[Senate Hearing 119-416]
[From the U.S. Government Publishing Office]
S. Hrg. 119-416
FOREIGN DEPENDENCE: HOW CHINA
CAPTURED AMERICA'S DRUG SUPPLY
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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
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SPECIAL COMMITTEE ON AGING
RICK SCOTT, Florida, Chairman
DAVE McCORMICK, Pennsylvania KIRSTEN E. GILLIBRAND, New York
JIM JUSTICE, West Virginia ELIZABETH WARREN, Massachusetts
TOMMY TUBERVILLE, Alabama MARK KELLY, Arizona
RON JOHNSON, Wisconsin RAPHAEL WARNOCK, Georgia
ASHLEY MOODY, Florida ANDY KIM, New Jersey
JON HUSTED, Ohio ANGELA ALSOBROOKS, Maryland
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McKinley Lewis, Majority Staff Director
Claire Descamps, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Rick Scott, Chairman................ 1
Opening Statement of Senator Kirsten E. Gillibrand, Ranking
Member......................................................... 2
PANEL OF WITNESSES
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
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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.]
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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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