[Senate Hearing 119-263]
[From the U.S. Government Publishing Office]
S. Hrg. 119-263
MADE IN AMERICA: RESTORING
TRUST IN OUR MEDICINES
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
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NOVEMBER 19, 2025
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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
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SPECIAL COMMITTEE ON AGING
RICK SCOTT, Florida, Chairman
DAVE McCORMICK, Pennsylvania KIRSTEN E. GILLIBRAND, New York
JIM JUSTICE, West Virginia ELIZABETH WARREN, Massachusetts
TOMMY TUBERVILLE, Alabama MARK KELLY, Arizona
RON JOHNSON, Wisconsin RAPHAEL WARNOCK, Georgia
ASHLEY MOODY, Florida ANDY KIM, New Jersey
JON HUSTED, Ohio ANGELA ALSOBROOKS, Maryland
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McKinley Lewis, Majority Staff Director
Claire Descamps, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Rick Scott, Chairman................ 1
Opening Statement of Senator Kirsten E. Gillibrand, Ranking
Member......................................................... 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
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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
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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.
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Questions for the Record
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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.
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Statements for the Record
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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
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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
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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
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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
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