    [Senate Hearing 119-416]
    [From the U.S. Government Publishing Office]

                                                          S. Hrg. 119-416

                         FOREIGN DEPENDENCE: HOW CHINA
                         CAPTURED AMERICA'S DRUG SUPPLY
    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                                 MARCH 11, 2026

                                   __________

                               Serial No. 119-26

             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
    63-836 PDF            WASHINGTON : 2026
    =======================================================================

                           SPECIAL COMMITTEE ON AGING

                         RICK SCOTT, Florida, Chairman

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

                            C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

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

                               PANEL OF WITNESSES

    Hon. Ted Yoho, Former Congressman (Fl-3), Senior Advisor, Kyle
      House Group, Welaka, Florida...................................     4
    Gordon G. Chang, Author, Plan Red: China's Project to Destroy
      America, Bedminster, New Jersey................................     5
    Rosemary Gibson, Author, China Rx: Exposing the Risks of
      America's Dependence on China for Medicine, McLean, Virginia...     7
    Chan Harjivan, Visiting Fellow, Duke Margolis Institute for
      Health Policy, Washington, D.C.................................     8

                                    APPENDIX
                          Prepared Witness Statements

    Hon. Ted Yoho, Former Congressman (Fl-3), Senior Advisor, Kyle
      House Group, Welaka, Florida...................................    26
    Gordon G. Chang, Author, Plan Red: China's Project to Destroy
      America, Bedminster, New Jersey................................    30
    Rosemary Gibson, Author, China Rx: Exposing the Risks of
      America's Dependence on China for Medicine, McLean, Virginia...    38
    Chan Harjivan, Visiting Fellow, Duke Margolis Institute for
      Health Policy, Washington, D.C.................................    44

                            Questions for the Record

    Hon. Ted Yoho, Former Congressman (Fl-3), Senior Advisor, Kyle
      House Group, Welaka, Florida...................................    68
    Gordon G. Chang, Author, Plan Red: China's Project to Destroy
      America, Bedminster, New Jersey................................    70
    Rosemary Gibson, Author, China Rx: Exposing the Risks of
      America's Dependence on China for Medicine, McLean, Virginia...    73
    Chan Harjivan, Visiting Fellow, Duke Margolis Institute for
      Health Policy, Washington, D.C.................................    76

                           Statements for the Record

    AARP Statement...................................................    85
    ASHP Statement...................................................    88

                         FOREIGN DEPENDENCE: HOW CHINA
                         CAPTURED AMERICA'S DRUG SUPPLY

                                  ----------

                           Wednesday, March 11, 2026

                                            U.S. Senate
                                     Special Committee on Aging
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:32 p.m., Room
    216, Hart Senate Office Building, Hon. Rick Scott, Chairman of
    the Committee, presiding.
        Present: Senator Scott, Tuberville, Moody, Gillibrand, and
    Alsobrooks.

                      OPENING STATEMENT OF SENATOR
                          RICK SCOTT, CHAIRMAN

        The Chairman. The Special Committee on Aging will now come
    to order.
        What if I told you that Communist China, an adversary of
    the United States, and they made that decision, has sole
    control of the building blocks of many of the medicines seniors
    Americans rely on, completely dependent on. I am not just
    talking about a few medicines, I am talking about our
    antibiotics, our diabetes drugs, our blood pressure
    medications, essential life-saving medicines found in every
    hospital, every pharmacy, and every medicine cabinet in this
    country.
        This isn't speculation, it is a reality. Xi Jinping and his
    thugs in the CCP have decided to be our enemies, and they are
    controlling the very medications our families rely on to live
    happy, healthy lives. Today's hearing is about getting to the
    bottom of why this is the case.
        I want to be very clear. It didn't happen because Communist
    China was clever or lucky, this happened because Washington was
    negligent. Lobbyists are powerful and politicians in both
    parties chose cheap over safe. For years, we watched Communist
    China's Government and its leaders execute a deliberate,
    documented, publicly stated plan to capture the global drug
    supply chain.
        They weren't trying to hide it, the signs were obvious and
    our government did absolutely nothing to stop it. As a matter
    of fact, politicians created regulatory barriers and enacted
    policies that pushed manufacturing overseas and right into the
    CCP's hands. This Committee has spent the last six months
    exposing this threat and building this case piece by piece,
    hearing by hearing.
        In September, we exposed how our dependence on foreign
    generics is threatening drug safety and availability for
    American patients. In October, we brought in experts to examine
    solutions and discuss ideas like procurement reform and supply
    chain transparency. In November, we had American manufacturers
    testify what a rebuilt domestic industry could actually look
    like.
        In January, along with Ranking Member Gillibrand, and
    several members of this Committee, introduced the CLEAR LABELS
    Act to inject transparency into our drug supply chain, because
    the American people have a right to know where their drugs, and
    the medicines keeping their mothers, fathers, and children
    alive, come from.
        We have written to the FDA and the Secretary of HHS, we
    have written to drug distributors, and group purchasing
    organizations demanding answers about their foreign sourcing.
    We have written to Secretary Hegseth about what dependence on
    Communist China means for the health and readiness of our
    troops. We even published an investigative report that
    documents in plain terms what decades of offshoring has done to
    the American drug manufacturing industry.
        Over the last 24 years, domestic production has collapsed,
    dropping from 84 percent of the U.S. market in 2002, 84
    percent, to just 37 percent today. 80 percent of APIs used in
    these essential medicines have no U.S. source whatsoever. Think
    about that, 80 percent.
        During COVID-19 the Chinese Government nationalized its own
    medical supply production, turned off the exports, turned off
    the exports, and decided which countries got life-saving drugs
    based on politics, 37 Chinese factories that made ingredients
    for American drugs shut down during the pandemic.
        U.S. hospitals and healthcare workers fighting to keep
    Americans alive ran out of sedatives, antibiotics, and cancer
    drugs. That was a taste what it looks like when you let an
    adversary control your supply of essential medicines. It should
    serve as a warning to all of us, if we just sit here, hold this
    hearing, thank our witnesses, and go home without acting, it
    will happen again, but worse.
        We didn't come here today to preside over another
    Washington exercise when all we do--where all we do is identify
    a problem, and then pat ourselves on the back for a nice
    hearing. This Committee has been working since day one to sound
    the alarm, talk to experts, and present real solutions to fix
    the problem. I hope today will be a moment that alarm becomes
    impossible to ignore.
        To all the members of this Committee and all congressional
    colleagues, let us continue to work together to fix this
    problem. Let us find a path forward that will protect American
    patients and American lives, the lives of our constituents.
        I would like to recognize Ranking Member Gillibrand for her
    opening statement.

                     OPENING STATEMENT OF SENATOR
                 KIRSTEN E. GILLIBRAND, RANKING MEMBER

        Senator Gillibrand. Thank you, Chairman Scott and thank you
    to our witnesses, being here today.
        As this Committee continues to investigate the generic drug
    supply chain, its safety, its quality, there is one refrain
    that is repeated at each hearing, and that is that the United
    States has become reliant on China and India for key
    ingredients to manufacture generic drugs, active pharmaceutical
    ingredients, and key starting materials.
        A combination of factors has led to China's dominance in
    this space. Subsidies provided by the Chinese Government lacks
    environmental regulations and lower costs of labor but China is
    not the sole reason that the United States is reliant on
    foreign manufacturers for these critical chemicals. Underlying
    market factors in the United States have led to a race to the
    bottom where incentives for manufacturers are solely based on
    cost and not quality, while amongst all of the generic drugs
    that Americans take are--sorry--while almost all of the generic
    drugs that America takes is safe, Congress must empower the FDA
    to conduct rigorous oversight to make sure foreign
    manufacturers comply with our safety standards.
        Congress must also work with industry to move away from
    cost being the only factor for purchasing. We must also
    incentivize manufacturers and purchasers to consider quality
    when they are sourcing active pharmaceutical ingredients and
    final dose form medicines. While the United States has
    unfortunately ceded much territory regarding the generic drug
    supply chain, there are still steps we can take to reshore or
    friendshore for sourcing.
        However, the United States must keep our global leadership
    in biopharmaceutical innovation. China has rapidly scaled up
    their innovation for these novel medicines and therapies. They
    have reformed their clinical trial system, invested Government
    funding into development, and improved coordination between
    early research and commercial scale manufacturing. While the
    United States does not need to replicate the steps that the
    Chinese Government has taken exactly, we have to realize that
    China is moving at a much faster pace than we are.
        The United States has been the standard bearer for clinical
    innovation for decades. It would be a detriment to our global
    leadership if we let China surpass us in innovation. I look
    forward to working with my fellow Members of Congress to ensure
    that emerging biotechnology and innovation is supported in a
    way that incentivizes these companies to stay in the United
    States.
        I also urge my colleagues in Congress to adopt
    recommendations laid out by the National Security Commission on
    emerging biotechnology. Congress has the roadmap to continue
    our global leadership in biopharmaceutical innovation and we
    must recognize this sector for the asset that it is.
        I look forward to continuing this robust conversation
    today, and I look forward to collaborating with my colleagues
    across the aisle on this incredibly important issue.
        The Chairman. Thank you, Ranking Member Gillibrand.
        Next, I would like to welcome our witnesses. They are
    experts on Communist China and supply chains and they can
    explain how we got here and what we can do to address our
    reliance on the CCP.
        First, I would like to welcome a fellow Floridian,
    Congressman Ted Yoho. Served in Congress for eight years,
    formerly chairing the House Foreign Affairs Subcommittee on
    Asia and the Pacific. Thank you for coming and I look forward
    to hearing your testimony.

                   STATEMENT OF HON. TED YOHO, FORMER

                  CONGRESSMAN (FL-3), SENIOR ADVISOR,

                   KYLE HOUSE GROUP, WELAKA, FLORIDA

        Dr. Yoho. Chairman Scott, and Ranking Member Gillibrand,
    thank you for the opportunity to address your committee on this
    important and timely topic.
        The integrity of pharmaceuticals consumed by Americans,
    especially our seniors, must be of the highest standards in
    quality, purity, and effectiveness and free of adulteration
    from toxins and cancer-causing substances that cause illness or
    death. The responsibility lies with the pharmaceutical
    companies and U.S. Government agencies like the Food and Drug
    Administration and the offices--or the Office of the United
    States Trade Representative.
        The medical community including drug retail outlets,
    insurance companies, hospitals, and doctors all share the
    responsibility of ensuring medications are of the highest
    standards. China took advantage of the U.S. self-inflicted
    wounds which was caused by overly burdensome regulations, tax
    policies imposed by the U.S. Government, as well as by
    corporations seeking higher profits to appease boardrooms and
    investors.
        China enticed U.S. manufacturers to their shores with the
    lure of low taxes, lacks regulations, cheap labor and a 1.4-
    billion-person market.
        However, the cost to drug makers, the danger to the U.S.
    consumers, and the vulnerability to U.S. national security were
    missed. Drug makers soon realized they were subject to Chinese
    rules, laws, patent agreements. They were required to have
    Chinese Communist Party Members on their boards, and relinquish
    up to 51 percent of their companies to state-owned enterprises.
        Corporations must give up their drug formula for approval.
    If not surrendered freely, they are stolen. Chinese companies
    then spring up, creating the exact same drug and selling it
    below cost. As a result, U.S. manufacturers cannot compete and
    are forced to leave the market. The result is that China
    controls the world market, price, and supply chain. This is a
    national security risk and a health risk to our country.
        As detrimental as that is, it gets worse. China does not
    adhere to or practice the good manufacturing practices set by
    the FDA. Nor do they follow the standards set by U.S.
    Pharmacopeia, a 200-year-old U.S. organization that establishes
    requirements for pharmaceutical manufacturers to ensure the
    purity, quality, and effectiveness of the medicines U.S.
    consumers take.
        This results in adulterated products entering our markets
    that have been documented to contain toxins, cancer-causing-
    agents like nitrosodimethylamine, melamine, tainted heparin, or
    ineffective medications causing treatment failures or death.
    These and many other examples are well covered in Rosemary
    Gibson's book, China Rx, printed in 2016.
        Pharmaceuticals are made from key starting materials and
    active pharmaceutical ingredients that create the final dose
    form. China controls 30 to 60 percent on many of these
    components and up to 100 percent on others. With this control
    over the raw ingredients in our drugs, it is easy to see how
    China has positioned themselves to control much of the U.S. and
    the world's drug market.
        The solution, change U.S. policies. First, we must require
    all manufacturers and countries wishing to sell or import drugs
    into the U.S. market to meet the same FDA inspections as U.S.
    manufacturers. That means an unannounced 24/7 inspection. This
    is non-negotiable. Congress must create laws requiring all
    nations producing pharmaceuticals for sale in the U.S. to meet
    U.S. FDA inspections.
        Second, we must encourage U.S. manufacturers to move back
    to the U.S. with a combination of investment, tax incentives,
    trade policies, and tariffs. President Trump's four executive
    orders have already brought back millions of dollars of
    pharmaceutical manufacturing investment to our shores.
        Third, we must require quality and purity inspections that
    adhere to USP Inc.'s gold standard for drug manufactured in or
    entering the U.S.
        Fourth, we must forbid the FDA from relaxing regulations
    when drug shortages occur. Permitting this willingly allows
    inferior products to be sold to and consumed by U.S. military
    and citizen populations.
        Last, we must require all medicines for our military to be
    100 percent U.S.-made from the KSM, to APIs, to the final dose
    stage. The role of the pharmacy benefit managers needs to be
    reevaluated. Failure to address the Nation's pharmaceutical
    dependency on China, or any other nation, jeopardizes our
    national security and our citizens' health security, and it
    cannot be accepted.
        I yield back and look forward to your questions.
        The Chairman. Thank you, Congressman.
        I now would like to welcome Mr. Gordon Chang, who has
    decades of experience as an author and commentator on the CCP.
    Mr. Chang has briefed our Nation's top leaders and written
    extensively about the CCP. Thank you for being here, and thank
    you for your wife being here, Lydia.

                 STATEMENT OF GORDON G. CHANG, AUTHOR,

                  PLAN RED: CHINA'S PROJECT TO DESTROY

                    AMERICA, BEDMINSTER, NEW JERSEY

        Mr. Chang. Chairman Scott, Ranking Member Gillibrand, and
    distinguished Members of the Committee. I am honored to be here
    and thank you so much for the opportunity to appear today.
        China, as we just heard, has monopolies over many of our
    pharmaceuticals and the question is, what is at stake? The
    reason why this is so important is because China could deny
    these medications to us. This statement needs context.
        China's regime believes it is at war with us. In May 2019,
    People's Daily, the most authoritative publication in China, in
    a landmark editorial, declared a "people's war" on us. March
    2023 PLA Daily, the official publication of the Chinese
    military, defined people's war as "total war," and China to win
    this war, and they are serious, China to win this war has a
    doctrine of unrestricted warfare.
        In 1999 two Chinese air force colonels wrote a book by that
    title, and they argued that China could adopt any tactic to
    take down the United States, so unrestricted means
    unrestricted. China, we know, has weaponized its near monopoly
    over rare earths in the trade discussions, but it has not
    weaponized its 100 percent monopoly, 100 percent monopoly, on
    the production of pharmaceuticals.
        This is not just a theoretical threat because in March 2020
    during the COVID epidemic, the Chinese regime threatened to
    throw the United States into, what it called, "a mighty sea of
    coronavirus" by cutting off pharmaceuticals and other items
    that were needed during the epidemic.
        China, we know, has a monopoly on many of these, so for
    instance, a hundred of America's most used antibiotics
    pharmaceuticals, they require ingredients that are made in only
    one Chinese factory, 100 pharmaceuticals only one Chinese
    factory. India the other heavyweight production center for
    generics, they get 80 percent of their active pharmaceutical
    ingredients from China and with regard to the key starting
    materials, 45 percent of them are produced only in China.
        Generics are especially important because 91 percent of all
    U.S. prescriptions are filled with them. The generics, they are
    produced in China as well. Eighty-three percent of the top
    generics are produced only in China. China is the supplier of
    at least one of the key starting materials for 679 of the
    active pharmaceutical ingredients.
        The Defense Department in 2023 issued a report that showed
    that 27 percent of the medications it used were 100 percent
    dependent on China and antibiotics, as we just heard, is a
    particular American vulnerability, so for instance, the most
    widely used antibiotic in America is made from four separate
    key starting materials that are produced almost entirely in
    China and America gets 45 percent of its penicillin from China
    as well.
        FDA officials told us that they did not enforce America's
    standards on the importation of foreign-made pharmaceuticals,
    because they said if they did that it would cause severe
    shortages here.
        We know how we got into this predicament, it was China's
    predatory trade policies, but it was also on America, an
    America that thought manufacturing was no longer important, and
    also thought that the nature of regimes was no longer
    important.
        We know that in emergencies foreign countries, even our
    friends, will hoard medications and that happened in the 2009
    swine flu epidemic for instance, so of course, we need to
    onshore our production and to do that, we need to impose
    Section 232 tariffs, invoke the Defense Production Act, enhance
    the investment tax credit for the production of medications,
    require the Federal Government to buy American-made
    pharmaceuticals, and authorize federally backed loans for
    pharmaceutical production.
        Senators, we do not have a moment to lose. Thank you.
        The Chairman. Thank you, Mr. Chang.
        Our next witness is a leading author and expert on
    Communist China and the drug--and drug quality issues. Rosemary
    Gibson is the author of China Rx, a book that outlines our
    dependence on Communist China for drugs and ingredients. She
    has been recognized for her work, including receiving the
    highest honor for the American Medical Writers Association.
        Ms. Gibson, thank you for being here. Please begin your
    testimony.

            STATEMENT OF ROSEMARY GIBSON, AUTHOR, CHINA RX:

               EXPOSING THE RISKS OF AMERICA'S DEPENDENCE

                ON CHINA FOR MEDICINE, MCLEAN, VIRGINIA

        Ms. Gibson. Thank you, Chairman Scott, and thank you
    Ranking Member Gillibrand.
        China Rx was the first to expose how dependent the United
    States is on a single country, and it also exposed that other
    countries like India are highly dependent on China also, so all
    roads lead to the same source. My comments today are on generic
    medicines because they are so prominent in our supply chain.
    The centralization of the global supply in a single country is
    so open to catastrophic failure, an export ban would turn our
    health care system into chaos.
        An export ban is not hypothetical. In June 2025, last year,
    a statement came out of China, this was during the trade
    negotiations, and it was said that, "If China chose to restrict
    pharmaceutical raw materials from the United States, the
    situation in the U.S. would be much worse than it is for
    critical minerals". We have been warned and we have no time to
    waste.
        Today, I am very pleased to share with you the findings of
    the Department of War first Generic Drug Testing program which
    highlights quality concerns in our medicine supply. For the
    first time we have data on how well our generic drugs are made
    and whether they meet our standards. The Department of War's
    work started in 2019 when I was invited to the DLA and I asked
    them a question: Do you test your medicines?
        The Department of War's work followed on the heels of
    Kaiser Health Plan, which started testing generic drugs right
    beforehand. Here are some of the highlights of the testing
    program to date, so far, 13 different generic drugs have been
    tested, all the different manufacturers and repackagers.
    Fifteen percent of what has been tested fail basic quality
    standards. In any industry products with 15 percent
    manufacturing defects, it would be shut down.
        Here are some of the test findings: For people who are
    recipients of organ transplants, their lives depend on taking a
    drug to prevent organ rejection. Some of those products were
    not manufactured right. They don't work right, and very
    reputable physicians believe patients have died as a result.
    Testing has found toxins including thallium which is known as
    the poisoner's poison in some products, and then arsenic, lead,
    and carcinogens.
        Thirty years ago, when we used to make generic drugs here,
    for the most part, people would go to prison for this. The
    testing team led by the independent laboratory, Valisure, we
    would welcome the opportunity to brief members of the Committee
    on the full details of all these 13 generic drugs.
        What do we do? I have three recommendations. The first, as
    alluded to, it is absolutely essential that a country that is a
    superpower have the capacity to make its own antibiotics. China
    Rx was the first to expose that we have no capacity to make
    antibiotics end to end here. We have no sovereignty and our
    survival is at risk. Let us do what we have done with critical
    minerals and bring that manufacturing back home now and not
    only for antibiotics, but the most essential generics that are
    essential to sustain life and there are a lot of good people in
    this country waiting on the sidelines to help do that.
        Second, the federal departments of HHS, the VA, and
    Department of War should be directed to use the quality data in
    their procurement decisions. When they do that, that quality is
    correlated with location that will automatically, if we use the
    quality data, drive out substandard generics that are typically
    made in Asia and it would support U.S. manufacturers who would
    be able to enter and supply quality medicines to our military
    and veterans.
        Finally, we have to go right to the tip of the spear and
    where the root cause of this is. There is a handful of U.S.
    companies that source all the generics that are distributed in
    this country and they scour the earth looking for the cheapest.
    Now, going forward, it is imperative that they are held
    accountable for quality and not just cost.
        The narrative that all generics are the same today, what
    this data shows, it is not true. Once again, we welcome the
    opportunity to brief the Full Committee on these findings which
    we believe are game-changing. A total of 42 drugs will be
    tested, and we look forward to the opportunity for this to
    really transform our drug supply system. Thank you.
        The Chairman. Thank you, Ms. Gibson. Now, I would like to
    recognize Ranking Member Gillibrand to introduce the next
    witness.
        Senator Gillibrand. Thank you, Mr. Chairman. I want to move
    to introduce our next witness, Dr. Chan Harjivan. Dr. Harjivan
    is visiting fellow with the Duke Margolis Institute for Health
    Policy. Previously, he was a special assistant to the White
    House where he reported directly to President Biden, working to
    strengthen the Nation's readiness for biological threats. He
    was a key architect of Operation Warp Speed, the historic
    federal initiative to develop the COVID-19 vaccine.
        You may begin.

                  STATEMENT OF CHAN HARJIVAN, VISITING

                  FELLOW, DUKE MARGOLIS INSTITUTE FOR

                    HEALTH POLICY, WASHINGTON, D.C.

        Mr. Harjivan. Chairman Scott, Ranking Member Gillibrand,
    and Members of the Committee, thank you for this opportunity to
    testify.
        Much of the discussion around pharmaceutical supply chains
    have focused on admiring the problem as Chairman Scott has
    mentioned, foreign dependence, shortages, and market failure.
    Now, sound policy changes are being proposed but today I would
    like to focus on an integrated solution set. America still has
    the world's largest pharmaceutical market, flexible allocation
    capital, and the strongest research system with unparalleled
    talent.
        What we need is alignment between policy, markets, and
    resilience. In my view, America and its democratic allies
    should pursue what I call an allied life-sciences platform, a
    strategy built around five mutually reinforcing pillars:
        First, know the chain. We cannot manage risk in a supply
    chain that we cannot see. Congress should require auditable
    end-to-end supply chain mapping. This is not about burdensome
    reporting, much of this information already exists and it
    aligns with other industries and other country standards. What
    we need are common data frameworks and enforcement mechanisms
    that allow Government and industry to identify vulnerabilities
    before they become shortages or dependencies. Transparency is
    the foundation of flexibility.
        Second, buy resilience. The second pillar is about
    providing predictability to makers of drugs. Federal purchasers
    including the DoD, the VA, and CMS reimbursement systems shape
    a significant share of the pharmaceutical demand. They should
    reward supply redundancy, quality manufacturing, surge
    capacity, and geographic diversification and in fact,
    predictable contracts can lower the price for medications, not
    increase them.
        In general, I have always been struck by how these buyers
    seem not to understand how stable and reliable demand signals
    are valuable to their suppliers and enable them to build more
    efficient processes. Analysis by Rios Partners highlights the
    significant opportunity to strengthen procurement efficiency
    within the VA as hospitals often purchase identical products at
    widely varying prices, often exceeding those paid by private-
    sector providers. This is costing taxpayers hundreds of
    millions a year while not securing the supply chain or serving
    patients optimally. If the DoD and the VHA don't value security
    of medical supply chain for the war fighter or veterans, who
    will?
        Third, build capacity at home and with allies. The goal
    should not be complete reshoring of global pharmaceutical
    production or creating trade barriers. That would be
    unrealistic and unnecessary. Instead, the United States should
    maintain domestic manufacturing capacity for a few essential
    medicines while building a trusted supply network. Powerhouses
    such as India, South Africa, Canada, Europe, and Japan already
    play critical roles in the global pharmaceutical system. Let us
    work with them to eliminate choke points at the same time lower
    costs.
        Fourth, win the biotech stack. The fourth pillar looks
    forward. Competition in life sciences increasingly spans the
    entire innovation pipeline, from AI-enabled discovery, to
    clinical trials, to advanced manufacturing. When I started
    consulting in 2000 the cost to develop a drug was $500 million,
    in 2010 it was one billion, it is now two billion. We are not
    efficiently developing or harnessing technological innovation
    in drug development. The United States should invest in and
    enforce standards that catalyze technologies. The country that
    defines the architecture and set standards will own the AI
    biology industrial revolution. We don't want to win the generic
    supply chain battle and lose the global war in life sciences.
        Fifth, mobilize long-duration capital, the final pillar. We
    must address the capital gap between scientific discovery
    industrial and industrial scale in the U.S. The implication is
    stark. A Chinese biotech asset is profitable at 200 million. An
    American equivalent is considered a failure unless it hits one
    billion. This imbalance transformed the entire calculus of
    capital allocation. One idea to address this is the creation of
    strategic research investment vehicles. Mission oriented,
    professionally governed investment vehicles designed to deploy
    existing long-term institutional capital into critical
    biotechnology platforms and manufacturing capacity. These
    entities would complement private venture markets by financing
    the hard middle between laboratory discovery and industrial
    scaleup without taxpayer funding.
        Let me close with three imperatives. First, if we improve
    supply chain visibility and reward resilience economically, the
    private sector will deliver. This is easy. Second, the United
    States does not need to produce every medicine domestically,
    but together with trusted allies, we can eliminate systemic
    vulnerabilities. This is common sense and the third, the
    largest strategic competition is not simply about today's drug
    supply chains, it is about who leads the life sciences platform
    for the 21st century. This is existential.
        For the past hundred years, the United States and its
    allies built that platform. With the right strategy, we can
    continue to lead it.
        Thank you, and I look forward to your questions.
        The Chairman. Thank you, Ranking Member Gillibrand. Mr.
    Harjivan, we appreciate you joining us today.
        Let us go to questions. Let me start with Senator
    Tuberville.
        Senator Tuberville. Thank you, Mr. Chairman. Thank you for
    this hearing. It can't get any more important than this.
        Ms. Gibson, it is becoming common knowledge that, for
    whatever reason, China is often able to circumvent the FDA when
    producing generic medications so worldwide. That means
    Americans are often taking drugs that, if produced in the
    United States, would meet higher standards. How can we move
    that leverage that China has over our people making drugs?
        Ms. Gibson. You are correct, Senator, that China has
    outmaneuvered the FDA. The former FDA Commissioner, Dr. Robert
    Califf, told the House Appropriations Committee in 2023 that
    China quote, "Is a problem. It is not transparent. The FDA
    cannot get information from them to perform its regulatory
    functions" and he said we cannot be allowed to depend on China
    and as you may know in 2023 they started an anti-espionage law
    where regulators don't want to travel there.
        I believe the way to get around this regulatory issue is,
    we are importing, in my mind, de facto unregulated products and
    the quality data demonstrate that in countries that don't
    respect our regulations then we should not be buying from them.
    If we use the quality data from the DoD testing program that
    will turn out and take out manufacturers in countries who do
    not respect our laws and we will be able to use U.S.
    manufacturers, so let us use the quality data to really cleanup
    the system. I think it is sending a market signal rather than a
    regulatory signal.
        Senator Tuberville. Thank you. In your book, the China Rx,
    you reveal that China controls approximately 90 percent of key
    starting materials to make APIs and generics. How do you think
    the U.S. would be affected if China were to cease those exports
    today?
        Ms. Gibson. A lot of people would die in this country. We
    would not be able--our health care systems would cease to
    function and you know----
        Senator Tuberville. We have--yes.
        Ms. Gibson [continuing]. if China wanted to spread
    infectious disease, we would not have the tools to be able to
    treat people.
        Senator Tuberville. Mr. Chang, you said in your testimony
    that China has a pharma death grip on America. How do we work
    to change that at the federal level?
        Mr. Chang. The most important thing is on an emergency
    basis, we need to bring back production here and the reason is,
    China has been able to outmaneuver the FDA, as you just talked
    about, because they do have such a big monopoly on all parts of
    the chain and the only way to do that is to break that
    monopoly, and unfortunately this is going to take some time but
    it does--it is possible. China developed this monopoly, we can
    take it back, but we have got to know that within two or three
    years there is a period of extreme vulnerability.
        Senator Tuberville. Can we use tariffs to help us out with
    China?
        Mr. Chang. Section 232 tariffs I think are very important
    in that regard. Other tariffs are also possible. The Supreme
    Court in the Learning Resources decision struck down the 1977
    Act tariffs, but Section 301 tariffs and 232s could very well
    create the conditions where, if we had an enhanced investment
    tax credit, and if the President were to invoke the Defense
    Production Act, these are things that could stimulate domestic
    production immediately.
        Senator Tuberville. Thank you. Last November, we had a
    young man that came from my State in Birmingham, Oxford
    Pharmaceuticals, to testify the importance of onshore drug
    manufacturing. Mr. Chang, what can we do to encourage
    pharmaceutical companies to acquire APIs domestically instead
    of sourcing them from places like China or India? Is that
    possible?
        Mr. Chang. It is possible but the first thing I think we
    need to do is get the Federal Government to require the
    purchase of American-made pharmaceuticals, or pharmaceuticals
    that are friendshored if they are not available in the U.S. It
    is an all-of-the-above approach because, as I mentioned, China
    is able to get around all of our rules because they know that
    if they cutoff production then, as Rosemary Gibson just told
    us, Americans are going to die.
        It is an all-the-above approach on an emergency basis. I
    know that is not a satisfactory answer, but unfortunately, I
    think it is close to where we have to be and if we don't do
    this, the problems are just going to get worse because China is
    becoming more predatory.
        Senator Tuberville. Yes. Congressman, you served on the
    House Foreign Affairs Committee, you understand the risk. What
    is at stake if we do not gain control of what is going on here?
        Dr. Yoho. National security. I mean, we would be beholden
    to another country, i.e. China. This is something, it is
    imperative that we get this right. We get it done now. The
    Defense Production Act, as President Trump used in his first
    term to create those products here, you know, the PPEs, is
    something we could do now.
        The other thing is the ABCs of manufacturing anywhere but
    China, friendshore, nearshore, onshore. Use the tools we have
    to bring that stuff home now. We know where China is going. We
    know what their end intent is, and we need to do it now.
        Senator Tuberville. Yes. This CLEAR LABELS Act that the
    Chairman has--of putting absolutely what is in the drugs that
    we take. How important is that?
        Dr. Yoho. It is real important. I like it. I think it is
    something that needs--but for it to be effective people have to
    read it.
        Senator Tuberville. Yes.
        Dr. Yoho. We tried that on the Ag Committee with the COOL
    Amendment. I think legislation like that is strong and I think
    we need to do it but I think we need to put more force on the
    FDA to regulate drugs or inspect them the same way they do here
    and tell those countries, you are going to do it our way or
    don't sell here. It is your choice.
        Senator Tuberville. Thank you. Thank you, Mr. Chairman.
        The Chairman. Senator Moody.
        Senator Moody. Thank you. Thank you for being here. It
    seems like yesterday that our country was reeling when we
    received a rude awakening from the COVID-19 pandemic and the
    millions of Americans that needed medical care so quickly and
    in that moment of national vulnerability, we began to realize
    just how heavily our country depends on China for medical
    supplies, including pharmaceuticals. Since their entry into the
    World Trade Organization in 2001, China has concentrated its
    efforts to circumvent international trade norms, committing
    economic espionage by stealing our IP, and disrupting our
    economy and this is one of the many ways I think our Chairman
    and Ranking Member have been great about holding hearings to
    show how vulnerable we are to this dependence on China for our
    drugs, and specifically how it can be a national security
    threat.
        I am grateful, Chairman, that you are willing to commit the
    time today to hold this hearing. I think it is one of the most
    important things we can be doing on this Committee since so
    many of our citizens in Florida, our seniors, and otherwise,
    dependent on recurring daily medications. This is so very
    important.
        Many of the shortages that Americans have had to face are
    not because of natural market dynamics but because of the
    coordinated Chinese engineered multi-decade effort to subvert
    our economy, and really much of the west. In the past decade,
    from what I can see, we have seen a decrease of 61 percent in
    our domestic API manufacturing facilities, which are essential
    for our drug production.
        One of the things that we heard from in the opening
    statements was something that concerns me, which is that they
    are--the Chinese notoriously ignore quality and safety
    standards, manipulate prices and utilize dubious labor
    standards. FDA import alerts routinely cite carcinogenic
    impurities, falsified batch records, and nonsterile conditions
    from manufacturers in China, with roughly one-third of all FDA
    import alerting on Chinese facilities.
        I am grateful for the administration. They are trying to
    fix this problem. At least they are focusing on it. They are
    aware of it. In the course of the last year, the administration
    announced multiple hundred-billion-dollar investments being
    made in the American economy and of these investments, the
    White House announced in December that 150 billion will be
    invested into American pharmaceutical manufacturing, reducing
    our reliance on foreign industries, in places like China.
        We know not only will this secure up our supply market and
    make sure that we can trust the ingredients in our
    pharmaceuticals, but that we have ready access to them in times
    of vulnerability. Also hopefully brings back American jobs in
    that industry.
        Mr. Yoho, again, thank you for being--former Congressman
    Yoho, I would like to say, as you know, I have been very strong
    in pushing back on the way China has meant to infiltrate the
    strength of this country, or undermine the strength of this
    country. I am the lead sponsor of a bill to halt visas for
    Chinese nationals and students when their laws require them to
    cooperate with the CCP. I am fighting hard to keep illegal
    Chinese vapes from coming in. They keep dumping them over and
    over, and we have no idea what is in them, and our kids are
    being affected.
        This is another way, I think, that we can focus on ways to
    protect Americans. Are there any ways that you can tell us
    today that we can take quick concrete action here in the Senate
    that would--what is the most effective thing we can do right
    now as senators in terms of legislation, or otherwise, to make
    sure that we are reshoring domestic manufacturing of drugs?
        Dr. Yoho. Awareness. I think the biggest thing is fill this
    room up with people, the news people, American people knowing
    what is going into their pharmaceuticals. Second thing is get
    on the FDA through legislation that you all can introduce to
    require, and this is not directing the FDA, but you are saying
    any country producing pharmaceuticals for the United States
    will meet FDA standards anytime, anywhere, 24/7. If not, it is
    your choice not to sell into my market, and you need to enforce
    that.
        I was with an FDA inspector last week who was the one doing
    the inspections in China when we beefed it up so they could go
    in there, but it was kind of like the IAEA with Iran. They
    would let you go where they wanted you to go and you couldn't
    ask too many questions or they would shut it down, so China
    saying they are more tolerant and are going to abide by the
    rules, it is a joke. We need to put the pressure on them and
    stop that and the other thing is bring that production here
    using any tool we have, whether it is the DFC, using the
    Defense Production Act, or any other tool like that but we
    don't have time to play around with this. This is imperative
    that we get this done within the next year and a half, two
    years, period.
        Senator Moody. Well, I want to thank the people that showed
    up today because we almost filled this room. That was a great
    recommendation. Thank you, Chairman.
        The Chairman. Thank you, Senator Moody.
        Senator Gillibrand. Thank you, Mr. Chairman. I really
    appreciate this testimony that you have all given. You have
    highlighted for us why this is such an urgent crisis and I
    could hear from each of your testimonies how concerned you are.
    It is something the Chairman and I are very focused on and we
    hope to have meaningful legislation to move us in the right
    direction in this Congress.
        For Dr. Harjivan, the United States holds a key advantage
    over India and China in the biomedical and biotechnological
    space with its strong support for universities that produce
    world-renowned scientific research. Historically, we have been
    able to recruit the top talent from nearly anywhere including
    China and India.
        One of the pillars that you talked about in your written
    testimony was the importance of securing U.S. biotech
    leadership. China has treated investments in biotech as
    strategic infrastructure. The final report that was recently
    released by the National Security Commission on Emerging
    Biotech created robust framework for policymakers about what we
    can do to rapidly support this advancing industry.
        Can you expand upon the role the Federal Government should
    play in securing our global leadership in biotech and how
    important is it for the United States to set the global
    standard for biotech research and development? What are the
    national security risks of the U.S. losing its leadership to
    China in this space?
        Mr. Harjivan. I mean, the threat is real about losing
    leadership. I think my analogy would be, and we are all of that
    age where we remember the internet, how it was developed. With
    the early days of the internet, it was a bit of chaos, right.
    We put structure around it, we put standards around it, we put
    HTTP and then HTTPS, because of that industry could coalesce
    around that. We had Facebook, we had Meta, we had Uber, we had
    Netflix, these are all American companies, so we control the
    internet through innovation, but we set the standards for the
    internet.
        As we enter the age of AI and biology we also need to be
    setting the standards. NIST, the FDA, need to work really hard
    so we set global standards. The world trusts U.S. standards,
    not Chinese standards. Once we set that, I trust industry to
    coalesce around that develop innovation. We don't know where
    these innovations are going to go, for the next 50 years these
    innovations will be transformative in our society. We need to
    own that.
        Our allies will also trust our standards as well. We need
    to work with them, but we need to work at pace. I feel we are
    not working fast enough in developing innovations in standards.
    We use AI now to develop drugs, but the FDA still uses the same
    time lines to approve those drugs. We need to accelerate that,
    so we need to develop new metrology. We need to work with NIST,
    with FDA, to work with industry partners to develop standards
    that we can work against.
        Senator Gillibrand. Okay. Would anybody else like to answer
    that question?
        Mr. Chang. China has certainly made the development of
    biotechnology a priority. If you go back to the Made in China
    2025 Initiative, that is one big World Trade Organization
    violation but nonetheless, the regime continued to do that and
    that is one of the reasons why China has become innovative in
    biotech, where before it was just making drugs for other
    countries, especially us.
        Rosemary Gibson has mentioned that we need to be as
    determined in this area as China has been. That doesn't mean
    that we have to violate norms and guidelines on trade, but it
    does need--but it does mean that we need to put the resources
    there and that is of course going to be a partnership but the
    Federal Government does need to lead and to make it clear to
    industry that this is a critical national security threat, and
    it is a something that must be done as we have just heard.
        Senator Gillibrand. Thank you. In some of your testimony,
    you talked about how federal procurement reform through HHS,
    the VA, and the DoD is a way to incentivize quality
    manufacturing for generic drugs. Can you each talk about that a
    little more? Dr. Chan Harjivan, you have talked about it, and
    Ms. Gibson, you mentioned it as well in your testimony.
        Ms. Gibson. Yes, I will start. I think a way to do this
    expeditiously is to have the Department of Veterans Affairs,
    HHS, and the Department of War to use the data that Department
    of War paid for to guide procurement decisions. If we buy based
    on quality, you are more--they will be more likely buying
    products made in the United States and other countries that
    actually care about the quality of the drugs that they produce,
    so automatically deal with some of these issues and bring in
    some of the companies that you had in the hearing back in
    November.
        I think it is important to even go further upstream. China,
    and India, and other countries that don't respect our laws,
    their products cannot be sold here unless they have a buyer,
    unless they have those who source them, so who is sourcing
    them? There is a handful of companies, about six of them, that
    source all the generics and they go on the basis of the
    cheapest product.
        I know from talking with CEOs of ethical U.S. companies
    say, we can't compete if they are going to be buying and
    sourcing from companies that have a litany of FDA recalls,
    warning letters, and 483s, so we have to go to the tip of the
    spear, the root cause and this might be tough to do
    politically, but I think the CEOs of these companies should be
    convened, and to indicate that we can no longer--they should no
    longer be sourcing vital medicines only on the basis of cost.
    They have to include quality and we have the testing data to
    begin to do that and that will affect everything else that is
    distributed around the country.
        Senator Gillibrand. Thank you.
        Mr. Harjivan. I would add that it does not need to be
    costly either. We can--with longer term contracts, with
    visibility into supply chain, we can actually have lower term
    contracts because they will have predictability of demand.
    Visibility into that is very important. When I go buy a car, I
    can see where it is made. They will tell me which parts come
    from which country. When I put a drug into my mouth, I have no
    idea about the quality, nor do I know where it is made.
        We also need diversity. When we buy--you know my
    restaurant, my favorite restaurant chain gets its tomatoes from
    three different sources, California, Mexico, and Texas maybe,
    right. When I buy a drug, it is often a single-source supplier.
    I actually don't worry whether it comes from Idaho, India, or
    Ireland, or China, but I don't want it to come from only India
    or China, or Ireland, shortages often come up in the United
    States as well because we have single-source suppliers.
        It is transparent supply chain and diversity of supply but
    with long-term contracts and building in these quality measures
    I think will lower the cost and I have talked to generic
    manufacturers who agree with me as well. We could actually
    lower the cost of generics by having this process in place.
        Ms. Gibson. If I may add just one further point? The
    Generic Drug Testing Program has found that we are actually
    paying more for poor quality generics, and some of the cheaper
    ones are the better quality ones.
        Mr. Chang. One of the issues is going to be FDA rules and
    regulations that restrict innovation. Obviously, this is the
    competing considerations here because we do want drugs to be
    effective, we do want them to be safe, but we also want to
    encourage innovation here and really the alternative to
    innovation here is innovation in countries that consider us to
    be an enemy.
        When we think about FDA regulation, I think that we should
    believe--it should look at what the alternative is. We don't
    want to have drugs manufactured in China, so we need to
    encourage them here, and that very well may mean a real change
    in the way the FDA looks at new drugs.
        Senator Gillibrand. Congressman, would you like to add
    anything.
        Dr. Yoho. Yes. In addition to what I have said about the
    FDA changing the regulations with the power of Congress doing
    that, I think holding CEOs at drug companies and
    pharmaceuticals, if they know they--if they brought something
    in and it didn't meet the correct standards, hold them
    accountable. You know, somebody has got to be held accountable
    because they put those drugs on the market that goes to our
    consumers, and the seniors, you know, unfortunately I am one--I
    am happy to be one of those now. We take more medication than
    when I was in my youth.
        They are more dependent on that and we have got to make
    sure of that. Just something of interest here on, when you look
    at pharmacy--or the antibiotics virtually all that is in China.
    When you look at the fermentation and the fluorination process,
    India relies on that but they have closed down their
    fermentation and fluorination processes, so 100 percent of that
    comes from China. That is a national security and health risk
    that needs to be addressed now and I think those are things
    that we need to put the money in our NIH and the research used
    properly.
        I was at a meeting last week and they said: Too many of our
    scientists and researchers are going to Africa or being courted
    by China to go over there, so five years from now the brain
    drain, we are going to lose that cutting edge, and it is hard
    to get back to first place when you are falling behind. We need
    to entice people to stay here to do the research and support
    that.
        The Chairman. Mr. Harjivan, why is it so difficult for the
    Federal Government to buy American drugs? I mean, we have got
    Department of War, we have the VA, we have, you know, prison
    system, we have all these groups, why is it so hard?
        Mr. Harjivan. I mean, they are not the largest part of
    purchasing, but they are significant part of purchasing. I
    think it is a few things, I think--I will be honest, I worked
    at the White House and had a lot of discussions with the VA and
    the DoD, I think there is a bit of lethargy there. I think
    there are also entrenched incumbents who supply them a lot of
    the people who do the contracting for them as well.
        I think that they need a bit of a nudge, right and I think
    they need to understand the value of this as well. I think if
    you look at the cost of quality, if you look at the cost of
    contracts, and the cost of switching, we have been--literally,
    the DoD and the VA having helped enable Chinese to come in when
    there is spot pricing and they come in with these spot--to spot
    lower prices.
        I think we can resolve this as we look at other supply
    chains as well, and mimic them as well, so this is not--this my
    point is, this is not hard to do. There is just a little bit of
    a nudge they need to understand the value to the warfighter, to
    veterans by doing this. I think they need a better
    understanding of procurement as well. They often default to a
    lot of these organizations that was referred to earlier but I
    think by having better procurement practices they can make
    better educated buyers and that is the whole chain.
        I am going to add one more thing though. It is not just
    buying the end product, if we pay more for a generic, we could
    see, it is about economic rents along the way, right, so if you
    look at maybe a KSM supplier, they make three-to five-percent
    profitability. Maybe an API, three-to five-percent
    profitability. Distributors make what, one or two percent? Then
    all of a sudden it is a big leap when you look at the PBMs,
    GPOS, et cetera.
        What we don't want is to raise the price and they simply
    capture the economic rents. We have to understand that when we
    pay more, it has got to flow back down, so we can have
    onshoring, friendshoring of some of these capabilities as well.
    The other part of it is the complexity of the supply chains.
        It is not just KSMs and APIs, it is excipients, it is
    solvents, et cetera, as well, so we need transparency as part
    of that of purchasing and paying for a little bit more for
    these products to understand the visibility of all the choke
    points as well. As was mentioned, China is really good
    identifying the choke points. It is not just owning the market.
    It is the choke points that they are owning. We need to
    understand those choke points.
        We also need to own some of those choke points ourselves
    and that has happened in other--in our Operation Warp Speed we
    saw lots of choke points that we owned we can use as
    countermeasures as well. We need to make sure we continue to
    have those.
        The Chairman. Yes. Every successful business person figures
    out where their leverage point is, where people need to do
    business with them, and we have got to do the exact same thing.
    China has done it, yes?
        Mr. Harjivan. Actually, these companies are doing what
    their shareholders want them to do, right, maximize
    profitability but we just need to change the metrics a little
    bit so that the patients actually benefit more as well.
        The Chairman. Yes. Now, I when I was in business, I always
    tried to figure out how to make sure that I was indispensable.
    You got paid better when you were indispensable. Shocking.
        Mr. Harjivan. You want to be--I am a pharmacist, but you
    want to have a monopoly, right and that is what these companies
    are doing but we are allowing them to have monopolies, the role
    of the government and policy is to not have monopolies in many
    industries, including this one.
        The Chairman. Congressman Yoho, you have been vocal about
    Communist China's use of economic coercion as a foreign policy
    tool. How does leverage of drugs and APIs compare to what we
    have seen with rare earth, or semiconductors in terms of the
    speed and severity with which Beijing could deploy it against
    us?
        Dr. Yoho. I think you are going to see pharmaceuticals play
    in there a lot more. I had to wonder when Secretary of State
    Rubio said they were going to revoke the student visas for
    267,000 Chinese students, and about a week or two later,
    President Trump says: No, we are going to have 600,000. I
    wonder if there was a backdoor meeting where Xi puts his arm
    around the President and said: Donald, let us talk about this.
    You know, we control the drugs here.
        Those are the kind of things that could happen. I am not
    saying it happened, but I don't want to be in that situation.
    We need to have what is best for America at heart, and we need
    to be prepared for that and it needs to start five, six years
    ago but you can't start fast enough and so I think that kind of
    leverage is something you are going to see. We have already
    seen them do with the rare earth minerals. They have done it to
    Japan. They have done it to us and it is only going to ramp up
    as things escalate.
        The Chairman. There are companies and lobbying interests
    that benefit from keeping Chinese drug supply chains intact,
    and resist reshoring efforts as we heard, right? Congressman,
    you have never been shy about naming those names. Who are the
    players most invested in maintaining or enforcing the status
    quo, and how should Congress think about their influence as it
    considers legislation?
        Dr. Yoho. Well, I think your big pharma companies that have
    the lobbyists that come up here. You know, again, I think those
    companies ought to be held accountable. If you bring in a
    tainted drug, I mean, when I was practicing as a veterinarian,
    melamine was being put into the dog food, killed thousands of
    dogs, does kidney damage, but there was over 300,000 people in
    China that was fed to their--in their baby formula and you
    know, there were a handful of people died, but what about the
    long-term health risk? You know, chronic--kidney disease and
    things like that.
        I think you need to call people out and say, if you are
    going to sell this drug into my market, if it is tainted, it
    goes back to you, and you are going to be 100 percent
    reliable--or liable for this. It is hard ball, but I think this
    is time to play hard ball.
        I guarantee you if you go to those manufacturers and the
    CEOs of those c companies and you tell them that these are the
    new rules, and I think we need to do--really put the pressure
    on the FDA, but it is going to require legislation so that
    another administration doesn't waive those FDA rules, if
    Congress mandates that, and says, this is how these drugs will
    come into this country, I feel better--I will feel better in
    the future.
        The Chairman. Ms. Gibson, how has the lack of
    accountability for foreign manufacturers allowed subpar drugs
    to enter our market?
        Ms. Gibson. Because they can, and we are buying only on the
    basis of cost irrespective of quality and if I may, Senator,
    your question about why is it so hard for the DoD to do the
    right thing? In 2019, as a private citizen, I had this idea
    that since so much of our manufacturing base was decimated, I
    came up with a core of an idea for an executive order, and it
    is very simple, that is what China does and that was the DoD,
    the VA, and HHS should give priority to U.S.-made generics in
    their procurement process.
        Turns out that got into an executive order signed in August
    2020. The same day that that executive order came out, there
    was a press release from the Pharmatrade group, and this was
    during a pandemic when we were rationing drugs, and the comment
    was that that--and just for essential drugs--that this would
    cause chaos, and it would destabilize the global supply chain.
        That same year the Generic Trade Association came out with
    almost the same wording: It would cause instability and two
    days after that statement came out, the Chinese President at a
    G20 meeting said, "We have to ensure that global supply chains
    remain stable." Is that coincidence or is it coordination? You
    know, I have been thinking about the speech that former U.S.
    Attorney General Bill Barr gave in Grand Rapids, Michigan, in
    2020, and he explained what goes on. He says that, as you
    alluded to, that U.S. executives with businesses in China, they
    are expected by the Chinese Government to lobby for them here
    in Washington if they want their businesses in China to go
    smoothly, and if they don't, it will go the other way.
        We have companies here that are lobbying on behalf of China
    and against the American interests and so that executive order
    is still active but nothing has been done, and we just need to
    say this is the directive and it shall be done, and to help
    them, the different departments actually execute on those
    executive orders.
        The Chairman. Mr. Chang, you have argued for years that the
    Chinese Communist Party pursues comprehensive national power
    through means that Western policymakers consistently
    underestimate. In that framework, how deliberate and how
    dangerous is Communist China's dominance of the global
    pharmaceutical supply chain?
        Mr. Chang. Mr. Chairman, we know what the Chinese have done
    with rare earths, and there they don't even have 100 percent
    monopolies, so given that their maliciousness, then clearly
    this is the next item to be concerned--for them to actually
    weaponize and we can go back and look at the Communist Party's
    policies toward the United States. We can see what they say, we
    can see what they have done and it is malicious and we as
    Americans have refused to acknowledge that because we have
    wanted to integrate the Chinese into the international system,
    we have wanted to get along, and because we are a democracy, we
    are slow to recognize threats, so that is where we are and so
    to answer some of the previous questions, as the Congressman
    has said, we just need to acknowledge the aims of the Chinese
    regime and deal with it with the determination and vigor that
    is necessary and one of those things you mentioned where you
    are talking about accountability, why don't we make drug makers
    strictly liable for the damages caused by pharmaceuticals that
    are manufactured abroad and imported into the United States?
        That is not an unreasonable thing to do because we had
    about 150 Americans die in 2008-2009 because of adulterated
    heparin that was made in China. We had another problem in 2019
    with Zantac and other heartburn medications, so this is a
    problem that continues, and because we know that the Chinese
    will weaponize every point of contact with our society, it is
    something that we need to do.
        If we do this, I think that drug manufacturers are going to
    shy away from importing from China and they will rush to make
    in the United States or in jurisdictions where they have
    confidence, so that is one of the things that we can do too
    onshore as quickly as possible.
        As I mentioned, with regard to Senator Tuberville, there is
    going to be a period of vulnerability because the Chinese do
    have this 100 percent monopoly on perhaps 800 pharmaceuticals,
    and we can't ignore that but we can do all we possibly can in
    the interim, and that means we have got to move fast.
        The Chairman. Ms. Gibson, when you first began research in
    China Rx, what was the reaction from the drug industry, from
    government officials, and from the medical community?
        Ms. Gibson. Denial.
        The Chairman. They weren't accepting, they weren't saying,
    a good job?
        Ms. Gibson. No there was all this clamoring about: Oh, no,
    the numbers are wrong. It is not that high and there was a lot
    of manipulation of that but China Rx was very well researched,
    and I got the information from the actual manufacturers, the
    people in the manufacturing plants. They know what is going on.
    They know where product comes from. They know where they have
    to get their key starting materials and antibiotics. It doesn't
    come from the lobby groups and the researchers, so it was
    absolutely sound.
        In fact, right before the pandemic hit home here in early
    2020, I was with a group of pharmaceutical engineers, great
    people with 150 years' experience. I went around the table and
    said: Okay, so what percentage of our key starting materials
    for the drugs we need to treat all these people who are going
    to get sick and be hospitalized? They all said: 90 percent, 95
    percent, 90 percent, so that is it.
        There was--but you know, what I am really pleased at,
    Senator, is that now everybody in Washington knows about APIs,
    and they know that APIs don't fall from the sky, that they are
    made of key starting materials and where our dependence is, so
    I consider that partial success but we have such a long way to
    go.
        If I may say something about this product liability issue.
    You know, if you have to go buy tires for your car and you go
    to a retailer, and there is 15 percent of those products could
    blow out while you are going 60 miles an hour on the beltway,
    the market fixes that. It fixes it through reputational risk,
    and also product liability and I believe we need to start move,
    not just from a regulatory point of view, but from a market
    signaling point of view that this is not acceptable, that you
    are putting products on that are harming people and we have--
    you know, arsenic is arsenic, thallium is thallium, you can't
    debate that, and there was secondary testing to verify these
    findings for the DoD, so I think we need to send this market
    signal that this is not acceptable and begin to use those
    tools.
        The Chairman. Mr. Harjivan, is Communist China moving up
    the drug chain from generics to brands, and what risk does this
    pose to our national security and patient access to medications
    and I think what you will say is, they are even--they are going
    further than that. They are the main--they are the main--they
    own the drug--the brand now too?
        Mr. Harjivan. Yes. In fact, I would say, you know, the
    generic industry, it is kind of fungible, right, so it is not
    like rare earths or semiconductors, you don't need a billion-
    dollar fab, you don't need to dig up, you know, the earth to
    get this material. The KSMs and APIs could move pretty quickly
    if we have the right incentives over here. It is not a supply
    chain issue, it is a demand issue.
        Now, for them moving up the value chain in life sciences,
    to me, that is an existential threat because they are moving
    very fast in this area. If you look at the number of, you know,
    different publications that they have, if you look at their
    work on gene therapy, look at advanced manufacturing, it is
    tremendous how quickly they are moving.
        What they are doing though, is they are putting the right
    incentives for those technologies to move ahead at a rapid
    pace. They are putting in very quick regulatory standards.
    Sometimes they are not that great, but often it is because they
    are putting in innovative regulatory standards that actually
    are of high quality, not poor quality, but they are using
    innovation around the regulatory standards, which we should
    adopt.
        Around quality, I think there is actual innovation there
    that can occur as well. When I worked on Operation Warp Speed,
    we were able to remotely look at manufacturing quality. We
    didn't have to do inspections necessarily. We could remotely
    monitor quality. That has advanced a lot in the last five years
    and so we can reduce the cost and have real-time monitoring of
    quality.
        The big CDMOs do that already. We can require that of China
    and by the way, India is a big problem here too, we could do
    that of India as well and so I think there is cheaper
    solutions. Again, innovation is the key and I am telling you
    right now that the next 50 years is going to be all about the
    biology revolution, and if we don't invest right now, it is
    going to be really important.
        I think the other part is, they invest but they are
    sclerotic, they invest top down, and we have got wonderful
    flexible capital market here, but we are not leveraging it. We
    need to leverage it much more efficiently in creating demand
    mechanisms for these products, for innovation, and then
    standards. Again, I think we can do it, but we are not focused
    on that right now, and that is a big problem.
        The Chairman. Ranking Member?
        Senator Gillibrand. It is okay.
        The Chairman. All right. I want to thank everybody for
    being here. I think this is--I think this is an unbelievable
    important issue. I want to thank the Ranking Member for being a
    partner in this. I am actually optimistic, I actually believe
    that the American public is getting more informed. I think the
    Congress is clearly getting more informed, and I think we are
    going to get something done.
        If you take a pill every morning for a chronic condition,
    there is a very good chance that pill was made using key
    ingredients from Communist China. There is also a good chance
    that you, your doctor, your pharmacist, and even the FDA have
    no way of knowing for certain where the pill ingredients come
    from, because we don't require disclosure and by the way, if
    anybody feels comfortable putting something in their mouth from
    China, I think they are a fool. The standards in China are
    despicable whether you--if you are buying food from China, I
    think it is unsanitary. The conditions where things are
    produced is horrible.
        Unfortunately, Congress has failed to demand transparency,
    and for 30 years lawmakers have prioritized the lowest possible
    price over everything else and I think what Mr. Chang said, I
    think a lot of us--a lot of people thought: Oh, we are going to
    bring China into the fold and all that stuff. It never
    happened.
        COVID-19 showed us what happens when we do that, and the
    system breaks. Thirty-seven factories that made ingredients for
    American medicines shut down and the shortages hit within
    weeks. The Chinese Government is despicable. They nationalize
    its own medical supply production and decide who got what based
    on politics, not need. That was a warning, we didn't take the
    hint. This hearing is meant to change that.
        Our incredible witnesses today made a clear, documented
    evidence-based case that what we are dealing with is not market
    inefficiency. It is a national security vulnerability that has
    been intentionally engineered by an enemy nation, not the
    People of China, the Government of China, enabled and supported
    by our own policy failures.
        The solutions aren't a mystery, my and Ranking Member
    Gillibrand's CLEAR LABELS Act is a first step. Soon we will
    have legislation on closing loopholes in our system and finding
    ways to support additional domestic manufacturing focused on
    federal procurement. The seniors of our country didn't create
    this problem, but they are the ones paying the price and this
    Committee is committed to fighting for them and for solutions.
        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.
        I want to thank everybody for being here.
        [Whereupon, at 4:40 p.m., the hearing was adjourned.]
    =======================================================================

                                    APPENDIX

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                          Prepared Witness Statements

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                            Questions for the Record

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                     U.S. Senate Special Committee on Aging

         "Foreign Dependence: How China Captured America's Drug Supply"

                                 March 11, 2026

                            Questions for the Record

                                 Hon. Ted Yoho

                            Senator Elizabeth Warren

        Question:

        What short and long-term actions should the Administration
    and Congress take to protect the U.S. pharmaceutical supply
    chain from disruptions, including during periods of
    international conflict or against foreign adversaries'
    retaliation?

        Response:

        Short Term: United States Government (USG) should continue
    with tariffs and tax incentives to entice pharmaceutical
    companies to move back to the US. These should not be give
    ways, but strong motivations to relocate back to the US. If not
    done, regardless of a conflict or not, the country that
    controls the pharmaceutical supplies can/will dictate the
    terms. Up to 80% of the US Military's pharmaceuticals are
    controlled by China or India with the majority of the key
    starting materials, KSMs coming form China. The likelihood of
    China providing essential medicines during a conflict between
    the US and China is nil.

        Question:

        How would increase domestic manufacturing of
    pharmaceuticals help achieve this goal?

        Response:

        Increasing the domestic manufacturing will do several
    things to secure national security. Assurance that FDA quality
    control is in place with the production of KSMs, APIs and FDF
    in the manufacturing process. Currently our FDA cannot conduct
    unannounced inspections in China as they do with US domestic
    manufacturers. This results in substandard or adulterated
    products entering the consumer/medical supply chain. This leads
    to failed treatments, iatrogenic illness and death. This is
    well documented in Rosemary Gibson's book, China Rx.
        Domestic production will secure the pharmaceutical supply
    chain eliminating another country from using that control to
    leverage or force compliance from the US to their demands. It
    would help reduce the FDA shortlisted medications from being on
    frequent backorders that disrupts treatments for human and
    animal patients.

        Question:

        How would the U.S. population benefit from government-
    owned, government-operated or government-owned, contractor-
    operated pharmaceutical manufacturing facilities?

        Response:

        It is doubtful the US population would realize an
    appreciable benefits from government involvement in
    pharmaceutical production for the following reasons.

          This would limit the free market from the equation
    reducing competition, limit selection and be subject to stopped
    productions with government shutdowns and layoffs.
          It would disincentivize private research and discovery
    of new medications and treatments.
          It would create a situation where the government assigns
    winners and losers in drug manufacturing and decrease the
    choice of medicines.
          It would have little affect at reducing and may increase
    counterfeit, unregulated and unsafe pharmaceutical products
    entering the US market and jeopardizing US citizen health.

        Domestic production would have a positive impact if KSMs,
    APIs, and FDF were all produced adhering to FDA inspections and
    meeting USP, Inc (US Pharmacopeia, Inc) standards. However,
    this can be accomplished in the private sector with out
    increasing government employment and the added expense to the
    American taxpayer.
        Question:

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

        Response:

        Direct costs increase when pharmaceuticals are not
    manufactured with the proper ingredients or follow USP, Inc.
    standards. When ineffective or adulterated drugs are produced
    it increases the duration of treatment, can lead to other
    illnesses or organ failure. Death have been reported that are
    associated with adulterated drugs entering the US market from
    both domestic and foreign produced drugs. When treatments are
    ineffective due to inferior pharmaceuticals it increases ER,
    (emergency room) visits and lengthier hospital stay ultimately
    adding more costs for the US healthcare system.

        Question:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    indirect costs resulting from higher rates of illness?

        Response:

        The indirect costs are longer treatment durations for an
    illness which increases cost. A decreased quality of life for
    the patient, family members, and caregivers is a consequence of
    the adulterated/ineffective medicines. Inferior medicines can
    cause protracted debilitating disease, add to income stress,
    has forced people into bankruptcy. Adulterated/inferior drugs
    have caused cancers, driven people into bankruptcy and either
    directly caused deaths from those drugs or from suicide linked
    to the drug or the depression associated with their health
    condition or financial situation.

                     U.S. Senate Special Committee on Aging

         "Foreign Dependence: How China Captured America's Drug Supply"

                                 March 11, 2026

                            Questions for the Record

                                Gordon G. Chang

                            Senator Elizabeth Warren

        Question 1:

        New reporting indicates that the closure of the Strait of
    Hormuz due to the Trump Administration's war in Iran threatens
    the United States' supply of generic drugs. Around half of the
    country's generic prescriptions originate in India - a country
    that "relies on the Strait of Hormuz for the arrival of key
    inputs in drug manufacturing including petroleum-based
    materials," according to reporting by CNBC.
              a.What supply chain disruptions could the war
    trigger, and how would these disruptions affect Americans'
    ability to access their prescriptions?
              b.Which pharmaceuticals would be most seriously
    compromised by the war?
              c.How much would any such disruptions cost to the
    U.S. health care system, patients, or taxpayers?
              d.What would these supply chain disruptions mean for
    national security and military readiness?
              e.If the Strait of Hormuz remains closed, how long
    would it be before Americans experience the effects of
    significant pharmaceutical supply chain disruptions, including
    drug shortages?

        Question 2:

        If the war against Iran causes serious pharmaceutical
    supply chain disruptions, how long would it take for the United
    States to address vulnerabilities in its supply chain and
    resolve subsequent drug shortages?
              a.What actions could the United States take to remedy
    these disruptions, and how much would these actions cost?

        Question 3:

        China is one of the biggest buyers of oil from Iran, buying
    more than 80 percent of Iran's shipped oil. How much does
    China's ability to manufacture finished drug products, active
    pharmaceutical ingredients, and key starting materials rely on
    this supply of oil, and how would disruptions to Iran's oil
    supply due to the war between the United States and Iran affect
    China's supply of pharmaceuticals?
              a.How would these disruptions to China's
    manufacturing capacity of pharmaceuticals in turn disrupt the
    United States' pharmaceutical supply chain?

        Question 4:

        The United States has seen China ban or threaten to ban its
    export of critical minerals in response to the Trump
    Administration's trade agenda, jeopardizing national security.
    Given the Trump Administration's war against Iran and its
    intervention in Venezuela - and the impact this could have on
    China's oil imports - what is the likelihood of China
    retaliating against the United States's actions by restricting
    or banning the export of pharmaceuticals, including final
    dosage forms, active pharmaceutical ingredients, and key
    starting materials, to the United States?
              a.What would a ban on pharmaceuticals exports from
    China mean for Americans' ability to access their
    prescriptions?
              b.How soon after a ban on pharmaceutical exports from
    China would the United States experience disruptions in its
    pharmaceutical supply chain, including drug shortages?
              c.How many pharmaceuticals on the Food and Drug
    Administration's essentials medicine list would be impacted by
    a ban on pharmaceutical exports from China?
              d.What would be the impact of such a ban on national
    security?
              e.What would be the impact of such a ban on the
    ability for the department of defense to keep service members
    healthy and maintain military readiness?
        Question 5:

        What short- and long-term actions should the Administration
    and Congress take to protect the U.S. pharmaceutical supply
    chain from disruptions, including during periods of
    international conflict or against foreign adversaries'
    retaliation?
              a.How would increased domestic manufacturing of
    pharmaceuticals help achieve this goal?
              b.How would the U.S. population benefit from
    government-owned, government-operated or government-owned,
    contractor-operated pharmaceutical manufacturing facilities?

        Question 6:

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

        Question 7:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    indirect costs resulting from higher rates of illness?

        Question 8:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    higher rates of illness and increased medical complications?

        Response to Question 1:

        The ongoing Iran war can radically reshape the world in
    different directions.
        If America prevails, the war can lead to decades of peace.
        On the other hand, the war, given the current fragility of
    the current situation, could spread. In the late 1930s,
    separate conflicts merged into what we now call World War II.
    If that happens now-the chance of that is not insubstantial-
    Americans undoubtedly would not have access to the hundreds of
    medicines made in China.
        We have known of this critical vulnerability for years, and
    every American administration this century is at fault for this
    critical dependence on a hostile China. The current
    administration is taking steps to onshore manufacturing, but
    onshoring will take years at the current pace.
        If China goes to war with us now, Americans will be
    deprived of medicines and the consequences will be
    catastrophic.
        If we assume the worst does not occur, the disruption to
    supply chains could still be substantial. Companies are nimble,
    however, so they will reconfigure their supply chains quickly.
    Costs will increase, but I do not expect a substantial
    reduction in pharmaceutical production.

        Response to Question 2

        If the United States acts on an emergency basis-a total
    mobilization of society-I think it would take a little over two
    years to onshore the most-used generics and other medicines.
        A total mobilization would include the President invoking
    the Defense Production Act and Congress giving the President
    additional war-time powers to onshore production.

        Response to Question 3

        China has the world's largest strategic petroleum reserve-
    perhaps as much as 140 days of import cover-and China has
    alternative sources of oil. A complete closure of the Strait of
    Hormuz by itself should not significantly disrupt China's
    production of pharmaceuticals.

        Response to Question 4

        There are, as some have argued, several reasons why China
    would not deny pharmaceuticals. Beijing is deterred by the
    prospect of retaliation, such as America denying China advanced
    cancer treatments and other things available only here.
        More important, Beijing would be cutting off important
    revenue streams. Yes, America has to buy, but China as a
    practical matter has to sell. This is especially true as the
    Chinese economy is now deteriorating.
        The United States in the so-called "trade war" has more
    leverage over a trade-dependent China than China has over the
    U.S. The Trump administration, however, has chosen not to
    employ much of this leverage. If China were to threaten to cut
    off pharmaceuticals or actually do so, the administration would
    almost certainly employ all the tools at its disposal.
        Response to Question 5:

        There are a number of technical fixes. The U.S., for
    example, should establish a "federal buyer's market" and
    prioritize American-made products for, among others, the
    Pentagon, the Veterans Administration, and Medicare. If
    American-made medicines are not available, the government
    should try to buy those produced in friendly countries.
        Congress should require sellers to disclose country of
    origin, and it's necessary to close loopholes that now allow
    foreign-made products to be labeled "Made in America."
        It's also time to eliminate the FDA's red tape, which
    unnecessarily delays approvals and increases costs.
        Congress must also ban the importation of medicines that
    are either uninspected or inadequately inspected. Moreover, it
    is way past time to vigorously enforce Section 307 of the
    Tariff Act of 1930, which prohibits the importation of goods
    made with forced labor.
        Ultimately, cost is the name of the game. Beijing
    suffocates foreign competitors by lowering prices and by
    flooding markets with artificially high supplies. U.S.
    manufacturers would feel confident of moving production to
    American soil if they felt sure that Washington was fully
    committed to protecting them from vicious Chinese price
    tactics.
        There are also non-technical fixes. Washington can restart
    domestic production with incentives, such as low-cost loans-the
    first Trump administration experimented with this approach with
    a proposed $765 million loan to Eastman Kodak in 2020 to make
    active pharmaceutical ingredients-and, more important, an
    enhanced investment tax credit.
        Tariffs are also needed so these measures will have a
    chance to succeed.
        Finally, we need collaborative international policies so
    that we have access to the production of friendly countries.

                     U.S. Senate Special Committee on Aging

         "Foreign Dependence: How China Captured America's Drug Supply"

                                 March 11, 2026

                            Questions for the Record

                                Rosemary Gibson

                            Senator Elizabeth Warren

        Question 1:

        You are part of a working group that is performing quality
    risk assessments of drugs on the Department of Defense's
    pharmaceutical supply chain. In your testimony, you indicated
    that around two of the thirteen generic drugs analyzed so far
    by the working group (or 15 percent) have serious manufacturing
    defects. How significant are these findings, and how can the
    Department of Defense use these findings to inform its
    procurement decisions?

        Response to Question 1:

        Thank you for the opportunity to respond to these
    questions. Please note that I receive no compensation with
    regard to the quality risk assessments.
        In my testimony I reported that 13 different generic drugs
    were tested including all products sold by manufacturers and
    re-packagers.
        For example, in the case of one of the drugs, metoprolol,
    which is prescribed for heart failure and chest pain, 25
    different metoprolol products were tested.
        For all 13 generic drugs tested including all their
    manufacturers and re-packagers, 15% of the total number of
    products tested have manufacturing defects. This level of
    defects reflects very poor quality in virtually any modern
    manufacturing context. World class manufacturing would have
    less than 1% defects and closer to .01%.
        The Department of Defense can use these findings to inform
    procurement decisions and avoid purchasing products with high
    levels of toxins and dissolution failures.

        Question 1a:

          a.How can the working group's findings be used to support
    the onshoring of domestic manufacturing?

        Response to Question 1a:

        Quality has been found to be correlated with location. In
    locations/countries where FDA has limited ability to perform
    its full regulatory functions due to limited respect for U.S.
    law and regulations, products made there may be more likely to
    have product defects. Additional research is being conducted on
    this point.

        Question 1b:

          b.How can other federal procurement practices - such as
    long-term contracts or domestic purchasing requirements - help
    address the vulnerabilities exposed by the working group's
    findings?

        Response to Question 1b:

        Long-term contracts, guaranteed volume purchasing, and
    price floors are contract features that would attract U.S.
    owned and operated generic drug and API manufacturers.

        Question 2:

        New reporting indicates that the closure of the Strait of
    Hormuz due to the Trump Administration's war in Iran threatens
    the United States' supply of generic drugs. Around half of the
    country's generic prescriptions originate in India - a country
    that "relies on the Strait of Hormuz for the arrival of key
    inputs in drug manufacturing including petroleum-based
    materials," according to reporting by CNBC.

          a.What supply chain disruptions could the war trigger,
    and how would these disruptions affect Americans' ability to
    access their prescriptions?

          b.Which pharmaceuticals would be most seriously
    compromised by the war?

          c.How much would any such disruptions cost to the U.S.
    health care system, patients, or taxpayers?

          d.What would these supply chain disruptions mean for
    national security and military readiness?

          e.If the Strait of Hormuz remains closed, how long would
    it be before Americans experience the effects of significant
    pharmaceutical supply chain disruptions, including drug
    shortages?

        Response to Question 2:

        I do not have knowledge and expertise to answer questions
    2-4. A general comment is that any prolonged disruption of
    essential medicines can adversely affect national security. In
    the case of China, its control over the global supply of key
    starting materials coupled with a prolonged disruption of
    upstream material for antibiotic production could be
    extraordinarily serious. In a matter of weeks, Americans could
    experience the impact of supply chain disruptions.

        Question 3:

        If the war against Iran causes serious pharmaceutical
    supply chain disruptions, how long would it take for the United
    States to address vulnerabilities in its supply chain and
    resolve subsequent drug shortages? What actions could the
    United States take to remedy these disruptions, and how much
    would these actions cost?

        Response to Question 3:

        I do not have knowledge and expertise to answer questions
    2-4. A general comment is that any prolonged disruption of
    essential medicines can adversely affect national security. In
    the case of China, its control over the global supply of key
    starting materials coupled with a prolonged disruption of
    upstream material for antibiotic production could be
    extraordinarily serious. In a matter of weeks, Americans could
    experience the impact of supply chain disruptions.

        Question 4:

        China is one of the biggest buyers of oil from Iran, buying
    more than 80 percent of Iran's shipped oil. How much does
    China's ability to manufacture finished drug products, active
    pharmaceutical ingredients, and key starting materials rely on
    this supply of oil, and how would disruptions to Iran's oil
    supply due to the war between the United States and Iran affect
    China's supply of pharmaceuticals? How would these disruptions
    to China's manufacturing capacity of pharmaceuticals in turn
    disrupt the United States' pharmaceutical supply chain?

        Response to Question 4:

        I do not have knowledge and expertise to answer questions
    2-4. A general comment is that any prolonged disruption of
    essential medicines can adversely affect national security. In
    the case of China, its control over the global supply of key
    starting materials coupled with a prolonged disruption of
    upstream material for antibiotic production could be
    extraordinarily serious. In a matter of weeks, Americans could
    experience the impact of supply chain disruptions.

        Question 5:

        The United States has seen China ban or threaten to ban its
    export of critical minerals in response to the Trump
    Administration's trade agenda, jeopardizing national security.
    Given the Trump Administration's war against Iran and its
    intervention in Venezuela - and the impact this could have on
    China's oil imports - what is the likelihood of China
    retaliating against the United States's actions by restricting
    or banning the export of pharmaceuticals, including final
    dosage forms, active pharmaceutical ingredients, and key
    starting materials, to the United States?

          a.What would a ban on pharmaceuticals exports from China
    mean for Americans' ability to access their prescriptions?

          b.How soon after a ban on pharmaceutical exports from
    China would the United States experience disruptions in its
    pharmaceutical supply chain, including drug shortages?

          c.How many pharmaceuticals on the Food and Drug
    Administration's essentials medicine list would be impacted by
    a ban on pharmaceutical exports from China?

          d.What would be the impact of such a ban on national
    security?

          e.What would be the impact of such a ban on the ability
    for the department of defense to keep service members healthy
    and maintain military readiness?

        Response to Question 5:

        China has reportedly threatened to withhold generic drugs
    and critical inputs at least since 2008 during the heparin
    contamination that killed many Americans. Further, it
    threatened to withhold antibiotics in early 2020 during the
    pandemic. Hence, such threats are not new.
        What is new is that the U.S. has become more dependent on
    China and hardly any action has been taken in recent decades to
    reduce dependence.
        Looking ahead, the impact of a ban on exports would depend
    on the scope and duration.
        Within months, if not weeks, hospital and retail pharmacy
    shelves would be depleted of vital medicines as would the
    military health system.
        While the U.S. government has known about this risk for
    many years, as noted, little action has been taken which is in
    contrast to how a threat to ban exports of critical minerals
    generated immediate action by the government and private sector
    to boost domestic production. Similar actions are needed in
    this sector.
        For example, China Rx exposed in 2018 how dependent the
    U.S. is on China for antibiotics and again, eight years later,
    no action has been taken to create domestic sources for end-to-
    end production here. Meanwhile, China's leverage over the U.S.
    as well as the EU regarding antibiotics has increased.

        Question 6:

        What short- and long-term actions should the Administration
    and Congress take to protect the U.S. pharmaceutical supply
    chain from disruptions, including during periods of
    international conflict or against foreign adversaries'
    retaliation?

          a.How would increased domestic manufacturing of
    pharmaceuticals help achieve this goal?

          b.How would the U.S. population benefit from government-
    owned, government-operated or government-owned, contractor-
    operated pharmaceutical manufacturing facilities?

        Response to Question 6:

        An immediate first step is to stockpile APIs for critical
    generics where foreign dependency poses a national security
    concern. The focus here is not to "boil the ocean" but instead
    focus on the most critical life-sustaining generics.
        Next, the federal government should support public-private
    partnerships with U.S.-owned companies to make APIs for
    critical medicines in the U.S. Federal procurement should give
    preference to critical generic medicines and APIs made in the
    U.S. with long-term contracts, price floors, and volume-based
    contracts.
        In the Medicare program, hospitals can be provided
    incentives to procure domestically produced essential generics
    with critical inputs made in the U.S.
        As for government-operated manufacturing facilities, it is
    unclear how that would be implemented.

        Question 7:

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

        Question 8:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    indirect costs resulting from higher rates of illness?

        Question 9:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    higher rates of illness and increased medical complications?

        Response to Question 6-9:

        In response to questions 6, 7, 8 and 9, an emerging body of
    literature is documenting the cost of poor quality generics due
    to exacerbation of serious medical conditions, and additional
    medical expenses for patients, their families and society at
    large. The testing team would be pleased to share some of this
    literature if this is of interest.

                     U.S. Senate Special Committee on Aging

         "Foreign Dependence: How China Captured America's Drug Supply"

                                 March 11, 2026

                            Questions for the Record

                               Dr. Chan Harjivan

                            Senator Elizabeth Warren

        Question:

        New reporting indicates that the closure of the Strait of
    Hormuz due to the Trump Administration's war in Iran threatens
    the United States' supply of generic drugs. Around half of the
    country's generic prescriptions originate in India - a country
    that "relies on the Strait of Hormuz for the arrival of key
    inputs in drug manufacturing including petroleum-based
    materials," according to reporting by CNBC.What supply chain
    disruptions could the war trigger, and how would these
    disruptions affect Americans' ability to access their
    prescriptions?

        Response:

        A Hormuz closure would stress three interdependent nodes
    simultaneously: maritime transportation, petrochemical
    feedstock availability, and Key Starting Material (KSM) supply
    for API manufacturing. India-which supplies roughly half of all
    U.S. generic prescriptions-depends on petroleum-based raw
    materials routed through the Strait. Rising input costs and
    production delays in India would cascade directly into U.S.
    drug availability. China compounds the risk: Indian firms
    source approximately two-thirds of their key APIs from China,
    and that dependence reaches 87 percent for antibiotic
    ingredients. Disruptions to Chinese feedstock costs would
    further strain the world's dominant upstream pharmaceutical
    supplier. The result for American patients would be reduced
    drug availability, significant price increases, and shortages
    of essential medicines, with the greatest impact on those
    managing chronic conditions.

        Question:

        Which pharmaceuticals would be most seriously compromised
    by the war?

        Response:

        Generic sterile injectables-including oncology drugs such
    as carboplatin and cisplatin, antibiotics, anesthetics, and
    critical care medications-would be most immediately affected.
    Sterile injectables are particularly vulnerable because they
    have no simple substitutes, require precise manufacturing, and
    depend on cold-chain logistics. Antibiotics present a second
    acute risk: Chinese suppliers hold near-monopolies on
    penicillin and cephalosporin intermediates, including 6-
    aminopenicillanic acid (6-APA), the critical KSM underlying
    amoxicillin and several other widely used antibiotics. India
    manufactures 47 percent of all API volume used for chronic
    conditions in the U.S.; cardiovascular drugs, diabetes
    medications, and essential antibiotics representing tens of
    millions of daily prescriptions would all be at elevated risk.

        Question:

        How much would any such disruptions cost to the U.S. health
    care system, patients, or taxpayers?

        Response:

        Drug shortages generate direct costs-higher drug
    acquisition prices, pharmacy and nursing labor for workarounds,
    wastage, and premium sourcing fees-as documented in Vizient
    research and analyses published in JAMA and by the HHS
    Assistant Secretary for Planning and Evaluation (ASPE).
    Indirect costs are equally significant: delayed surgeries,
    extended hospital stays, and preventable complications from
    treatment interruptions add costs that dwarf the price of the
    original medicine. The U.S. system has minimal surge capacity,
    having seen more than 3,000 generic product discontinuations
    since 2010 due to unsustainably low reimbursement. A Hormuz-
    driven supply shock would be of a scale the system is
    structurally unprepared to absorb.

        Question:

        What would these supply chain disruptions mean for national
    security and military readiness?

        Response:

        The U.S. military procures from the same commercial generic
    drug supply chains as the civilian health system. Disruptions
    to sterile injectables, antibiotics, and chronic disease
    medications would impair military treatment facilities' ability
    to care for service members and maintain force readiness.
    Beyond the direct military impact, pharmaceutical supply chain
    resilience is a dimension of national security in its own
    right: the ability of a geopolitical event-or an adversary-to
    constrain access to essential medicines represents a strategic
    vulnerability comparable to energy or semiconductor supply
    chain exposure. Pharmaceuticals should be designated as
    critical infrastructure accordingly.

        Question:

        If the Strait of Hormuz remains closed, how long would it
    be before Americans experience the effects of significant
    pharmaceutical supply chain disruptions, including drug
    shortages?

        Response:

        The effects would be felt within weeks. Just-in-time
    inventory practices throughout the pharmaceutical distribution
    system mean most hospitals and distributors carry only weeks of
    stock for many generic medicines. Shortages of carboplatin and
    cisplatin are already documented. Indian manufacturers
    operating on thin margins cannot readily absorb rapid input
    cost increases; a prolonged closure would force production
    cutbacks. A closure lasting more than a few weeks would
    generate visible U.S. drug shortage reports; one lasting months
    would produce a systemic crisis across multiple therapeutic
    categories.

        Question:

        If the war against Iran causes serious pharmaceutical
    supply chain disruptions, how long would it take for the United
    States to address vulnerabilities in its supply chain and
    resolve subsequent drug shortages?What actions could the United
    States take to remedy these disruptions, and how much would
    these actions cost?

        Response:

        There are no adequate short-term solutions. Rebuilding
    pharmaceutical manufacturing capacity requires years of
    investment and regulatory work; onshoring API production at
    meaningful scale would cost billions and take three to five
    years at minimum. Near-term mitigations include expanding the
    Strategic National Stockpile with critical APIs and finished
    dosage forms, facilitating emergency imports from allied
    partner countries with existing API capacity, and activating
    FDA compounding and substitution authorities. Critically,
    upstream supply chain visibility-which the U.S. currently
    lacks-is itself a solution: without knowing where each API and
    KSM is manufactured, policymakers cannot identify chokepoints,
    prioritize stockpiling, or activate contingency plans. The
    Clear Labels Act would enable this mapping for finished dosage
    forms and APIs; USP's KSM mapping work would remain essential.
    Mechanisms to measure and reward resilience, quality, and
    geographic diversification would create durable incentives over
    time.

        Question:

        China is one of the biggest buyers of oil from Iran, buying
    more than 80 percent of Iran's shipped oil. How much does
    China's ability to manufacture finished drug products, active
    pharmaceutical ingredients, and key starting materials rely on
    this supply of oil, and how would disruptions to Iran's oil
    supply due to the war between the United States and Iran affect
    China's supply of pharmaceuticals?How would these disruptions
    to China's manufacturing capacity of pharmaceuticals in turn
    disrupt the United States' pharmaceutical supply chain?

        Response:

        China's API and KSM manufacturing is heavily energy-
    intensive, and the Chinese government subsidizes energy costs
    for its pharmaceutical sector-a primary reason Chinese
    suppliers have achieved near-monopoly positions in categories
    such as penicillin intermediates, aspirin, and acetaminophen.
    Disruptions to China's Iranian oil supply would increase those
    energy costs and create feedstock shortages for petroleum-
    derived pharmaceutical chemicals. Given that China supplies
    eight percent of U.S. generic APIs directly and substantially
    more through Indian intermediation-and that India sourced 87
    percent of its antibiotic ingredients from China by value as of
    2024-any meaningful reduction in Chinese manufacturing output
    would rapidly translate into Indian production shortfalls and
    U.S. drug shortages. India's PLI scheme has begun reducing some
    of this dependence, but the transition is incomplete,
    particularly for antibiotics.
        Question:

        The United States has seen China ban or threaten to ban its
    export of critical minerals in response to the Trump
    Administration's trade agenda, jeopardizing national security.
    Given the Trump Administration's war against Iran and its
    intervention in Venezuela - and the impact this could have on
    China's oil imports - what is the likelihood of China
    retaliating against the United States's actions by restricting
    or banning the export of pharmaceuticals, including final
    dosage forms, active pharmaceutical ingredients, and key
    starting materials, to the United States? What would a ban on
    pharmaceutical exports from China mean for Americans' ability
    to access their prescriptions?

        Response:

        The impact would be severe. Although China directly
    supplies only three percent of finished oral doses and 9
    percent of injectables consumed in the United States, its
    upstream dominance means its true influence is far greater-a
    report to the U.S.-China Economic and Security Review
    Commission found the U.S. is "substantially more exposed to
    Chinese raw pharmaceutical ingredients," with India often
    serving as a conduit. A ban covering KSMs would effectively
    halt Indian production of amoxicillin and related penicillin-
    based antibiotics within weeks. For patients, the result would
    be rationed antibiotics in hospitals, delayed or cancelled
    chemotherapy, forced substitutions, and significant price
    spikes. Tens of millions of Americans relying on daily generic
    medicines for chronic conditions would face treatment
    uncertainty, with lower-income patients and those with serious
    illnesses most severely affected.

        Question:

        How soon after a ban on pharmaceutical exports from China
    would the United States experience disruptions in its
    pharmaceutical supply chain, including drug shortages?

        Response:

        Disruptions would begin almost immediately. Just-in-time
    inventory practices throughout the distribution system mean the
    pipeline from a Chinese export ban to a U.S. drug shortage is
    measured in weeks for the most critical categories. For
    products already in shortage, the timeline would be shorter
    still. A simultaneous Hormuz closure and Chinese export ban
    would create a multi-vector supply crisis for which the U.S.
    health system has no adequate response capacity under current
    policy frameworks.

        Question:

        How many pharmaceuticals on the Food and Drug
    Administration's essential medicines list would be impacted by
    a ban on pharmaceutical exports from China?

        Response:

        USP's Medicine Supply Map (MSM) research provides the most
    granular available data. India produces 27 percent of the U.S.
    supply of APIs designated essential under the FDA's Essential
    Medicines, Medical Countermeasures, and Critical Inputs list or
    the WHO's Essential Medicines List-and Indian production of
    those APIs is itself heavily dependent on Chinese KSMs. A
    Chinese export ban would therefore indirectly compromise a
    large proportion of essential medicines consumed in the United
    States. A precise count requires the multi-tier supply chain
    mapping the U.S. currently lacks, underscoring the urgency of
    requiring manufacturers to report tier-2 and tier-3 supplier
    information.

        Question:

        What would be the impact of such a ban on national
    security?

        Response:

        A Chinese pharmaceutical export ban would constitute a
    national security threat of the first order. China's
    demonstrated willingness to use supply chains as geopolitical
    instruments-evidenced by its restrictions on rare earth
    elements and critical minerals-makes this scenario credible.
    The near-term consequences would be severe: rationed
    antibiotics in military and civilian hospitals, constrained
    infectious disease treatment capacity, and degraded population
    and workforce health. These systemic effects, even without
    targeted weaponization of specific military medicines, would
    represent a major strategic vulnerability. Precisely
    quantifying the national security impact would require
    comprehensive data currently unavailable, but the direction and
    severity of harm are not in doubt.

        Question:

        What would be the impact of such a ban on the ability of
    the Department of Defense to keep service members healthy and
    maintain military readiness?

        Response:

        The Department of Defense procures pharmaceuticals from the
    same commercial generic drug supply chains as the civilian
    market. A ban affecting KSMs, APIs, or finished dosage forms
    would constrain availability of medicines essential to military
    readiness: antibiotics, analgesics, cardiovascular medications,
    and critical care injectables. The extent of DoD's independent
    strategic pharmaceutical stockpiles would determine the precise
    timeline before readiness degraded, but the underlying
    dependence on commercially sourced generic medicines means a
    large-scale Chinese export ban would impair military medical
    readiness and potentially affect force availability. This alone
    justifies treating pharmaceutical supply chain security as a
    defense priority.

        Question:

        What short- and long-term actions should the Administration
    and Congress take to protect the U.S. pharmaceutical supply
    chain from disruptions, including during periods of
    international conflict or against foreign adversaries'
    retaliation? How would increased domestic manufacturing of
    pharmaceuticals help achieve this goal?

        Response:

        Increased domestic manufacturing reduces exposure to
    geopolitical disruptions by shortening supply chains, reducing
    adversarial upstream dependencies, and building surge capacity
    that currently does not exist but domestic manufacturing alone
    cannot solve the problem in the near term-it must be paired
    with allied diversification through the Bio5 framework with the
    EU, Japan, South Korea, and India. Short-term priorities
    include expanding the Strategic National Stockpile with
    critical APIs and finished drugs, enacting advanced purchase
    commitments by Tricare and the VHA to provide manufacturers the
    revenue certainty needed for long-term investment, and
    mandating tier-2 and tier-3 supplier reporting. Medium- and
    long-term levers include CHIPS Act-style tax credits and grants
    for domestic API and KSM manufacturing, regulatory
    harmonization through mutual recognition agreements, and
    investment in continuous flow manufacturing and AI-enabled
    process control. One critical point: KSM dependency remains a
    risk even when finished drug or API manufacturing is onshored.
    A durable strategy must address the full upstream chain.

        Question:

        How would the U.S. population benefit from government-
    owned, government-operated or government-owned, contractor-
    operated pharmaceutical manufacturing facilities?

        Response:

        Government-owned manufacturing facilities offer a targeted
    capability for producing strategically important medicines that
    the commercial market consistently underproduces due to
    structural incentive failures. The benefit would be
    concentrated in two areas: greater assurance of supply
    continuity for essential medicines during disruptions, and a
    price anchor during shortage conditions. However, government-
    owned manufacturing is expensive, and important questions about
    governance and operational efficiency warrant careful analysis.
    Advanced purchase commitments, long-term contracts, and
    resilience-weighted reimbursement are likely more cost-
    effective near-term interventions; government-owned facilities
    may play a complementary role for a defined set of the most
    strategically critical molecules.

        Question:

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

        Response:

        Shortages generate direct costs throughout the health care
    system: higher acquisition prices for alternative agents,
    pharmacy and nursing labor for workarounds, wastage from unused
    preparations, and premium sourcing and expedited shipping fees,
    as documented by Vizient. Exposure to unsafe or adulterated
    pharmaceuticals-such as the valsartan contamination of 2018 and
    heparin adulteration of 2008-adds further direct costs through
    recalls, replacement procurement, monitoring, and clinical
    management of harmed patients.

        Question:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    indirect costs resulting from higher rates of illness?
        Response:

        When patients cannot access prescribed medicines, treatment
    is interrupted, and underlying disease progresses. For chronic
    conditions-cardiovascular disease, diabetes, cancer, epilepsy-
    interruptions increase the risk of acute events requiring
    emergency care, hospitalization, and long-term complication
    management, all generating costs that far exceed the cost of
    the unavailable medicine. Delayed chemotherapy due to shortages
    of carboplatin and cisplatin has been associated with worse
    outcomes and increased mortality. Treatment delays do not
    simply defer costs; they generate new and higher costs through
    worse clinical outcomes and extended treatment courses.

        Question:

        How do pharmaceutical supply chain challenges, drug
    shortages, or exposure to unsafe pharmaceuticals result in
    higher rates of illness and increased medical complications?

        Response:

        Supply chain failures increase illness and complications
    through treatment interruption, forced substitution to less
    effective alternatives, and direct patient harm from
    substandard or adulterated medicines. Forced substitution
    increases the risk of adverse drug events, subtherapeutic
    dosing, and clinical failure. The moral and clinical distress
    placed on providers who must ration scarce medicines-deciding
    who receives a critical chemotherapy agent or antibiotic when
    supply is insufficient-is itself a systemic consequence that
    undermines the integrity of care. Supply chain resilience is a
    patient safety issue. Addressing it is not only an economic and
    national security imperative-it is an ethical one.

                            Senator Raphael Warnock

        Question:

        Health care providers across Georgia are concerned about
    the growing shortage of pharmaceutical drugs, including generic
    medications. Due to limited access, patients must wait longer
    for their treatments or turn to alternative drugs. You
    highlight how procurement reforms at federal agencies like the
    Department of Defense can address generic drug shortages and
    incentivize domestic manufacturing of pharmaceutical drugs.
    What type of procurement reforms should Congress pursue to
    ensure states like Georgia have access to quality medications?

        Response:

        The most impactful reform is adopting quality-based
    contracting frameworks that break the current race to the
    bottom in generic drug pricing. Federal purchasers-Tricare, the
    Veterans Health Administration, and Medicaid programs-currently
    award contracts primarily on lowest price, driving
    manufacturers toward cost-cutting that undermines quality and
    eliminates the margin needed to sustain domestic or allied
    production of essential medicines. The Drug Shortage
    Comprehensive Recovery and Improvement (DSCRI) framework and
    related proposals would reform contracting to reward
    manufacturers for quality, resilience, and domestic or allied-
    nation sourcing. Multi-award contracts preserve supplier
    diversity; long-term contracts provide the revenue
    predictability manufacturers need to invest in infrastructure.
    CMS reimbursement reforms incentivizing medicines made with
    domestic or allied APIs would shape incentives across the
    entire commercial market-with broader impact than direct
    government procurement alone. For states like Georgia, these
    systemic reforms are the most durable path to reliable access
    to quality medications.

        Question:

        According to a Government Accountability Office report,
    there have been inspection workforce shortages at the Food and
    Drug Administration (FDA) since 2018. From November 2021 to
    June 2024, the vacancy rate of investigators who oversee drug
    manufacturers increased from 9 percent to 16 percent, leading
    to fewer safety inspections of generic drugs. The Trump
    administration also dismissed more than 3,500 FDA employees in
    April 2025, further exacerbating the FDA's inspection workforce
    capacity.
        You mention how limited FDA inspection workforce capacity
    hinders the agency's ability to regulate generic drugs and
    conduct quality inspections in foreign countries like China and
    India. How can Congress help stabilize the FDA inspection
    workforce and improve oversight over foreign manufacturing of
    generic drugs?
        Response:

        Congress should prioritize funding to restore the FDA's
    foreign inspection capacity. The FDA's inspection program is
    chronically under-resourced relative to the scale of overseas
    manufacturing it oversees; as I noted in my testimony, OAI
    outcomes in India are 13 percent-compared to two percent in
    Europe and eight percent in the U.S.-reflecting both real
    quality variability and insufficient inspection frequency.
    Domestic manufacturers face a structural disadvantage because
    U.S. facilities are inspected far more frequently than foreign
    counterparts without commensurate benefit to overall supply
    safety. Congress should direct the FDA to implement a risk-
    based inspection model calibrated to a facility's prior
    history, product criticality, and supply chain concentration-
    regardless of location. Risk-based border inspection
    authorities and point-of-care quality testing tools provide an
    additional layer of assurance against substandard products
    entering the U.S. market. Congress should also support mutual
    recognition agreements with trusted regulatory partners-the EU,
    Japan, and comparable advanced economies-to share inspection
    data and free FDA resources for the higher-risk environments in
    India and China where they are most needed.
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                           Statements for the Record

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