashman. No, sir. I don't know that. What I can comment
    on is we keep a year's worth of API supply at our facility, and
    we have about a year's worth of finished goods products in our
    facility as well.
        The Chairman. Does the FDA inspect your facility?
        Mr. Cashman. Yes, it does.
        The Chairman. Okay. If you had flying birds and lizards,
    what would happen?
        Mr. Cashman. We would be shut down.
        The Chairman. Would they care if there was a shortage?
        Mr. Cashman. Excuse me?
        The Chairman. Would do you think they would care if there
    was a shortage--?
        Mr. Cashman. Chairman Scott, no, I don't think they would
    care.
        The Chairman. Dr. Edwards, why is it so important that we
    make active drug ingredients or APIs right here in the United
    States?
        Dr. Edwards. The active pharmaceutical ingredients are the
    components of the drug that give that medicine the therapeutic
    effect. Some might say it is the most critical component, given
    that definition. For us, we have lost this industrial base over
    four to five decades now.
        It has gotten to the point where, in many cases abroad, we
    rely on a single source outside the United States to produce
    the medicines that our seniors and Americans rely on every
    single day to treat a variety of acute and chronic issues.
        For us, this truly is a matter of national public health
    security, but it is also a matter of national security as our
    war fighters on the battlefield have to deal with the fact that
    they may be having to utilize a drug that is made with
    ingredients coming from a potential foreign adversary. It is
    simply unacceptable.
        The Chairman. Mr. Neely, is it too much to ask that plants
    don't have flying birds and skittering lizards?
        Mr. Neely. No, sir, it is not, and I think it is important
    to state that quality is not cheap. For every $1.00 of expense
    that we spend, $0.38 is spent on quality. What I am seeing is--
    --
        The Chairman. Say that again.
        Mr. Neely. Every $1.00 of expense that is spent in our
    plant, $0.38 is based on quality--is spent on quality. What I
    am seeing is our foreign competition is cutting their cost so
    that they can come up with the lowest price possible to sell to
    the distributors to get the contracts or get the formulary.
        Senator Gillibrand. Related. Drug manufacturers around the
    globe are frequently the target of cyber-attacks. These attacks
    are perpetrated for a wide range of reasons by competitors,
    adversarial nations, even non-state actors, and can cause
    disruptions in the supply chain and impact the availability of
    key drugs and their components.
        Which link of the supply chain is most vulnerable to cyber-
    attacks, and in what ways does cyber resilience protect
    domestic drug production? What types of measures does your
    company take to promote cybersecurity?
        How much does this cost out of your operating budget? For
    Mr. Coukell directly, how can new and existing domestic drug
    manufacturers engage with CISA, the FBI, DHS, and other federal
    authorities for robust cybersecurity protections? You can start
    Mr. Coukell.
        Mr. Coukell. Thank you, Senator. I think it is an important
    risk to flag. We often think about what if a country were to
    cutoff our supply, but you can shut down a pharmaceutical plant
    the way you can shut down any business with a cyber-attack or a
    cyber ransom attack, and if you Google, India cyber ransom
    attack pharma, you will find a long list of companies there
    that have been targeted.
        Which is not to say that we are not also at risk in the
    U.S. Of course, those sorts of attacks know no borders, but it
    is reasonable to think that a company that is cutting corners
    on its manufacturing quality is probably not also investing in
    cybersecurity the way it should.
        There are a number of federal programs to support U.S.
    manufacturers, but there is no doubt, to ensure our supply, we
    need to be ensuring that our domestic manufacturers and our
    manufacturing partners have top notch cybersecurity.
        Dr. Edwards. Yes. Thank you, Ranking Member Gillibrand.
    This is a critical, critical aspect of the pharmaceutical
    supply chain and resiliency across them, and I think every
    single node of the supply chain is at risk, not one more than
    another.
        In combination and in partnership with the Administration
    for Strategic Preparedness and Response, Phlow's government
    program incorporated cybersecurity into the infrastructure
    build from day one. We have partnered with the FBI, Homeland
    Security, and CISA in order to test our systems and to come on
    top of this infrastructure build because we know that fragility
    and that vulnerability is real.
        In 2017, for example, Merck experienced a ransomware attack
    that ended up having an impact of over $1 billion in potential
    damages. This is not something that is theoretical. It has
    happened in the past, and in the age of where we are today and
    the vulnerabilities that we are experiencing from a
    geopolitical conflict potential, this is only going to become
    even more of a threat.
        For us, it is about not building an infrastructure and then
    trying to decide on, let's layer cybersecurity on top of it. It
    is about integrating that cybersecurity posture from day one
    and ensuring that anyone who works alongside the Government
    supply chain to secure our critical industrial base is making
    sure that we are prepared for the future as a matter of
    national public health security.
        Mr. Neely. I do think that the new regulation around DSCSA
    and serialization has improved so that we track every batch,
    every case, every bottle down to the consumer level. If there
    is ever a recall, we can identify where it is.
        Senator Gillibrand. Also related, Mr. Neely, you talked
    about that there needed to be some support. You weren't
    specific about what the support was, but I want to challenge
    some of the witnesses about what supports would actually
    matter.
        Dr. Edwards, you mentioned your groundbreaking partnership
    with the Administration for Strategic Preparedness and
    Response, known as ASPR, in your testimony. Mr. Coukell, you
    mentioned in your testimony that your facility in Petersburg,
    Virginia is funded with U.S. Government support with ASPR
    through the Biomedical Advanced Research and Development
    Authority, known as BARDA. Can you both, Dr. Edwards and Mr.
    Coukell, speak about your experiences, what is working, what is
    not working.
        Mr. Neely and Mr. Cashman, if you want to add, what types
    of support you would want. Because it is relevant for us
    because we are definitely going to do the transparency stuff.
    That is like very much common ground--something the chairman
    and I want to work on immediately, but more is needed, and we
    need more color on the issue. Go ahead, Dr. Edwards.
        Dr. Edwards. Thank you for that question, Ranking Member
    Gillibrand. You know, ASPR has undertaken a critical mission
    since we first got started with them over five years ago
    through now multiple Administrations, and a pandemic, and on
    the other side of that pandemic, to try to address
    pharmaceutical supply chain sovereignty.
        However, they need help. The GAO has repeatedly recommended
    that HHS implements a formal department wide mechanism to
    coordinate drug shortage activities. This would ensure that
    FDA, CMS, DOD, DOW, and ASPR, and other agencies work together
    rather than in silos, which is really what is happening today.
    There need to be clearly defined roles, goals, and outcomes
    among the agencies.
        Finally, ASPR and any other agency that is tasked with this
    extremely important mission should ensure that they receive
    long-term sustainable funding as well, to support companies
    like ourselves, but also others who are working to bring back
    this industrial base, as this is not something that Phlow can
    do alone.
        You need multiple Phlow's. You need multiple companies
    working together. Really helping them raise up their posture
    and have the support they need going back to that centralized
    authority would be a critical step in the right direction,
    specifically.
        Mr. Coukell. Thank you, Senator. The funding that we
    received from ASPR to invest in our plant was very important.
    Taking into account the capital costs and the startup costs,
    nearly a third of that funding came from ASPR. That was during
    the pandemic when there were resources to make those kinds of
    investments.
        In recent years, the Office of Industrial Base Management
    and Supply Chain within ASPR, which is the office that has the
    expertise and the mandate to make these sort of targeted
    investments, has had very low, very flat budget, and hasn't had
    the ability to make additional investments, so they can do
    more, but we have to support them to do more.
        Mr. Neely. Ranking member, mine is pretty simple. I would
    think that this Committee would want a plant that is just
    fairly new to be at full capacity. To be at full capacity, an
    $18 million grant to build out three packaging lines and
    another granulating piece of equipment could quadruple the
    throughput through our operation.
        Mr. Cashman. I would second that, Ranking Member. I would
    also add that we need a very comprehensive approach. Strategic
    antibiotic manufacturing fund with targeted grants and low
    interest loans would be very, very helpful, similar to the
    CHIPS Act.
        Second, tax incentives for domestic API production,
    including immediate expensing of new equipment and enhanced R&D
    deductions. Third, supply chain visibility, which you
    mentioned, which I think is so important for patients and
    doctors and hospitals to know where their medications come
    from.
        Fourth, recognition that essential medicines are a national
    security assets, making manufacturers eligible for industrial
    based support available to other critical sectors. You know,
    there is a lot of different tools we could employ here, but we
    need a sustained commitment. I think that is a message we hear
    from every one of us up here, and it has to be a long-term
    sustained commitment. Thank you.
        The Chairman. I think Mr. Coukell, didn't you say about--
    you were talking about the hospitals ought to be compensated
    for quality, didn't you say in your testimony? Right now I
    think under Medicare Advantage they are. I think--so but it has
    nothing to do with medicines, right?
        Mr. Coukell. Thank you, Senator. Let me clarify. What I
    really meant is right now the thing that drives generic drug
    purchasing is price.
        The Chairman. Only price?
        Mr. Coukell. To the exclusion of everything else. What we
    need I think is a system as we have at Civica where when we are
    looking at a supplier, we are looking at what supplier is less
    likely to fail us in the future? What are their quality
    systems? What is their quality maturity? We need to drive
    purchasing to factor that in.
        Which is not to say we become indifferent to price, but we
    ought to weigh some other things that are pretty important
    along with price when we choose what drug suppliers we are
    going to use.
        The Chairman. You know, we have to look at this, but I bet
    CMS already ranks people enough on quality that they have the
    ability to put information out whether hospitals and probably
    Medicare Advantage for sure, or all the health plans, are doing
    this. They probably--and I bet they already have that ability
    without even any new legislation, if it was important to them.
        I will find out. What would happen--what would happen for
    each of you if you got 100 percent of the volume from the
    Department of War and the VA of the things you do today? What
    would happen to your business?
        Mr. Neely. Quite frankly, Chairman, I would make money for
    the first time in 10 years.
        Mr. Coukell. I think every company would welcome that, and
    for the company that got that business, it would be
    tremendously significant. I do want to make the point that DoD
    and VA are both one or two percent of the total market.
        Changing how they procure drugs, very meaningful to
    whatever company gets that business, but it is not enough to
    shift the whole market and bring back. For that we are going to
    have to get into Medicare and the commercial market.
        Mr. Cashman. In our case at USAntibiotics it would be
    transformational. It would be so important for us to have that
    volume. It would give us a solid base of manufacturing volume
    to grow on and grow our commercial business on as well.
        Dr. Edwards. In our case, it would help us baseload our
    facilities, support the 1.5 million active duty soldiers,
    secure a supply chain of 25 to 50 drugs that these soldiers
    depend on a daily basis, and enable us to send a market signal
    that is real. That will help spur additional private investment
    and help us grow and sustain our business when that type of
    demand signal starts to reveal itself because, where do we
    start?
        We start on the federal supply schedule and what the
    Government actually has authority to do. Ultimately, it can
    then move into CMS and some of the other challenging
    environments. Starting somewhere is better than nowhere and we
    need to get started.
        The Chairman. What would happen to--let's take it from the
    patient standpoint. If that happened, what would be the benefit
    to a soldier or sailor, or to a--somebody in a VA facility?
    What would happen to their quality of care?
        Dr. Edwards. Chairman Scott, we know that not only patients
    but also physicians, they don't have a clue where their
    medicines are made or what they are using, so the first thing
    that we would emphasize in this is that we would restore trust.
        We would begin making sure that we are able to restore
    trust in the quality of these medicines. We would know where
    they are coming from. It is really important that we not only
    emphasize location, but we also emphasize quality manufacturing
    as well. They both go hand in hand.
        I think what would happen is we would experience the health
    and well-being, and more important, the national resiliency, we
    would experience a change in that, that is significant. It is
    significant for the well-being and the quality of care that is
    being provided.
        Based off of some of the testing and the reports coming out
    of the Pentagon and Kaiser and others, we would hopefully
    experience less adverse events or subpotent medications that
    have entered our supply chain when we know where they are
    coming from.
        Mr. Neely. If I could just expand on that, I did an
    informal poll of my family. We take 23 generic drugs. Now, they
    are all Medicare, okay. Of the 23, 20 are produced in India,
    two were in China, one in Canada. Not one is made in the United
    States.
        The Chairman. You probably--and you don't even know where
    the ingredients are from.
        Mr. Neely. The only way I was able to find out is because I
    am in the industry. I research the NDCs, but for example, take
    a cholesterol medication. It is repackaged. It is owned by a
    distributor.
        You would think, okay, it is a United States product. You
    do the NDC, it comes from a plant in India. It is labeled in
    India. India ships it to the United States. They send the bill
    to Ireland, and but the owner of that business is here in the
    United States, but they never touched that medicine.
        The Chairman. Did you want to add something?
        Mr. Coukell. Well, I will just make one additional point,
    Senator, which is I think there is an important difference
    between a product defect on a given day, which is important and
    that is a risk to a patient, but it is different from a company
    that has inadequate quality systems.
        At some point in the future, the FDA is going to come along
    and find they are pouring acid on their records or cutting
    corners in some other way, and they will have a failure to
    supply.
        Part of what we want to do is shift the market to companies
    that are less likely to cause a drug shortage and have a
    failure to supply, which doesn't necessarily mean that on a
    given day their product is defective.
        The Chairman. We had testimony from Dr. Ball from the
    University of Indiana that you have an over 50 percent
    increased chance of hospitalization and death if you take a
    generic drug from India or China.
        Would any of you like to talk about the--how the Department
    of Commerce should use their Section 232 investigations to
    support domestic manufacturers? Anybody want to comment on
    that?
        Mr. Neely. Well, I will because I think it jump starts the
    whole reformation of what we need to do. It provides some
    ability to go in and fix the procurement problem, number one.
        You know, we have a long time, it seems to me, to reform
    the entire industry. We have got to get started and we have got
    to get started as fast as possible. That 232 is the first part
    of making sure that we can respond to other problems that we
    have in this industry faster.
        The Chairman. Mr. Cashman, why don't you have contracts
    with the Department of War, or with the VA--you don't have
    contracts with the Department of War or VA, right?
        Mr. Cashman. No, Chairman Scott, we do not. The reason for
    that is we are not considered a small business.
        Many of the amoxicillin contracts--all of the amoxicillin
    contracts in recent years, have been small business set asides.
    Because Jackson Healthcare, a fine Georgia corporation, made an
    investment in our facility, and they spent millions of dollars
    saving our facility, our facility is not considered a small
    business, and therefore we can't compete for those small
    businesses set asides.
        The Chairman. Are any of you familiar with any independent
    quality testing for imported medicines from China and India? Is
    that happening?
        Mr. Coukell. Senator, I am not aware of any.
        The Chairman. Anybody else?
        Mr. Cashman. The Department of Defense has a quality
    investigation or testing program, which is something we think
    all imported medications should have tested before they are
    sold in the United States.
        Dr. Edwards. I am familiar with a couple of pilot programs
    that are looking to test.
        The Chairman. It doesn't surprise you that every drug that
    comes in is not tested?
        Dr. Edwards. Yes, I think----
        The Chairman. Think about--USDA, you can't buy meat unless
    you have a USDA inspector at that plant, right?
        Dr. Edwards. We operate off of an honor system, Chairman,
    Scott.
        The Chairman. For something you put in your body.
        Dr. Edwards. Correct.
        The Chairman. We don't do it for cattle.
        Dr. Edwards. Or groceries, or clothing, or anything else.
        Mr. Neely. Yet at our plant--excuse me, but at our plant,
    we have an end-to-end testing process and program.
        We test every raw material that comes into our plant. We do
    efficacy testing. We do dis-solvency testing. We do breakage
    testing throughout the entire process, from the beginning of
    the raw material to when it is packaged.
        The Chairman. All right. Do you have any other questions?
    All right. Does anybody else want to add anything that we
    didn't ask? Anything we should have asked that we didn't ask?
        Okay. I think I want to thank everyone for being here today
    and participating. I look forward to continuing to work with
    members on this Committee.
        I want to thank--especially thank the ranking member for
    her efforts in this and the fact that we have been able to do
    this on a bipartisan manner.
        If any Senators have additional questions for the witnesses
    or statements to be added, the hearing record will be open
    until next Wednesday at 5:00 p.m. Thanks, everybody.
        [Whereupon, at 04:57 p.m., the hearing was adjourned.]
    =======================================================================

                                    APPENDIX

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

                          Prepared Witness Statements

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

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                          Prepared Witness Statements

                                 Allan Coukell

    Summary of Testimony:

          Civica is a non-profit generic drug company created by
    US health systems and philanthropies to prevent and mitigate
    drug shortages.
          Civica currently delivers more than 50 injectable
    medications,\1\ each chosen by US hospitals because they are at
    risk of shortage, with more than 240 million vials of medicine
    delivered to date.
    ---------------------------------------------------------------------------
        \1\ In nearly 80 distinct presentations.
    ---------------------------------------------------------------------------
          Civica prioritizes domestic manufacturing, both in
    sourcing from contract suppliers and in our own U.S. sterile
    injectable fill-finish manufacturing facility located in
    Petersburg, Virginia. We also conduct direct quality oversight
    of our suppliers.
          Civica has a "no China" policy in our supply chain, both
    for finished drugs and for active pharmaceutical ingredient,
    unless there is no other supply available.
          Despite this commitment to domestic production, the
    financial model for producing generic drugs is challenging with
    many generic drugs selling below the marginal cost of domestic
    production.
          There isn't a single "silver bullet" policy that will
    restore domestic manufacturing, but a key component of any
    successful effort will be ensuring market prices that allow for
    domestic production. Targeted investments can also create new
    manufacturing capacity at an affordable cost.
          Onshoring active ingredient production cannot succeed
    unless a manufacturer has FDA approval to turn that API into a
    finished drug product and a viable domestic market.

    Full Testimony:

        Chairman Scott, Ranking Member Gillibrand, and
    Distinguished Members of the Committee, thank you for the
    opportunity to speak with you today on the issue of "Made in
    America" pharmaceuticals.
        My name is Allan Coukell. I am a pharmacist by training,
    and I lead public policy for Civica, Inc., also known as Civica
    Rx, which is a non-profit generic drug company created
    specifically to mitigate and prevent drug shortages by ensuring
    a reliable supply of quality essential medicines for U.S.
    patients.
        Civica currently provides more than 50 drugs to 60 health
    systems, accounting for 1400 hospitals around the country. Over
    the past seven years, we have delivered more than 240 million
    vials, serving about 90 million American patients. To provide
    these medications, we work with a range of manufacturing
    partners, giving preference to U.S. sourcing whenever possible.
    Civica has a rigorous quality oversight process for its
    suppliers involving in-person facility audits and ongoing
    quality reviews.
        We also have our own newly built pharmaceutical
    manufacturing facility located in Petersburg, Virginia, funded
    partly with U.S. government support from ASPR/BARDA. It is a
    state-of-the-art sterile injectable finished dosage form
    manufacturing facility with the ability to make 90 million
    vials and 50 million pre.lled syringes per year, as well as to
    fill and assemble autoinjector pens used for insulin and other
    products. We have dozens of generic drug products in
    development for this facility.
        Civica has a "no China" policy in our supply chain, both
    for finished drugs and for active pharmaceutical ingredients
    (API), unless there is no other supply available.
        The drugs that Civica supplies are chosen by pharmacists
    and physicians from US health systems because they are at risk
    of being in shortage. These are the products that are the
    bedrock of emergency and in-patient health care- products like
    antibiotics, anesthetics, blood thinners, sedatives, and pain
    medications. These tend to be long-established, low-cost drugs.
    Most of them are on one or more essential drugs lists.
        As this Committee knows, generic medications account for 90
    percent of prescriptions in this country, but less than 15
    percent of drug spending.\2\ While branded drugs are mostly
    produced domestically, generic drugs are more likely to be
    produced offshore - increasingly in low-cost manufacturing
    environments such as China and India. Our dependence on
    foreign-made active ingredients is even greater than our
    dependence on foreign finished drug products - a point I will
    return to.
    ---------------------------------------------------------------------------
        \2\ Association for Accessible Medicines. The U.S. Generic &
    Biosimilar Medicines Savings Report (Sept. 2024), available at https://
    accessiblemeds.org/resources/blog/2024-savings-report./
    ---------------------------------------------------------------------------
        It is precisely because generic drugs are so inexpensive -
    and because U.S. systems for drug procurement are so efficient
    at pushing prices down - that manufacturing has been steadily
    exiting the US for decades. Make no mistake: low prices are the
    principal barrier to onshoring generic drug manufacturing.
        Let me provide a real-world example. There is a widely
    prescribed antinausea medication that typically sells for under
    $0.40 per vial. That is an astonishingly low price for a
    medicine that can only be produced in an expensive
    manufacturing facility after a complex process of scientific
    development, quality oversight, time-consuming testing and
    analytics, facility inspection and regulatory approval. Even
    the packaging is subject to strict regulatory requirements.
    While each of these steps is necessary to ensure patient
    safety, it would be difficult or impossible at that price for a
    US manufacturer to compete. Numerous injectable drugs sell for
    less than $1.

    Creating a sustainable market

        Generic drugs are the foundation of inpatient medical care.
    They also cost less in the United States than they do in other
    OECD countries.\3\ In discussing how we create a sustainable
    market for domestic production, we must be comfortable that it
    is worth paying slightly more for a reliable and safe supply of
    quality domestic medication.
    ---------------------------------------------------------------------------
        \3\ For every dollar the other countries on average pay for generic
    drugs, in the U.S., consumers pay 67 cents. Andrew W. Mulcahy, et al.
    "International Prescription Drug Price Comparisons: Current Empirical
    Estimates and Comparisons with Previous Studies," July 1, 2022, https:/
    /aspe.hhs.gov/reports/international-prescription-drug-price-comparisons
    ---------------------------------------------------------------------------
        The good news is that - at least for the sterile injectable
    drugs that I am focused on today - it should be possible to
    substantially increase domestic supply at a manageable cost and
    in a reasonable timeframe. Indeed, while I focused a moment ago
    on products selling for less than a dollar, there are others at
    higher prices that don't need support. Therefore, a policy that
    puts a floor price on domestic drugs would achieve the desired
    goal.
        One possible approach, developed as a bipartisan discussion
    draft by the Senate Finance Committee, would be to provide
    extra payments to hospitals that take into account quality and
    supply resiliency, along with domestic sourcing, when
    purchasing generic drugs. Since generic drug spending accounts
    for only one to two percent of total hospital expenditures,
    such a program would have a negligible impact on overall health
    spending but could help to incentivize hospitals to purchase
    from domestic and/or more resilient suppliers.
        The Senate Finance discussion draft was framed in response
    to drug shortages, but the general approach can also be applied
    to onshoring. Stakeholders generally recognize that that
    framework, in its 2024 form, needs to be streamlined.
    Nevertheless, this approach is directionally correct in that it
    offsets the incremental costs associated with choosing
    domestic, higher quality suppliers and holding a buffer
    inventory to mitigate supply disruptions.

    Targeted investments as an insurance policy

        In combination with long-term market .xes, Congress should
    invest in an insurance policy so that domestic manufacturers
    can develop low-cost products now so the drugs can be ready
    when they are needed. It takes two to three years to develop a
    generic drug for an existing manufacturing facility, but
    companies cannot invest in products if they won't recover their
    costs. We should support companies to develop these products
    now and obtain FDA approval, rather than waiting for the day
    when the foreign supply fails. The FY26 Senate Labor HHS
    Appropriations bill has report language instructing the
    Administration for Strategic Preparedness and Response (ASPR)
    Industrial Base and Supply Chain Management office (IBMSC) to
    fund generic drug development. Congress should direct funding
    to ASPR to implement the policy.

    Creating new manufacturing facilities

        The above policies would support manufacturing of domestic
    drugs in existing facilities. The cost to onshore a drug into
    an existing facility is two orders of magnitude less than the
    cost to create a new manufacturing facility where none
    currently exists. However, in some cases entirely new
    manufacturing facilities will be required. New facilities are
    capital intensive - typically in the hundreds of millions of
    dollars - and the facility startup costs can be as high, or
    higher, than the capital costs. Because of the complex
    development and approval process mentioned previously, more
    than four years may elapse from the start of construction to
    the first commercial sales.
        No single facility can produce every drug. For example, in
    the injectable drug space, liquid-fill vials require different
    equipment than powder-fill vials. Some drugs, such as
    penicillin-type antibiotics, require their own dedicated
    facilities. Many cancer drugs also must be separated from
    facilities where other products are produced.
        At current market prices, if new facilities need to be
    built to enable domestic production, it will require government
    support for capital investment - combined with some assurance
    of sustained demand in the face of low-cost foreign production.
        Active pharmaceuticals ingredient (API) facilities are
    different from the facilities that produce finished dosage
    forms, such as vials and tablets. They require different
    equipment and expertise. While policymakers interested in
    onshoring drug production often focus on API (because that is
    where our dependence on China is greatest), it does no good to
    produce domestic API unless there is a U.S. facility with an
    FDA-approved finished dosage form.

    Removing harmful market distortions

        Generic drugs are beyond doubt the single most effective
    cost-saving strategy ever deployed in American healthcare.\4\
    They reduce prices as much as 95 percent below the pre-
    competition prices of branded drug products.\5\ And yet
    government policies distort the market by introducing mandatory
    rebates that disincentivize production and prevent prices from
    rising the way they sometimes need to in a properly functioning
    market. Congress should remove the market distortions from
    mandatory rebates on generic drugs, allowing prices to rise to
    sustainable levels.
    ---------------------------------------------------------------------------
        \4\ The Association of Accessible Medicines, the generic industry
    trade association, calculates savings of $445 billion from generics and
    biosimilars in 2023 and $3 trillion over the prior decade alone.
        \5\ Ryan Conrad & Randall Lutter, Generic Competition and Drug
    Prices: New Evidence Linking Greater Generic Competition and Lower
    Generic Drug Prices (2019), available at https://www.fda.gov/media/
    133509/download?attachment.

    ---------------------------------------------------------------------------
    Regulatory reforms

        Finally, I would like to address the potential for
    regulatory reform to support domestic manufacturing. Building
    and qualifying a new pharmaceutical manufacturing facility is a
    multi-year process. Even developing a new drug for an existing
    facility is typically a two- to three-year undertaking, The
    first federal oversight is typically an FDA inspection that
    occurs in the months after a drug application is filed with the
    agency. There are opportunities to de-risk this by allowing FDA
    inspection to occur earlier, and the agency has recently
    announced a program to enable such earlier engagement.\6\
    ---------------------------------------------------------------------------
        \6\ Food and Drug Administration. FDA Announces New FDA PreCheck
    Program to Boost U.S. Drug Manufacturing. 07 August 2025. https://
    www.fda.gov/news-events/press-announcements/fda-announces-new-fda-
    precheck-program-boost-us-drug-manufacturing
    ---------------------------------------------------------------------------
        However, most or all generic drug facilities are multi-
    product facilities, meaning they are not breaking even until
    they have multiple different FDA-approved products. The
    financial viability for a new generic drug facility typically
    depends not only on the first product approved, but on having a
    portfolio of approved drugs, each with a typical FDA review
    time of one year. By shortening the review time for drugs
    manufactured on already-approved lines and allowing
    manufacturers to submit drug stability data on a rolling basis,
    this cycle could be reduced by as much as nine months. This
    change would have a major impact for new domestic facilities.
    Conclusion

        Thank you again for your attention to this important topic
    and for the opportunity to be with you today. I welcome your
    questions.

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                          Prepared Witness Statements

                                   Tom Neely

        Chairman Scott, Ranking Member Gillibrand, and Members of
    the Committee:
        Thank you for the opportunity to testify on an issue
    central to our nation's health security: strengthening domestic
    manufacturing to produce safe, affordable, and dependable
    medicines.
        My name is Tom Neely, and I am the chairman of Oxford
    Pharmaceuticals, a U.S. manufacturer of generic oral solid-dose
    medicines based in Birmingham, Alabama. Our 150,000-square-foot
    facility-built from the ground up with a total investment
    exceeding $130 million during an almost 10-year development
    period-was approved by the FDA in 2019 and is among the most
    modern generic pharmaceutical production plants in the country.
        Oxford produces 13 product families of generic medicines,
    10 of which have no other U.S.-"owned" and operated
    manufacturer, and three of which are classified as critical
    medicines. Our portfolio is focused on chronic disease
    management, spanning cardiovascular and blood pressure
    treatments, mental health, and pain management therapeutics.
    From amlodipine, the fifth-most prescribed drug in America, to
    trazodone, the 11th-most prescribed therapy, we manufacture
    high-quality generics on which millions of Americans rely
    daily.
        We founded Oxford on the belief that these medicines can be
    made in America to the highest standards of quality and
    accountability. Our team takes pride in the enormous value we
    deliver to consumers. Unlike many generic manufacturers-in-
    name-only, including those with significant federal procurement
    awards, we don't import finished tablets from India and China
    only to repackage or relabel them. We procure raw materials,
    weigh, blend, compress, coat, package, and perform quality
    tests on everything within the four walls of our facility. We
    perform the full transformation of active pharmaceutical
    ingredient into finished dosage form that defines end-to-end
    American manufacturing.
        At Oxford, our purpose is simple: ensuring that Americans
    can trust and afford the medicines they take and proving that
    we can still make them here at home.

    I. A Fragile System Subject to Overseas Dependence

        Two decades of offshoring and price compression from
    imports have gutted American generic pharmaceutical
    manufacturing. Our domestic peers are a dying breed, leaving
    Oxford as one of the last remaining U.S. manufacturers of
    generic pharmaceuticals.
        Understanding the pharmaceutical supply chain reveals how
    deeply foreign governments have penetrated every stage of
    American medicine production. The process begins with key
    starting materials, the basic chemical building blocks. These
    materials are synthesized into active pharmaceutical
    ingredients, the compounds that provide therapeutic effects.
    Manufacturers then transform APIs into finished dosage forms
    through weighing, blending, compressing, and coating.
    Wholesalers distribute these finished products to pharmacies,
    hospitals, and clinics. China dominates the first two stages
    while India controls much of the third stage but is itself
    heavily reliant on China for its precursor chemicals. American
    manufacturers like Oxford operate in stage three but depend
    heavily on foreign-origin APIs. This nested dependence means a
    single disruption or chokepoint in China or India cascades
    through the entire system, potentially leaving American
    patients without essential medicines.
        More than 80 percent of the active pharmaceutical
    ingredients (API) used in U.S. prescription drugs have no
    domestic source.1 With China being the sole source for
    approximately 45 percent of all key starting materials on the
    global market, Beijing casts a long and dangerous shadow over
    the pharmaceutical supply chain.2 Meanwhile, India produces
    about half of the generic finished drugs used in the United
    States but remains heavily dependent on China for its own
    active ingredients and starting materials.3
        America's foreign dependence is both deliberate and
    engineered. As a manufacturer that has fought to sustain robust
    domestic operations, we face competitors backed by entire
    foreign countries and their industrial policies. Building a
    pharmaceutical plant in India costs a fraction of what it costs
    in the U.S. For a low-margin, high-volume business like
    generics, these advantages are already almost insurmountable.
    In addition, India has dedicated roughly $4.5 billion in
    production-linked subsidies for pharmaceutical exports through
    its national incentive program. It also provides discounted
    utilities and financing to its companies as well as minimal
    regulatory overview and barriers.
        China offers its own tax rebates, cheap industrial power,
    and soft loans. In China's "12th Five-Year Plan," the central
    government allocated CNY 10,000 million (about $1.65 billion)
    for the Key Drug Innovation Program. Local governments added
    another CNY 30,000 million (about $4.96 billion).4 These state-
    backed advantages make it nearly impossible for U.S. producers
    to compete on price alone.
        Every tablet that leaves our factory is undercut by foreign
    government-subsidized competitors who treat medicine as a
    strategic export. The current U.S. trade model has distorted
    and manipulated the market, directly harming U.S. manufacturers
    like us and ultimately the well-being of American citizens.
        U.S. policy opened our market to unlimited, unfettered drug
    imports from anywhere, letting the chips fall where they may.
    Other countries then ruthlessly dominated and captured our
    industry.
        The consequences are visible across our country. The number
    of U.S. plants producing generic drugs has fallen by more than
    40 percent since 2013.5 Facilities in states such as Louisiana,
    New Jersey, and California have closed or gone idle. In
    Shreveport, Dr. Reddy's Laboratories abandoned its 1980s-build
    facility, which now stands empty after years of losses.6 That
    facility once supplied household medicines used by tens of
    millions of Americans weekly but today is little more than a
    monument to our policy failures. Its closure shows what happens
    when we treat medicine as an ordinary consumable. We cannot
    watch our industry get offshored under the false belief that
    America has simply been outcompeted.
        For Oxford and other U.S. manufacturers, the message is
    clear: we are on borrowed time. The current policy threatens
    our livelihood and existence.

    II. Foreign Safety Failures and Double Standards

        Unrestricted generic pharmaceutical trade has failed
    American consumers and patients because of foreign states'
    determination to own the global means of production and their
    willingness to subvert safety standards in a race to the
    bottom. Foreign governments have succeeded in creating an
    enormous U.S. national security weakness that can be weaponized
    or leveraged at will.
        Our own government has created a widening divide between
    what it demands of American manufacturers and what it tolerates
    from foreign suppliers. No country should accept a two-tiered
    system of drug safety with one standard for domestic producers
    and another more lax regime for importers, but that's the
    reality U.S. manufacturers and patients face today.
        U.S. plants operate under continuous FDA inspection, strict
    documentation, and full compliance with Good Manufacturing
    Practices. These are sound safety measures that we're proud to
    follow. They guarantee the integrity of our medicines. Every
    Oxford employee understands that quality isn't optional-it
    defines who we are. When our team upholds those standards,
    they're not just satisfying a regulation; they're protecting
    someone's health.
        Our facility was built to exceed FDA requirements, with
    HEPA-filtered environments, validated cleaning systems,
    serialized packaging, and duplicated digital and paper-base
    batch recording safeguards. We welcome inspectors at any time
    because transparency and safety define our operation.
        This commitment becomes unsustainable when not everyone
    plays by the same rules. Many foreign manufacturing facilities
    go five years or more without FDA inspection.7 When inspected,
    advance notice is given in at least 90 percent of cases.8
    Recently, the FDA began conducting more surprise inspections of
    overseas facilities. Still, the FDA's foreign inspection
    program fails to provide the same level of quality assurance as
    U.S. products because of funding and staffing realities and the
    massive volume of foreign-origin KSM, API, and generic drugs.
        When oversight is this inconsistent, patient outcomes
    suffer. Indian-made generic drugs have a 54% higher rate of
    severe adverse events compared to those made in the United
    States.9
        Recent FDA reports reveal what these safety gaps look like
    in practice. The lack of consistent oversight lets foreign
    plants conceal unsafe practices until U.S. inspectors finally
    arrive. At India-based Intas Pharmaceuticals, for instance,
    investigators discovered shredded and acid-doused documents in
    an apparent attempt to hide falsified safety tests and
    records.10
        When FDA inspectors entered an undisclosed Indian facility
    run by Hetero Labs, they found birds flying through storage
    areas, lizards crawling over raw ingredients, and cats weaving
    between pallets.11 Damaged drums with torn labels sat open to
    the air, and an uninspected truck full of material drove away
    after staff refused to allow the FDA team access.12 Inspectors
    had already been denied entry to the facility for two hours
    while the assistant manager and warehouse staff "had ran out of
    plain sight upon announcing our intent to inspect the
    facility."13 Such conditions are unthinkable in any U.S.
    facility-they would trigger an immediate shutdown. Yet this
    site still ships medicine into our supply chain.
        Hundreds of foreign producers have received FDA Form 483
    letters for data falsification, contamination, or document
    destruction. Foreign-site inspections uncover severe violations
    more than twice as often as U.S. sites, but penalties remain
    rare.14 This double standard puts patients at risk by creating
    uneven regulatory burdens that punish companies like ours that
    invest heavily in safety, people, and process controls.
        At Oxford, quality is a moral obligation. Every batch we
    make is tested, recorded, and traceable. Our employees know the
    medicines they manufacture serve their own families and
    neighbors. Only domestic production ensures this
    accountability.
        Quality isn't cheap, but unsafe imports cost much more in
    recalls, shortages, and adverse patient outcomes.

    III. The Economics of Survival for U.S. Manufacturers

        Major U.S. institutional buyers of generic drugs prioritize
    price over quality or safety. Generic drug production is a low-
    margin, high-volume business where price trumps all. This
    business reality facilitates capture by state actors who can
    heavily subsidize their own industries. They know that if
    subsidies can be maintained for even a relatively short period,
    domestic U.S. production can be displaced.
        But this does not mean that Americans have seen price
    savings.
        For a typical Oxford product, we receive about $1.50 per
    hundred tablets. Medicare reimbursement for the same quantity
    averages $13.25. A handful of large intermediaries absorb the
    difference. Wholesalers, pharmacy benefit managers (PBMs), and
    group purchasing organizations (GPOs) dominate this space.
        Three Group Purchasing Organizations-Vizient, Premier, and
    HealthTrust-control about 90 percent of hospital generic
    contracting,15 while three PBM-aligned distributors handle
    roughly 90 percent of retail generic purchases,16 giving a
    handful of intermediaries near-total market power.
        These middlemen now capture at least $64 of every $100
    spent on generic drugs.17 Rather than passing savings from
    importing cheap drugs on to patients, these intermediaries use
    their market power to extract profits from both ends-forcing
    U.S. manufacturers to sell at ever-lower prices while inflating
    downstream markups to preserve their own margins. They pit
    domestic producers directly against imports, leveraging
    subsidized foreign bids to drive U.S. firms into unsustainable
    pricing. The result is a race to the bottom, in which
    production shifts to the lowest-cost, least-regulated source
    regardless of safety or reliability.
        India and China's drug pricing playbook is elegantly
    simple, if devious. It begins with highly subsidized foreign
    manufacturers flooding the U.S. market with cheap drugs,
    allowing middlemen to leverage those low prices to force price
    concessions from U.S. producers. Of course, once U.S. producers
    are edged out of the market, foreign suppliers raise prices.
        For small and midsize U.S. producers, this system is
    economically impossible to survive. When subsidized foreign
    competitors undercut prices through government subsidization
    and shortcuts on quality, U.S. facilities close-and once that
    happens, domestic capacity and technical expertise disappear.
        Oxford currently operates at 55-60% production capacity
    because import-dominated market conditions dominate the
    landscape, but with the right policy support and a relatively
    modest $17 million investment, we could quadruple output to 750
    million doses per month and double employment. That production
    capability already exists within our facility. The missing
    piece is a stable home-market environment that values security
    and quality over the imagined benefits of global free trade and
    the short-term arbitrage of middlemen.

    IV. Rebuilding U.S. Capacity: What the Industry Needs to Expand
    Production and Secure the Supply Chain

        The collapse of America's generic pharmaceutical
    manufacturing base didn't happen overnight, and rebuilding will
    take some years, but we can and must start-and we must start
    now. Every month of delay means another factory closure,
    another skilled team lost, and deeper dependence on inferior
    imports.
        For decades, federal policy on drug imports has been
    simple: keep the borders open and hope cheap imports don't
    destroy domestic capacity. That hasn't worked. For certain
    agricultural commodities like sugar and peanuts, U.S. policy
    has always favored a "managed trade" approach in which import
    volumes-actual outcomes-are capped through quotas. The U.S.
    generic pharmaceutical supply chain should be at least as
    secure as the U.S. peanut butter supply chain.
        Oxford sees four immediate steps that Congress can take to
    rebuild capacity and restore a reliable supply of American-made
    medicine.

        1. Affirm Generic Pharmaceuticals as a National Security
    Industry Under Section 232

        We strongly support the Department of Commerce's Section
    232 investigation into imports of generic pharmaceuticals and
    pharmaceutical ingredients. From our perspective on the ground,
    it is clear that imports of generic drugs are impairing U.S.
    national security.
        The stakes are staggering. More than 133 million Americans,
    roughly 40 percent of the U.S. population, live with at least
    one chronic disease requiring daily medication. Cardiovascular
    disease alone affects 127 million adults who depend on blood
    pressure and cholesterol medications. Another 38 million
    Americans manage diabetes with daily therapies. Mental health
    conditions requiring pharmaceutical treatment affect 57 million
    adults. If China or India restricted access to key starting
    materials, APIs, or finished dose generics, these Americans
    would face immediate treatment interruptions. Patients managing
    hypertension would risk stroke. Diabetics would face dangerous
    blood sugar swings. Heart disease patients could suffer cardiac
    events. Americans battling depression or anxiety would lose
    access to stabilizing therapies. The human cost would be
    catastrophic, measured not in dollars but in preventable deaths
    and suffering.
        Once the Department of Commerce has made this finding, the
    President is delegated broad authority to adjust imports.
        Simply deploying a sweeping ad valorem tariff of 25, 50, or
    even 100 percent will not work. That's because most of the
    markup on generic drugs is in domestic distribution,
    intermediary margins, and retail. If the declared import value
    of a particular product is half a penny, a 100 percent tariff
    that adds another half a penny to the cost of a dose will not
    be sufficient for sourcing decisions. Foreign suppliers can
    easily absorb these kinds of changes.
        Instead, we believe a quota system can simultaneously
    rebuild our domestic supply chain, one drug and API at a time,
    without disrupting domestic availability or inflating consumer
    prices.
        Rather than across-the-board ad valorem tariffs, we propose
    "specific tariffs" applied against the actual measured export
    volume that shows up on a ship, not whatever price the importer
    claims they paid overseas.
        Policymakers should pair these specific tariffs with a
    finite import quota limited to licensed importers and regularly
    adjust that based on forecasted domestic consumption and
    production at home and in import-concession countries. We
    guarantee market space for domestic producers and allow limited
    imports only for what's beyond current capacity.
        Our business collaborated with the Coalition for a
    Prosperous America to sketch out how such a system could work,
    with real-world drug examples: See "To Restore Generic Drugs,
    Use Sugar's Sweet Model", October 22, 2025, available at
    https://prosperousamerica.org/to-reshore-generic-drugs-use-
    sugars-sweet-model.
        Our proposed quota system will not increase costs for U.S.
    patients or Medicare reimbursement expenses. Historically,
    changes in production costs have been absorbed by market
    intermediaries-wholesalers, pharmacy benefit managers (PBMs),
    and group purchasing organizations (GPOs)-who capture roughly
    64 percent of the final drug cost.18 When these middlemen began
    sourcing cheaper imported drugs, production costs fell, yet
    patient prices and Medicare reimbursement amounts did not. The
    same logic applies in reverse: restricting imports will not
    raise prices-it will simply redirect profits away from
    intermediaries and toward sustainable domestic production.
    Under this proposal the Medicare reimbursement would remain
    flat.
        Any price correction from a quota system would amount to
    pennies per dose, but it would finally allow U.S. manufacturers
    to compete in their own market on a sustainable footing and
    would encourage a wave of onshoring to meet national security
    objectives. It is essential that both finished generic drugs
    and active pharmaceutical ingredients (APIs) be included in the
    scope of the quota system, with product-specific quotas
    adjusted as domestic capacity ramps up for that product. A
    petitioning system modeled on the U.S. International Trade
    Commission's Miscellaneous Tariff Bill System, or more recently
    the U.S. Department of Commerce's Inclusion Rounds in the steel
    and aluminum Section 232 actions, would perfectly suit the
    proposed product-by-product reshoring. These systems give U.S.
    producers official, regular input in determining which products
    are covered and what tariff rates apply.

        2. Reform Federal Procurement to Reward Quality and U.S.
    Production

        U.S. manufacturers need a CHIPS-style approach to medicine
    production-one that treats generic pharmaceuticals as a
    strategic industry rather than a disposable commodity. Federal
    purchasing power through the Department of Veterans Affairs,
    the Department of Defense, and Medicare can serve as a
    cornerstone of market stability and a strong signal for
    investment in domestic capacity.
        The Department of Health and Human Services (including
    Medicare and Medicaid programs, plus BARDA and ASPR), the
    Department of Veterans Affairs, and the Pentagon collectively
    account for roughly 45 percent of all U.S. prescription-drug
    expenditures, giving the federal government unparalleled
    leverage over pricing and supply stability.19 20 21 That
    leverage should be used not just to help seniors and low-income
    Americans, but to reward and rebuild reliability, resilience,
    and safety through domestic manufacturing.
        Long-term federal contracts for essential generics and
    active pharmaceutical ingredients can anchor demand for U.S.
    plants-ensuring steady production, higher quality, and
    preventing shortages driven by today's concentrated import
    reliance. Tools like the Strategic National Stockpile and the
    Defense Production Act can further help sustain a baseline of
    domestic essential medicine manufacturing. The cost of these
    reforms would be minimal-pennies per dose-but the benefits
    would be enormous: secure supply chains, consistent quality,
    and thousands of well-paying American jobs.
        Domestic medicine production strengthens supply-chain
    reliability and upholds rigorous quality standards. That
    stability benefits both patients and manufacturers alike. The
    federal government can provide the demand signals we need to
    compete and scale.

        3. Reshore and Vertically Integrate API Production

        Every manufacturer knows that a supply chain is only as
    strong as its weakest link. For pharmaceuticals, that link is
    the active pharmaceutical ingredient. We cannot rebuild our
    pharmaceutical base without rebuilding ingredient production.
        At Oxford, we currently import most of our APIs because
    virtually no U.S. suppliers remain, but we have both the land
    and the engineering capability to build a dedicated API plant
    on our Birmingham site. With predictable demand and the right
    policy support, companies like ours can bring API manufacturing
    back to U.S. soil.
        Policies such as production and investment tax credits
    under the proposed PILLS Act would directly reduce the cost gap
    that has driven API and finished drug production overseas and
    jumpstart new U.S. capacity. A 35 percent production tax credit
    on U.S.-made ingredients, paired with a 25 percent investment
    tax credit for new or modernized facilities, would make
    domestic manufacturing economically viable again. Combined with
    long-term federal procurement contracts that provide a stable
    demand signal and a Section 232 framework that limits unfairly
    subsidized imports, these measures would give American firms
    the certainty needed to invest.
        Building that capacity would mean traceability, quality,
    and reliability from molecule to medicine. It would make our
    supply chain safe and resilient against disruptions, whether
    from politics, pandemics, or natural disasters.

        4. Restoring Geographic Transparency and Safety in the
    Medicine Supply Chain

        Patients deserve to know where their medicines come from.
    Country-of-origin labeling should be required for both active
    pharmaceutical ingredients (APIs) and finished dosage forms.
    This simple step would introduce transparency, empower
    hospitals, federal procurers, and other buyers to choose safer
    sources, and reward companies that uphold the highest
    standards.
        Even the FDA and the Department of Defense struggle to
    determine where the ingredients in essential medicines are
    originate.22 Roughly 22 percent of active pharmaceutical
    ingredients for the military's essential drugs lack a
    verifiable source country.23 This lack of visibility leaves
    federal buyers, hospitals, and pharmacies alike blind to risk,
    making it impossible to track vulnerabilities before they cause
    shortages or safety failures.

        Congress should require full supply-chain disclosure:

          Country of origin listed on all drug labels for both API
    and real manufacturing drug labels.
          Public FDA database linking each finished product to its
    manufacturing and API sites.
          Mandatory reporting of production changes, site
    closures, and inspection outcomes.

        Moreover, to secure a safe medicine supply, additional FDA
    reforms are essential-including unannounced foreign inspections
    and tougher enforcement when violations occur, such as import
    bans. By closing the loopholes that let unsafe suppliers hide
    behind opaque distribution chains, we can protect American
    patients from risks that are too often discovered only after
    the medicine has been taken.
        Ultimately, this reform is about restoring trust. Patients
    and hospitals should know whether their medicines were produced
    under U.S., European, or other trusted regulatory systems-or in
    a high-risk plant overseas that has not been inspected for
    years. Transparency empowers accountability. It ensures that
    safety, reliability, and quality once again guide the U.S.
    medicine supply chain.

    V. The Human Cost of Inaction

        This issue affects American citizens every day. With the
    shuttering of the Shreveport facility, we lost more than a
    building. We lost skilled workers: chemists, operators,
    technicians who spent decades producing lifesaving medicines,
    only to see their plant close because they could no longer
    compete with subsidized imports.
        Across the country, former pharmaceutical production-linked
    communities in New Jersey, Pennsylvania, Louisiana, and beyond
    are now home to idle or demolished facilities. These plants
    once supported thousands of good-paying, middle-class jobs and
    sustained local economies. The economic damage is long-lasting,
    and rebuilding those capabilities takes years. If we lose the
    remaining domestic producers, we lose not only capacity but an
    entire generation of expertise. At some time in the future our
    national security may require this workforce.

    VI. Why This Matters for Seniors and Patients

        The Committee on Aging is right to make this a priority.
    America's seniors are the largest users of generic medicine and
    the most at risk when shortages occur.24 Generic medicines
    serve as the foundation of treatment for roughly 90 percent of
    Americans taking prescription drugs. More than 270 million
    people in this country filled at least one prescription last
    year, and the vast majority of those prescriptions were
    generics.
        When a foreign plant halts shipments or fails inspection,
    it's seniors who face delays, rationing, or sub-optimal
    treatment.25 Hospitals scramble to stretch limited supply,
    pharmacists search for less-than-ideal substitutes, and
    patients face higher costs and worse care.26 27 For vulnerable
    and elderly patients, drug shortages can be life-threatening.
    Delays or interruptions in treatment can worsen health outcomes
    and significantly increase the risk of serious illness or
    death.28
        These crises result from a global race to the bottom, where
    foreign manufacturers cut corners and American producers are
    close amid unsustainable pricing. The real cost of cheap
    imports is an unstable drug supply that puts patients at risk.
        The cost of rebuilding U.S. capacity is small compared to
    the cost of dependence. For Oxford's products, the difference
    between a sustainable domestic price and a foreign import price
    is often less than one cent per tablet. In return, Americans
    would gain a reliable supply, verified safety, and high-quality
    domestic manufacturing jobs.

    VII. Oxford's Commitment and Readiness

          Oxford stands ready to do its part. We have the
    workforce, the technology, and the physical capacity to expand
    immediately. With capital support and stable demand, we could:
          Quadruple monthly output from 180 million to 750 million
    doses.
          Employ 200+ people in skilled pharmaceutical
    manufacturing roles.
          Build an on-site API facility to vertically integrate
    our supply chain domestically and reduce foreign reliance.

        Our experience proves that making medicines in America is
    possible. What's needed now is a framework that rewards
    companies for doing the right thing and allows the domestic
    industry to expand nationwide-producing safe, consistent, high-
    quality products under U.S. oversight.

    VIII. Securing America's Medicines: The Path Forward

        Rebuilding trust in our medicines starts with rebuilding
    the ability to make them.Congress has recognized that
    industries like semiconductors, aluminum, rare earth minerals,
    and batteries represent national strategic assets. Generic
    pharmaceuticals deserve the same recognition. If we lose
    control of medicine production, we lose control of public
    health itself.
        This is an issue we must confront-and we must begin now.
    The industry stands at a crossroads between continued collapse
    and lasting renewal. Rebuilding capacity becomes more
    challenging and costlier every year we delay.

        Oxford urges Congress to:

        1. Affirm generic domestic pharmaceutical manufacturing as
    a national security priority under Section 232.
        2. Create procurement incentives and long-term contracts
    for U.S.-made medicines.
        3. Support investment in domestic API production and
    vertical integration.
        4. Require U.S.-level safety standards for all imported
    drugs and full transparency so patients and hospitals know
    where their medicines come from.

        Protecting America's seniors means protecting America's
    medicine supply. At Oxford, we have the skill, the knowledge,
    and the determination to help rebuild our nation's generic
    pharmaceutical supply chain. What we need now is the will of
    the federal government to act.
        Submitted by: Tom Neely Chairman Oxford Pharmaceuticals
    Birmingham, Alabama

    References
    --------------------------------------------------------------
    --------------

    1Olin Business School, Washington University in St. Louis.
    (2021, August). U.S. Health Security at Risk Because of
    Medicine Manufacturing Limits. https://olin.washu.edu/about/
    news-and-media/news/2021/08/study-us-health-security-at-risk-
    because-of-medicine-manufacturing-limits.php

    2Council on Strategic Risks. (2024). The National Security
    Rationale for Stockpiling Key Pharmaceutical Ingredients
    https://councilonstrategicrisks.org/2024/03/05/the-national-
    security-rationale-for-stockpiling-key-pharmaceutical-
    ingredients

    3Exiger. (2020). A Bitter Pill: America's Dependence on China-
    Made Pharmaceuticals. https://www.exiger.com/perspectives/a-
    bitter-pill-america-dependence-on-china-made-pharmaceuticals/

    4Huang, M., et al. (2014). Key Drug Innovation Program in
    China: A Review of Policy and Outcomes. Health Research Policy
    and Systems, 12(27). https://health-policy-
    systems.biomedcentral.com/articles/10.1186/1478-4505-12-27

    5Stolberg, S. G. (2025, November 4). Trump's New Plan for
    Generic Drug Manufacturing Draws Mixed Reactions. The New York
    Times. https://www.nytimes.com/2025/11/04/health/generic-drug-
    manufacturing-trump.html

    6Ibid.

    7U.S. Government Accountability Office. (2024). FDA: Foreign
    Drug Manufacturing Inspections - Challenges Persist (GAO-24-
    107359). https://www.gao.gov/products/gao-24-107359

    8White & Case LLP. (2025). FDA Foreign Inspections: Key
    Developments and Strategic Shifts. https://www.whitecase.com/
    insight-alert/fda-foreign-inspections-key-developments-and-
    strategic-shifts

    9Kelley School of Business, Indiana University. (2025, February
    19). All Generic Drugs Are Not Equal: Study Finds Generics Made
    in India Have More Severe Adverse Events. https://
    blog.kelley.iu.edu/2025/02/19/all-generic-drugs-are-not-equal-
    study-finds-generics-made-in-india-have-more-severe-adverse-
    events/

    10U.S. Food and Drug Administration. (2023). Inspection Report:
    Intas Pharmaceuticals Limited. https://www.fda.gov/media/
    164602/download

    11FiercePharma. (2024, October 3). Finding Birds, Lizards, and
    Cats - FDA Says "Oh My!" in Scathing Hetero Form 483. https://
    www.fiercepharma.com/manufacturing/finding-birds-lizards-and-
    cats-fda-says-oh-my-hetero-scathing-form-483

    12Ibid.

    13Ibid.

    14White & Case LLP. (2025). FDA Foreign Inspections: Key
    Developments and Strategic Shifts. Ibid. https://
    www.whitecase.com/insight-alert/fda-foreign-inspections-key-
    developments-and-strategic-shifts

    15Association for Accessible Medicines. (2023, June 22). White
    Paper on Drug Shortages. https://accessiblemeds.org/wp-content/
    uploads/2024/11/AAM--White--Paper--on--Drug--Shortages-06-22-
    2023.pdf

    16Ibid.

    17USC Schaeffer Center for Health Policy & Economics. (2017).
    The Flow of Money Through the Pharmaceutical Distribution
    System. https://schaeffer.usc.edu/research/flow-of-money-
    through-the-pharmaceutical-distribution-system/

    18Ibid.

    19U.S. Department of Health and Human Services, Office of
    Inspector General. (2024). Drug Spending in Federal Programs.
    https://oig.hhs.gov/reports/featured/drug-spending/

    20U.S. Government Accountability Office. (2025). Prescription
    Drugs: Federal Spending and Oversight Gaps (GAO-25-107187).
    https://www.gao.gov/assets/gao-25-107187.pdf

    21U.S. Government Accountability Office. (2021). Prescription
    Drugs: Federal Purchasing and Contracting Trends (GAO-21-111).
    https://www.gao.gov/assets/gao-21-111.pdf

    22U.S. Government Accountability Office. (2020). Drug Supply
    Chain Security and FDA Oversight Gaps (GAO-20-718363). https://
    www.gao.gov/assets/720/718363.pdf

    23U.S. Senate. (2023). FY23 National Defense Authorization Act
    Section 860: Risk Management for DoD Pharmaceuticals. https://
    www.warren.senate.gov/imo/media/doc/FY23/20NDAA/20sec/20860/
    20Risk/20management/20for/20DoD/20Pharmceuticals1.pdf

    24Association for Accessible Medicines. (2024, January). 2024
    U.S. Generic and Biosimilar Medicines Savings Report. https://
    accessiblemeds.org/wp-content/uploads/2025/01/AAM-2024-Generic-
    Biosimilar-Medicines-Savings-Report.pdf

    25Rowland, C. (2023, June 27). Cancer Drug Shortage Highlights
    Fragile Generics Supply Chain. The Washington Post. https://
    www.washingtonpost.com/business/2023/06/27/cancer-drug-
    shortage-generics/

    26Owens, C. (2023, March 21). Drug Shortages Upend Cancer
    Treatments Across U.S. Axios. https://www.axios.com/2023/03/21/
    drug-shortages-upend-cancer-treatments

    27Johns Hopkins Bloomberg School of Public Health. (2023). Drug
    Shortages Are Affecting Cancer Treatments. https://
    publichealth.jhu.edu/2023/drug-shortages-are-affecting-cancer-
    treatments

    28National Center for Biotechnology Information. (2023). Drug
    Shortages and Their Impact on Patient Care. https://
    www.ncbi.nlm.nih.gov/books/NBK608930/

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                          Prepared Witness Statements

                                Patrick Cashman

        Chairman Scott, Ranking Member Gillibrand, and
    distinguished members of the committee:
        On behalf of the millions of Americans who require
    antibiotics every year to protect against life-threatening
    bacterial infections, thank you for your attention to the
    security and resilience of the United States' pharmaceutical
    supply chain.
        My name is Patrick Cashman, and I serve as President of
    USAntibiotics, headquartered in Bristol, Tennessee.
    USAntibiotics is the last remaining end-to-end domestic U.S.
    manufacturer of amoxicillin, the most prescribed antibiotic in
    the country.
        The facility I lead has a proud history of supplying this
    critical generic medicine to American patients for more than 40
    years. Until around 2008, every dose of amoxicillin needed to
    treat life-threatening bacterial infections in this country was
    produced at our Bristol plant. The years that followed were
    punctuated by escalating subsidized competition from Indian and
    Chinese generic drugmakers. In the space of 12 years, we had
    crashed from 100 percent of the U.S. market to zero, our
    production lines were dark, and our assets had been placed into
    bankruptcy.
        But our story didn't end there. The company was rescued in
    2021 by its first-ever American owners, who felt passionately
    that the United States could not be dependent on hostile
    foreign powers for such a critical resource as antibiotics.1
    Over the last four years, we've revived the facility, rehired
    and grown our staff, and restored consumer confidence in
    America's antibiotic supply chain with the assistance of great
    partners like Walmart.
        The challenge of creating a resilient domestic antibiotic
    supply chain is enormous and urgent. It's not simply a question
    of public health but national security. A country without
    stable, secure access to life-saving antibiotics cannot grow
    its economy or defend itself against threats.
        My testimony today will outline the unique challenges faced
    by U.S. manufacturers of critical generic medicines, such as
    amoxicillin. I will devote particular attention to well-
    intentioned but counterproductive government contracting
    barriers that sideline U.S. manufacturers like ours. I will
    also propose policy recommendations to ensure our healthcare
    supply chain remains secure, resilient, and American-made.

    I. The Strategic Importance of Domestic Antibiotic
    Manufacturing

        Antibiotics are the backbone of modern medicine. Without
    them, routine surgeries become life-threatening and common
    infections become lethal. Our nation's health security,
    military readiness, and emergency preparedness hinge on
    reliable access to antibiotics.
        According to the Centers for Disease Control and
    Prevention, amoxicillin alone accounts for approximately 50
    million prescriptions annually in the U.S., making it the
    single most prescribed antibiotic.2 It treats a wide range of
    infections, particularly in children. Yet the overwhelming
    majority of today's U.S. amoxicillin supply is sourced from
    overseas, often from a small handful of producers, many of
    which are concentrated in India and China. Today, USAntibiotics
    serves approximately 5% of the U.S. market, even though we have
    the underutilized capacity to meet 100% of the country's demand
    once again.
        Seniors account for a disproportionate share of antibiotic
    prescriptions and surgical procedures. According to CDC data,
    adults over 65 receive antibiotics at rates 50 percent higher
    than younger Americans.3 Hip replacements, cardiac procedures,
    and cancer surgeries-all of these life-extending interventions
    depend on reliable access to antibiotics.
        Now, consider the post-operative risks when antibiotics are
    unavailable or of low quality. A routine hip replacement
    becomes a life-threatening gamble. A cardiac stent placement
    risks deadly infection. Cancer surgery-already traumatic-
    becomes even more dangerous. During the 2022 and 2023
    amoxicillin shortages, hospitals across the country were forced
    to ration antibiotics, delay elective surgeries, and substitute
    less effective treatments.4 Elderly patients and children were
    impacted most by these shortages.
        This vulnerability extends beyond surgeries. Pneumonia
    kills roughly 50,000 Americans annually, with seniors
    representing the overwhelming majority of deaths.5 Urinary
    tract infections, which disproportionately affect older women,
    can become life-threatening sepsis without prompt antibiotic
    treatment. Skin infections from minor wounds become dangerous
    without reliable antibiotic access.
        These shortages occurred during peacetime and under normal
    economic conditions alike, without any overt effort by foreign
    manufacturers to restrict supply. Imagine what happens during a
    crisis when foreign governments decide to prioritize their own
    populations over exports. Imagine what happens if China decides
    to weaponize pharmaceutical exports the way Russia weaponized
    energy exports to Europe.
        We must treat antibiotic production with the same strategic
    urgency as energy independence or semiconductor manufacturing.
    Rebuilding domestic capacity is not optional. It's essential to
    ensure a safe, stable supply chain.
        If our facility were to shutter operations permanently, it
    would take at least five years and hundreds of millions of
    dollars to construct a new facility capable of producing
    amoxicillin. That timeline assumes favorable regulatory
    treatment, available capital, and a skilled workforce-none of
    which are guaranteed. More realistically, rebuilding domestic
    amoxicillin capacity from scratch could take a decade.
        That would be half a decade or more in which this country
    would be entirely reliant on China and India, during which time
    one or both countries could restrict our access. Quality
    matters. Source matters. Security of supply matters.
        The quality gap is equally alarming. A 2025 peer-reviewed
    study found that serious adverse events-including
    hospitalization, disability, and death-were 54 percent higher
    for generic drugs manufactured in India than for equivalent
    drugs made in the United States.6 That difference represents
    real people, real harm, and real cost. When quality fails,
    patients suffer-and our entire healthcare system pays for it in
    higher costs, longer hospital stays, and lost trust.
        The FDA's inspection system also requires urgent reform.
    Domestic facilities are typically inspected without notice,
    allowing regulators to see real working conditions. By
    contrast, foreign inspections are often announced up to twelve
    weeks in advance, giving manufacturers time to conceal
    problems. That is not a level playing field, and it does not
    ensure safety. Although the FDA announced in May of this year
    that it would expand its use of unannounced inspections at
    foreign manufacturing facilities, it is not clear that FDA has
    the funding or workforce capacity to fulfill that commitment.7
        Mandatory, independent quality testing of all imported
    medicines is both reasonable and essential. The Department of
    Defense testing program with Valisure provides a potential
    model for larger-scale safety assurance testing of imported
    pharmaceuticals.8

    II. Recognition and Validation of Our Strategic Importance

        Earlier this year, the U.S. Food and Drug Administration
    launched the Commissioner's National Priority Voucher program
    to recognize critical pharmaceutical manufacturing that
    addresses urgent public health needs. This competitive program
    represents the FDA's acknowledgment that certain medicines and
    certain manufacturers warrant special regulatory recognition
    and support.
        USAntibiotics was selected for this distinction based on
    our production of AugmentinTM XR. This recognition validates
    what we've long argued: domestic antibiotic manufacturing
    represents a strategic national priority. The FDA understands
    the vulnerability created by foreign dependence.
        Federal pharmaceutical procurement policy needs to catch up
    with what the FDA already knows. The agency charged with
    ensuring drug safety and efficacy has recognized our
    importance. The agencies charged with purchasing life-saving
    medications for the federal government have not.

    III. The Fragility of Global Antibiotic Supply Chains

        Antibiotic manufacturing contains multiple single points of
    failure, and almost all of them are overseas. The supply chain
    spans continents and involves dozens of steps, from key
    starting materials to active pharmaceutical ingredients to
    finished drug products. Any interruption along this complex
    chain would have catastrophic consequences for public health.
        China produces approximately 45% of the active
    pharmaceutical ingredients used in amoxicillin today, and it
    also accounts for a majority of the global key starting
    material market.9 Even as India leads the world in finished
    form amoxicillin exports, its drugmakers are highly reliant on
    Chinese-made amoxicillin API. The result is that the majority
    of amoxicillin on pharmacy shelves today is simply Chinese
    chemistry with Indian finishing.
        USAntibiotics has never purchased, and will never purchase,
    Chinese API. We source exclusively from Trade Agreement Act-
    compliant partners in Europe, but many of our subsidized
    foreign competitors don't share these supply chain concerns,
    buying instead from wherever the prices are lowest.
        The concentration risk is staggering. Suppose China
    restricted API exports, whether for economic leverage or during
    a geopolitical crisis, millions of Americans could lose access
    to life-saving medicine within weeks. The Strategic National
    Stockpile would likely not sustain the country for more than a
    few months in the event of a bacterial pandemic. The United
    States has no domestic manufacturing alternative to
    USAntibiotics-which is why the risk of our closure is so
    significant.
        This vulnerability extends beyond amoxicillin. The same
    dynamics affect dozens of other critical generic medicines. The
    U.S. has offshored our pharmaceutical industrial base to
    countries that may not share our interests, and we've done so
    without any meaningful contingency planning. The Department of
    Defense has conducted multiple studies documenting these
    vulnerabilities, yet procurement practices have not changed.
        Some might argue that market forces will naturally correct
    these vulnerabilities, that if Chinese or Indian supply becomes
    unreliable, manufacturers will diversify, but that argument
    ignores the economics of generic drug manufacturing. Margins
    are so thin that manufacturers cannot afford to maintain
    redundant supply chains. They source from the cheapest
    supplier, which is often the most subsidized, meaning China.
        Others might argue that stockpiling provides adequate
    insurance against supply disruptions, but stockpiles are
    expensive to maintain, have limited shelf life, and cannot
    possibly cover all essential medicines in sufficient
    quantities. Stockpiles are a temporary buffer, not a strategic
    solution.
        The only real solution is domestic manufacturing capacity
    for critical medicines. That capacity must be maintained during
    peacetime even if it costs more than foreign alternatives,
    because once it's gone, it cannot be quickly rebuilt - and may
    never return.

    IV. Unique Challenges to Domestic Generic Antibiotic
    Manufacturing

        While all pharmaceutical manufacturers face global
    competitive pressures, generic antibiotics like amoxicillin
    represent a uniquely challenging market.

    1. Unfair Global Competition and Market Distortions

        Generic antibiotics are among the lowest-cost
    pharmaceutical products in the world. Amoxicillin, in
    particular, is often sold at razor-thin margins. A typical
    bottle of generic amoxicillin might wholesale for just a few
    dollars, leaving manufacturers with pennies in profit per
    prescription.
        Indian and Chinese manufacturers benefit from significant
    state subsidies, lower labor costs, and less stringent
    environmental, regulatory, quality, and safety standards. These
    advantages allow them to undercut U.S. manufacturers on price,
    often selling at or below their production costs. One 2022
    study found that a lack of regulatory oversight in China and
    India allows their drugmakers to cut production costs by as
    much as 25 percent.10
        These pricing tactics often resemble anti-competitive
    dumping practices, in which foreign producers flood the market
    to eliminate competition. The playbook is straightforward:
    subsidized manufacturers offer below-market pricing to drive
    out unsubsidized competitors, then raise prices once
    competition is eliminated. We've seen this pattern in steel,
    solar panels, and countless other industries.
        Recently, some Indian drugmakers have been selling
    amoxicillin at a price below our chemical costs for active
    pharmaceutical ingredients. That means they're offering
    finished products for less than we pay just for the raw
    materials. Either they're selling at a loss (subsidized by
    their government) or they're using such substandard ingredients
    that quality is suspect.
        U.S. manufacturers must comply with rigorous FDA
    regulations, maintain higher quality standards, and absorb
    higher input and operational costs. Our workers earn middle-
    class wages with benefits. Our facilities meet U.S.
    environmental standards. We pay U.S. taxes. While these
    standards are vital for public safety and American prosperity,
    they create an uneven playing field that deters domestic
    investment.
        The competitive disadvantage compounds over time. Foreign
    manufacturers gain scale advantages by supplying not just their
    domestic markets but global markets. They invest in newer
    equipment and more efficient processes. They develop expertise
    and institutional knowledge. Meanwhile, domestic manufacturers
    like USAntibiotics struggle to survive on a five percent market
    share, unable to invest in growth because we're fighting for
    survival.

    2. Lack of Long-Term Purchasing Commitments

        Generic manufacturers often operate without secure or long-
    term purchasing agreements. Most buyers, whether they are
    pharmacy chains, hospitals, or distributors, prioritize cost
    over reliability or origin. They purchase on short-term
    contracts, often as short as 90 days, and switch suppliers
    solely on price.
        This purchasing behavior leaves U.S. manufacturers
    vulnerable to market fluctuations and unable to make long-term
    capital investments or retain specialized labor. A U.S.
    generics manufacturer cannot reasonably invest tens of millions
    in new equipment when its largest customer might switch to a
    foreign competitor next quarter based on a price difference of
    pennies per unit.
        Contrast this with defense or semiconductor procurement,
    where the federal government frequently uses multi-year
    contracts to ensure stability and scalability. Defense
    contractors operate under contracts that span years or even
    decades. These long-term commitments allow contractors to
    invest in facilities, retain skilled workers, and plan for the
    future.
        The Berry Amendment has required the Defense Department to
    buy American textiles, food, and hand tools since 1941. The
    Trade Agreements Act restricts government purchases to U.S. and
    designated country products. The Buy American Act requires
    federal agencies to procure US domestic materials and products,
    subject to conditions. Federal agencies routinely avoid Chinese
    telecommunications equipment despite lower costs. The
    government pays premiums for American-made vehicles,
    construction materials, and technology solutions.
        Why? Because economic security, supply chain security, and
    national security sometimes require paying more for domestic
    production. Because supply chain resilience has value beyond
    immediate cost savings. Because maintaining domestic industrial
    capacity serves strategic objectives that transcend quarterly
    purchasing decisions.
        Pharmaceutical procurement should align with these existing
    practices. Yet it doesn't. Antibiotics are treated as
    commodities to be purchased from the lowest bidder, regardless
    of source or supply chain resilience.
        The government could transform this dynamic with relatively
    modest changes to procurement practices. Long-term contracts
    with domestic manufacturers provide the revenue stability
    needed to justify capital investments and workforce
    development. Even if those contracts cost pennies more per unit
    than foreign-origin alternatives, the national security
    benefits would far exceed the incremental costs.

    3. Lack of Recognition for National Security Relevance

        Generic antibiotics are not treated as strategic assets in
    the same way that weapons systems or critical minerals are.
    This means manufacturers cannot access the same financing
    tools, tax incentives, or industrial base support programs
    available to other critical infrastructure sectors.
        Defense contractors can access Defense Production Act
    authorities, guaranteed loans, and preferential tax treatment.
    Semiconductor manufacturers received tens of billions in direct
    subsidies through the CHIPS Act. Energy manufacturers and
    operators benefit from investment tax credits and accelerated
    depreciation.
        Generic drug manufacturers receive none of these benefits,
    even though pharmaceutical supply chain failures could kill
    more Americans than most military threats.
        The threat to U.S. national security and public health
    posed by antibiotic shortages is just as real, and arguably
    more acute and more immediate, than many threats that receive
    significant federal support. We must reclassify generic
    critical medicines as national security assets and build policy
    around that recognition.

    V. The Small Business Set-Aside Paradox: How Government Policy
    Threatens America's Last Antibiotic Manufacturer

        In 2021, USAntibiotics was rescued from bankruptcy by
    Jackson Healthcare, one of the largest healthcare staffing
    agencies in the United States.
        When the Bristol facility faced permanent closure, Jackson
    Healthcare and its founder, Rick Jackson, recognized the
    national security imperative in restoring domestic antibiotic
    production. He stepped in when no one else would, including our
    government. Over the last four years, Jackson has spent many
    tens of millions to reactivate our production lines and even
    more to underwrite our losses. They are the only reason that
    the United States still possesses antibiotic manufacturing
    capacity.
        But by virtue of our ownership by a larger company,
    USAntibiotics has been precluded from participating as a prime
    contractor in small business set-aside contracts for
    amoxicillin. The federal government has recently structured
    virtually all amoxicillin contracts on a small business set-
    aside basis, effectively locking out America's only domestic
    manufacturer from competing as a prime for federal government
    business.
        This is the height of irony. USAntibiotics would have
    closed permanently without Jackson Healthcare's ownership. No
    one else was willing to rescue this facility. No private equity
    firm saw a profitable opportunity. No pharmaceutical company
    wanted to enter the low-margin generic antibiotics market.
    Jackson Healthcare stepped up when others walked away - viewing
    the acquisition out of bankruptcy of USAntibiotics not as a
    profitmaking opportunity, but as a U.S. national security
    imperative.
        Jackson has subsidized our losses while we've worked to
    rebuild market share and achieve profitability. They've
    invested tens of millions when others invested nothing. They've
    created jobs when other pharmaceutical facilities were closing.
    They've restored domestic manufacturing capacity when the trend
    was toward greater foreign dependence.
        And now, because of that patriotic investment, we're
    effectively barred from selling to the federal government
    through prime contracts.
        The government's small business set-aside policies exist
    for good reasons. They're designed to help small businesses
    compete against larger corporations. They prevent large firms
    from using their scale and resources to crowd out smaller
    competitors. These goals are admirable, and the policies serve
    essential purposes in many contexts.
        But when applied to critical medicines with severe supply
    chain vulnerabilities, these policies can produce perverse and
    dangerous consequences. In practice, they prevent the only
    American manufacturer from selling to the government while
    allowing foreign competitors, often subsidized by their own
    governments, to dominate federal procurement. They treat
    domestic manufacturers owned by successful American companies
    worse than foreign manufacturers owned by Chinese state-owned
    enterprises.
        This paradox has created a reality in which a U.S.-based
    small business repackager of foreign-origin drugs can partner
    with a Chinese or Indian enterprise to the detriment of the
    only U.S. end-to-end manufacturer of that critical medicine.
        Since January 2023, USAntibiotics has sold around $1
    million directly to government purchasers through the United
    States Department of Veterans Affairs and the United States
    Public Health Service via the Federal Supply Schedule System.
    This amount represents a tiny fraction of government antibiotic
    purchases, and it's only possible through the Federal Supply
    Schedule, which operates differently from direct contracts.
        In September 2022, the U.S. Department of Health and Human
    Services issued an approximately $40 million award for the
    provision of amoxicillin for the Strategic National Stockpile.
    This contract was structured as a small business set-aside,
    excluding USAntibiotics from competing. That means during
    roughly the same period in which the last U.S. domestic
    manufacturer of amoxicillin sold less than $1 million of
    amoxicillin to U.S. government purchasers, our government spent
    40 times that amount on foreign-origin amoxicillin.
        Every dollar spent on Chinese or Indian amoxicillin
    strengthens their industrial base while weakening ours. It
    sends a clear message to any entrepreneur considering domestic
    pharmaceutical manufacturing: the U.S. government won't support
    you. Even if you invest tens of millions of private capital,
    create high-quality manufacturing jobs, and address a critical
    national security and supply chain security vulnerability, the
    government will continue buying from foreign competitors
    because its procurement rules don't account for strategic
    considerations and prioritize lowest cost over quality.
        The $40 million Strategic National Stockpile contract
    perfectly illustrates the problem. The stockpile exists to
    protect Americans during public health emergencies. Its entire
    purpose is to supply security during crises when normal supply
    chains fail. Yet HHS structured the contract in a way that
    excluded the only American manufacturer from competing.
        The government's approach to stockpile procurement
    demonstrates a fundamental misunderstanding of the stockpile's
    purpose. The stockpile should prioritize American manufacturers
    for critical medicines where domestic capacity exists. This
    approach serves dual purposes: it ensures supply security and
    resilience during crises while providing the revenue stability
    that domestic manufacturers need to survive.
        But current policy does the opposite. It treats stockpile
    procurement the same as any other government purchase,
    prioritizing short-term cost savings over long-term supply
    security.
    The Repackager Problem

        Some U.S. companies import foreign-origin amoxicillin, slap
    a new label on the bottle, and market it as "Made in America."
    These repackagers add no manufacturing value. They don't
    operate pharmaceutical manufacturing facilities that create
    jobs at the scale that true end-to-end pharmaceutical
    manufacturing provides.
        Yet current procurement rules often treat them the same as
    genuine domestic manufacturers like USAntibiotics.
        When the government buys from a repackager instead of
    USAntibiotics, it's not buying American. It's buying Chinese or
    Indian antibiotics with an American sticker. That might satisfy
    the letter of some procurement rules, but it violates the
    spirit of domestic preference policies and does nothing to
    strengthen our U.S. pharmaceutical industrial base.
        Some repackagers are transparent about their business
    model. Others use carefully worded marketing that implies
    domestic manufacturing without explicitly claiming it.
    Procurement officers who lack pharmaceutical industry expertise
    may not understand the difference between genuine manufacturing
    and simple repackaging.
        A 2023 Department of Defense review found that the country
    of origin for API used in 22% of essential military drugs could
    not be identified.11 That's not supply chain management-that's
    negligence.
        USAntibiotics is the only end-to-end domestic manufacturer,
    meaning we control the entire production process from API to
    finished drug. We source our API from Trade Agreement Act-
    compliant European manufacturers, not from China. When you buy
    USAntibiotics amoxicillin, you're buying genuine American
    manufacturing with genuine supply chain security, but
    procurement rules don't distinguish between our approach and
    that of repackagers in a race to the bottom.
        What U.S. Manufacturers of Generic Antibiotics Need
        We are not asking for a U.S. government subsidy or handout.
    We're not asking for protection from competition or guaranteed
    profit margins. We're not asking for special treatment beyond
    what the government already provides to defense contractors,
    semiconductor manufacturers, and countless other strategic
    industries.
        We're asking that when the government buys antibiotics, it
    prioritizes genuine U.S. manufacturing over cheap foreign
    imports, whether those imports arrive directly or are disguised
    by domestic repackagers.
        We're asking that procurement policies align with national
    security imperatives rather than purely with short-term cost
    minimization.
        We're asking that the government not allow well-intentioned
    small business rules to prevent the only American manufacturer
    from competing for contracts for medicines designated as
    critical to national security.

    VI. How America's Allies Handle Pharmaceutical Sovereignty

        The United States is not alone in recognizing
    vulnerabilities in the pharmaceutical supply chain. Our allies
    have taken aggressive action to secure domestic manufacturing
    capacity for critical medicines. Their approaches offer lessons
    for American policymakers.
        The European Union launched the Critical Medicines Alliance
    to reshore manufacturing of essential medicines.112 This
    initiative identifies critical drugs where European dependence
    on Asian manufacturing poses unacceptable risks, then provides
    funding and regulatory support to rebuild European capacity.
        France announced a ?160 million fund explicitly dedicated
    to rebuilding domestic pharmaceutical production.13 The French
    government identified 30 essential medicines for which domestic
    production had been lost to Asian competitors, then offered
    financial incentives to pharmaceutical companies willing to
    reshore manufacturing.
        Japan has prioritized the reshoring of critical drug
    manufacturing through direct government investment and
    preferential procurement policies. The Japanese government
    maintains a list of strategic medicines where domestic
    production receives substantial support.
        Germany has launched multiple initiatives to reduce its
    reliance on China for pharmaceuticals, including research
    funding for domestic API production and requirements that
    government purchasers consider supply chain security alongside
    price.
        Australia established the Sovereign Manufacturing
    Capability Plan to identify and support critical industries,
    including pharmaceutical manufacturing. The plan includes
    direct subsidies, tax incentives, and preferential procurement
    for strategic goods.
        These countries understand that pharmaceutical sovereignty
    is national security. They've moved beyond studies and reports
    to actual policy implementation with real funding. They've
    recognized that maintaining domestic pharmaceutical
    manufacturing capacity requires government support, not just
    market forces.
        Yet while our allies act decisively, America dithers.
    Meanwhile, our last domestic manufacturers close their doors
    or, in USAntibiotics' case, operate on the edge of insolvency
    while the government buys from foreign competitors.
        We can learn from our allies' approaches without copying
    them wholesale. European subsidies may not be appropriate for
    the U.S. market. Japanese procurement policies may not fit
    American legal frameworks, but we must act with similar urgency
    and similar commitment to the principle that critical medicines
    require domestic industrial capacity.
        The longer we delay, the more difficult rebuilding becomes.
    Manufacturing expertise is lost, workforces transition,
    facilities deteriorate, and supply chains become reliant on
    foreign sources. Each passing year makes domestic
    pharmaceutical manufacturing less viable, not more.

    VII. Policy Recommendations

        To revitalize domestic manufacturing of generic antibiotics
    and protect our healthcare supply chain, I respectfully offer
    the following recommendations:

          1. Create Procurement Pathways for Critical Domestic
    Manufacturers

        When the federal government solicits contracts for
    medicines designated as essential medicines by the
    Administration for Strategic Preparedness and Response (ASPR),
    domestic manufacturers engaged in the end-to-end production of
    finished-form critical medicines should be allowed to compete
    regardless of whether their parent company is large or small.
    We respectfully submit to this committee that amoxicillin is
    critical to national security, because it is a reliable and
    highly effective treatment for bacterial infections.
        When the only domestic source of a strategic good is owned
    by a larger company, that ownership structure should not
    prevent government purchases if those purchases serve national
    security objectives.
        Alternatively, Congress could direct agencies to split
    contract awards between set-aside and open competition,
    ensuring that domestic manufacturers have opportunities to
    serve their government. A $40 million contract could be split
    into a $20 million small business set-aside and a $20 million
    open competition. This approach preserves support for small
    businesses while allowing domestic manufacturers to compete.
        Or Congress could create a national security exception to
    small business set-asides for critical medicines where domestic
    manufacturing capacity is at risk. This exception would apply
    narrowly to situations in which a domestic manufacturer faces
    closure due to its inability to compete for government
    contracts.
        The specific mechanism matters less than the outcome:
    America's last domestic amoxicillin manufacturer should be able
    to compete on a level playing field for government contracts.
    The current situation in which we're excluded from competing
    while foreign manufacturers dominate government procurement is
    indefensible from an economic security, national security, and
    supply chain security perspective.

          2. Define "Domestic Manufacturing" to Exclude Repackagers

        Any Buy American or domestic preference policy for
    pharmaceuticals should require that the finished dosage form be
    manufactured domestically through a process or combination of
    formulating, filling, and finishing, not simply labeled or
    repackaged domestically. Further, it should require that the
    active pharmaceutical ingredients be manufactured either
    domestically or by a supplier from a TAA-compliant country that
    has submitted to regular FDA on-site inspections. Repackagers
    who import foreign-origin drugs should not qualify for domestic
    preference treatment.
        A domestic manufacturer, for purposes of federal
    procurement preference, should be defined as a company that
    performs all steps necessary to convert API from a designated
    country under the TAA regulations into a finished dosage form,
    including formulation, blending, granulation, tableting or
    encapsulation, and final packaging.
        Companies that merely repackage or relabel foreign-
    manufactured drugs should be explicitly excluded from domestic
    preference provisions. Companies that manufacture finished
    drugs in the United States using Chinese and Indian API should
    likewise not qualify for domestic preference, at least in the
    context of critical medicines (i.e., medicines for which it is
    important to maintain a domestic manufacturing capability for
    national security purposes).
        The government should also require country-of-origin
    disclosure for APIs in all federal pharmaceutical procurement.
    Full supply chain transparency from key starting materials
    through finished drug products should be mandatory for any
    government contract. Every government pharmaceutical contract
    should require detailed disclosure of the country of origin for
    all APIs and key starting materials.
        This transparency serves multiple purposes, enabling
    procurement officers to make informed decisions about supply
    chain security, preventing repackagers from disguising foreign
    products as domestic, and creating accountability and enabling
    oversight.

          3. Establish Strategic National Stockpile Domestic
    Purchase Requirements

        The Strategic National Stockpile exists to protect
    Americans during public health emergencies. The stockpile
    should prioritize American manufacturers for critical medicines
    where domestic capacity exists. Congress should direct HHS to
    develop procurement strategies for the Strategic National
    Stockpile that give preference to domestic manufacturers of
    medicines designated as critical to national security.
        Congress should appropriate multi-year funds to HHS to
    provide for multi-year stockpile procurement contracts that
    enable manufacturers to make long-term capital investments.
        These longer-term contracts would serve dual purposes. They
    would ensure fresher stockpile inventory by enabling regular
    rotation rather than allowing medicines to age to expiration,
    and they would provide domestic manufacturers with the revenue
    stability needed to justify continued operations and capital
    investments.

          4. Incentivize Long-Term Purchasing Agreements

        Beyond the Strategic National Stockpile, encourage federal
    agencies broadly to enter into long-term contracts with
    domestic producers of essential medicines. This requires
    Congress to appropriate multi-year funds, but multi-year
    agreements will provide stability and predictability for
    manufacturers and will help us weather the storms caused by
    anti-competitive pricing from foreign competitors.
        Defense contractors and semiconductor manufacturers operate
    under multi-year agreements that provide revenue stability and
    enable long-term capital planning. Generic drug manufacturers
    of critical medicines deserve the same consideration.
        The government could establish Indefinite Delivery,
    Indefinite Quantity contracts for critical medicines, similar
    to those used in defense procurement. These IDIQ contracts
    would guarantee minimum purchase volumes while providing
    pricing predictability for both the government and
    manufacturers.
        An IDIQ contract might guarantee that a manufacturer will
    supply between 20% and 80% of federal agency needs for a
    particular medicine over a five-year period, with specific
    delivery orders issued based on actual requirements. This
    structure provides manufacturers with enough certainty to
    justify capital investments while maintaining flexibility for
    government purchasers.
        The Department of Veterans Affairs, the Department of
    Defense, the Public Health Service, and other federal
    healthcare providers collectively purchase enormous quantities
    of antibiotics. Coordinating these purchases through IDIQ
    contracts with domestic manufacturers would provide significant
    support to domestic manufacturing without requiring direct
    subsidies.

          5. Create a Strategic Antibiotic Manufacturing Fund

        Provide targeted grants, low-interest loans, and tax
    incentives to companies investing in domestic API and
    antibiotic production. The CHIPS Act offers a model that could
    be replicated for pharmaceuticals.
        Just as semiconductor manufacturing received tens of
    billions in federal support to rebuild domestic capacity,
    critical pharmaceutical manufacturing deserves similar
    investment. The amounts needn't be comparable to CHIPS Act
    funding-pharmaceutical manufacturing requires far less capital
    than semiconductor fabs-but they should be meaningful enough to
    offset the competitive disadvantages that domestic
    manufacturers face.
        This fund could support multiple activities. Direct grants
    could help manufacturers upgrade facilities and equipment. Low-
    interest loans could finance the construction of new API
    manufacturing capacity. Tax incentives could offset higher
    domestic labor and compliance costs.
        The fund should prioritize medicines designated as critical
    to national security, particularly those where domestic
    manufacturing capacity has been lost or is at risk. Antibiotics
    would be a logical initial focus, but the fund could expand to
    cover other essential medicine categories.

          6. Enforce Trade Rules to Counter Predatory Pricing

        Instruct the Department of Commerce and USTR to investigate
    and, where appropriate, penalize unfair trade practices in the
    pharmaceutical sector. We cannot allow predatory pricing to
    destroy our last line of defense.
        We support the ongoing Section 232 investigation regarding
    the national security effects of imports of pharmaceuticals and
    pharmaceutical ingredients. Section 232 investigations have
    been used to address perceived national security threats from
    steel, aluminum, and other strategic materials imports.
    Pharmaceuticals deserve the same scrutiny.
        When foreign manufacturers engage in below-market pricing
    that threatens to eliminate domestic capacity, the government
    should use all available trade tools to counter those
    practices. This includes anti-dumping duties, countervailing
    duties to offset foreign subsidies, and tariffs justified by
    national security considerations.

    VIII. Conclusion

        Rebuilding America's generic critical medicines
    manufacturing capacity is not just a matter of economics or
    public health. It is a matter of U.S. national security.
        The federal government faces a choice. It can continue
    policies that inadvertently favor foreign sources over the
    dwindling number of American generics manufacturers, or it can
    align its procurement policies with its stated national
    security goals. It can ensure that small business rules don't
    prevent critical domestic manufacturers from competing, demand
    transparency in pharmaceutical supply chains, and provide long-
    term contracts and policy support that domestic manufacturers
    need to thrive. It can recognize that pharmaceutical
    sovereignty requires the same commitment we've shown to
    semiconductor sovereignty, energy independence, and defense
    industrial base preservation.
        USAntibiotics stands ready to play our part. We have the
    infrastructure, the expertise, and the commitment. We have the
    capacity to supply 100 percent of America's amoxicillin needs.
    We employ skilled workers who take pride in producing medicine
    that saves American lives. We source our ingredients from
    allied countries, not adversaries.
        But we need Congress to act boldly and urgently. It's time
    for procurement policy to align with the national security
    realities of global pharmaceutical trade. Preserving
    pharmaceutical manufacturing in America is as important as
    keeping semiconductor manufacturing, defense manufacturing, or
    any other strategic industry. It's time to stop rewarding
    foreign dependence and start supporting domestic resilience.
        Thank you for the opportunity to testify. I look forward to
    your questions and working together on solutions that protect
    the health and safety of every American.
        Respectfully submitted, Patrick Cashman, President,
    USAntibiotics Bristol, Tennessee

    Resources
    -----------------------------------

    1Georgia Public Broadcasting. (2024, September 18). The only
    American maker of generic antibiotics wants the government to
    buy local. GPB News. https://www.gpb.org/news/2024/09/18/the-
    only-american-maker-of-generic-antibiotics-wants-the-
    government-buy-local
    2Outpatient Antibiotic Prescriptions - United States. CDC.
    (2022) https://archive.cdc.gov/www--cdc--gov/antibiotic-use/
    data/report-2022.html
    3Kabbani, S., et al. (2018). Outpatient Antibiotic Prescribing
    for Older Adults in the United States: 2011 to 2014. Journal of
    the American Geriatrics Society, 66(10), 1998-2005. https://
    pmc.ncbi.nlm.nih.gov/articles/PMC7909599/
    41 in three U.S. hospitals severely affected by drug shortages,
    survey finds. NBC News. (August 2023) https://www.nbcnews.com/
    health/health-news/drug-shortages-causing-hospitals-skip-delay-
    ration-care-survey-finds-rcna99007
    5Holland, E., et al. (2025). Demographic and regional trends of
    pneumonia mortality in the United States, 1999 to 2022.
    Scientific Reports, 15(1), 10103. https://www.nature.com/
    articles/s41598-025-94715-6
    6All generic drugs are not equal, study finds; Generics made in
    India have more `severe adverse events'. Indiana University
    Bloomington. (Feb 2025) https://blog.kelley.iu.edu/2025/02/19/
    all-generic-drugs-are-not-equal-study-finds-generics-made-in-
    india-have-more-severe-adverse-events
    7U.S. Food and Drug Administration. (2025, May 6). FDA
    Announces Expanded Use of Unannounced Inspections at Foreign
    Manufacturing Facilities. https://www.fda.gov/news-events/
    press-announcements/fda-announces-expanded-use-unannounced-
    inspections-foreign-manufacturing-facilities
    8Valisure. (2023, August 8). Valisure Signs Agreement with
    Department of Defense to Independently Test & Quality Score
    Drugs. PRNewswire. https://www.prnewswire.com/news-releases/
    valisure-signs-agreement-with-department-of-defense-to-
    independently-test--quality-score-drugs-301895301.html
    9China's position and competitiveness in the global antibiotic
    value chain: implications for global health. Globalization and
    Health. (2024) https://
    globalizationandhealth.biomedcentral.com/articles/10.1186/
    s12992-024-01089-x
    10Young, C. (2022, February). America's other health care
    crisis: Generic medicine supply chains. American Affairs
    Journal. https://americanaffairsjournal.org/2022/02/americas-
    other-health-care-crisis-generic-medicine-supply-chains
    11Warren, E. (2023). FY23 NDAA section 860: Risk management for
    DoD pharmaceuticals. U.S. Senate. https://
    www.warren.senate.gov/imo/media/doc/FY23/20NDAA/20sec/20860/
    20Risk/20management/20for/20DoD/20Pharmceuticals1.pdf
    12European Commission. (2024, April 24). Commission launches
    the Critical Medicines Alliance to help prevent and address
    shortages of critical medicines. https://health.ec.europa.eu/
    health-emergency-preparedness-and-response-hera/overview/
    critical-medicines-alliance--en
    13France to re-shore production of 50 key medicines. Le Monde.
    (June 2023) https://www.lemonde.fr/en/france/article/2023/06/
    13/france-to-re-shore-production-of-50-key-medicines--6031218--
    7.html

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                          Prepared Witness Statements

                                Eric Edwards, MD

        Chairman Scott, Ranking Member Gillibrand, and
    distinguished members of the Committee, thank you for the
    opportunity to testify on a matter that directly impacts the
    health, security, and well-being of millions of Americans,
    namely, our nation's growing dependence on fragile, foreign
    pharmaceutical supply chains and the resulting drug shortages
    that continue to threaten patient safety, public health, and
    national security.
        My name is Eric Edwards. I am a physician, scientist, and
    co-founder of Phlow Corp., a leading American advanced
    pharmaceutical contract development and manufacturing
    organization (CDMO) and certified B-Corporation created to
    advance the domestic development and manufacturing of critical
    medicines and help reshore medicine manufacturing on U.S. soil.
    I also continue to serve as a volunteer paramedic in Virginia,
    providing care in emergency settings. These are also the
    settings where the consequences of drug shortages are most
    acutely felt.

    I. The Human Cost of Drug Shortages

        Drug shortages are not abstract supply-chain problems. They
    are real crises unfolding daily in our nation's emergency
    rooms, ambulances, and operating suites. Across the country,
    clinicians are being forced to substitute unavailable
    medications with less effective or unfamiliar alternatives,
    increasing the risk of medication errors, adverse reactions,
    and patient harm. In my own clinical experience, there have
    been moments when critical drugs such as epinephrine for
    allergic emergencies, midazolam for seizures, or
    succinylcholine for intubating critical patients were simply
    unavailable. Every second counts for patients in these
    situations. Substituting or improvising can mean the difference
    between life and death.

    II. Overreliance on Fragile, Foreign Supply Chains

        The U.S. today relies on foreign manufacturers, primarily
    in China and India, for most of its active pharmaceutical
    ingredients (APIs) and associated precursor chemical
    ingredients, including pharmaceutical intermediates and key
    starting materials (KSMs). In many essential medicine
    categories, there is only one qualified source, and it is often
    overseas. Although drug shortages have not been primarily
    attributed to geopolitical conflicts in the past, the risk is
    significant due to growing global tensions and supply chain
    vulnerabilities, leading to an unacceptable strategic
    vulnerability.

    III. The Geopolitical and National Security Dimension

        Our pharmaceutical dependence is not just a public-health
    concern but rather a national-security threat. Rising global
    tensions make our fragile drug supply increasingly risky. If
    conflicts disrupt Asian trade routes or trigger export bans,
    the U.S. could lose access to essential APIs and precursor
    chemical ingredients needed for critical care, oncology, and
    infectious disease treatments. Future drug shortages may be
    significantly more severe, affecting a broader range of
    medications than we have seen in the past. The Defense
    Logistics Agency and the Department of Defense Inspector
    General have both warned that military readiness could be
    severely compromised by disruptions in the medical supply
    chain. A purposeful adulteration or export ban on key drug
    ingredients could leave warfighters without vital medicines.
        Over the past few years, Congress has taken significant
    steps to secure rare earth minerals, once 80-90% imported,
    including by expanding the National Defense Stockpile through
    actions such as the purchase of critical minerals.
        That same level of urgency is required for APIs and their
    chemical precursors, including KSMs, which underpin every
    essential medicine and medical countermeasure. Just as rare
    earths underpin critical technologies, APIs underpin the entire
    pharmaceutical supply chain, and without them, we cannot make
    critical medicines. Yet, the U.S. still imports over 80% of
    APIs, primarily from China and India, creating a hidden but
    serious risk exposed during the COVID-19 pandemic.
        Just as Congress views the rare earth critical industrial
    base as vital to national security, the API industrial base for
    key medicines and medical countermeasures should also be
    safeguarded as essential health infrastructure. The same
    bipartisan resolve that drove progress in rare earths can, and
    must now, be harnessed to restore America's pharmaceutical
    sovereignty, ensuring that the lifeblood of our healthcare
    system is made safely, reliably, and here at home.

    IV. What Phlow Is Doing to Address the Crisis

        Phlow was created to help solve this problem. In
    partnership with the U.S. Government, we have built a state-of-
    the-art advanced manufacturing campus in Virginia, designed to
    domestically produce APIs for medicines at both small and large
    scale. We share a campus with Civica Rx, which can produce the
    finished drug product for sterile injectable essential
    medicines. Our pharmaceutical campus integrates advanced
    manufacturing, process analytical technology, and digital
    quality control systems that are state-of-the-art, offering a
    high-quality, more efficient, and more sustainable way to make
    medicines entirely on U.S. Soil once again. Through our
    groundbreaking partnership with the Administration for
    Strategic Preparedness and Response (ASPR), Phlow is developing
    and supplying a broad catalogue of essential APIs. For each
    active ingredient program, Phlow reconstructs the chemistry,
    sources starting materials domestically or from allied nations
    if not possible to source or manufacture in the U.S., and
    leverages state-of-the-art development and manufacturing
    approaches, such as green chemistry and continuous
    manufacturing, to drive efficient, higher-yielding production,
    cost competitiveness, and a reduction of our environmental
    impact.
        To date, we have completed five API development programs,
    filed four drug master files, and have a dozen additional APIs
    in various stages of development. Our latest program,
    epinephrine, is now making its way into a finished drug
    product, creating a product with both API and finished product
    manufactured in the U.S. - something that has not occurred in
    decades. This API was previously majority manufactured in
    Taiwan, highlighting the vulnerability of such a critical
    medicine supply chain. We are also proud to support the
    Department of Defense (DoD) in strengthening the warfighter
    supply chain through a pilot program focused on developing and
    manufacturing critical drug ingredients for medical
    countermeasures.
        Phlow also co-founded the Children's Hospital Coalition,
    dedicated specifically to solving pediatric drug shortages. To
    date, we have delivered over 1.8 million doses of critical
    essential pediatric medicines to the Coalition to support a
    reliable supply of medicines that have experienced drug
    shortages. Furthermore, we have begun a domestic end-to-end
    program, from KSM to API to finished drug product, for
    ketamine, recently receiving the Commissioner's National
    Priority Review Voucher as a part of the FDA's inaugural pilot
    to support rapid development and approval of this critical
    essential medicine. Despite some misconceptions, ketamine
    remains vital to modern medicine as a fast-acting, versatile
    anesthetic that clinicians depend on for safe surgical
    procedures, emergency interventions, and battlefield care.
        Phlow also worked with the U.S. Government to conceive of,
    and build, the U.S. Strategic Active Pharmaceutical Ingredient
    Reserve (SAPIR) program. SAPIR is designed to function as a
    national security buffer for medicine supply chains. Through
    SAPIR, we are working to maintain an inventory of end-to-end
    domestically produced or allied-nation-sourced KSMs,
    intermediates, and APIs for the most essential medicines
    identified by the federal government. This forward-leaning
    model not only allows the U.S. to secure a much larger number
    of critical APIs in larger quantities but also ensures that if
    global supply chains are disrupted, the U.S. retains the
    ability to rapidly convert reserve materials into finished drug
    products to protect Americans. Unlike traditional stockpiling,
    which often relies on imported finished products with limited
    shelf life, SAPIR focuses on the building blocks of
    pharmaceuticals, enabling immediate domestic surge
    manufacturing, longer stability windows, and far greater
    resilience.

    V. What Is Needed for Sustainable Onshoring Success

        As we discuss how to strengthen America's medicine supply
    chain, it is important to be clear: the goal should not be to
    reshore every single medicine or chemical precursor ingredient.
    The U.S. pharmaceutical market encompasses more than 2,000
    approved medications. Attempting to onshore everything would be
    economically unrealistic and strategically unfocused.
        Instead, we must take a disciplined, risk-based approach,
    one that prioritizes medicines based on clinical criticality,
    population reach, and supply-chain vulnerability. Some
    medicines, such as certain injectables used in emergency care,
    have no substitutes and are essential for saving lives within
    minutes. Others treat millions of Americans daily, meaning any
    disruption would have broad population-level impacts. We are at
    serious risk when essential drugs depend on fragile or highly
    concentrated foreign supply chains that can be disrupted, or
    even weaponized, without warning.
        A national resilience strategy must therefore begin with
    the right-tiered list of essential medicines, regularly updated
    and informed by federal agencies, healthcare systems, and
    manufacturers. This list should continue to identify which APIs
    and KSMs require domestic or allied-nation production, which
    can be supported through diversified global sourcing, and which
    pose minimal risk. By doing this, we focus on the medicines
    that keep Americans alive in emergencies, followed by certain
    medications that stabilize chronic conditions and support
    national preparedness in times of crisis.
        Despite considerable progress, the onshoring movement
    remains fragile. For this transformation to succeed, certainty
    and sustainability are essential. No company, no matter how
    mission-driven, can sustain long-term domestic production
    without predictable demand and multi-year commitments. America
    must invest in domestic and allied API manufacturing capacity,
    particularly through shared-infrastructure ecosystems that
    dramatically lower production costs while enabling
    environmentally responsible synthesis.
        For Phlow, this aligns directly with our work under ASPR
    and the SAPIR program: if the U.S. cannot secure these earliest
    building blocks of medicines, it cannot secure the medicines
    themselves. Strategic API manufacturing is only as strong as
    the weakest upstream link. Therefore, this is not a one-company
    solution. We need a competitive marketplace of U.S.
    manufacturers aligned under a national strategy for medicine
    security.

        Several key policy enablers are required:

    1. Develop a Long-term and Comprehensive Strategy

        Restoring our nation's pharmaceutical supply chain cannot
    be achieved through isolated, short-term interventions. To
    prevent future shortages and secure our supply chain, the
    government must create a comprehensive, long-term plan that
    encompasses demand forecasting, industrial base growth,
    research and development, workforce development, and
    procurement reform. Congress should support a centralized
    authority to align policy and funding, while bringing stability
    for patients and predictability for manufacturers. Developing
    and then executing such a strategy requires sustained, cross-
    functional partnership across the federal government; siloed
    decision-making is a vulnerability.
        Given the finite time and resources available, this
    strategy must prioritize those essential medicines and medical
    countermeasures that treat life-threatening conditions and for
    which no suitable clinical alternatives exist. Prioritization
    is not optional, but rather necessary, to ensure that federal
    investments protect the most critical and high-risk segments of
    our healthcare system.
        At the same time, this strategy should leverage advanced
    development and manufacturing technologies, such as continuous
    manufacturing, that improve yields, reduce costs, strengthen
    quality, and enable greener, more sustainable chemistry.
    Integrating such technologies into the federal industrial base
    plan will not only accelerate domestic production but also
    ensure it is economically viable and environmentally
    responsible for the long term.

    2. Realign Payment and Procurement Policies with Reliability

        The central obstacle in restoring the reliability of
    America's drug supply is not a lack of data, but rather a lack
    of aligned incentives. The market will not shift back to the
    U.S. if the buyers of essential medicines, especially
    hospitals, clinics, and wholesaler intermediaries, remain
    structurally rewarded for choosing the lowest immediate cost,
    even when those savings come at the expense of long-term
    security and patient safety. Information about quality,
    sourcing, or supply-chain fragility becomes little more than a
    "warning label" if purchasers are neither financially supported
    nor contractually required to act on it. To change outcomes,
    federal entities should adopt procurement policies valuing
    supply chain reliability. Strategic investment in domestic
    sourcing can help save lives by strengthening national health
    security, reducing drug shortages, and mitigating the
    widespread disruptions they cause.
    3. Ensure Predictable, Long-Term Resourcing
        To build enduring resilience, the Administration and
    Congress must resource these programs with multi-year
    contracts, similar to how we support defense and energy
    infrastructure. This allows U.S. manufacturers to plan, invest,
    and scale with confidence.
        There is much to learn from the Department of Defense's
    long-term industrial base planning and its disciplined use of
    multi-year procurement, which has enabled stable domestic
    production of critical materials for decades. Defense
    contracting models demonstrate that when the government
    provides predictable demand signals, industry responds with
    sustained investment, innovation, and surge capacity.

    4. Level the Playing Field

        We must ensure that domestic manufacturers can compete
    fairly against foreign producers who benefit from heavy state
    subsidies, lax environmental and labor standards, weak
    intellectual property protections, and currency manipulation -
    advantages that artificially suppress prices and distort global
    markets. Without corrective action, U.S.-based pharmaceutical
    manufacturers are forced to compete not on innovation or
    quality, but against foreign governments underwriting the true
    cost of production.

    5. Close the Acetris Loophole

        As previously recommended by this Committee, it is critical
    that Congress prioritizes work to close the Acetris loophole.
    This loophole breaks the connection between "Made in America"
    and the actual location of pharmaceutical value creation and
    strategic risk, enabling continued dependence on vulnerable
    foreign API supply chains even in federal purchasing programs
    intended to prioritize domestic or allied production.
        Fixing the Acetris loophole is not about limiting trade or
    restricting competition; it is about aligning federal
    procurement with national security reality. APIs account for
    the greatest concentration of risk in the entire pharmaceutical
    supply chain. When the U.S. government buys drugs formulated
    domestically but sourced from adversarial nations upstream, it
    inadvertently reinforces the very dependencies we are working
    so hard to reduce. For essential medicines, particularly those
    relied upon by vulnerable patient populations, our military,
    and our emergency response systems, this loophole leaves the
    U.S. exposed to disruptions, coercion, and shortages
    originating far outside our borders.
        Closing this gap would also give companies like Phlow the
    market signals needed to invest boldly in U.S. advanced
    manufacturing, end-to-end pharmaceutical ingredient synthesis,
    and strategic API reserves.

    VI. Looking Ahead

        If we fail to act decisively, the next crisis will not be
    hypothetical. The shortages our great Nation has been coping
    with have shown us the harm they can cause. If the United
    States is not adequately prepared, the repercussions could be
    even more severe than those seen during past shortages of
    saline or chemotherapy treatments. We could see dangerous
    situations where anesthetics are unavailable in emergency
    rooms, saline or antibiotics are unavailable for a sepsis
    patient, or the inability of our military to access life-saving
    countermeasures in the midst of conflict.
        However, if we succeed in creating a durable, competitive,
    and secure domestic pharmaceutical manufacturing base, we will
    have restored one of the most critical pillars of national
    resilience. Phlow is honored to play a role in this mission,
    and we stand ready to partner with the U.S. Government and our
    fellow innovators to make medicine security a permanent reality
    for the American people.

    Conclusion

        Chairman Scott, Ranking Member Gillibrand, and members of
    the Committee, thank you for your leadership in shining a light
    on this issue. Drug shortages are not inevitable; they are the
    product of choices. Together, we can choose to build a safer,
    more resilient, and more self-reliant future for American
    healthcare.
        Thank you, and I welcome your questions.

    ?

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

                            Questions for the Record

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

    ?

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                            Questions for the Record

                                  Alan Coukell

                            Senator Raphael Warnock

        Question:

        Health care providers across Georgia are concerned about
    shortages of pharmaceutical drugs, including generic
    medications. Due to limited access to drugs, patients have been
    seeking alternative drugs and waiting longer periods for
    treatments.
        What type of federal procurement reforms should Congress
    lead to address pharmaceutical drug shortages in states like
    Georgia?

        Response:

        The most common cause of a drug shortage is a quality
    problem in the manufacture of the finished dosage form (i.e.
    the vial or the tablet). Most shortages occur among injectable
    drugs, because these products are more complex with more
    exacting requirements for sterility.
        Shortages are also highly correlated with price: lower cost
    drugs are more likely to go into shortage.\1\ Every
    authoritative investigation into the causes of drug shortages
    has concluded that low prices are the root cause.\2\ This is
    because when a drug is produced at low (or even negative)
    margins, a manufacturer loses the ability or the incentive to
    invest in quality. In addition, maintaining rigorous quality
    systems is expensive, so a manufacturer that cuts corners on
    quality can undercut prices and gain market share.
    ---------------------------------------------------------------------------
        \1\ United States Pharmacopoeia. USP Annual Drug Shortages Report:
    Longstanding drug shortages persist in 2024. https://go.usp.org/
    2025drugshortagesreport?--gl=1*hrts0*--gcl--
    au*MTA1MzEwODM0MS4xNzY0NjkyOTg1*--ga*MTc3MTU5MDcxNS4xNzY0NjkyOTg1*--
    ga--DTGQ04CR27*czE3NjQ2OTI5ODUkbzEkZzEkdDE3NjQ2OTI5OTckajQ4JGwwJGgw
        \2\ For example, see FDA "Drug Shortages: Root Causes and Potential
    Solutions," 2019; Brookings "Federal Policies to Address Persistent
    Generic Drug Shortages," 2023; Duke Margolis, "Advancing Federal
    Coordination to Address Drug Shortages" 2023.
    ---------------------------------------------------------------------------
        Thus, the ever-downward trend in generic drug prices is
    also a story of poor quality driving out good quality, which
    leads to shortages. This same pressure on price and quality
    also leads to a move of manufacturing from the United States to
    countries with low cost of labor and less well-developed
    regulatory systems, which enable manufacturers to cut corners.
        Domestic manufacturing is not automatically synonymous with
    good quality oversight, nor is off-shoring automatically a
    cause of drug shortages. Nevertheless, the "race to the bottom"
    on generic drugs prices fuels both offshoring and quality
    problems. In general, purchasers of generic drugs treat all
    FDA-approved products as equivalent. The only factor used to
    discriminate between them is price. Purchasing decisions do not
    take into account quality history or other practices that could
    ameliorate the risk of shortages - practices such as
    diversifying sources of supply or maintaining a reserve
    inventory to buffer any demand or supply shock.
        To mitigate and prevent future drug shortages, federal
    procurement should require or incentivize drug purchasing that:

          1. Selects suppliers with superior quality management
    practices that are less likely to result in a future shortage.
    This could be based on a physical audit of manufacturing
    facilities by, or on behalf of, the purchaser and informed by
    regulatory history from recent FDA inspections. Related
    approaches include FDA's ongoing work on "Quality Management
    Maturity" assessments and various third-party programs in
    development.
          2. Involve multi-year committed volume contracts, which
    bring stability to the generic drug market. Such agreements
    provide a manufacturer with a clear stable demand signal that
    is often lacking in the current highly labile commodity market
    for generic drugs.
          3. Include reserve inventory that can buffer supply
    shocks if the supplier (or another company making a competing
    generic) is unable to supply. While a buffer inventory cannot
    prevent a shortage indefinitely, it can frequently prevent an
    interruption in supply while manufacturers make additional
    batches of drug.
          4. Ensure appropriate diversity of supply. If multiple
    manufacturers each hold a significant market share, they are
    more likely to have the ability to increase production in
    response to a shortfall by another supplier.

        Such an approach has been proposed in a recent bipartisan
    discussion draft from the Senate Finance Committee.\3\ With
    improvements to simplify and streamline, this draft could be
    the basis for shifting procurement towards a more resilient
    supply. Other authorities could be used to achieve the same
    goal, such as changes to the Medicare In-patient Prospective
    Payment Ssytem rule or a demonstration program through the
    Center for Medicare and Medicaid Innovatoin (CMMI).
    ---------------------------------------------------------------------------
        \3\ Senate Committee on Finance, Medicare Drug Shortage Prevention
    and Mitigation Program (May 3, 2024 discussion draft), available at
    https://www.finance.senate.gov/imo/media/doc/050124--sfc--drug--
    shortages--discussion--draft--legislative--text.pdf
    ---------------------------------------------------------------------------
        Importantly, the SFC draft uses Medicare payment authority
    but would affect all purchases by providers that receive
    Medicare reimbursement (i.e. based on purchase invoices, not on
    which patients are covered by Medicare). This approach is
    essential to achieving a scale that would impact the supply.
    Direct federal procurement, such as through the Veteran's
    Administration and the Department of Defense, would affect only
    a small portion of the market and would therefore not
    meaningfully mitigate shortages in the wider market beyond a
    discrete effect in these systems.

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                            Questions for the Record

                                   Tom Neely

                            Senator Raphael Warnock

        Question:

        Health care providers across Georgia are concerned about
    shortages of pharmaceutical drugs, including generic
    medications. Due to limited access to drugs, patients have been
    seeking alternative drugs and waiting longer periods for
    treatments.
        In your testimony, you mentioned that Group Purchasing
    Organizations (GPOs) and Pharmacy Benefit Managers (PBMs)
    manage nearly all hospital generic contracting and retail
    generic purchases in the United States. What steps should
    Congress take to increase transparency into GPOs and PBMs and
    ensure profits captured by these entities are passed on to
    patients?

        Response:

        One of the central drivers of the cheap-import surge and
    resulting chronic drug shortages is the highly consolidated
    structure of purchasing intermediaries-especially Group
    Purchasing Organizations (GPOs) and Pharmacy Benefit Managers
    (PBMs). Three GPOs control 90% of hospital generic contracting,
    and three PBM-aligned alliances control 90% of retail generic
    purchasing.
        Their contracting structures drive prices below sustainable
    production costs by pitting subsidized imports against domestic
    producers. This dynamic has pushed U.S. manufacturers out of
    the market and deepened reliance on single foreign suppliers.
        To correct this structure, Congress can take the following
    steps:

          Revisit the GPO safe harbor and vendor-fee model. The
    Anti-Kickback safe harbor that allows GPOs to collect vendor
    fees biases contracts toward large, subsidized foreign
    incumbents, reinforces offshoring, and creates barriers for
    domestic and emerging producers.
          Require contracts-especially where federal dollars are
    involved-to weigh security and quality, not only price.
    Medicare, Medicaid, DoD, and VA purchasing, as well as GPO/PBM
    contracts, should explicitly factor FDA compliance history,
    redundancy of supply, and safe domestic or allied sourcing
    rather than rewarding the lowest unit cost.
          Expand supply-chain transparency and oversight. Congress
    should require clear disclosure of manufacturing sites and API
    country-of-origin. The FTC and DOJ should strengthen scrutiny
    of exclusionary contracting practices that shut out new or
    domestic suppliers.

        These steps realign purchasing incentives so that the
    system rewards reliable, high-quality, and domestically
    anchored supply rather than opaque, lowest-bid foreign
    sourcing.

        Question:

        According to the Georgia Chamber of Commerce,
    pharmaceutical drugs are one of the largest imports in Georgia.
    As tariffs continue to increase the price of pharmaceutical
    drugs, Georgians might face a greater barrier to accessing
    medications.
        How can Congress lead long-term solutions for strengthening
    domestic drug supply chains while also securing Georgians'
    immediate access to affordable pharmaceutical drugs?

        Response:

        The core tools for rebuilding the generic and API base are
    a Section 232 pharmaceutical Tariff-Rate Quota (TRQ), the PILLS
    Act production and investment incentives, and the realignment
    of federal purchasing toward secure, reliable supply.
        First, a TRQ under the Section 232 national-security
    authority would set quota volumes for critical generics and
    APIs, allowing needed imports from trusted FDA-standard-
    equivalent partners to enter at zero tariffs while imposing
    high, specific tariffs only on over-quota volumes and on risky,
    subsidized supply from countries such as China and India.
    Quotas are set at U.S. demand minus domestic capacity and
    adjusted regularly, ensuring patients maintain access while
    domestic capacity is rebuilt.
        Second, the PILLS Act framework provides a production tax
    credit for U.S.-made generics, APIs, and biosimilars, plus an
    investment tax credit for new and modernized facilities.
    Together, these credits can offset much of the foreign cost
    advantage rooted in subsidies and weaker standards abroad,
    making it economically viable to reshore and expand
    manufacturing.
        Third, federal procurement-Medicare, Medicaid, DoD, and the
    VA-is the single largest buyer of medicines in the country.
    Prioritizing safe, reliable U.S.-made products, using long-term
    anchor contracts, and expanding strategic API reserves all
    guarantee stable demand for domestic producers and reduce
    dependence on single overseas suppliers.
        These tools do not raise out-of-pocket costs for patients
    in Georgia or elsewhere. Only about 36% of a generic's retail
    price is manufacturing; the remaining 64% goes to wholesalers,
    PBMs, pharmacies, and insurers. Federal reimbursement systems
    in Medicare Part B, Medicaid, and Part D already absorb modest
    cost shifts. It is the lack of domestic production that drives
    the 300-500% gray-market price spikes hospitals face during
    shortages.
        A Section 232 TRQ, PILLS-style incentives, and aligned
    federal procurement give Congress a clear path to strengthen
    domestic drug and API capacity over time while keeping
    medicines affordable and available for Georgians right now.
    =======================================================================

                           Statements for the Record

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

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                           Statements for the Record

      Composition of OSCS contaminated heparin occuring in 2008 Statement
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                           Statements for the Record

                  Heparin at the Center of the Storm Statement
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                           Statements for the Record

                      National Consumers League Statement
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     U.S. Senate Special Committee on Aging

              "Made In America: Restoring Trust In Our Medicines"

                               November 19, 2025

                           Statements for the Record

          White Paper: The 2008 Heparin Contamination Crisis Statement
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  [all]