▶ 0:00:44Testing, testing. One, two, three. Testing the witness microphone for the court reporter. Okie do. Testing microphone for the court.
▶ 0:01:36You want me to sit and do it? Where are you at? Oh, rules. You had it really high in rules, huh? Oh, you had an interview. Okay. Where was it at? In Reburn. Oh, okay. Okay. Witness mic test. Witness mic test. 1 2 3 4. 1 2 3 4. What if I'm back here? Can you still hear me?
▶ 0:02:06Okay. Mic test. Remember mic test. One, two, three, four.
▶ 0:24:29Subcommittee will come to order. The chair recognizes himself for five minutes for an opening statement. Welcome everyone. Today's hearing is critical in addressing our nation's reliance on adversarial countries for essential medications and health care products. This dependence not only jeopardizes our national security and patient safety, but also highlights the urgent need to increase domestic and fringe manufacturing. Let me be clear.
▶ 0:24:57The United States should never be dependent on the Chinese Communist Party for the antibiotics and essential medicines. But that's exactly the dangerous position we are in today. In 2002, the United States manufactured 72% of the pharmaceuticals it consumed. By 2023, that number had dropped to just 37 a.5%. We didn't just outsource manufacturing, we outsourced the sovereignty and safety of our health care system.
▶ 0:25:25We saw the impacts of this reliance firsthand during the CO 19 pandemic. According to a conversation I had with the administrator for strategic preparedness and response or ASPER, under the Trump administration, the United States saw a downtick in the amount of PPE and pharmaceuticals coming to our country from China in the fall of 2019. In the fall of 2019, we didn't learn about the CO until January of 2020. They knew what was going on.
▶ 0:25:53They started hoarding this stuff and not sending it to us. China knew there was an unidentified sickness in its own country. They concealed it and then they withheld medical supplies so the United States was less prepared when CO 19 hit our shores. As both a pharmacist and a member of Congress, I know how critical these medicines and supplies are, especially for our national security. Under the Biden Harris administration, over 323 drugs were in shortage during the first quarter of 2024.
▶ 0:26:22an all-time high. And cancer patients often were often forced to switch treatments, adjust dosage regimens, or in extreme cases unable to receive their life-saving medications. There were no comprehensive effort to support American manufacturers or reduce our reliance on foreign supply chains. That is simply unacceptable.
▶ 0:26:44Thankfully, President Trump is taking meaningful action by demanding real investment in our domestic production base and putting an end to decades of failed America last policies that left our supply chains hallowed out and put our patients, constituents, and families at risk. Under the leadership of President Trump, we are bringing manufacturing back to America.
▶ 0:27:06Since the start of this year, the start of President Trump's second term, Johnson and Johnson broke ground on a new $2 billion facility in North Carolina, Amgen announced a $900 billion uh $900 million manufacturing expansion in Ohio. Avi committed $10 billion to invest in the United States and Santa Fe announced plans to invest at least $20 billion. And these are just a few examples. This is just the start.
▶ 0:27:33I look forward to hearing from my other colleagues about the recent investments in their districts and states during during this hearing today and I'm thrilled to see what additional investments continue to flow and thrive under administration focused on unleashing innovation and bringing capacities back home. Along those lines, I commend recent efforts by this administration to bolster domestic production, but we must do our part in Congress as well.
▶ 0:27:59This hearing will make it clear that more can be done to eliminate burdensome regulatory barriers, streamline processes that impede our competitiveness on the global stage, and establish the proper incentives to ensure we are creating the environment to allow innovation to flourish.
▶ 0:28:15It's no coincidence that Georgia, my home state, the number one state in the nation to do business, is home to Manis Bio, which has invested nearly $60 million and created over 100 jobs with the acquisition of a new manufacturing facility in Augusta. We need more more policies at the federal level that mirror the progra growth examples we have in the state of Georgia.
▶ 0:28:39That's why House Republicans passed the one big beautiful bill act which incentivizes domestic medical supply production by rewarding companies that build their products in America like US antibiotics who is the last remaining end-to-end domestic US manufacturer of amoxicylin the most prescribed antibiotic in the country this is about protecting American lives empowering American workers restoring American sovereignty and reinforcing US leadership in medical innovation
▶ 0:29:10China is not our friend. Ladies and gentlemen, China is not our friend. Every product component that that that then turns into a vial of medicine or a piece of medical equipment that is made in China is a missed opportunity to strengthen our economy and protect our people. It's time to act. We need to view pharmaceutical and healthc care supply chain independence just as we are viewing energy independence.
▶ 0:29:35I'm proud to stand with President Trump and all those committed to putting America first in our health care system, starting with the medicines we rely on every day. I now recognize the gentle lady from Colorado, Representative Dette, for five minutes for an opening statement. Thanks so much, Mr. Chairman. Um, I do agree with you that China is not our friend.
▶ 0:29:57Uh but however, it's hard to take this administration seriously on this issue when they are firing hardworking public servants who support generic drug approvals, facility inspections, and initiatives that help companies make the products in America because that will just cause a longer delay. I do want to say the CO 19 pandemic laid bare the challenges of our medical supply chain. But unfortunately, Mr.
▶ 0:30:23Chairman, as you mentioned, our reliance on foreign supply chains for critical med medical pro products has been a problem for decades, as you said, much longer since 2020. We have a system that's great at producing cheap generic drugs and basic supplies. But we do not have a system that's great at encouraging a resilient supply chain that we can always count on.
▶ 0:30:46I believe everybody in this room wants to be serious and come up with serious solutions to ensure a secure reliable medical supply chain. During the COVID pandemic, everybody in the world needed the same products at the same time and manufacturing was severely disrupted. that put the co the problems with co put this problem into sharp relief because there were too many single points of failure.
▶ 0:31:15There was an inability to quickly shift manufacturing to critical products and there were as you said there was an over reliance on unreliable foreign countries among them that has all been long simmering. So, I think it's past time we work together to stop the endless cycle of shortages of critical medicines and ensure that we will have a reliable supply of medical products.
▶ 0:31:40This committee considered legislation last Congress to address the supply chain and how it relates to drug shortages. This includes legislation from the former chairwoman of this subcommittee and my my predecessor Anna Essu to ensure that we better understand where the active ingredients for these drugs are coming from.
▶ 0:32:00The bill, the drug origin transparency act is so important because only 12% of active pharmaceutical ingredients globally are made in the United States. We also of course need to reauthorize the pandemic and all hazards preparedness act. One of the major tools we have to invest domestically in medical counter measures.
▶ 0:32:22Some papa authorized programs like the biomedical advanced research and development agency have made it possible for innovative manufacturers to help the American people prepare for public health emergencies. And I know we have f I have friends on the other side of the aisle who are working very closely to try to get this pop of reauthorization into this committee for hearing and markup and onto the floor and the strategic national stockpile can be used to help support domestic manufacturers and
▶ 0:32:53secure the supply chain by focusing on resiliency. Our hospitals can also be part of the solution. Hospitals are major medical supply purchasers and they need to be at the table to encourage and reward domestic production and secure supply chains. But frankly, I'm as I mentioned, I'm troubled by the discordance between this committee's other work this Congress and our work today on supply chain chains.
▶ 0:33:18For example, the more we squeeze hospitals, particularly rural hospitals, the less they will be able to do to spend a few extra dollars on by American. If we kick off millions of people for Medicaid under under the Republicans uh uh reconciliation bill, that will result in an additional 42.4 billion in hospital uncompensated care costs in 2034. Let me say that again.
▶ 0:33:47If this bill actually passed the way it passed from this committee in the House, there would be an additional $42.4 billion in hospital uncompensated care costs in 2034. That would translate into hundreds of billions of dollars of care hospitals who will have to swallow in the next 10 years. I don't think that that's going to make hospital procurement offices more able to consider the source of the antibiotics they're buying.
▶ 0:34:14Instead, what it does is it makes them even more likely to go with the cheapest option regardless of where it came from or any downstream consequences. So, I implore my Republican colleagues to consider all of the consequences of their Medicaid cuts, not just throwing 16 or however many people off of health care.
▶ 0:34:36A resilient supply chain will become less popular as we squeeze care for hardworking Americans and especially rural and otherwise underresourced hospitals that provide us with that care. So I want to thank you again for Mr. Chairman for having this hearing and I will yield back. The general lady yields. The chair now recognizes the chairman of the full committee chairman Guthrie for five minutes for an opening statement. Thank you uh chairman Carter and and ranking member of the gap for this hearing.
▶ 0:35:04I really appreciate all the witnesses for being here today. And during this hearing, we we'll be hearing from expert witnesses regarding the current state of our supply chain and opportunities and challenges to strengthen our domestic manufacturing capacities and infrastructure.
▶ 0:35:19Efforts to bring back capacity uh back home to the United States are critical to protecting our national security as well as ensuring access to safe, secure, and reliable medicines and healthcare products for Over the years, countries like India and China have continued to grow more influential in research, development, and manufacturing of medical products.
▶ 0:35:41Globally, this has led many countries, including the United States, to be reliant on international sources for the production of certain medicines and other health products and supplies. The reasons for this evolution are incredibly complex involving involving both workforce and development and manufacturing cost considerations, differing incentive structures, strategic location selections, operational risk, as well as associated regulatory burdens or corresponding flexibility, just to name a
▶ 0:36:11few. While the reasons are complex, the staggering reality that our current domestic supply chain is largely reliant on international forces is remarkably clear and one that we must address. According to recent data, about half of all the APIs or active pharmaceutical ingredients for prescription medicines in the US come from India and the European Union. In addition, India controls the majority of production volume for most oral tablets and capsules.
▶ 0:36:40Meanwhile, China is an exclusive manufacturer of certain APIs in essential medicines while remaining a dominant supplier of key starting materials, the pieces of the puzzle that often go to contribute to API. Thus, it is fair to say the US remains reliant on several international partners for many varied pieces of supply chain that eventually come together to produce the products that land in our medicine cabinets, our doctor's offices, or use in our hospitals.
▶ 0:37:09Our healthcare supply chain involves many components and important players from the groundbreaking research to the raw material suppliers, product manufacturers and distributors and purchasers of all the way to the patient. We look forward to hearing from the experts in front of us today to provide their perspective and shed light on the nuances of this supply chain and the role their entities play. shed light on vulnerabilities and discuss possible opportunities and solutions.
▶ 0:37:36With decreased reliance on China and other nations, we can help to foster a more sustainable, resilient, and predictable healthc care supply chain, bolstering our domestic manufacturing and promoting the safety of our medicines and the security of our country. It is important to remember the national advancements in medicine already being made right here at home.
▶ 0:37:59For example, from 2018 to 2022, the biofarmaceutical industry increased capital investments in their facilities, equipment, and infrastructure by more than 72%. More than 126 billion towards US's banks manufacturing. To put into perspective, the only industry who exceeded this was motor vehicles. In terms of innovation, the biioharmaceutical industry increased their research and development by more than 58% at the same time.
▶ 0:38:28In fact, 46% of 63 novel drugs have been approved globally over the last decade as a result of American companies involvement in discovery, patent or clinical research process. This is twice as much as Europe. I look forward to hopefully uh hearing more about some of these uh district stories from members of the committee as well as our witnesses. And I look forward to having our witnesses testify today. And I yield back.
▶ 0:38:57Thank you. The gentle I now recognize the ranking member of full committee, Mr. Palone, for five minutes for an opening statement. Thank you, Mr. Chairman. Today, committee Republicans want to discuss healthc care supply chains while the Trump administration is unleashing chaos and harm on our public health infrastructure.
▶ 0:39:15The latest dangerous action by this administration came on Monday when Secretary Kennedy fired all 17 medical experts of the Advisory Committee for Immunization Practices, the committee that advises our nation on immunization practices. And this action puts the health and well-being of the American people, especially our nation's children, at extreme risk. It undermines vaccine safety and politicizes research and also politicizes uh science. And it's all being done so RFK Jr.
▶ 0:39:45can stack the panel with a bunch of antivaccine people. And also on Monday, 342 of the top scientists at the National Institutes of Health signed a letter to the NIH director detailing unprecedented waste, abuse, and illegality at NIH under the Trump administration. The letter also addresses the harmful consequences of these actions in our nation's ability to improve and save lives through scientific breakthroughs.
▶ 0:40:09This was really an unprecedented action by these employees who must feel they have no other options at this point than to go public. Now, each of these actions warrants a hearing here in this committee and yet rep Republicans on the committee remain silent, blindly following the Trump administration as it decimates our public health infrastructure. This committee has yet to hear from the Secretary of HHS. We've yet to hear from the NIH director.
▶ 0:40:33I know Republicans plan a budget hearing with Secretary Kennedy later this month, but he's caused so much destruction at HHS already that one hearing focused on the budget is not going to be sufficient. He must answer separately for the dangerous actions he's taken to undermine vaccines. And rather than demanding answers of this administration, congressional Republicans are plowing ahead with their big ugly bill that rips healthc care away from 16 million people so they can give giant tax breaks to billionaires.
▶ 0:41:01Committee Republicans want to talk about strengthening domestic manufacturing and the healthc care supply chain. However, it's difficult to have a discussion about the supply chain without acknowledging the disruption, confusion, and uncertainty that the Trump tariff policies have caused, as well as the deep budget cuts the administration has proposed to the FDA. I don't understand how congressional Republicans intend to square their desire to onshore manufacturing and bolster the domestic supply chain while eliminating nearly 2,000 jobs at FDA and proposing an 11% budget cut.
▶ 0:41:32FDA employees are the ones who inspect foreign and domestic manufacturing facilities, approved branded and generic drugs, and ensure that medical products are safe and accessible for the people who rely on them. FDA staff have said the layoffs have resulted in drug safety work being stalled and inspections falling behind. And that's the hearing we should be having. We should be conducting robust oversight on the implications of these actions.
▶ 0:41:55What it means in the short term for preparedness and response, what it means in the long term for American innovation and our ability to lead on a global scale. Both are threatened under the Trump administration's policies. And if Republicans are really interested in strengthening domestic manufacturing and the healthcare supply chain, they would work with Democrats to ensure FDA has the resources and authorities it needs to ensure the medical products Americans rely on are safe, effective, and available.
▶ 0:42:21FDA needs additional tools, resources, and authorities, not less, to address drug shortages, and strengthen the supply chain. Now, last Congress, Democrats put forward several bills that would bring greater transparency and resiliency to the supply chain. But Republicans refused to act on them. They also walked away from a bipartisan reauthorization of the pandemic allhazards preparedness act after Elon Musk blasted the overall package it was included in. There's a lot of work to be done here, Mr.
▶ 0:42:48Chairman, to protect our supply chain, mitigate drug shortages, and ensure we're better prepared for the next pandemic. However, unless and until the Trump administration chooses to end its dangerous crusade against public health, against biomedical research and vaccines, it's not possible to do the things that supposedly this hearing is about with the supply chain. It's time that the administration and Republicans understand that these policies and solutions are all intertwined. You can't separate them.
▶ 0:43:18You can't talk about the supply chain and mitigating drug shortages. in the same time fire people at FDA, limit the resources that go to FDA and all the other chaos that this administration is creating. And with that, I yield back the balance of my time, Mr. Chairman. This concludes member opening statements. The chair would like to remind members that pursuant to committee rules, all members opening statements will be made part of the record.
▶ 0:43:44We want to thank all of our witnesses for being here today and taking time to testify before the subcommittee. Our witnesses today are Mr. Patrick Kushman, president, US Antibiotics. Mr. John Murphy, President and Chief Executive Officer, Association for Accessible Medicines. Dr. Ronald T. Pieran Cheesey, Chief Executive Officer, US United States Pharmacopia. Miss Don O'Connell, former assistant secretary for preparedness and response.
▶ 0:44:14And Mr. Josh Bolan, associate executive director, government affairs and innovation of the National Association of Boards of Pharmacy. Per committee custom, each witness will have the opportunity for a fivem minute opening statement, followed by a round of questions from members. The light on the timer in front of you will turn from green to yellow when you have one minute left. I now recognize Mr.
▶ 0:44:38Patrick Ashman for five minutes to give an opening Chairman Carter, Ranking Member Dette, distinguished members of the subcommittee, thank you for the opportunity to speak today. My name is Patrick Kman. I serve as president of Bristol, Tennessee based US antibiotics, which is the last remaining end-to-end US manufacturer of amoxicylin. The facility I lead has supplied life-saving medicine to American patients for more than 40 years.
▶ 0:45:07Until 2008, every US prescription of moxicylin was produced at our Bristol plant. But after years of escalating subsidized competition from Indian and Chinese generic drug makers, the facility's previous owners filed for bankruptcy in 2020. By the time our production lines went dark that year, the US had become entirely reliant on foreign origin amoxicylin.
▶ 0:45:31In 2021, US Antibiotics was rescued from bankruptcy by private American investors who recognized the national security imperative of antibiotic production. Since then, we have created new jobs, invested tens of millions of private capital into reactivating production lines, and re-entered the commercial market. I feel privileged to play a role in this important story, and I look forward to sharing more with you about our experience.
▶ 0:46:00Without antibiotics, routine surgeries and common infections can become fatal. Our nation's health security, military readiness, and emergency preparedness all hinge on reliable antibiotic access. Amoxicil alone accounts for approximately 50 million US prescriptions annually, making it the most prescribed antibiotic. After dropping to zero in market share in 2020, US antibiotics now has about 5% market share.
▶ 0:46:30If our facility were to shut down permanently, it would take no less than five years and hundreds of millions of dollars to construct a new facility capable of producing amoxicylin. That would be at least half a decade in which the US would be entirely reliant on other countries for the most commonly prescribed antibiotic. Our company and other US generic drug makers like us face three primary challenges. one, unfair foreign subsidies, labor practices, and lacks regulatory oversight.
▶ 0:47:01One 2022 study found that a lack of Chinese and ind Indian regulatory enforcement allows their drug makers to cut as much as 25% off their cost. Two, a lack of long-term government purchasing commitments. Most buyers prioritize cost over reliability or origin. Unlike defense contractors which often operate under multi-year contracts, US drug makers of critical generic medicines are vulnerable to market fluctuations.
▶ 0:47:32Three, a lack of recognition for critical drugs national security relevance. Generic antibiotics are not treated as strategic assets like weapon systems or critical minerals. This means manufacturers cannot access all of the same financing tools, tax incentives, or industrial-based support programs available to other domestic producers of critical goods.
▶ 0:47:54Today, my colleagues in Bristol will manufacture approximately 700,000 doses of amoxicylin before their shift ends, but we operate on razor thin margins. Despite our strategic importance, we receive no federal subsidies, federal prime contracts, or protection from predatory pricing. Since January 2023, the US government has spent six $900,000 on US antibiotics products through the federal supply schedule system.
▶ 0:48:22However, during roughly the same period, HHS spent approximately $40 million to purchase foreign origin to moxicylin for the strategic national stockpile. To ensure the US is never again dependent on China or and India for moxicylin, I humbly submit four policy recommendations for your consideration. One, incentivize longterm purchasing agreements to establish predictable demand. Companies like usabox require to scale and grow.
▶ 0:48:51Encourage federal agencies to enter a multi-year contract with domestic producers of essential medicines. Two, implement domestic preference policies. The US government should establish a bi-American requirement for antibiotics purchased with federal funds when a US manufacturer exists. Three, create strategic antibiotic manufacturing fund. Provide targeted grants, lowinterest loans, and tax incentives to companies investing in domestic production.
▶ 0:49:20Four, enforce trade rules to counter predatory pricing. The Department of Commerce and USR should leverage existing authorities to penalize unfair trade practices in the antibiotic sector. We support the ongoing section 232 investigation regarding national security effects of imports of pharmaceuticals and pharmaceutical ingredients. US Anabonics stands ready to play its part to secure the US Anabox supply chain for the 21st century.
▶ 0:49:49We have the infrastructure and we have the expertise, but we need this Congress to act. Thank you for the opportunity to testify. I look forward to your questions. Thank you, Mr. Cashman. The chair now recognizes Mr. John Murphy III for five minutes to give an opening statement. Chairman Carter, ranking member to get members of the subcommittee. Thank you for inviting me to discuss how we can strengthen domestic pharmaceutical manufacturing and secure our supply chain.
▶ 0:50:17My name is John Murphy, president CEO of the Association for Accessible Medicines. We represent the companies that supply more than 90% of US prescriptions to American patients while accounting for just over 13% of total US drug spending. American families depend on affordable generic and biosimilar medicines. Yet, the supply chain that delivers these medicines is under increasing pressure and in some parts is already fracturing.
▶ 0:50:40The total value of sales of generic and biosimilar medicines has stag stagnated for more than a decade and the economic footprint of US generics has shrunk by 6.5 billion over the past 5 years despite growth in volume and the availability of many new medicines. Production has increasingly evolved globally due to the competing economies seeking to bolster their own health security and access and the declining incentive structures and reimbursement potential here in the United States.
▶ 0:51:08To be more specific, four key challenges face our industry and its growth in the United States. We have no comprehensive national strategy or real incentives for production. The Chips Act, as an example, incentivized domestic manufacturing of semiconductors and showed what a bold industrial policy looks like. Reimbursement policies continue to underpric essential drugs. For sterile injectables, in particular, a race to the bottom competitive environment drives prices for indispensable medicines below sustainable levels.
▶ 0:51:38and often rewards higher price brands over generics. We have labor shortages. According to a recent HHS sponsored report, the US faces a shortage of worker workers with the requisite expertise to work in our sector and more than half of specialized manufacturing jobs go unfilled. Slow permitting and regulatory barriers also add. It can take 5 to seven years to build a new plant and 3 to 5 years to add a single production line. That's the bad news.
▶ 0:52:06The good news is that Congress can help. Congress can reverse these trends with commitments built on non-pragmatic steps. First, we should create guaranteed purchase contracts for essential medicines. Fixed volume, fixed price agreements structured to encourage multiple suppliers would give manufacturers the revenue certainty to build or reopen capacity here in the United States. Second, we should expand the strategic national stockpile to include finished drugs and other active ingredients.
▶ 0:52:34Third, fund grants to defay relocation and retrofitting costs of existing dormant capacity. We should provide targeted tax incentives. A 50% credit on capital costs for domestically producing essential medicines. A simplified 20% R&D tax credit, relief for bioequivalence studies and FDA user fees, and wage credits for US production would narrow the cost gap with overseas labor and energy.
▶ 0:52:59We should streamline FDA regulatory review of new complex generics and We should look to invest in domestic API capacity. Many other countries like Austria and South Korea have incentve invested heavily to support their own API production. The US can and should pursue similar strategies that cluster suppliers and reduce barriers to scale. We should appropriate multi-year funding equal to the strategic value of medicines to the United States comparable to commitments made in the chips act.
▶ 0:53:28We should look to curb anti-competitive brand patent tactics that delay generic entry by limiting serial patents and preserving the ability to reach pro-co competitive settlements. And last, we should reform Medicaid Medicare and PBM practices that steer patients to higher price brands and protect prolonged brand monopolies. These measures are not theoretical. They mirror the tools that secured domestic production of semiconductors and personal protective equipment.
▶ 0:53:55Applying them to medicines will expand US manufacturing, enhance national security, and preserve access to affordable treatments for every patient. Let me close with two realities. First, the United States has dormant capacity. With the right incentives, existing facilities can restart lines faster than we can build new plants. Second, rebuilding resilience will require some patience.
▶ 0:54:19Capital investments, ingredient qualification, validation, and FDA inspections take time, but the sooner we begin, the sooner patients, hospitals, and our military will benefit. Generic and biosimilar medicines are not just cost savers. They are lifelines. With strategic, sustained support, we can reinforce that lifeline at home, reduce reliance on any single foreign source, and create skilled jobs across our communities.
▶ 0:54:45I appreciate the subcommittee's attention to this urgent issue and look forward to working with you to turn these proposals into law. Thank you. Thank you, Mr. Murphy. The chair now recognizes Dr. Ronald Is that pretty good? That's pretty good. Thank you. You know, I try to get staff to get Smith and Jones, but they get all these other people here. So, I've directed them. Don't have any witnesses unless it's a Smith or Jones. Thank you, Chairman Carter.
▶ 0:55:14Uh and thank you ranking member Dette, members of the committee for this opportunity to provide testimony on strengthening the domestic manufacturing um and the healthcare supply chain. I'm Ron Pier Vincenzi, chief executive officer of the United States Pharmacopia um better known as USP.
▶ 0:55:32USP is an independent scientific global nonprofit organization founded on January 1st of 1820 when 11 physicians concerned about patient safety and poor quality imported medicines from England came together to create the first national pharmacipa in the world. Uh today USP works with hundreds of independent experts to set 6,000 over 6,000 uh quality standards for the entire medicine supply including dietary supplements and also their ingredients.
▶ 0:56:00Importantly, in addition, we've developed verification services to ensure the quality of ingredients, a program to test the quality of pharmaceutical products from the marketplace and initiatives to accelerate adoption of advanced pharmaceutical manufacturing All of this work is in service of USP's mission to help strengthen the global supply chain so that medicines people rely on are available when needed and meet quality standards as expected and USP launched an ambitious initiative in 2019
▶ 0:56:30to map and analyze the global medicine supply chain. The resulting data platform known as the medicine supply map now tracks 94% of US drug products and ingredients wherever they are manufactured in the world. It identifies vulnerabilities in our supply chain and helps guide smarter investments by both the private sector and hopefully targeted interventions by policy makers. So what have we learned from this extensive mapping? Globalization has indeed enabled the manufacturer of generic medicines at lower costs.
▶ 0:57:01Um but it has clearly made our supply chains longer, more fragmented and more opaque. So a few Over 80% of key ingredients and raw materials used in US medicines are manufactured abroad today and many in just a handful of locations. India supplies more than a third of all US prescription drug APIs.
▶ 0:57:22But China's API filings have risen 63% just over a two-year period from 2021 to 2023, now comprising a third of new global filings on a go forward basis. This geographic concentration is one key driver of vulnerability. Using our data, USP has identified 100 vulnerable medicines that are both at high risk for disruption and difficult to to substitute uh therapeutically. Pharmacists will understand that one.
▶ 0:57:53Right now, the supply of our most essential medicines, nearly all of which are generics, remain highly sensitive to geopolitical tensions, disasters, pandemics, and importantly, market dynamics that drive often the most reliable manufacturers to exit the market for individual drugs. The result is an increasingly fragile supply chain that jeopardizes not just patient care, but national security.
▶ 0:58:16To reduce these risks and improve resiliency, we've identified four key recommendations which can also serve as pillars to guide Congress's support for domestic manufacturing. The first is to continuously identify the nation's most vulnerable medicines to leverage that data to pinpoint the factors most responsible for supply risk and target interventions where the data shows the risk is most imminent.
▶ 0:58:40The second is supporting uh the innovation in US manufacturing technologies reducing the barriers for new novel methods for producing pharmaceutical ingredients including key starting materials as well as APIs.
▶ 0:58:54The US is actually white quite well positioned to lead on breakthrough technologies including advanced manufacturing and to find alternative synthesis pathways for those APIs that can help reduce our reliance on overseas suppliers and enable us to domestically manufacture medicines and your ingredients more efficiently and more A third is to establish a resiliency benchmark for the purchase of vulnerable medicines.
▶ 0:59:19We must rethink how we value essential generic drugs, which account for more than 90% of medicines that Americans rely on, but represent less than 20% of our spending on medicines. USP and other stakeholders have proposed establishing a resilience benchmark to help shift the paradigm to empower and incentivize public and private sector purchasers to value resiliency and Fourth, expand the supply chain visibility by leveraging tools
▶ 0:59:49like the USP Medicine supply map. Expertise like this is essential to unravel complicated supply chains and provide the riskmanagement intelligence. We can pinpoint vulnerability so that we can also pinpoint solutions. The fragile supply chain is a problem we can and should solve and with confidence. In fact, we must work to forge a more resilient, adaptable, and secure future for America's medical uh medicine supply because the well-being of millions of people and our nation security does depend on it.
▶ 1:00:18USP thanks the committee for convening this discussion on this urgent issue that affects so many of um my fellow Americans and their healthcare providers. I look forward to answering your questions. Thank you. Thank you, sir. Chair now recognizes Mrs. Don Okonnell for five minutes for an opening Thank you, Chairman Carter and Ranking Member Dette. I am pleased to have this opportunity to testify before you today on the need to strengthen domestic manufacturing and the public health and medical supply chain.
▶ 1:00:47I served in the previous administration as the assistant secretary for preparedness and response. My job was to help the country prepare for, respond to, and recover from public health emergencies and disasters. Much of this work was focused on making sure the country had the tools it needed to respond to whatever emergency was at hand. As a result, having a resilient public health and medical supply chain was always a concern of mine. But over the last four years, it became a mission.
▶ 1:01:14We must never forget what ranking member DGAT mentioned, those early days of COVID when the whole world needed the exact same medical supplies at the exact same time and most of them were manufactured somewhere else. The strategic national stockpile had limited stores of usable PPE, the last pieces purchased 10 years prior during the H1N1 outbreak. Also, the amount of PPE manufactured in the United States was limited, and much of it was manufactured just in time with little surge capacity.
▶ 1:01:42As a result, our frontline healthcare workers were forced to wear garbage bags and used empty soda bottles for PPE. When I began my work at Asper in 2021, two things were clear to me. First, we needed enough supplies in the strategic national stockpile to get the country through the first 90 days of an emergency. And second, we needed a manufacturing base in the United States with enough capacity that could quickly ramp up to meet demand after those first 90 days. And so we got to work.
▶ 1:02:11The first Trump administration began the work of investing in domestic manufacturing of critical PPE and medical supplies. We continued that work when we came in. And over the course of the COVID response across both administrations, Asper invested in the domestic manufacturer of masks, gloves, gowns, tests, as well as ancillary equipment such as swabs and vials. Under my leadership, I established Asper's supply chain office to manage our domestic manufacturing efforts.
▶ 1:02:38I elevated the strategic national stockpile to a direct report to me, and I restocked its depleted shelves with domestically manufactured supplies whenever possible. As the country emerged from the acute COVID PPE and medical supply shortages, our team expanded its efforts to invest in the domestic manufacturing of active pharmaceutical ingredients and key starting materials for the medicines that are most needed in public health Expanding the healthc care manufacturing base in the United States takes time, attention, and a coordinated
▶ 1:03:08effort across the government. We ran into several challenges that Asper and HHS alone could not solve, but required the support and engagement of other parts of government. And despite our efforts, some of the companies we invested in were unable to survive the waning demand for PPE that quickly followed the ending of the acute phase of the COVID response. But despite these challenges, I think we have an opportunity. The previous two administrations initiated much of their supply chain work during times of emergency and acute shortage.
▶ 1:03:39There is an opportunity now that we are not in a crisis to take a look at what has worked and what has not and consider a comprehensive framework for securing our public health and medical supply chain. This framework should first clearly identify what is the public health and medical supply chain, what is in it that needs to be available and ready to use on day one of an emergency. It should promote investment in the domestic manufacturer or nearshoring of whatever those products are.
▶ 1:04:04It should have a strategy to ensure there is a market for those products in both peace time and times of emergency. And the strategy should take into account government incentives, thoughtfully applied tariffs, and stockpiles of vendor managed inventory. And it should build enough domestic manufacturing that manufacturers can surge production quickly in times of emergency. Ensuring a resilient and secure domestic supply chain is a nonpartisan issue.
▶ 1:04:29In fact, it is a place despite deep partisan divisions around public health where both the Biden and first Trump administrations found agreement. We owe it to our frontline healthcare workers to make progress on this important issue before the next public health emergency so they never have to wear garbage bags for PPE again. Thank you, and I look forward to your questions. Thank you, Miss Gonnell. The chair now recognizes Mr. Josh Bolan for five minutes to give an opening statement.
▶ 1:04:59Health Subcommittee Chairman Carter, Ranking Member Dette, members of the subcommittee, thank you for the opportunity to testify today about the state of the US drug supply chain. NBP is a 501c3 nonprofit association that for over 120 years has protected public health by assisting our member boards of pharmacy in all 50 states that have the responsibility for regulating the practice of pharmacy as well as the prescription drug supply chains within their states.
▶ 1:05:23With my testimony today, I'll highlight some of the emerging safety threats to both the regulated and unregulated supply chains for products as they move closer to patients. As the subcommittee is aware, the drug supply chain security act passed into law in 2013 and provided a phased window of implementation for the pharmaceutical supply chain to achieve interoperable data sharing and electronic tracing of products to prevent dangerous products from reaching patients.
▶ 1:05:50The DSCSA provides essential tools that trading partners in the supply chain and state and federal regulators can utilize to detect unsafe medications. First, products now have to be serialized onto the individual salailable unit, meaning that there's a unique identifier for each product, and product packaging contains a 2D barcode that can be scanned.
▶ 1:06:09Once the product is scanned, trading partners and regulators can ask about the legitimacy of that product's identifiers or who owned that product Now the US supply chain now generates 16 to 20 billion transactions per year. And given this massive amount of data, NABP started working with our member boards of pharmacy and all sectors of the supply chain to conduct pilots that led to the development of Pulse by NABP, which is NABP's digital platform for DSCSA that we launched in January.
▶ 1:06:38Best way to think about Pulse is that it's a directory for all the manufacturers, distributors, andarmacies in the supply chain as well as all the products that move through the supply chain. Utilizing Pulse, regulators and trading partners can scan the 2D barcode of a product and ask questions of trading partners about that product. NABP is providing the tools to our members and to every pharmacy in the supply chain at no cost. We're doing so because the tools of DSCSA only work if they're accessible and easy to use.
▶ 1:07:07We rolled out Pulse to our member boards in mid January. And as it happens, the very first scans that were conducted out in the field utilizing Pulse helped the Arkansas and Mississippi boards of pharmacy in identifying illegitimate and counterfeit GLP-1 medications that had actually made their way into our legitimate supply chain. From a congressional perspective, the SCSA worked, but it illustrated that our supply chain is still susceptible to illegal actors.
▶ 1:07:33Since January, we have nearly 30 states utilizing the tool and not just boards of pharmacy, but other regulatory authorities such as attorneys general and drug enforcement administration field offices. While we've made progress and implementation of DSCSA helps, we still face challenges and threats to supply chain security. First, regarding medications offered over the internet, NABP has a host of resources we can share about the dangers of purchased medications over the internet.
▶ 1:08:01But our primary highlight in that work, we estimate that 96% of onlineies in operation at any given time are illegal in violation of state and federal law. And research shows that the majority of Americans falsely believe that websites offering prescription medications have been approved by the FDA or by the boards of pharmacy. And people increasingly trust that medications on the internet are safe and regulated. But unfortunately, that's not always the case. Second, NABP's members have flagged a disturbing trend in the loosely regulated space of med spas.
▶ 1:08:31For example, one state board uncovered an operation where a med spa had been set up in an individual's home where compounding, and I use that loosely, or mixing of purported GLP-1 medications with vitamin B12 in their bedroom, hardly a sterile environment. The med spa was compounding using active pharmaceutical ingredient that was obtained not from an FDA registered API manufacturer but from an international online source advertising cheap weight loss APIs.
▶ 1:08:59Medosa simply mixed these ingredients, drew it up in syringes, and then mailed them in individ to individuals in plastic bags. This is just one example from a state that actually has authority uh to regulate these types of entities. And unfortunately, we know activities like this are going on in every state, but most state boards lack the authority to actually do anything about it. So, while there are absolutely legitimate sources for obtaining medications over the internet, unfortunately, bad actors are using internet platforms to pedal medications, putting profits over safety.
▶ 1:09:29And to be clear, legitimate compounding plays an essential role in our supply chain to ensure patients have access to medications they need that aren't commercially available. that those that are simply mixing medications in their bedroom or in their bathroom in non-sterile environments and calling it compounding are a threat to legitimate practice. Given the popularity of certain medications, those who believe they can make a dollar over demand for a popular medication will do so irrespective of the harm it causes to patients. I'd like to once again thank the committee for their time and attention.
▶ 1:09:59I'll look forward to your Thank you, Mr. Bolan, and thank all of you for your testimony. We now begin questioning and I'll recognize myself for five minutes of questioning. As has been established here already, America has found itself entrenched in an issue that poses a threat to our safety and our national security. China has become our pharmacist. I practice pharmacy for almost 40 years. Now I've been replaced by China. Seriously, China's become our pharmacist.
▶ 1:10:29China decides whether Americans have the prescription and over-the-counter drugs we need to get and stay healthy. That's why we are having this hearing today so that we can examine the policies that bolster our domestic pharmaceutical supply chain. Before our committee today is US Antibiotics who is the only only US manufacturer of a moxel and augment based in Bristol, Tennessee.
▶ 1:10:52US Antibiotics operates a world-class antibiotic production facility with the sole focus of supporting patient access to quality life-saving medications, antibiotics, securing critical domestic supply chains, and creating good paying jobs. Despite US antibiotics critical importance to our supply chain, national security, previous administrations didn't prioritize these Americanmade products. In fact, previous administrations prioritize foreign sourced amoxicylin over Americanmade emoxicylin.
▶ 1:11:22Thankfully, President Trump has prioritized Americanmade medicines and issued an executive order promoting Americanmade pharmaceutical manufacturing to reduce our reliance on adversarial countries. Mr. Cashman, in your testimony, you uh you mentioned that that we should treat generic drugs the same way as we treat military weapon systems or critical minerals. Can can you explain the rationale for that? Thank you, Chairman Carter. Yes, absolutely.
▶ 1:11:51We should approximately 45% of the global amoxicilan API production you bring that microphone closer to you so excuse me approximately 45% of the global amoxicylin API production capacity is concentrated in China even though China isn't the leading global exporter of our finished form of moxicylin they supply upwards of 70% of the moxicylan API that Indian drug makers use in addition one should note that 80% %
▶ 1:12:21of the key starting materials used for the production of API amoxicylan API is also produced in China. So China has a strangle hold on a on a moxicylan production globally. Let me ask you something. There was a study done in 2025 that found that Indianmade generics were 54% more likely to cause severe adverse effects than made in America drugs.
▶ 1:12:47Can you describe any documented quality differences between domestic and foreign manufactured antibiotics? Yes, in this study that was done by Ohio State that you mentioned, Chairman Carter, um 54% effect was there were 54% more severe adverse events in medications from China than medications the same very same medications produced in the United States.
▶ 1:13:14In addition, there's been cases of um contamination with carcinogens. In 2019, there was a case of carcinogens being in blood pressure medications. And there's been numerous other situations like this. And this is one thing we want to look at in the future on this committee as well, on this subcommittee and this committee.
▶ 1:13:34and that is the FDA investigating and and and looking at and at these um foreign manufacturers and um if Congress were to act on the recommendations today, how quickly could we could our domestic capacity expand? If we were to act on this, how quickly could we get this up and running? With the right policy framework, we could significantly expand production with 18 to 24 months. And let me let me explain that a little bit.
▶ 1:14:03We're currently running three active production lines. We have two uh crews on first shift and another crew on second shift. By adding simply adding new crews to adding shifts, so we can have three shifts per day on each line. We could dramatically increase our production. In addition, we have over 11 production line or excuse me, nine production lines. So we can add additional new production lines as well. So in a in a time period of 18 to 24 months we could increase our production significantly.
▶ 1:14:34So can we work with our allies to reduce dependence on China without going totally domestic? I mean French shoring offshoring with and that that would help as well. Correct. Absolutely that would help but we have to keep in in mind here that we working with our allies that many of them have supply chain vulnerabilities as well and they don't have the capacities to supply all of the US market as well as the European market for example right so
▶ 1:15:04those are situations we have to look at each specific case okay I'm out of time um thank you very much for that Mr. Cashman, I now recognize the ranking member of the subcommittee, Representative Deette, for five minutes of questioning. Thank you so much, Mr. Chairman. I'm well, I' I've got to say the we're all alarmed about this issue. Um, I was alarmed to find out that my local hospitals didn't have IV fluids and other essential medications.
▶ 1:15:34Um and and we can easily see how tenuous this makes our whole health care system. Um so I want to start with you Dr. Pier Vincenzi. In the 2025 annual drug shortages report, the USP identified four factors that contribute to and drive medication shortage. Can you briefly restate what those risk factors are? Thank you, Miss Deette. I appreciate that um that question.
▶ 1:16:04So the report did a retrospective analysis of that broad what were the four briefly what were those four areas? So first was price and by first I mean the thing that was most highly correlated to uh supply disruptions and in this case of course low price or generic drugs too low of a price. Um a second was quality and in this case it was quality disruptions. So bad inspections, poor quality medicines that resulted in discontinuities. Um third was geographic collocation.
▶ 1:16:35So this has different factors including geopolitical but also of course weather weather events. We're familiar with many examples. Um and the uh excuse me on the oh and of course complexity. you were mentioning the IV bags. The higher the complexity, the more things that can go wrong. So, unsurprisingly, that becomes also highly correlated.
▶ 1:16:58Right now, the last thing I'll say is that the four factors aren't independent, meaning any one of those perhaps might be okay, but it's when they come together, when you have really serious risk. So, does does USP call for deregulating domestic pharmaceutical manufacturing as a solution? deregulating deregulating as a solution because that's not in the four factors you talked about. Oh, I'm sorry. Yes. Um, so the US FDA's inspections are critical. Um, and we talked about a couple of the factors including quality.
▶ 1:17:29The assurance of quality is one of those factors. So deregulating the quality that's not one of your recommendations would I think work against the And what about reducing inspections domestically? Would that help if we reduce domestic inspections? Would it help resilience? Yeah. Would it help solve these problems? So, the FDA's role and this is we know from working with our partners in industry that strong inspections result in higher resilience. Thank you.
▶ 1:17:58Um, and sorry now. Now, so, so the reason I'm asking you these questions, the Trump executive order pretty much tells company they can avoid inspections if they manufacture in the United States. But as you said, the FDA's involvement ensures quality and safety and thereby it averts drug shortages caused by subpar drugs. I want to move quickly to you, Miss Okonnell.
▶ 1:18:21Um I I so you are so right about replenishing the stockpile now instead of waiting like we always do until a crisis and the chairman is nodding because he agrees with me. So I want to ask you HHS recently canled $766 million in contracts with Maderna to develop vaccines against influenza strains with pandemic potential including the H5N1 aven flu.
▶ 1:18:48Merna utilizes mRNA technology that has important advantages over older methods of vaccine development. This technology was developed over three decades with $337 million of federal government in investment pre- pandemic. It saved millions of lives when operation warp speed resulted in multiple safe and effective vaccines for CO 19 in less than a year.
▶ 1:19:14So I want to ask you can you explain why the strengths of mRNA technology matter in a pandemic context? Absolutely. At this point the mRNA platform is the only vaccine that we can uh use to meet our 100day mission. Our biocurity strategy requires that we are able to at the first identification of a of an outbreak have a vaccine ready to go.
▶ 1:19:36the mRNA platform because it's very flexible and quick to manufacture is the only platform at this point that will provide the country that protection within the first three months of an outbreak. What would happen if we had a massive bird flu outbreak or other strain of influenza if we didn't have that RM R mRNA platform? Well, at this point we do have other vaccines egg based cellbased but they take six months to manufacture. Okay. And um does Mona have manufacturing capacity in the US? They do.
▶ 1:20:06Okay. And does cancelling this contract help off ashore the medical supply chain? No. Madna contract? No. So, so I just want to say is it is is this platform the mRNA platform safe and is it reviewed? Absolutely. It's been studied as as you mentioned over uh 30 years and uh it was uh licensed by FDA and been through several clinical trials in the process under both under Republican and Democratic administrations. Thank you. I yel back.
▶ 1:20:37Gentle lady yields. The chair now recognized as the chairman of the full committee, Representative Chairman Greth for five minutes of questioning. Thank you. Thank you uh Mr. Chairman. Thank you for yielding the time. And I just want to talk about advanced manufacturing technologies. Um actually I want to go back. I want to talk about HR1 for a couple of minutes. So Mr. Cashman, um HR1 has several tax credits involved. And can you speak to the benefit of the provisions of the US antibiotics specifically?
▶ 1:21:07And if the Senate were to pass the bill with these incentives in tax, how quickly could US antibiotics expand production to serve more of the American market? Thank you, Chairman Guthrie. Uh, great Uh, I can I can only impact speak to the impact of specific limited provisions of the legislation on companies like ours. As stated, we serve only 5% of the US emoxicilla market despite having capacity to scale to serve 100%.
▶ 1:21:37The immediate expensing of new product production equipment and facility improvements as well as domestic R&D expensing provisions could better position us to make capital investments. So, it would help us. Thank you. And so, Mr. Murphy, would you explain how your member companies could use the provisions in HR1 to to move uh production back domestically? Yeah, Mr. Chairman, thank you for that question.
▶ 1:21:59Um we we have often talked about the need to have tax credits and the ability to have flexibility in the tax code to make the investments necessary in the United States. I would say we have a significant amount of dormant capacity in the United States too that could be turned back on which would require some capital investments to get things online and our members have been very you know uh pleased to hear that there's more attention being paid to this sector of the market from a tax perspective that could help the industry.
▶ 1:22:25So you have open capacity what's prevented the price obviously is what's preventing you from expanding your capacity. Yeah. So I would say predominantly and Dr. Praven Jenzi said this as well you know price in the generic market is the is the primary driver to being make more investments and you know we have a lot a long history of working with this committee on on solutions to that but ultimately tax provisions help as well. But you have open domestic capacity. We do. We do because because there's a couple I'm used to do supply chain so not pharmaceutical but automotive but so you have two couple of things. one, if you're going to try to bring it back, you got to build a new plant.
▶ 1:22:56You're saying, you can bring this back if if if the you without big capital investments, you have capacity or you have to do some. I get it. But you just need the right price signal to do it, which the tax code can help you get there. The tax code can help. And then the price signal that, you know, we could work on with PBM reform and other areas that this committee's worked on could could certainly help. But yes, there's finished fill capacity in the United States that could be turned on and as Mr. Cashman said would take, you know, far less than the five years that would take to build a new facility. Do you have So, Mr.
▶ 1:23:24Cashman, you have capacity as well or you'd have to build new facilities to bring production back. Yes, we have significant capacity. We have over 390,000 square feet and we're using a fraction of that at this point. So, being a supply chain person, so when as I just said, if somebody says, "Hey, we're going to bring this back, it can be short-term or longterm." You said you could do it pretty quickly if the right price signal, the right investment opportunity was there, right? Which the tax bill gives you that.
▶ 1:23:53Yes, Chairman Guthrie, with the right pricing and the right economic incentives, we can bring this production capacity back. In your in your testimony, is the current what we passed out of the house is sufficient for you to start making those decisions. Well, Chairman Chairman Guthrie, I'm I'm an expert on production. I live and breathe producing amoxicylin. Um I I believe it's going to be helpful to us to allow us to deduct these um investments more quickly. Yes. Okay. Thank you.
▶ 1:24:24Yeah. Then if you that yeah the investment then some of you just have capacity you've already invested so that's a different animal. Okay. I understand. So Dr. Pvenchenzi um I'm looking at advanced manufacturing technologies. Uh could you provide some examples of how EMTTs or advanced manufacturing technologies have been or could be utilized successfully to modernize and localize and stabilize your domestic production and therefore reduce our overseas dependence.
▶ 1:24:53Thank you, Chairman Gotthri. Um and I think this is a a question that maybe goes to the second half. The first half being dormant capacity, but at some point that that runs out. Um the next step is how do we build new capacity? And I think that's where the advanced manufacturing comes into play to create a system that produces even even better higher quality medicines with a lower labor rate and a lower footprint which gives it an advantage especially in countries with higher income um levels.
▶ 1:25:20Um uh a second piece to that is that where the US legs the furthest behind is in API and then even more so in the kartarding materials and in those spaces it's probably the only solution that would be able to domestically increase the production is through these advanced techniques and they're advanced for a pharmaceutical industry. They're not really advanced in the world. The automotive industry has been doing it for many decades now. Um and the last thing I would say is where is it happening? It's happening with innovator medicines that have a higher margins and able to make the capital investments.
▶ 1:25:48where it's not happening is for generic drugs where we see the shortages. Right. Thank you. And my time is expired. I yield back. The gentleman yields back. The chair now recognizes the ranking member of the full committee, Representative Palone, for five minutes of questioning. Thank you, Mr. Chairman. Okay.
▶ 1:26:06It's difficult for me to have a discussion about the medical supply chain in the midst of the chaos and destruction that the Trump administration and the Republican big ugly bill is causing to our public health infrastructure. I mean, the chairman talks about how, you know, the big ugly bill is going to help manufacture more drugs, but the CBO says 16 million more than 16 million Americans aren't even going to have health insurance. How are they going to buy any?
▶ 1:26:34how are they gonna, you know, get any drugs or get any health care if they have no health insurance. So, I I I don't understand. Um, you know, these things are intertwined and and you can't talk about them separately. Um, I wanted to ask the former assistant secretary Okonnell, you noted in your testimony that bolstering domestic manufacturing requires highly competent federal employees who understand both economics and healthcare. I had two questions.
▶ 1:27:01But why are highly skilled and trained federal workers so critical to this mission and impact? What impact does it have when that expertise and experience are lost? And second, do the federal layoffs make us more vulnerable to shortages or supply chain challenges? I have more questions so briefly if you will. Absolutely.
▶ 1:27:20just to say that that is a highly uh specialized skill that we had within HHS to be able to understand market dynamics, economics, pushpull incentives across the health uh supply chain uh and and to have staff that understood both and are able to work across both and pick the right investments has been really important and a unique skill set uh that we were pleased to have in ASPER and is necessary. Well, thank you Miss Okonnell.
▶ 1:27:44I'd also like to briefly touch on the hospital preparedness program which is operated by ASBR and is one of the key preparedness programs typically reauthorized as part of the pandemic and all hazardous preparedness act. However, as I noted earlier, congressional Republicans walked away from an agreement to reauthorize PPA last year. Hospitals obviously play a key role in securing the supplies, medicines, and equipment necessary to care for patients. I mean, I guess that's pretty obvious.
▶ 1:28:13and they're important actors in the supply chain. However, in just another example of how the Trump administration is decimating public health, the fiscal year 2026 budget proposes to eliminate funding for the hospital preparedness program. So again, Miss Okonnell, can you provide some examples for how HPP has been utilized in response to past public health emergencies and disasters and what would be the impact of eliminating the hospital preparedness program?
▶ 1:28:42Well, HPPP is the only source of federal funding that hospitals and healthcare coalitions have to be prepared. Um, and they've uh used that funding to run exercises and to be prepared for hurricanes, for cyber attacks. Uh, we saw recently in October there was a case of Lassa fever that was imported to Iowa. The hospital because it had its preparedness uh mechanisms in place was able to contain the lassa uh to to the one patient and it didn't spread throughout the hospital or into the community.
▶ 1:29:10So having hospitals that can identify challenging um pathogens is critically important and to know how to respond in those times. And this healthcare funding, the HPP funding is the only source of federal funds that allows them to do that. And of course, I saw this vividly during the COVID epidemic, right?
▶ 1:29:28I mean I literally and I'm sure most members of this committee on both sides of the aisle spent so much time trying to you know get our hospitals so that they had the equipment they had the you know supplies that were necessary which were in such a shortage during co and so you know this idea of having no hospital preparedness program to me I I can't imagine anything that's as destructive in the event of a natural disaster or another epidemic.
▶ 1:29:57I mean, to me, it makes absolutely no sense to have that level of preparedness. But again, I I I go back to the same thing again. We're talking about the tax implications of this big ugly bill and how they're going to provide more domestic manufacturing. But we're at the same time, we're firing people who are going to run the programs. We're saying that we don't need our hospitals to be prepared. You know what I don't understand?
▶ 1:30:25And I know I'm going to keep saying it over and over again is these hearings. Not that there's anything wrong with the hearing, but you have to recognize that these things are all intertwined, right? You can't say we're going to increase supply chains and domestic manufacturing when you don't have the people available to actually do the work uh you know to to make sure that uh that we're prepared. and and and I just I just I don't expect you to respond because I think you already have, but I just I have to say, Mr.
▶ 1:30:55Chairman, I just don't understand how there's so much silence on the Republican side uh to all these concerns about people losing their health insurance, you know, not being hospitals not being prepared, cuts that come from the Medicaid, uh Medicare, a ACA cuts that are going to occur uh with all with this big ugly bill. I yield back the balance of my time, Mr. Chairman. The gentleman yields back.
▶ 1:31:22The chair now recognizes the vice chair of the subcommittee, Dr. Dunn, for five minutes of questioning. Thank you very much, Mr. Chair, and thank you to our witnesses for being here today. Over a 30-year career in medicine, I've become familiar with the complex health care supply chain that produces our essential drugs and products that Americans rely on. Reliable domestic supply chain not only serves to ensure the health of American people, it is a national security priority.
▶ 1:31:53As a member of the House Select Committee on China, I'm very aware of the extent to which America has become reliant on foreign entities to supply our country's medical needs. The Chinese Communist Party has made an intentional and coordinated effort to become a force in the biomed production world. The United States has been a long-standing leader on research and development and that did not happen by accident.
▶ 1:32:19It was driven by policy choices that reflect our values that promote uh continued discovery. It's clear to me that those values also mean that the United States should be a leader in the production of those critical medicines.
▶ 1:32:35uh we must ensure that America remains at the forefront in biioharmaceutical uh to protect our supply chain and bring American innovative cures to our patients in a safe and reliable manner especially at a time when China is fast on our heels. Mr. Kman, uh it seems to me that domestic antibiotic manufacturing should be a fundamental priority for this committee.
▶ 1:33:01I also believe that the federal government can play a role in ensuring a domestic supply of other critical products. Uh I find it troubling that under uh the former administration, the HHS made a $40 million award to a foreign moxicylin producer when there was a domestic manufacturer available.
▶ 1:33:23In your experience, do federal contractors appropriately take into account made in America when determining federal awards? Thank you, Vice Chairman Don. That's an excellent question. Let me let me respond to that.
▶ 1:33:42um the the the focus is all primarily on pricing um by the federal government but I think it's something that the federal government has to take a much broader view and look at security of supply national security issues and to ensure America has access to quality med medicines made in the United States.
▶ 1:34:05So I think it's something that needs to be re-evaluated and perhaps put more emphasis on the sourcing of medications from manufacturers within this country. By the way, I want to make a side comment here. I think I think the source is important. The supply chain is important, the control of it, but also the the quality is and I don't think we do enough independent and I mean independent third-party testing on all these products. I have seen reports on this.
▶ 1:34:31DoD is doing a study on it that uh that actually is is pretty clever in showing some very wide disparities in quality both quantitatively and qualitatively in generic drugs that are produced by different manufacturers and are being sold legally legally in this country. So that's just a a side comment. Um I also want to make a final comment if I may uh to Mr.
▶ 1:34:55McConnell having previously served as the asper the assistant secretary for preparedness and response and the person in comment or rather in charge of the strategic national stockpile.
▶ 1:35:08I I I get I'm troubled, but it was your team and the Biden administration who chose not to support the last remaining end to end domestic manufacturer of a box of it's it's a story that I heard too many times during the last four years and which it it looks like we mismanage the strategic national stockpile of repeatedly misalign our contract decisions.
▶ 1:35:35Um and um and honestly I think The office of Asper repeatedly was slow in awarding federal contracts uh to delays you know this leads to delays unreliable supply chains for the manufacturers uh and I believe our federal agencies can play a critical role in ensuring that markets for the key medical products remain viable. I also believe it's necessary for our safety and our national security. And I see my time's up. Mr.
▶ 1:36:04Chairman, I yield back. The gentleman yields. The chair now recognizes the gentleman from California, Dr. Ruiz, for five minutes of questioning. Thank you, Mr. Chairman. As an emergency medicine physician, it has always been my top priority in Congress to improve patient access to highquality and affordable healthcare. We have made great strides towards this goal, but these efforts are mute if we cannot ensure a readily available supply of medications patients desperately need.
▶ 1:36:33In the emergency room, I've witnessed firsthand the dire implications that shortages of key medications have on the lives of my patients. For patients suffering from infections or trauma or fighting against cancer, this can be a matter of life and death. In fact, I remember times where we have a patient with respiratory distress or after trauma and we didn't have suinyloline, a paralytic that we used to intubate a patient.
▶ 1:37:02And when you're used to using suinyl and have to use another drug that has a higher side effect profile and more contraindications, then you have to think for a moment uh and take time to assess what you're doing. And in the emergency department, time is of the essence as you all know. So it definitely creates complications.
▶ 1:37:24Uh and even if medications are not in short supply, affordability remains a significant barrier to care and safety is paramount. So that is why we need to act in order to strengthen the supply chain for critical medications. uh this includes bolstering domestic production but it is crucial that we do so in a way that will not raise cost for patients and will not jeopardize the safety of these medications.
▶ 1:37:51It is important to think about geographic diversity in manufacturing. Let's remember the alarming impact on the availability of IV fluids back in late 2024 due to the critical damage the Baxter facility in North Carolina sustained during Hurricane Helen. Baxter supplies roughly 60% of the IV fluids used in North America. When just one manufacturing facility was damaged, supply was restricted and hospitals across the country faced shortages.
▶ 1:38:22And I remember speaking to desperate CEOs of the hospitals in my district very concerned about patient quality care during that shortage. Miss Okonnell, can you share some lessons learned from your experience as assistant secretary for preparedness and response during the aftermath of hurricane Helen, particularly with respect to the importance of geographic diversity in manufacturing critical medical supplies? Absolutely. Thank you, Congressman. So of course we were not invested in in Baxter.
▶ 1:38:52Baxter is a private company. But when we were making investments in domestic manufacturing, we made sure that we had regional diversity in the investments that we made. So we weren't weren't putting uh the the manufacturers of similar products in the same regions that could potentially uh be impacted uh by either a hurricane down south, ice storm up north, uh wildfires out west. It was critical that we had uh our investments spread out across the country. That was one of the things that we tried to do.
▶ 1:39:19Uh when it came to Baxter, we did a couple of things. We um helped them import their IV solutions that were manufactured in other parts of the world. We But what so um what can what can we do as legislators to help right uh with the geographic diversity? So I think it would be important to encourage the private industry, those that we don't have levers with, but uh that act on their own to seek uh geographic diversity. I think Baxter would absolutely agree.
▶ 1:39:46I know they're not here today that it would be important moving forward that they don't have just one plant manufacturing 60%. So, we've talked about the importance of geographic diversity and safeguarding medical supply chains, but how do we do that on American soil while also ensuring the safety and affordability of medications?
▶ 1:40:03So the answer is certainly not dismantling FDA and firing thousands of federal workers that support key roles and responsibilities in ensuring the safety and efficacy of medications Americans rely on like the Trump administration has done. The answer is not slashing protections and inspections to ensure the safety and tariffs will raise prices uh on the components of the supply chain vials and tubings etc which will raise prices.
▶ 1:40:33Uh so um the Trump administration uh is calling for looser regulations or weaker protections that are in place to keep patients safe within that executive orders. Inspections of safety standards are vital to ensuring the safety of medicines we rely on. Mr. Murphy, do you believe that we should have fewer inspections of manufacturing facilities?
▶ 1:40:55And how does that lead to better quality and does the Association for Accessible Medicine and your member companies want clear regulatory guidance from federal regulators? Yeah, thank you Dr. Ruiz. We we support a strong FDA with a strong inspections division. It provides certainty to the marketplace that there's quality built into the overall inspection process. And so we support uh FDA having more uh resources in the inspection space to do their work. And you do not support reducing the inspections.
▶ 1:41:24Certainly we certainly we understand that there are different priorities across the agency. But we but from an inspection standpoint that's a very critical component of of our work. Thank you. Thank you. I yield back. The gentleman yields back. I now recognize a gentleman from Virginia, Mr. Griffith. Thank you very much, Mr. Chair. U Miss Okonnell, a nitrial glove manufacturer in my district is aiming to create the first domestic facility to create both the base nitrial glove ingredients and production of the final nitrial glove.
▶ 1:41:55Their initial application was just for glove production, but it's my understanding from them that HHS and DoD encouraged them to expand their production capabilities to do both the final production of gloves and base ingredients for the glove manufacturer, which they did.
▶ 1:42:16However, HHS only provided a grant for a period of the expanded capabilities cost and has not provided additional assistance to help with the completion of the of the dual project which is necessary for them in order to begin production. Does HHS not view it as their responsibility to see this project fully through? Thank you, Mr. Griffith. And the investments in glove manufacturings were extraordinarily challenging.
▶ 1:42:43uh the uh grant that you mentioned was made by the first Trump administration and they did it in a in accordance with an assisted acquisitions relationship they had with DoD. So DoD manage let compet competed and then managed that contract. Uh they set it up as a firm fixedpric contract which means as there were cost overruns in the development of the manufacturing site uh no additional money could be added to that contract. Uh DoD decided at the completion of the contract that it was done and complete.
▶ 1:43:10Um, and if we uh were going to add additional money, we would have to recompete an entirely new contract. Uh, we, and I think everybody's aware of this. I've come to Congress many times to talk about the funding that was needed in order to make those additional investments. At this point, the office that's managing our supply chain has $10 million identified in in the next budget. That's not enough to be able to bring that glove manufacturing on board.
▶ 1:43:36So, you'll work with me to figure out ways that we can get that plant finished because I got this beautiful facility that's that's not finished and therefore no jobs and no real asset for the community. All right. Thank you. Uh, I truly believe that having a a a real by American policy for government agencies on masks, gowns, and other PPE will stimulate American manufacturing and decrease the likelihood of shortages if we have another situation similar to CO.
▶ 1:44:05Does any witness disagree with me on that? Raise your hand if you disagree. I give you a minute. All right. I didn't think you would. Um, and I do appreciate that. Um again, Miss Okonnell, as we've heard today, the US is incredibly too reliant for active pharmaceutical ingredients from foreign countries, specifically China and India. This is a serious national security threat.
▶ 1:44:28One solution is from a company in the Richmond area named FLO PH L who is in partnership with the federal government to bring the US to a competitive advantage with foreign countries to produce fully domestic essential medicines. What other incentives and policies can be implemented to not only support these efforts but also encourage other companies to follow suit? Thank you, Congressman.
▶ 1:44:52So, the flow contract is one that we uh spend a lot of time with and were uh very pleased with the outcome of what they've been able to do. I think that's a perfect example of some of the ways we need to work moving forward. Um bringing the uh the incentives there to Richmond was critical and the proposal to have some sort of stockpile of those active pharmaceutical ingredients. I think is something that the US government should pursue moving forward. I appreciate that. We'll switch gears a little bit on you.
▶ 1:45:17Has HHS considered starting a pilot program where they would ship close to expiring PPA, PPE, etc. in the national in the strategic national stockpile to rural hospitals. So instead of throwing them away, we can actually get some benefit out of it. Well, we looked at that and I think that's absolutely right. We're trying to encourage the SNS to think in innovative ways. Uh some of what we found was not everybody was interested in just about to be expired PPE. They wanted new PPE, but we continue to push on that.
▶ 1:45:47Of course, I'm not in a position to make those decisions now, but would, you know, encourage my former colleagues to consider it. I appreciate that greatly, Mr. Cashman. It's great to see you again. Uh while your uh operation is technically in Miss Harshburgger's uh district, I would suspect that at least 40% of your employees are probably living in my district since you're so close to the line that you could probably walk from your facility to my district without any great difficulty.
▶ 1:46:13Um at that at the meeting that we had previously, uh you mentioned how HHS awarded a company a contract that might not have been fully domest a fully domestic manufacturer. Can you explain that briefly because my time is about Congressman Griff, effectively, yes, you could walk from our plant to Virginia. Um, yes.
▶ 1:46:35Regarding that contract, um, yes, the the best of our knowledge, we we understand that that company imported API, active pharmaceutical agreement, from China. And it was, we don't know where it was manufactured, but uh it was effectively the only company that was awarded a contract for the SNS. And you don't do that. Is that correct? You don't import your API from China. No, sir. We import our API from Europe. Thank you. All right. I appreciate it. My time's up. I must yield back.
▶ 1:47:04The gentleman's time's expired. And I now recognize the gentle lady from California, Miss Kelly. I'm from Illinois, but thank you. I'm Illinois. Uh thank you Mr. Chair and ranking member Deette for holding today's hearing. The stability of our health care supply chain is not only an economic issue but one deeply tied to national security and public health. Health systems, providers and patients alike have all felt the strain caused by the waves of drug shortages.
▶ 1:47:35Over the past decade, we have witnessed chronic underinvestment in public health in infrastructure, notably during both of the Trump administrations. In 2019, the strategic national stockpile faced budget constraints even as warnings mounted about supply vulnerabilities. Now, in his second term, um, under his bill, there's an attempt to reduce Food and Drug Administration funding by $200 million.
▶ 1:48:01The Trump administration and RFK are actively undermining our ability to support supply chain resiliency by gutting the federal workforce and dismantling key responsibilities within the FDA. This uncertainty poses a significant risk to the FDA's ability to effectively oversee critical functions and threatens the integrity of our healthcare supply chain. Miss Okonnell, thank you for your work on equity and access to care during your time under the Biden Harris administration.
▶ 1:48:31Apart from the devastating impact to America's R&D and innovation, how will cuts to our public health agencies impact our ability to strengthen our domestic supply chain and reduce our dependence on China, who is actively supporting R&D and innovation? Well, as we've talked about today, uh, Congresswoman, uh, the innovation is going to be critical to us being able to afford to reshore some of the production that's left our shores over the last 50 years.
▶ 1:48:59And in order to invest in that innovation, we need to have the research and development in place. Um cuts to the uh to the administration uh you know to what we're seeing in HHS are impactful in a lot of ways uh in our preparedness and response efforts. You know, in order for us to have the tools we need ready to go, uh we need to be able to invest both in the advanced research and development of those tools as well as the stockpiling procurement of those tools. Um and with a limited funds, we're unable to do what we were able to do before. I continue to say we.
▶ 1:49:28Of course, it's not we anymore, it's they. But, uh, just a reflection on what the US government's going through right now. Thank you so much. A recent Brookings report titled The Wild East of Slimide raised concerns about the safety of compounded GOP-1 products, particularly those sourced from overseas manufacturers that have not been inspected by the FD FDA. Some of these products were found to contain unidentified impurities with limited regulatory oversight in place.
▶ 1:49:58Given these findings, can you also speak to the risk those pose to patient safety and whether stronger safeguards are needed in supply chain? Miss Okan, I'm sorry. Can you please um what I was asking about is um there was uh a question about the safety of compounded GLP-1 products particularly those sourced from overseas.
▶ 1:50:28How safe are those because there's questions around FDA and their ability to inspect. Absolutely. So seeing these FDA cuts is you know one of the impacts of that is that we're not able to secure and make sure that our products are as safe as they should be. And I think that's extraordinarily impactful for the country. It's very scary. Uh, thank you.
▶ 1:50:46According to the Doge terminated contracts dashboard on April 25th, Doge canceled four major contracts with the US headquartered genomic sequencing companies who are responsible for tracking coronavirus variants in the United States and from 25 other nations around the world. Miss Okonnell, do you believe that cutting the laboratories that provide over 80% of the CDC's critical data for public health response enhances our safety and preparedness? Excuse my voice.
▶ 1:51:16Making those cuts does not enhance our safety and preparedness. We need that surveillance to know what's coming next. And it's critical that we are able to do the genomic sequencing in order to see what's coming. Thank you very much. Thanks to the witnesses and I yield The gentle lady yields back and I recognize a gentleman from the great state of Florida, Mr. Bill Arachus. Thank you very much. Appreciate that, Mr. Chairman. Uh thank you again uh for holding this hearing on this very critical issue.
▶ 1:51:44Uh the healthc care uh supply chain is incredibly complex and we need to do more to protect our supply chains from vulnerabilities. This is not only a health issue but a national security issue. Public health and wellness should not depend on foreign adversaries. Plain and simple.
▶ 1:52:03I'm proud to be a founding member of the medicine uh caucus with my good friend Chairman Buddy Carter and look forward to advancing key policies on this particular issue. I'm also encouraged to hear that we're already making progress to invest in domestic manufacturing. Last year I had the privilege to visit MedNAP, a company in my district that specializes in saline and medical uh grade wipes.
▶ 1:52:33Uh this company has recently expanded and has has significant plans to expand further but struggles to compete with China unfortunately. We must protect American leadership in innovation with regulatory and market certainty. I look forward to learning from you today the witnesses and already have so but the first question is for uh Dr.
▶ 1:52:59Pvenzensi uh uh your organization has unique visibility into the domestic pharmaceutical supply chain. Uh your testimony mentions and I quoted fundamental shift in the market is needed to align supply and demand forces. Can you provide more detail on the types of incentives needed to make this shift, please? Thank you, Congressman. I appreciate that opportunity.
▶ 1:53:27Um, USP is working in a a public private partnership to address two sides of this. The incentives that you describe on the one hand and then the capacity on the other. On the incentives side, the incentives really come back to the buyers.
▶ 1:53:42Um we need the buyers need to be incentivized to make the investments in resilience which means to purchase medicines where they can rely on the quality where they can have um a higher expectation of um and not only purchase on price. However, those buyers today don't have the data that they need to make that choice and simply paying more for the same medicine achieves nothing except wasting patients money.
▶ 1:54:09Um and therefore what we also need the second part of this are a set of benchmarks that can describe what does consistent quality look like. How do we consider things upstream? For example, a manufacturer who buys their API from trusted sources in in Europe or from two locations rather than from from an adversary. These become factors and a variety of those factors can result in something that will be rewarded through a better contract.
▶ 1:54:34So these are the two pieces um that we're putting forward when we talk about our supply chain resilience initiative benchmarking initiative sorry thank you uh again sir uh uh would it be helpful for the federal government to conduct a national security assessment on the location and volume of APIs and key starting materials and countries of concern that are used to make drugs for the US market. Absolutely. Yes.
▶ 1:55:02Um and fortunately we're in a position to be able to do that now um that we wouldn't have been able to five years ago. Um USB has already completed mapping nearly all locations for APIs for 94% of US medicine. We're in the process and only need a few more months to complete the KSM analysis which is essentially where are the current keystarting materials coming from for those APIs.
▶ 1:55:27Um, the typical medicine today, if you randomly picked something off a shelf in a pharmacy, would probably be a solid oral dosage, a pill made in India with an API or at least a key starting material coming from China. Um, and so this mapping has to go upstream to that last step and then then we're not done. Then we've assessed risks and the next step we begin the process of fixing the problem, which partly could be figuring out different ways to make those APIs.
▶ 1:55:55And so perhaps the only key starting material in the world for a certain antibiotic is from China. Well, let's make it a different way. Chemistry will allow different pathways and new technologies for manufacturing allow us to use those new pathways. Um, and then the final thing is that the benefit of chemistry is it doesn't change. So we only have to do that work once and then we have a permanent database that we can use for the entire medicine supply to find alternative roots. And this is within our reach in a couple of years for fractions of of a billion, less than 100 million.
▶ 1:56:25It's right here and it's available today. Very good. Thank you. I yield back, Mr. Chairman. Uh the gentleman yields back and now recognize the gentle lady from uh Washington State, Dr. Shrier. Thank you, Mr. Chairman. Thank you to all of our witnesses. This has been such an interesting discussion. Uh before I start, I just need to make a couple comments.
▶ 1:56:49I want to open today uh just about recent news and to voice my deep frustration with HHS Secretary RFK Jr. for unilaterally uh and just unjustifiably firing all 17 members of the advisory committee on immunization practices. And um Mr. Chairman, I would uh like to know if you will commit to having a hearing on this I will check that up with the chairman. Thank you.
▶ 1:57:18In addition on the same topic as a pediatrician, I cannot help to mention that these policies of RFK Jr. to discourage vaccinations um may well decrease or eliminate the US production of vaccinations which I would consider just as if not in some cases more important than having uh all medications uh developed and manufactured here in the United States.
▶ 1:57:44And I just shuddered to think about this in the context of a future pandemic which will probably not take too long to arrive on our shores. And then I also want to mention because we've been talking a lot about uh antibiotic shortages in particular and I wanted to tie vaccines to that because although there are some diseases that just cannot be treated. I mean we're talking about measles and polio and others they can't be treated with medications.
▶ 1:58:12Um I like I personally have seen what the hip hemophilus influenza B vaccine has done in terms of preventing not just ear infections but menitis and something called epiglatitis where the epiglatitis swells so much that kids cannot breathe until they get intubated. Um that's virtually gone now. I've never seen a case of that and that would have required the antibiotics we're talking about today.
▶ 1:58:38I think about the numaccoal vaccine and what that has done also for sepsis, menitis, pneumonia, ear infections and how that has not only decreased deaths but has also decreased our reliance on some of these medications.
▶ 1:58:53So I just had to um close that loop and make it clear that vaccinations also need to be part of our healthc care strategy and domestic Um okay on the topic that we're talking about today about uh having domestic manufacturing and also you know we don't want to depend on our adversaries I would say nearshoring is another important strategy when we're talking about this um and I love the concept of uh the byamerican incentive I think that
▶ 1:59:23will work well especially because Medicaid Medicare VA triricare make up such a big part of our health care system that if we only did that on the governmental level and dealt with PBM reform. Um, I think that would go a long way to achieving what we're all hoping for today.
▶ 1:59:41Um, I also like that you talked about the other incentives and I think Operation Warp Speed is really a perfect example of how government incentivized manufact research, development, manufacturing of vaccines that have saved millions of lives. I think that's been forgotten in this country. Um, but that that was incredible. I also will mention that ACIP also vetted those vaccines and is directly tied to saving millions of lives. Ms.
▶ 2:00:11Okonnell, um it is great to see you again. I I was wondering if you could first just discuss how federal research uh over decades led to development of the co vaccines in less than a year, record time. Well, that's exactly right.
▶ 2:00:26And one of the things I think people forget is that when uh the Trump administration first started Operation Warp Speed, they invested in several an entire suite of candidates of various platforms and each of those platforms came through some early research uh work that NIH did and some advanced research and development that Barta did. So uh the government was critical in helping to see the success of each of those platforms come through. Um it turned out that the mRNA platform was the one that moved us quickly. You know, you mentioned the one that was done within 11 months.
▶ 2:00:55um that was uh we were able to uh the Trump administration at that time was able to push that research through and um and and develop that vaccine and it did provide significant protection for millions of Americans. Thank you. And just to double click on that, NIH research over 10 years led to that and China is currently seeking access to that technology. Okay. Um last government strategy in terms of having manufacturing facilities.
▶ 2:01:21I found it so interesting that there's all these retired manufacturing facilities out there that aren't being used that could be rehabilitated that could speed this path. And I just wanted to just drill down a little. Is it possible for like a given manufacturing facility to kind of shift lines to produce different kinds of medications? And has there been a strategy developed about which facility could manufacture what car facility produce ventilators?
▶ 2:01:50Go ahead and answer Sorry about that. Dr. Dr. Shrier. Um, so to some degree within a type of medicine, so physically rather than how it treats. So solid oil dosage form, a sterile injectable, saline, these will be quite different. However, switching from one type of this within a similar bucket becomes much more feasible and faster. That's great.
▶ 2:02:17I have to yield back, but I like that reassuring answer. Thank you. I yield back. The gentle lady yields back. I now recognize a gentleman from Pennsylvania, Dr. Choice. Thank you, Mr. Chairman, and thank you to our panel for appearing here today on such an incredibly important topic. With President Trump's executive orders aimed at increasing domestic manufacturing and more resilient supply chains, we've seen a multitude of new investment announcements in the US, specifically in the pharmaceutical space.
▶ 2:02:48It is for this reason that I'm glad this subcommittee is reviewing the issue today. Access to generic drugs is critical to American patients as generic medications make up 90% of the prescriptions filled in the US and they are essential to keeping costs down across the health care system. During the 118th Congress, this committee put forward a number of ideas to strengthen the supply chain and address drug shortages.
▶ 2:03:15One core provision in that legislation was to finally fix the Medicaid generic drug inflation penalty. The incorrect application of an inflation penalty to the generic drug market has resulted in drug discontinuations, shortages, and further instability in the generic drug supply chain.
▶ 2:03:35This financial penalt penalty can drive low margin essential medicines into negative territory, forcing manufacturers to leave markets, which ultimately leaves the patient without the medicines that they need. Mr. Mr. Murphy, you mentioned that this penalty in your testimony. Can you elaborate on how it creates uncertainty for generic manufacturers and why reform is necessary in this specific area? Well, Dr.
▶ 2:04:02Joyce, thank you for the question and as you know, we've said across our testimony, the generic marketplace has a number of critical factors facing it that are negative. I would think from a at a broader level though when we talk about domestic one of the things we really want to talk more about is how we can move the markets to more uh appropriately treat generic medicines and the reimbursement systems.
▶ 2:04:25So we talk about PBM reform, we talk about uh domestic manufacturing incentives because it's really it's a critical component of the US market that we don't do enough for. And so we'd love to follow up with your office and talk more about concrete steps we can take, but I think we look at the overall picture of this of this hearing to say there are lots of structural problems in the market that we need to address. And we hope to work with Congress collaboratively on a suite of reforms that we could get to to ultimately make this market a more predominant force in the US manufacturing base.
▶ 2:04:55And I would welcome that to open that dialogue so we can make those concrete steps forward. So, as we talk about strengthening our pharmaceutical supply chain, I urge my colleagues to also consider reforms that address the market challenges in the generic drug supply chain. We need policies that reflect the realities of the market and support not to stifle access to affordable medications. It's also important to acknowledge the existing barriers that exist to reshoring manufacturing in this space.
▶ 2:05:25Mr. Murphy, can you walk me through the average timeline and process to establish and construct a facility in the US starting from the initial decision to invest permitting inspection to fully opening and operating? How long does that generally take? So, so based on our conversations with our manufacturing members, once you've raised the capital, which is in and of itself a barrier in the generic market, you're looking at close to 5 to seven years if you're going to build a new facility.
▶ 2:05:53And there's state laws that actually come into play too that we that we really think we should talk about. And do you have any estimate on the costs that are associated with these processes as well as the corresponding delays which occur because so many inputs have to be taken into consideration? Yeah.
▶ 2:06:08So what we understand in in in new facilities right if a new API facility you're talking a couple hundred million dollars and that's you know at a small scale if we wanted to start really scaling up you know it's a significant investment uh for our manufacturers that is a significant cost and that's a long time I must imagine that these burdens play a role when making decisions about where companies should invest especially when facing those daunting costs with my remaining time. Mr.
▶ 2:06:38Murphy, what are the top three regulatory burdens that we in Congress could change to improve this process? Yeah, thank you for that question, Dr. Joyce. So, one, I think we need to streamline the regulatory review process both on the environmental, the water quality as well as the FDA inspections process. It doesn't mean limiting the safety and effectiveness of FDA, but figuring out ways for more complex generic development to be streamlined and prioritized at the agency.
▶ 2:07:05I think PBM reform to try and take uh the the the strangle hold over pricing that is occurring in this country uh back and and put it back in the driver's seat for generic manufacturers was another and then I think also prioritizing generic access once they become available on the market. Too often brand products remain in a predominant position to to provide access to patients over top of generic approvals and we could fix all three of those with this committee's help. I look forward to beginning this process and to work with you.
▶ 2:07:35This committee is dedicated to makeing our patients have access to affordable, efficient medications. I thank the entire panel for presenting here today. Mr. Chairman, I yield back. The gentleman yields back. I now recognize the gentle lady from Michigan, Miss Dingle. Thank you, Mr. Chair. Thank you for holding this important hearing.
▶ 2:07:56Uh we've really realized the CO 19 pandemic really showed the world how our supply chains were disrupted significantly and how we must focus on bringing production home. It's a public health safety issue and it's a national security issue which too many people do not realize. Congress needs to ensure that we're prepared for what's to come.
▶ 2:08:20increase our ability to onshore healthcare manufacturing as we have very clear bipartisan agreement on and respond effectively to disruptions. It's critical to ensure health care providers have access to the medical supplies and the prescription drugs that their patients rely on. And I think too many people do not understand how drug shortages in this country are leaving thousands of patients in distress.
▶ 2:08:47No one should have to panic and fight to find the medications their doctors know are necessary for their treatment. We must work to, as everybody's talking about, to onshore pharmaceutical supply chains, incentivize the production of generics, find ways to ensure we understand why shortages are happening, getting earlier alerts, helping with broader distribution, and many other I'm going to start I actually have more questions from some of your answers, but I'll go to my first
▶ 2:09:18one that I do want to say because one of our concerns, my concern is the ability to achieve these solutions is extremely difficult if not impossible as a result of the drastic reductions in force of $400 million in budget cuts at the FDA proposed by the Trump administration. Without a strong FDA work workforce, we can't ensure we're safely and effectively doing the critical work needed to maintain the safety of our drug supply chain. So, Mr.
▶ 2:09:48Murphy, the Trump administration has made these drastic reductions in the FDA workforce. How have large-scale staff reductions affected the ability of the FDA to maintain this prescription drug supply chain chain? and what long-term effects can we anticipate on our drug supply and resulting costs for American patients? Yeah, thank you for that question, Mrs. Dingle.
▶ 2:10:11Um, we we have seen uh delays already this year in uh the release of what are called product specific guidances which are the critical components uh that generic manufacturers need to develop the products to get them approved by FDA. Um and and so that was I think the first backlog we saw at a very material level.
▶ 2:10:31I I will say just um last week the FDA did start releasing those product specific guidances again and so we are hopeful that we will continue to see that backlog eaten away at but you know uh I will say as a representative of the generic industry every time or every month's delay of a generic drug getting to market is a month that patients are paying more for branded drugs than they should be for generic drugs. But I I do have a a a question and I'm probably going to have to do a lot more questions for the record.
▶ 2:11:01I remain concerned about the drug shortages that patients are currently facing and some just don't make sense to me. Uh an example, an asthma drug uh that many pulmonologists now want to use uh has gone to generic, but the generic is taking months. You've got the supply chain is so complicated. But pulmonologists are talking to me about how their patients can't get the generic and the generic is more I wish I could remember the name of it.
▶ 2:11:31Um, and it doesn't make sense and yet it's a real problem. And that's just one. There are about 20 other drugs I could name off the top of my head. Can you speak to how these cuts to our supply chain infrastructure will specifically impact the ability to address existing and prevent future drug shortages? Yeah.
▶ 2:11:51So certainly uh FDA's inspection capacity is critical to ensuring that products can get to market and you know we we hope to see as staff are are added back to FDA which we understand is is occurring um that those inspections will pick up. But I I don't want to discount the fact that in the drug shortages space just for purposes of clarity that you know price in the generic market is the is a is a huge driver of drug shortages and and that's something we would love to work with the committee to address. would love to get some specific recommendations and that I you know, Mr.
▶ 2:12:21Chairman, I'm down to 29 seconds. So, I guess what I'm going to do I have a lot of questions for the record and we'll and this is my partner in PBM reform. So, we both totally agree in a bipartisan way. I'll yield back. Thank you. The gentle lady yields. The chair now recognizes a gentleman from Ohio, Representative Balderson, for five minutes of questioning. Thank you, Mr. Chairman. Uh thank you all for being here today.
▶ 2:12:45Um, I'm looking forward to hearing uh some responses for my questions and I appreciate the innovation and quality of care that's available to all Americans. I'm proud to represent Ohio. Mr. Bolan talked about Ohio, a state that continues to support innovation, investment in domestic development, greatly impacting the patient community. Recently, I had the privilege of attending a groundbreaking in my district for Amgen's new advanced manufacturing facility in New Albany, Ohio.
▶ 2:13:12And with central Ohio being home to McKessan's largest and most advanced pharmaceutical distribution center as well, I can proudly say that the world's leaders in medicine are investing right here at home. The policies we work on should continue to support companies we choose to do business here in the United States, allowing for innovations to be accessible to all Americans. Mr. Bolan, my first question is for you, and thank you for being here, and I'm apologize for running back and forth between meetings.
▶ 2:13:41Uh, I have led bipartisan letters to the FDA twice raising question about the industry's ability to comply with the Drug Chain Supply Security Act and warning of possible drug shortages and supply chain disruptions if the FDA fails to act ahead of enforcement deadline of the I know progress has been made since the implementation process began and as of 2024, the FDA announced a set of phased exemption periods that will expire on different dates this year.
▶ 2:14:12Given your background, I'm curious to hear from you about the importance of this process as well as the importance of ensuring the supply chain remains uninterrupted as the exemption periods come to an end. Sure. Thank you, Congressman. Um so as you mentioned last year FDA has implemented this more of a phased implementation process for full implementation of drug traceability uh throughout the supply chain. Uh the manufacturer exemption actually just expired less than a month ago.
▶ 2:14:40Um and so that manufacturers now have to fully comply with the law. Uh the next expiration period comes up for uh both distributors and forarmacies later this summer. and FDA has been holding um a number of town hall meetings and listening sessions from each of the sectors to try to understand where they where each of the sectors stand moving toward implementation. Uh the manufacturing community I think by and large is and and was ready.
▶ 2:15:09Uh major distributors are well on their way. Uh and there are going to be some questions about where the pharmacy community is when it comes to compliance. Many of the larger chainies have already, you know, come into compliance by and large. Uh the smaller independent communityarmacies are likely going to be leaning on their uh small dispenser exemption that they have, which gives them until next year.
▶ 2:15:31Of course, the concern with that is that the longer it is for the supply chain to come into full compliance, the more susceptible it is for illicit products making their way into the legitimate supply chain, as we've seen with the GLP-1 medications in Arkansas and in um in Arkansas and Mississippi. And we've seen more recently HIV counterfeit HIV medications making their way intoarmacies um in New York. So, the longer the implementation takes, the more concern there certainly is. Okay. Thank you. appreciate that.
▶ 2:16:01Uh Dr. Pier Vincing, hope I said that correctly. Sorry, I mean no disrespect. Thank you for being here today. Also, we know that a recent analysis showed that around half of the active pharmaceutical ingredients APIs for prescription medications in the US come from India and the EU with around 12% being manufactured domestically here in the US.
▶ 2:16:23From your perspective and with your great experience, how do you believe we can increase this share in a sustainable Thank you, Congressman Boss, for that question. Um, there's two layers to it. I think the first layer is to increase the production of API will require new facilities and substantial new investments and time.
▶ 2:16:46Um, there are shorter term ways to bridge the gap and to create a more secure supply chain, including through French shoring and other purchasing opportunities. And finally also considering the the potentially even higher vulnerability to the starting materials upstream of the API which may even more highly concentrated um uh in adversary countries and coming to us through India and and Europe.
▶ 2:17:13Um so we talked earlier about the the good news being there's nearer term opportunity and some untapped potential for some production but for API production unfortunately we're going to have to do this from mostly from scratch. And that's why USP is is talking about creating a easier access to the advanced manufacturing technologies especially for generic companies who today are struggling to be able to make any capital investments like that in the US. Okay. Thank you very much Mr. Bolan. U you have another question. We are out of time. Mr.
▶ 2:17:43Chairman I yield back. Sorry. The gentleman yields. The chair now recognizes the gentleman from Texas, Representative VC, for five minutes of questioning. Uh, Mr. Chairman, thank you very much. Um, and I'm glad that we're here having this conversation today uh about uh this supply chain and of drug supplies. I think it's very important and uh and I too am worried about the US losing ground to this area.
▶ 2:18:13I don't want to seed anything whether it's solar, pharmaceutical drugs, whatever to the Chinese. I think that it's bad. Uh and one of the things that's that worries me and thinks I will fall even further behind in the race is the fact that the Trump administration has laid off more than 3,500 FDA uh employees and many of them perform very essential functions like drug inspections, generic drug reviews, uh oversight roles uh funded uh directly through uh user fees.
▶ 2:18:43Um and at the same time the administration is imposing these sweeping uh tariffs on these pharmaceutical ingredients uh and manufacturing equipment and we don't even make that manufacturing equipment for the most part here in America. Uh a lot of this manufacturing equipment u uh if you've visited uh any of these facilities, they come from places like Germany.
▶ 2:19:05uh and it's all of these things are going to mean that the American consumer could end up uh paying more uh for these uh tariff taxes. And so uh I wanted to ask uh Miss Okonnell uh we've seen uh firsthand how fragile this pharmaceutical supply chain can be.
▶ 2:19:25uh how do the current administration's actions, including uh unleashing these uh tariff taxes, uh serve to further undermine our pharmaceutical supply chain, and what are some specific effective ways the federal government can strengthen supply chain resiliency? Thank you, Congressman. I think one of the challenges with um you know, a policy initiative like the tariffs we've seen is it should be accompanied by um investments in domestic manufacturing.
▶ 2:19:53uh just putting tariffs on various products increases the price and likely decreases access uh for the American people to those products. Uh what's important is that that any tariff actions and you know they're a really good tool to be able to use thoughtfully. Any tariff action should be uh accompanied by investments to make sure that there is adequate domestic manufacturing so uh the American people continue to have access to the products that they need. Yeah. No, absolutely. Uh Mr.
▶ 2:20:20Murphy, you noted in your testimony that there is a structural challenge that generic manufacturers face uh including a lack of significant US government financial incentives to encourage domestic uh production of generic drug uh drugs. Can you expand on how uh this strategic stockpiling either at the national or state level uh can help encourage manufacturers to invest in US-based production uh even when there are high costs and market uncertainties that are involved? Yeah, Mr. Bey, thank you for your question.
▶ 2:20:50and thanks for your support on the stockpiling act that you're working on. Uh, one of the things we talk with our manufacturers about is what are creative ways to to sustain supply commitments across the US as we work on market challenges like PVM reform and reimbursement. And one of those areas we've talked about is can the government provide a more stable supply market uh at a fixed price for a period of time that gives some certainty to producers who may be looking to invest in the United States and could get preference in that regard.
▶ 2:21:19uh while we work across the market to sustain you know the overall generic supply chain in in a more holistic way. So, you know, we we view that as a as a critical uh interim gap that both secures the supply chain for American patients by having some supply at the ready given pandemic or other challenges, but also uh helps bridge the market and gives some certainty to manufacturers who are producing uh either in you know the US or French countries uh while we work on other structural
▶ 2:21:49reforms to the marketplace. Yeah. Yeah. No, absolutely. And I really appreciate you mentioning um the uh the bill that I have the state strategic stock stockpile act which will provide states with financial assistance to establish expand or maintain their own uh strategic uh stock piles. I think that uh that would u really help in in raising some of the concerns you have. So um I really appreciate that and Mr. Chairman with that I yield back the remainder of my time. The chair the gentleman yields back.
▶ 2:22:18The chair now recognizes the youngest pharmacist in Congress, Representative Harshburgger from Tennessee. Yeah, thanks for that, Mr. Chairman. I appreciate that. Uh, thank you and thank you to the witnesses for being here today and I'm especially pleased to see you, Mr. Kashman. Um, it's president of US Antibiotics and his facility is a magnificent facility in my district of East Tennessee.
▶ 2:22:44And if you don't know the story of how US antibiotics was uh resurrected, you need to read it. Talk to me or talk to Mr. Kashman because it's a remarkable story. It is a critical infrastructure facility. So, thank you for being here. Uh but before I get to questions, I do want to uh I think I need to talk about I'm a compounding pharmacist. So, I want to talk about um strengthening the safety and security and quality of our healthc care product supply chains.
▶ 2:23:12But talking about compounding, it's there's an indispensable role for pharmacy compounding. And you know, for 25 years, I came to the hill to beat that drum about my profession and the overburdensome regulations to where we couldn't get patients the medications they needed. And compounding starts with the problem. Um, and for whatever reason, there's a lot of people that can't take mass- prodduced medications. And these compounding medications uh will provide a solution. And not all compounders are the same.
▶ 2:23:41Let me make that perfectly clear. But there's been recent reports um wrong reports basically that have referred to compounding drugs as counterfeit or knockoffs or copycats. And let me assure you, they're produced legally. They're regulated and they serve as a critical lifeline for millions of patients. And many times have we stepped in when there's drug shortages and we have to provide that to patients to save their lives. So you're going to have bad actors and you're going to have those compounders that are lifesavers.
▶ 2:24:12So Mr. Chairman, for the record, I'd like to submit an article that corrects the record and discusses how misrepresenting compounded medications hurt patients undermines trust in a vital part of modern healthcare. Without objection. Thank you, sir. Now I'll get to the questions. The good stuff. Mr. Cashman, you said that the US government needs to prioritize made in American medication acquisitions over and beyond price comparisons.
▶ 2:24:39Do you think um this approach will lead to higher drug prices for American patients and taxpayers? Thank you, Congresswoman Harshbar, and good to see you as well. Yes. Uh it's a valid concern. Uh but I think it's something we really need to look at uh more broadly. uh when shortages occur as it they did in 2022 and 2023, physicians are forced to use less effective alternatives.
▶ 2:25:05You know that very well as a pharmacist leading to longer hospital stays, the potential for antimicrobial resistance in the case of antibiotics and treatment failures and and eventually overall higher overall health care costs. The economic disruption from supply chain failures are far exceeds any premium for domestic production. More importantly, we're not asking for subsidies or price guarantees. We're asking for purchasing policies that factor in more than just price.
▶ 2:25:36Things like supply chain security, national security, public health, and welfare alongside costs. A slightly higher upfront price is a small insurance premium against catastrophic costs of shortages or supply disruptions. Yeah, it to me it's a national national security issue when you know that it's really closer to 90% of your APIs come from an adversarial nation and 70% of India's APIs come from China.
▶ 2:26:05There's a problem and there has been and uh that's why I'm here. So um you mentioned that US antibiotics serves about 5% of the market despite having capacity to serve 100% of the market. You got 390,000 square feet. I've been there and it's not just your you could do you could venture into sephos or other drug therapies within that plant.
▶ 2:26:28So what prevents you from scaling up the the um our plant can produce any betalactum antibiotics, Congresswoman, and we what prevents us from scaling up is really long-term agreements with with uh both commercial and government uh buyers. That would really help our business. That would allow us to make appropriate business decisions and make investments and scale up when it's appropriate. Yeah.
▶ 2:26:55because we're hearing from physicians and healthc care providers all over the country about antibiotic resistance and things of that nature. And you want to make sure that those antibiotics you're receiving in a finished product even is exactly what it says it is. And when you have healthc care facilities testing their finished product, that's that shows you that not everything that says it is is really what it says it is.
▶ 2:27:19So uh you mentioned the government spent 40 million on foreign origin amoxicylum why buying less than a $1 million from US and the government supposed to take the lowest bid and why would they you know we need to know the origins of what they are buying. Aren't they supposed to take the lowest bid? You're only getting a million dollars worth of a $40 million business and you're domestic manufacturer.
▶ 2:27:47So, so Congresswoman, let me understand your question. I think uh what you're Well, let please can you rephrase the question so I better understand? Well, you're a domestic supplier. The government spent 40 million on um foreign origin amoxicylin and they only you only u I guess you had less than a million dollar in this million dollars spent on your market of and is it because of the
▶ 2:28:17price or why why would you be excluded from from that Thank you congresswoman. Now I understand. Okay. the the contract for the SNS was focused on small businesses. We're not considered a small business because of our ownership structure. Yeah. So, we weren't allowed to compete for that contract, that specific contract. Gotcha. Yes. Price is part of the government's decision, but we would ask that they take a broader view and look at other factors as well. Yeah. The gentle lady's time has expired.
▶ 2:28:48I yield back. Gentle lady yields back. The chair now recognizes the gentle lady from Texas, Representative Fletcher, for five minutes of questioning. Well, thank you, Mr. Chairman, and thank you to all of our witnesses today um for your testimony. I've appreciated it, and I think that your your prepared testimony and your answers to the questions today have been really helpful on this important topic.
▶ 2:29:11Um, this has long been an area of bipartisan agreement and I do hope we can move forward on some of the thoughtful recommendations and ideas that we have heard not only today but over the last several years about this issue. But once again, I caution everyone on this committee and everyone participating that these are not normal times and we can't pretend that they are. To the extent that holding this hearing suggests that they are, we have to acknowledge that they are not.
▶ 2:29:38Like my colleagues who've spoken before me, I can think of more than a dozen topics that this subcommittee should be holding a hearing on about unprecedented and tremendously damaging recent actions in the Trump administration, like the announcement that the Secretary of Health and Human Services just fired all of the members of the Advisory Committee on Immunization Policies, or the staff reductions and delayed and canceled research at the National Institutes of Health, or pauses in funding for grants at institutions that do critical medical
▶ 2:30:08research, undoing decades and decades of work that this country has invested in to lead the world in medical research and in scientific research more broadly. These are just not normal times.
▶ 2:30:21And these are huge issues in my district where so many people work at the Texas Medical Center, the largest medical complex in the world, doing the groundbreaking research that we are talking about in this country, including development for new vaccines for diseases threatening people here at home and around the world.
▶ 2:30:39So, I appreciate the importance of making our healthcare supply chains more resilient, but we cannot have this conversation without acknowledging that the Trump administration is today taking steps to gut our federal agencies that are directly responsible for making these supply chains function properly and result in safe and effective medical products for Americans. It was only two months ago that HHS fired 10,000 workers across the agency, including 3,500 at the FDA.
▶ 2:31:09The mass layoffs were done so haphazardly, as many of us in the room know, that the FDA had to hire some of those people back because they were critical to food and drug safety and work at the agency. Um, another example, firing all 13 of the Division of Policy Development staffers in the Office of Generic Drug Policy at FDA. This team drafts, reviews, approves the policy guidance that we're talking about. Um, give instructions on how generic versions of branded medicines can be developed and brought to the market.
▶ 2:31:40The kinds of things we're talking about today, the administration is gutting these agencies that do absolutely critical work. And so, you know, I'm glad that the administration realized its mistake and that some of these FDA employees have been rehired, but it's another example of a shoot first and ask questions later approach that is a huge threat to our healthc care supply chain. So, you know, for months, um, guidance documents outlining the approval of pathways for generic drugs were put on pause. Mr.
▶ 2:32:08Murphy, I know that your agency um or your organization put out a press release expressing concern about this in early April about the staffing cuts at FDA. Can you share with us um how has the confusion from the firing and rehiring of this team and the subsequent delays in issuing new guidance impacted generic drug development and approvals? Yeah, thank you Miss Fletcher for the question.
▶ 2:32:33Um, as you noted, obviously we view FDA as a very critical component of the drug supply chain, both in ensuring safety and making sure patients understand what they're getting uh is effective. Uh, we did see a number of delays this year that thwarted um the ability of of manufacturers to request product specific guidance. Um, it does appear that that is starting to to come back online.
▶ 2:32:57Uh and I think we were very heartened to hear uh that the agency is starting to look at the office of generic drugs to rehire uh individuals because it's an it's a a component of the agency that I think could benefit from more capacity uh versus less capacity. And so, you know, we we were glad to see Commissioner McCary announce that they were going to bring those folks back the generic drug policy, but you know, we now have a backlog that we have to work through and and you know, from a generic drug standpoint that uh inhibits the ability to bring more affordable medicines to patients sooner.
▶ 2:33:27So, we hope and and we look forward to working with the agency to try and address that backlog. Well, thank you, Mr. Murphy. And I just want to reiterate, it doesn't have to be this way. It doesn't have to work this way. This is an approach the administration has chosen. And there are other things the administration has chosen to do that I'm going to submit a question um for for the record um to to you, Mr. Bolan, because another thing that this administration has chosen to do um is is u impose tariffs on all kinds of imports.
▶ 2:33:55We've talked about it a little bit earlier, but I want to ask you and we'll submit for the record a question about how uh those tariffs are impacting pharmacies. I'm I'm hearing and seeing reports particularly that um tariffs on pharmaceuticals might impact pharmacies. And I know that that's a concern certainly for our chairman and and for all of us uh for access to drugs for our for our constituents. So um I thank you all very much for your work and for your time today. And I thank you, Mr. Chairman, for letting me go over just a minute. Um, and I will yield back.
▶ 2:34:25The gentle lady yields back. The chair now recognizes the gentle lady from Iowa, Dr. Miller Meeks, for five minutes of questioning. Uh, thank you, Mr. Chair. I'll try to stay on time. Let me just say that, uh, nothing could be more important this hearing today. Uh, I recall last term uh, that the now minority party held up the reauthorization of PPA because we didn't address drug shortages uh, with uh, more regulation on the FDA uh, which is certainly not the answer.
▶ 2:34:51Uh this is a pressing issue that impacts all Americans regardless of demographic and geographic location which is our health care supply chain. Includes pharmaceuticals, medical device components, bandages and other life-saving products which everyone in this room has either used, currently uses, or will use at some point. And I applaud recent efforts by the Trump administration to boost American supply chain production, such as the recent announcement of the opening of a facility in North Carolina to uh produce carbon black well ahead of schedule.
▶ 2:35:22Examining our supply chain is essential not just to ensure patients have the resources they need, but also to ensure we are not too reliant on other countries like China for supplies. As has already been addressed, only 90 19% of active pharmaceutical ingredients, for example, are produced in the United States, 13% um from China, and 21% from India.
▶ 2:35:44The reliance on other countries for generic drugs, which comprise a majority of prescriptions filled in the United States, is even higher, presenting additional and concerning challenges. Having robust USbased manufacturing is also essential to combating drug shortages which a number of our health systems in my district are currently facing.
▶ 2:36:03In addition to boosting manufacturing capabilities, there needs to be appropriate incentives to support innovation which is why I'm concerned about the damage that government price controls from the Democrats inflation reduction act has done to US biioharmaceutical research and development uh especially in areas like orphan drugs and small molecule medicines. And I've even heard this from pharmaceutical manufacturers abroad. And Mr. Murphy, thank you for mentioning PBM reform. My first PBM reform bill was in 2019 as an Iowa state senator.
▶ 2:36:33It's been a long time coming uh for PBM reform. Since 2021, small molecule development has decreased by 70% which led to fewer cures coming to the market, meaning less new drugs being manufactured and fewer options for patients who depend on innovation. It's why I also support fixing the pill penalty which will support domestic manufacturing of new and advanced drugs. Mr.
▶ 2:36:56F P Vinci, do you agree that creating new government price controls could worsen the harm being done by the IRA in terms of discouraging more R&D and if so by how Thank you, Congressman, for the question. um the um the important distinction I think in the supply chain resiliency is that between um the branded medicines and the the generics and we're getting a really much better understanding now.
▶ 2:37:21It's been known I think to some degree um on the branded side what we have is is a much higher production of of medicines in the US. We also have more onshoring going on right now as we've discussed during this hearing. Um and this is quite encouraging and I think there's even more opportunity. Um unfortunately the on the generic side just the the the economics and the incentives are just not there. Um and it is it is solvable and in fact because the prices are so low the cost of solving it is actually reasonable.
▶ 2:37:51Um but we don't have any mechanisms to make sure that when people maybe pay more or have a better contract that they are rewarded with something more resilient and they're not just paying for the same thing with more money. And this question is for you again or for docu Mr. Murphy. There's been a lot of talk um already about active pharmaceutical ingredients or APIs, key starting materials or KSMs, finished dosage forms and the like. I want to make sure we're all on the same page.
▶ 2:38:16Uh but instead of going through what the ingredients are, let me just say understanding that there's more to learn based on what we currently know, where are most KSMs extracted andor Either of you? Um yeah, I'd be happy to take that, Mr. Murphy. Um so we are very close to being able to actually answer that question.
▶ 2:38:38Um the worry has been as we've gone upstream we've discussed quite a bit about APIs because we kind of knew that and that gave us I think some concern but we got a lot more concern in discussions with industry in India in particular when we said where are you getting your KSMs from for your API production and the answer was mostly from China. This was a concern even in India where there are policies, government policies to incentivize production of KSMs in office parks in India and this is one piece of a solution.
▶ 2:39:08Um but USP believes we should be looking at that in in the US as well to create our own resilience especially for KSM. And quickly where do finished doses uh come from both injectables and solid uh oral doses? Yeah. So, injectable doses we produce much more as a percentage in the US over 50% of our US. And then as a whole, what country or countries are we most relying on? And which products are we particularly vulnerable? Yeah. The simplest answer to that is the most medicines for the US come from India?
▶ 2:39:40The gentle lady yields back. The chair now recognizes the gentle lady from New York, Representative Accassiocortez, for five minutes of questioning. Thank you so much, Mr. Chair. Um, and thank you to all of our witnesses for offering your your testimony here today. Uh, I'd love to spend some of this time honing in on the issue of drug shortages. Um, drug shortages of course are more than just an inconvenience for a lot of people, but they can have deadly consequences for people in urgent medical situations.
▶ 2:40:11And one of the most common drugs in the United States right now facing a short a shortage is the liquid form of aluterol uh which is used by hospitals to treat asthma. Albuterol has been in short supply since 2022 and this is an issue that hits particularly close to home in my community.
▶ 2:40:33Uh in the South Bronx in particular, we face one of the highest childhood asthma rates in the United And when these kids and their parents show up at a hospital and they're unable to breathe, they may not be able to access the medicine that they need if there is a shortage.
▶ 2:40:53Miss Okonnell, can you help the general public why is it that in such a common condition such as asthma and with such a broadly available drug like albuterol, how can we get to a place and how do we get to a place where there's a shortage of it in the United States? Thank you so much, Congresswoman.
▶ 2:41:16Um, albuterol wasn't one of the issues that we dealt with directly in asper, but observationally I think it's a perfect example as you've laid out of the fragility of the generics market. Um, albuterol is a generic drug there in the United States. One of them declared bankruptcy and left the market. Um, that left a shortage and there have been very few incentives as have been discussed already at the table uh to encourage generic manufacturing of abuterol in the country. Thank you.
▶ 2:41:43And I think to kind of disentangle this a little bit more, there's a lot of talk about incentives, but at the end of the the United States healthcare system is a for-profit system. And largely, an incentive is about if making it is profitable. And in a for-profit system, manufacturers need to know that their drugs will be profitable. If it's not profitable, the incentive doesn't exist. It becomes difficult to manufacture.
▶ 2:42:12But if manufacturers can't afford to operate, they will leave the market altogether, as you noted, or move their operations abroad. Meanwhile, drug shortages are costing hospitals at least $360 million annually in labor costs alone for making up for some of these shortages. Um, and so what all of these pieces put together are pointing to is a market failure.
▶ 2:42:39And ironically this market failure is emerging because the drug is affordable is because the price is very low. Um my understanding is that the federal government has effectively acted in the past to address drug shortages and in particular both Republican and Democratic administrations have used the Defense Production Act to address past drug shortages.
▶ 2:43:06There's been some discussion today about almost like a a strategic reserve of sorts, but for medicine. Miss Okonnell, what is the Defense Production Act and has the federal government used it in the past? How has the federal government use it in the past to address drug shortages? Absolutely. Thank you so much for the question.
▶ 2:43:24So the defense production act is an authority that allows the government in times to secure the the defense of the nation or in times of emergency to priority rate contracts uh to ensure that the supplies that are in the supply chain go to whatever uh is needed to um to secure the country. So in a case of shortages, it would go to the manufacturing of the particular item that's in shortage uh to be able to provide that item to the American people. Um, we used it multiple times, dozens of times, uh, throughout the COVID response, both the Trump and Biden administrations.
▶ 2:43:55Um, and then outside of the COVID response, uh, we also used it for the infant formula shortage and we used it most recently um, for the Baxter IV shortage. Thank you. Yes. And those are all excellent points because we are hearing talk today of moving manufacturing to the United States and it's not to give short shrift to that point but some of those examples that you named um al well albuterol is manufactured in the United States IV fluid manufactured in the United States even a couple of years ago baby formula also produced
▶ 2:44:25in the United States all three of those things are produced in the United States all three have had chronic shortages um Miss Okonnell could the federal government play a role in manufacturing some of these drugs where we are seeing persistent market failures and I'm interested in some of your thoughts to that point. Well, this is a question that we always come back to. Should the government be should the government be responsible for the manufacturer of say vaccines? That was a question we asked ourselves during um during COVID.
▶ 2:44:53And what it comes down to is a commitment from the government to fund both the capacity for the government to do the manufacturing as well as the capability for the government to do that manufacturing. And over the course of our analysis and looking into this and over, you know, many generations of of others in similar situations needing to uh to answer that question, uh what was needed most is a sustained commitment in funding and that has not been something that's been demonstrated from previous congresses.
▶ 2:45:20And so we always went to the public private partnership which is a perfect thing that Barta does which is invest in the uh the capacity that the private companies have reserve that capacity for the United States but the United States doesn't own the you know the actual physical structure and do the manufacturing itself. Thank you. The gentle lady yields back. The chair now recognizes the gentleman from Michigan Representative James for five minutes of questioning. Thank you Mr. Chairman.
▶ 2:45:48CO was a clear wakeup call that our nation for far too long has been relying on unstable and adversarial supply chains for our critical medicine and healthc care supplies. When we're relying on China for life-saving supplies to defend against the Chinese-made virus, something is horribly wrong. Only 12% of active pharmaceutical ingredients APIs for far for prescription medicines in America are manufactured domestically. Half our APIs come from India and the European Union.
▶ 2:46:15While China only contributes around 8% of APIs, they are dominant supplier of the key starting materials utilized to produce APIs. They're also the exclusive manufacturer of APIs and essential uh medicines controlling much of the antibiotic API production. While we've been asleep at the wheel, the CCP has engaged in a concentrated and strategic effort to become the global leader in biio medicine development and production.
▶ 2:46:40I'm gravely concerned over the growing role of the Chinese industry in our medicinal supply chains. Even India, which has made significant investments in carving out a major role in the medical supply chain, is dependent on China. An estimated 70% of their APIs. The warning lights are flashing red and it's time for Congress to take action. The health of our citizens is a national security imperative and too many lives are at stake. We must take action and we must do it now. So, I appreciate you all being here today.
▶ 2:47:09Um, and we're trying to look at things different. It's a bipartisan issue to address our medical supply chain, but I believe that Michigan, the Great Lakes region is in a specific and very special position to be able to contribute in new and innovative ways.
▶ 2:47:22Given the push for reshoring and diversifying supply chains, should Congress direct HHS, DOT, and commerce to study the feasibility of routing APIs and KSMs through US ports in the Great Lakes to reduce reliance on congested coastal ports? Any of you have a an opin? Yes, sir. Thank you, Congressman.
▶ 2:47:47Um it's true we haven't discussed this piece of the supply chain in particular and um in the USB's medicine supply map um the most of the US's important medicines come through the east coast. Yes. And it is something to be considered um because that's a vulnerability itself through weather conditions and other um and so it's something that if it's of interest we could utilize the data to try to get you some more information about that. I would like to follow up with you on that to at least have a feasibility study um coming in through St. Florence uh in through the Great Lakes.
▶ 2:48:17Um the ports of uh ports in uh in Ohio and in Michigan and in Illinois could provide us a very good opportunity to diversify um our um our risk levels in say New York, New Jersey with that port or maybe even further south in Jacksonville or Atlanta, I'm sorry, or Savannah and Charleston and the like. Um Mr. Cashman, as uh the head of the only US-based manufacturer of certain critical antibiotics, you understand logistical hurdles in sourcing both active ingredients and distributing finished uh drugs.
▶ 2:48:47This is the time to start considering regional shipping infrastructure again like Port Detroit. Um, is there any targeted investment um in port distribution infrastructure that can help firms like US antibiotics scale domestic uh manufacturing and create a new route to distribute drugs and ingredients to drug short areas? Thank you, Congressman. I'm I'm not an expert on that subject. We route all our uh ingredients coming from Europe through an East Coast port as well.
▶ 2:49:17Um it's something to take a look at and again I'm not an expert on that particular topic. So I'll I'll pass. But additional routes might um help with resilience and potentially lower cost. Yes, it would help definitely. Perfect. U Dr. Pachenzi, USP has done a lot of work mapping supply chain vulnerabilities and drug shortage risks.
▶ 2:49:36Has your analysis uh explored the concentration of pharmaceutical transportation channels and do you see value in restructuring transport and sourcing routes uh for example uh APIs or KSMs as we mentioned? uh could uh USP's medicine supply map incorporate uh port of entry and regional manufacturing hub data to help us understand how we could mitigate shortages and work through the Midwest. Thank you, Congressman. Um the we we actually do incorporate for most products the port of entry.
▶ 2:50:07Um but your question opens up something that we would be very interested to explore, which is that's only one step in that process. How else what are the other links between um that the map does not currently contain? Um, but it is an answerable question and so I'd be interested to follow up on that. Well, thank you um for your your feedback and advice. I look forward to following up with you, Mr. Chairman. That's all I have. I yield. The gentleman yields back. The chair now recognizes the gentleman from Massachusetts, Mr. Okintosh, for five minutes of Thank you, Mr. Chairman.
▶ 2:50:37I'm I'm going to change my name to Mr. Jones for you. I I appreciate the expert testimony this afternoon, Mr. Murphy. I want to uh engage with you please and first just by stating um you know there's so much debate in Congress rightfully so on expanding access to prescription drugs and one of the best answers is staring us right in the face right which is genericization of drugs uh it is the most
▶ 2:51:07effective way to ensure that people have affordable access to medications um and if I'm correct actually American Americans unlike with brand prices, Americans actually pay less for generic drugs than uh people overseas. So it's a real success story. There's debate in this committee of course about maybe the right amount of time before drugs go generic, but they should go generic without undue delay. Um and we want to see a successful generics and biosimilars sector.
▶ 2:51:34I appreciated the commentary you provided at the front end of this about maybe an industrial policy surrounding generics manufacturing. Um I'll be candid. I'm not sure I agreed with the middle parts of your recommendations which sound more like subsidies and tax breaks but the first and last thing you said I really liked and I want to dig into those a little bit. The first was basically demand signal for uh enhanced production of generic drugs particularly sterile injectables.
▶ 2:51:59Can you talk about proposals that have been made around having dish hospitals aggregate as group purchasing organizations and pro providing a premium for those sterile injectables for a sustainable supply chain? What what's your view on those? Yeah, Mr. Mr. Agen Claus, thank you for the question. Uh I I think you know the current state of the market demands any creative solution that will help provide certainty to manufacturers that there's going to be a market at a sustainable price for them to invest in the kind of domestic manufacturing you'd like to see.
▶ 2:52:28And is is that sort of dish premium approach something that you'd be amendable to? So I I'd have to talk with our our manufacturer. Would love to follow up with your office. I I haven't explored that in depth though. Great. it it would build on some examples that we've already seen with hospitals grouping together and group purchasing organizations for a sustainable supply chain. Um the last thing you talked about was PBMs and basically the the role of these intermediaries, these drug pricing middlemen and distorting healthy incentives.
▶ 2:52:55And I want to dig into that particularly on biosimilars because uh you know the biosimilar market has been working better uh but not working well enough. I believe 86% of brand biologics that are eligible for biosimilar competition still don't have a biosimilar under development. Right? And there's a lot of reasons for that. But that's a big opportunity cost. That's probably about hundred billion dollars of spending that could have been genericized, right? Um, talk a little bit about how PBMs are playing the rebate game to try to keep biosimilars out of the market.
▶ 2:53:24Yeah, this is this is an issue we've studied in extensively because we're we're missing a lot of opportunity and we're seating ground to Europe candidly, right? Um the the PBM environment has favored those manufacturers that can afford to pay very large rebates or have a large product portfolio that is rebatable that can prevent generic access. And one of the most famous examples of a product right now that has multiple biosimilar competitors.
▶ 2:53:49Uh the brand manufacturer retains over 80% market share multiple years after and it's infecting a investment in the future. Right? providing these the safe harbor to the anti- kickback provision does not seem like it was great policy from the 1990s. Maybe we should rethink that. We would we would love to to work with the committee on a number of areas to get that out of the way. Now the PBMs are also starting to do their own biosimilar manufacturing. Give us like 30 seconds on that and whether whether that's a good idea.
▶ 2:54:16So it's a it's it's challenging because in the one hand we want to promote biosimilar adoption but we also want to promote the investment that is necessary to bring new biosimilars to market and if standalone innovative standalone generic and biosimilar manufacturers don't see a signal that investing in that next generation of biosimilars is is going to be worthwhile from a portfolio standpoint they will stop investing in that.
▶ 2:54:40And so if we see follow-on products um that don't help the market but in fact favor you know particular in you know particular individual companies it's going to be a challenge for the overall market. So you're I'm not sure I fully tracked on that. Are you saying that the PBM's running their own biosimilar manufacturing is a net negative for biosimilar competition? I I think it's a challenge for those those folks who are trying to innovate new biosimilars. Got it.
▶ 2:55:06Um, quickly in our last 30 seconds, FDA's role given the staffing cuts in bioimilar uh, interchangeability studies. Yeah. So, we we're we're pretty pretty much in agreement with FDA that we need to uh optimize that process and take costs out of the system. And, you know, we look forward to working with Congress to try and codify that over the years. Do you have confidence given the the radical reorganization and cuts at the FDA that they have the personnel and expertise to do that? I think they could always use more support.
▶ 2:55:35I yield back. Gentleman yields back. The chair now recognizes gentleman from Oregon, Mr. Bch, for five minutes of questioning. Thank you, Mr. Chair, and thank all of you for being here. Mr. Kman, I'm interested in in balance, and I guess the the question is, is there a that we can impose on China if they choose to impose a restriction on us?
▶ 2:55:58And this is a broad general question because as I listen to this I'm trying to figure out whether the issue is fear of someone withholding stuff or price. But go ahead and just tell me are we are we currently in balance or out of Congressman Ben. That's a very interesting question. I think you know we have to think as a nation how much dependence do we want on a a foreign nation like China?
▶ 2:56:23Um right now in the case of amoxicylin 80% of the apa uh the starting material used to make the API it's called 6 APA comes from China. Okay. Uh we're very very dependent and therefore I think things are very much out of balance.
▶ 2:56:41We're so dependent upon China in the case of Amoxicillan and and I think you indicated earlier that the the challenge for you is is what in expanding your uh your footprint in that space from 5% to something higher is it price is it you said something about contracts and I wasn't quite clear on what the restriction was when it came to contracts. One of the challenges we face is is contracts. Yes, contracts give us consistency.
▶ 2:57:11It gives us stability. It allows us to make investments in personnel and in equipment. So, those long-term contracts, and we've had some success on the commercial side with that, but we haven't had success yet on the governmental side. And why not? I can't explain that, sir. Is there some Is it does it have something to do with the bid process as preventing long-term contracts? Is it is it on the government side of the equation? is on your side of the equation.
▶ 2:57:40I think it's on the government side of the equation. Um the the government's focus is very much on price. Um there are in some structural issues. For example, in cases they're looking for um purchasing from small business entities and things like that. Our organizational structure, we're not a small business. Yeah. Let let me hop ahead. The issue the trade-off seems to be price versus everything else, right?
▶ 2:58:03So if China is going to be subsidizing everything that they do in China, then is our market system such that we we we cannot compete because everything is all about price. Is that what you're really saying? The only way we can ever get even is if we f we decide we want to pay a higher price and the because we can certainly get it for less from China, but we lose the security situation. Is that that's what you're that's what you're trying to call out, isn't it?
▶ 2:58:26Well, price price is an important aspect and that I think affects all of us and yes, China and India have different ways of looking at the economic market than we do. Uh they made decisions to have lower much lower prices. In some cases, we're dealing with comp competition that's below our cost of production. Right. Well, it seems to me we face this situation in any space that China chooses to focus upon, which is a lot of them. Steel's a good one uh to talk about for a moment.
▶ 2:58:54They're vastly they can produce steel what 30% more than everybody actually needs. So what I'm trying to get at here the common theme seems to be if we want to be secure we're going to have to pay more. Is that a correct statement? Yeah, Congressman, I I think in in general that is the case. You will we will have to pay more. Okay. Let me let me flip over to you Mr. Purisency. Um what prevents China right now from withholding uh stuff that we actually need? Why is it is it world opinion?
▶ 2:59:24is what why we see it happening now in a in the context of negotiations with China. They're withholding rare earth minerals and we have chips and and perhaps certain types of stuff we use in fracking. So there's kind of a little bit of a balance there. Not much. But what what prevents us from right now uh being in real trouble in this space? Um not sure anything prevents it at the moment.
▶ 2:59:48Um, I would say that the key starting materials that we talk about here in medicines are probably the most equivalent to your rare earth metals. Um, and most of those are probably going to India for production, but these roots and channels are well understood if you're the if you're the owner of those key material plants. I would say that here in the US, we actually don't know where these keys materials are yet. And it's why we're working on that data source.
▶ 3:00:13We'll be done with that in the next few months and we'll finally have the answer as to where are we vulnerable and then we have to try to correct it one one drug at a time. I don't think there's a shortcut to it to to what do you attribute our current I'm going to say I don't want to say lack of preparedness but it appears that we are are we not prepared the key starting material topic is really chemicals and the chemicals industry has mostly left the US decades ago.
▶ 3:00:40Um, and while there are also API dependencies and that's not without some challenge, it's even it's even more of an issue upstream just as Mr. Catchman has described. Yeah. Thank you so much. Yield back. The gentleman yields back. The chair now recognizes the gentleman from IHOT from Ohio, Mr. Lansman, for five minutes of questioning. Uh, thank you, Mr. Chair, and uh to the ranking member for today's hearing.
▶ 3:01:03The importance of strengthening domestic manufacturing in the healthcare supply chain is is hugely important to all of us. Certainly in southwest Ohio, uh we have and I wanted to share a company called Emerge Manufacturing in Southwest Ohio. Uh it's um led by a woman named Cynthia Booth.
▶ 3:01:25She was this incredible entrepreneur and was going to retire and then realized that we had this issue during COVID and that we should be doing more of the PPE manufacturing here uh in the United States uh and in her mind in a community where folks don't really have access to these good paying jobs.
▶ 3:01:50So she sort of emerged out of what was retirement to to build emerge manufacturing and it is now up and running. They're producing PPE, all kinds of other uh you know uh things for the health care space. And it's in a neighborhood called B Bond Hill, uh historically black neighborhood, predominantly black neighborhood, uh where she grew up, and now they're they're manufacturing all of this.
▶ 3:02:18And the the majority of people who work there are from Bond Hill, uh which is uh just an incredible story. And I I wanted to share. And if you're ever interested in coming and spending time in Cincinnati and seeing emerge manufacturing, we'd love to have you. Anyone from the committee, too. Um, she and others rely on the FDA to get their PPE uh approved.
▶ 3:02:42Um, and that's why the job uh as it relates to the domestic supply chain is is so important. In April 2025, uh, the GAO released a report to Congress about drug shortages entitled HHS should implement a mechanism to coordinate its activities. Makes perfect sense.
▶ 3:03:04In the report, the GAO stated that the FDA, Congress, and academic experts have reported that collaboration across federal agencies is important to address drug shortages and enhance supply chain resiliency uh because each agency has a unique role in the supply chain. HHS then creates a supply chain resilience and shortages coordinator. Not a great name, but a a great cause. Uh it makes all the sense in the world.
▶ 3:03:33somebody who's going to lead the coordination across the agencies. Uh they do this in 2023, November 2023, a position within the office of the assistant secretary for planning and evaluation. It was funded through 2027. Uh last month, however, the Trump administration eliminated the role. Uh HHS no longer has the mechanism to coordinate drug shortages shortage activities across the department. Uh M. Okonnell.
▶ 3:04:02Um, question. As assistant secretary for preparedness and response, how was the office working with other agencies within HHS, including the FDA, to strengthen uh the domestic supply chain? Thank you, Congressman. I think that's a great example of the need to coordinate within the department that we always were were dealing with. Uh, but the role of the supply chain coordinator was extraordinarily important during my tenure there.
▶ 3:04:28Um, you have lots of independent agencies within HHS, each having their own agenda, each having their own constituencies that they're working towards. We needed someone sitting on top of all of that, uh, tying the threads together to ensure that we were moving forward in the way that we needed to in a unified way on behalf of the department and and on behalf of the White House. Can anyone on the panel give a reason for why they would just eliminate the position? Okay. None.
▶ 3:04:58Yeah, it doesn't seem like it was a a smart idea. But the position's now gone. Um HHS also has identified something like 10,000 employees uh to be fired. Uh is the department equipped to coordinate a response in the case of a supply chain issue uh as we had one several years So, it's hard for me to know since I'm on the outside now what it feels like on the inside. But what I can say is that the role of the coordinator was important.
▶ 3:05:27And the coordinator didn't just coordinate within the department. They coordinated across departments. And there are lots of other pieces of the supply chain, departments and agencies throughout the government that have roles to play. We've talked about tariffs and other incentives. So, having somebody sitting on top of all of that was really important. And we need somebody, I think, who can do that. I agree. and and and this maybe is something that this committee could take up.
▶ 3:05:50Seems like a simple enough thing to do to say, "Hey, why don't we put the coordinator back on the job?" Because we all agree that, you know, increasing the domestic supply and and domestic manufacturing is really important. Um that's my time. Uh thank you very much. I yield back. The gentleman yields back. The chair now recognizes the gentleman from Texas, Mr. Krenshaw, for five minutes of questioning. Thank you, Mr. Chairman. Thank you for holding this uh hearing. Thank you to our witnesses.
▶ 3:06:17Um, you know, I think too often we don't treat domestic drug manufacturing like the national security issue. It is, but it is one. Um, especially when we're depending on foreign nations, often adversarial ones, for critical medicines or their ingredients. We're handing them leverage. It's not good. It's a dangerous game to play. Uh, and it leaves us a vulnerable when we're in crisis.
▶ 3:06:40uh whether it's a pandemic, a supply chain disruption, geopolitical tensions, whatever it is, you know, in my district, I I'm proud to say uh our our citizens are not waiting around. Um they're acting St. Just College, Lonear College, leading the way, training the next generation of biommanufacturing and biomedical engineering professionals. You know, these students will fill those gaps in the workforce, help build the domestic capability that we really should have prioritized a long time ago. Uh we're seeing investments, too.
▶ 3:07:07Uh, Bionovo is a company that recently put $100 million into a new plasma DNA manufacturing facility in my district in the Woodlands. And that's not a coincidence. It's a it's a signal. I think companies are choosing Texas because they see the promise of a strong skilled workforce and a business environment that uh supports innovation and growth. But we've got a long way to go. Uh, nearly 80% of bioparma companies, many of them small and emerging biotech firms, they still have to rely on contract manufacturing or contract manufacturers in China.
▶ 3:07:36That should set off a lot of alarm bells. If we're serious about building biommanufacturing capacity here, then we got to take a hard look at the regulatory and policy roadblocks that are standing in the way. And you know, we have to fix what's making the US less competitive. And we should do it now um before we're caught flatfooted again in the next crisis. M Mr.
▶ 3:07:55Murphy, we've seen Congress um move pretty quickly actually to streamline permitting for specifically for semiconductors under the CHIPS act uh carving them out from the National Environmental Policy Act, NEPA, uh Given the strategic importance of and I I bring that up because so that was a recent bill and it was it was it was something that Democrats Republicans came together on NEPA reform but just for this one thing that we can agree on because we need more chips. Okay. Seems like a that's that's interesting.
▶ 3:08:25That's that's a that's a pathway to agreement. Um given the strategic importance importance of pharmaceutical manufacturing, do you think similar carveouts for pharmaceutical facilities are warranted? Would would removing these regulatory hurdles while also protecting the environment through you know paired back I think more efficient review processes. Would that help accelerate domestic buildouts? Yeah, Mr. Krenshaw, thanks for the question.
▶ 3:08:50Uh we certainly agree that you know permitting is is is one thing that can delay significant investments and really um stand in the way of uh getting our domestic manufacturing base back online particularly in the generic pharmaceutical space where cost is such a significant driver.
▶ 3:09:06Um, and so, you know, I think we saw in the president's executive order that talked about permitting reform in the medicine space is something that we could work collaboratively with uh with Congress to try and ensure that we both protect our environment but also not let the abnormally long permitting processes stand in the way of getting that domestic investment online. Yeah, I appreciate that. And again, that we've done it before in a bipartisan way and I and I hope we can we can do it again in this Congress.
▶ 3:09:32Um even if we can't get full NEPA reform at least we could do it for the for for certain industries. Um Dr. uh Pvencheni I get that right. Okay. Um you uh USP has worked on digital quality infrastructure advancing manufacturing mapping. What capabilities exist right now today for for really understanding and fully mapping the US pharmaceutical supply chain using that technology? Um so we are a lot closer than 2019 when we started.
▶ 3:10:00um many of the things that you know the the supply chain is complex, we don't know what it is. We can answer most of those questions already today and in just a few months we'll be able to talk about that even down to the level of key starting materials which means we're getting very close to having the information of what's where and we start to have to do the next thing which is what we do about it. Um and that's not a dead end because there's there are additional analyses we can do that open up those opportunities um for domestic manufacturing. So how else can we make those medicines?
▶ 3:10:29How else can we produce an API through different keystarting materials that maybe are available either nearshore or or or domestically? Um, and they're they're one at a time. They're solutions, but they are solvable. They're solvable one time. And then we can think about the incentives and the other things we've talked about here today to reduce the barriers to those investments that um are very hard for generic companies today to to make those commitments. And we see it the lack of investment in advanced manufacturing.
▶ 3:10:58It's almost at zero within the generic industry today. I want to get one more question in for for Mr. Murphy. Uh, regarding the FDA's current good manufacturing practice enforcement, what are what tools, if any, exist within FDA's own compliance and inspection regime to tip the scales toward domestic production? Yeah, I mean certainly FDA could signal uh their willingness to speed up inspections for newly brought online generic manufacturing facilities in the United States.
▶ 3:11:22Um, I think understanding that that inspection paradigm is is on the horizon and set and set up, you know, stably would would give folks the understanding that that investment has a time frame that at the end of it which requires FDA inspection is is more certain. Okay, I appreciate that. And yield back. Gentleman yields back. The chair now recognizes the gentleman from Louisiana, my first cousin, Representative Carter, for five minutes of questioning. Thank you, my dear cousin. Thank you, chairman and ranking member for holding this hearing.
▶ 3:11:53Thank you. Thank you all for being here. As the only member of the committee from Louisiana, I know how important uh a resilient supply chain and resources like the strategic national stockpile are for states like mine, especially during natural disasters and public health emergencies. In fact, I'm proud to share that Louisiana has uh been and continues to be a leader in this space.
▶ 3:12:16In 2020, during the CO 19 pandemic, Ashna Health and Safe Source Direct, a US-based PPE manufacturer, formed a partnership to set up to step up and address the nation's shortages of gloves, mask, and other critical PPE needed to protect our healthare workers on the front lines.
▶ 3:12:37Efforts like this and the federal investments allow to expand domestic manufacturing and bolster the supply chain to ensure we are all well prepared for when the next, not if, but when the next natural disaster or public health emergency hits. I look forward to hearing from my witnesses today and discussing how Congress can strengthen our medical supply chain and expand domestic manufacturing.
▶ 3:13:04Uh, Miss McConnell, um, we know that, um, the from this committee, Louisiana and what I've mentioned to you earlier, Louisiana is paving the way for domestic manufacturing in healthc care space through Ashner and Safe Source Direct. They're also currently in the process of standing up a rubber facility to fill the US gap in domestic raw materials such as rubber, which is needed to create gloves and PPE.
▶ 3:13:30Um, from your perspective, as someone who previously served at HHS, how can the federal government work to ensure there's domestic market to support the sale of domestic raw materials and end products? Congressman, thank you so much for that question. And I think the Safe Source example is one that we've been trying to or you know, the federal government should think about replicating um in other places.
▶ 3:13:55Uh what's important about what Safe Source was able to do, they were able to solve one of the problems that we continued to run run into in other situations which was making sure that there was a market for the PPE that was manufactured even after the emergency. And because a hospital system like Oxner committed to purchasing Safe Sourc's PPE, uh we were able to keep Safe Source in business and Oxner had the the high quality domestically manufactured PPE that it needed.
▶ 3:14:20uh finding similar hospital partners across the country with other investments we've made uh should be a priority of of the current proud to have Louisiana leading leading the way there. Uh the strategic national stockpile is important to states like Louisiana. To what extent does the stockpile support and utilize domestically manufactured products such as gloves and PPE? Whenever possible, we tried to restock with domesticly manufactured goods.
▶ 3:14:44Um it's important and as I said in my opening testimony that we have 90 days of this um emergency supply to be able to get us through those first early days of anything that comes next. Um yes uh Mr. Murphy uh thank you for being here with us here today and talking about the challenges challenges with domestically manufactured generic drugs. As you know, FDA reviewers are tasked with conduct conducting inspections and new manufacturing facilities and manufacturers are required to comply with good manufacturing practices.
▶ 3:15:15How would riffs and FDA impact the AY's mission to carry out this work and exacerbate the challenges you shared? Yeah, Mr. Carter, thank you for the question. And you know early on uh when the initial risks were announced we saw that it was a lot of support staff in the inspections division which you know raised a lot of concern in the industry uh because it's one thing to have qualified inspectors and and a sufficient amount of them but you also need that support staff to help FDA conduct all of the inspections and the logistics associated with that.
▶ 3:15:45Um, we've been tracking very closely uh whether or not there have been deficits in in inspections, but I would point out the fact that from a foreign inspection standpoint, FDA is still not getting back to the levels they had pre-COVID of being able to conduct foreign inspections. And the industry actually would like to see more capacity in that space. So, what happens? How does this continue to to to to slide down the the slope if we don't do something differently? Yeah. So I think right now it is affecting the ability to get more uh product into the market at a lower price.
▶ 3:16:16Um I think we're seeing FDA trying to triage that but but you know ultimately we need to see FDA funded at a level that allows it to uh have a fully functioning inspection force. Either of you can answer this. How and how have the on-again offagain tariffs impacted um manufacturing? Start with you Mr. Mr. Cashman and then we'll go down if we can. I've got about 13 seconds. So can you whoever wants to answer answer quickly. You can if you were ready. Mr.
▶ 3:16:42Murphy I'll just say it's creates uncertainty and it requires companies to make and uncertainty kills business doesn't it? It hurts our economy. The the uncertainty of not knowing if we're able to do business or not is one of the leading factors of why business people complain. They don't have the certainty of being able to conduct business. My time is uh is over. I yield. Mr. Chairman. The gentleman yields. The gentleman from New Jersey Mr. Kaine is recognized for five minutes.
▶ 3:17:07Thank you, Madam Chairwoman, and I want to thank our witnesses for being here today. I am very interested in learning about our medical supply chains, especially in the biotechnology space. New Jersey has a thriving biotech industry, both brand name and generic drugs. I've been pleased to see several companies making investments in the garden state.
▶ 3:17:30These include fairing, ro diagnostics, amnneo, novartis and b1 medicines amongst others. I am also a member of both the energy and commerce committee as well as the house foreign affairs committee and in that committee we are working on legislation to reauthorize the state department. I look forward to learning if I can use that work to build resilience and transparency in our medical supply chains. Mr. Poland.
▶ 3:17:58The med spa case that you cited in your testimony involved active pharmaceutical ingredients sourced from an unregulated international online supplier. What challenges does NAPB face in tracking and preventing the importation of counterfeit or substandard APIs or GP excuse me GLP1 drugs? What can Congress and the US government do to strengthen international partnerships such as with custom agencies or to better address this issue? Sure.
▶ 3:18:27Thank you for the question, Congressman. So, on the issue of um med spas, I'll say first there are legitimate operators that do things the right way and compound correctly. Uh but our members are seeing that most of the scary and egregious things that are happening are happening in these largely unregulated facilities. So you have instances where you have unlicensed practitioners um that are never inspected are setting things up in their homes or you know scarily in their bathtubs.
▶ 3:18:58Um and frankly a lot of the boards of pharmacy actually lack the jurisdiction to go in and inspect these facilities. So they will at times have to work with the board of nursing or work with the medical board or refer to the attorney general's office. So from a congressional perspective, I think any any sort of visibility, Congress can continue to shine on this issue will help uh because there are in we believe thousands of these locations that we'll never see a regulator come in the door.
▶ 3:19:24And so when you think about them obtaining this API from unregistered sources, like that's that's really really scary when you think that people are injecting these things into their body. Thank you. Thank you. Uh Mr. Hashman, my uh my district has a number of pharmaceutical manufacturers, both the brand name and generics space. Can you speak to the challenges you have faced operating domestically?
▶ 3:19:49And additionally, what can Congress do to ensure that that the companies that are choosing to do manufacturing domestically can continue to do so? Thank you, Congressman. That great question. Um I think you know I I talked about the issue of prices before and I just want to emphasize the the difference in prices between us and many other uh foreign domestic or foreign generic suppliers is not very big.
▶ 3:20:15It's somewhere between 10 and 20% in many in many cases and in a few cases in government contracts where we've checked that we can actually offer better prices than the government paid through uh their government contracting suppliers. So we could do better on the on some of the prices. Um but we do we have and we have lost business for 10 cents a bottle in the commercial side. So that's very cha challenging.
▶ 3:20:39But I think one of the things that would definitely help everyone I think in the generic industry have more stability and have the ability to have long-term contracts which will allow us to plan and plan our capital and expansion and scale up businesses in an efficient way. Thank you Dr. Pieran Shenzi and and Mr. Murphy.
▶ 3:21:01Uh the FDA recently announced its plans to expand the use of unannounced inspections at foreign manufacturing Uh can you explain how this policy change will impact efforts to increase supply chain resilience and even domestic manufacturing? So um thank you for that question uh Mr. Keane.
▶ 3:21:25Actually, I think there are net positives in the ability to ensure that FDA has the flexibility to get into facilities overseas uh and and provide the public with asurances of the safety of the medicine supply chain. So, you know, I think we look forward to working with the agency to try and expand uh inspection capacity both domestically and overseas to help uh ensure that we have a stable flow of medicines that come into patients. Thank you, doctor. Yes, thank you for that question.
▶ 3:21:54very much like FDA, USPS set up facilities with teams in in India and in China for specifically that purpose, which is risk-based approach to all uh assurance of quality medicines. You have to show up where you think the risks are and you've got to have enough resources. Um otherwise, you're just inspecting in your backyard and um that is not only not effective, but it's actually not fair to domestic Thank you to all the panel witnesses. I yield back. Thank you. The gentleman yields.
▶ 3:22:23The chair now recognizes herself for five minutes. I know that's strange. So, by now it's been made clear as we come to the conclusion of the hearing that depending on adversarial nations like China for life-saving medicines, it's dangerous. So, I'm not going to repeat what has already been said here today. Instead, I want to talk about some solutions.
▶ 3:22:48So we have American manufacturers ready to produce the antibiotics, the generics, the APIs that our system depends on, but they're getting crushed by subsidized competition from China and India while navigating a US system that buries them in red tape and rewards the lowest bidder no matter where it is made. This is a problem. So if we're serious about fixing this, we need to reward resilience. That means long-term federal purchasing contracts for essential medicines.
▶ 3:23:17It means fast-tracking approvals for domestic facilities and it means treating pharmaceutical manufacturing like the national security issue that it is. We also need to think bigger. Reshoring can't just mean the final pill or vial. It has to include the full chain starting from key intermediaries and chemical inputs. If we're still importing the ingredients from China, we're still vulnerable.
▶ 3:23:41It should be about incentivizing domestic production of these early stage materials to truly rebuild them from the ground up. And that means working closely with trusted allies as well, especially in Western Europe to diversify our sourcing and to build in redundancy. So if one facility going offline, it doesn't mean that we are putting other people at risk. The bottom line is that we cannot defend American lives with a drug supply chain that depends on the goodwill of Beijing or New Delhi.
▶ 3:24:11So I want to thank you all for being here as witnesses before this committee uh and for speaking on what's working, what's not so that we can finally get this straight. Mr. Bolan, you've been highlighting the early successes of the Pulse platform. Now, as we work to bring pharmaceutical manufacturing back to the United States and rebuild resilience into the supply chain, I'm very concerned about the counterfeit and substandard drugs slipping through the cracks, particularly from overseas sources.
▶ 3:24:42Since Pulse has launched, what are the most alarming trends that you've seen, whether in product type, origin, or distribution patterns, and what does that tell you about where the biggest vulnerabilities lie? Thank you, Madam Chair. Um I I think the most disturbing thing that we've seen is the fact that as the very first scans that we conducted utilizing the tool found illegitimate and counterfeit products and that's just in a handful of states that are using the tool so far.
▶ 3:25:11Uh the reality is that where there is money to be made bad actors are going to find ways to insert things into the supply chain. So it's going to require vigilance on the part of you know of the of the state boards of pharmacy as well as the pharmacies themselves to really think about where they're purchasing their medications. I think one of the other challenges is when you have you know we've talked today a lot about what happens as products are being manufactured. You know we still have issues within the supply chain from the point it a product enters the supply chain to the point it's dispensed.
▶ 3:25:41There's not a lot of visibility and transparency in the supply chain. And so, uh, I would encourage Congress to think about ways that you can start to unlock some of the capabilities that that do exist. The fact that this law and you can track a product down to the salailable unit that unlocks the ability to really trace medications and address issues like drug shortages, keeping illicit medications out of the supply chain. So, I think let's leverage the investments that's already been made. That would be what what I would recommend for Congress.
▶ 3:26:11And you mentioned of the states that have adopted it. What are the states that are currently utilizing the platform? The So, we have over 30 states that are that are currently utilizing the platform and I'm not going to make you name them all. Thank you for that. Yeah. Yeah. But we're we're finding good and and early success with that. And so, we're going to continue to help support our members so that they and and provide additional tools to help them detect. Okay. And in the interest of time, I've got a bit of minute left.
▶ 3:26:35Um, so you talked about the the needing transparency in the supply chain and you said Congress needs to do more in that space. Um, so as we're effectively working to reshore the production and reinforce these supply chains, how can we ensure that some of the regulatory tools like Pulse don't detect uh that just don't detect threats but actually help eliminate them as well?
▶ 3:26:59And so when you speak about that supply chain visibility, it's really getting members of the supply chain to be more transparent and communicative with each other. There is so much information that's moving from the point of manufacturer to distribution to dispensing, but no one shares it. It's only when they have to share it. And so I think the supply chain being incentivized to actually do something like the national control tower that existed back during COVID, that was some of the most widespread visibility that the supply chains had after the point of manufacturer.
▶ 3:27:27And I I think that's another opportunity to consider. I I have more for you that I would like to follow up on, but I have uh run out of time. So, my time has expired. I yield. Do we All right. Uh the gentleman from California, Mr. Obelty, you are recognized for five minutes. Well, thank you very much. I want to thank our witnesses. This has been a really valuable hearing for me.
▶ 3:27:51I represent uh obviously a district in California but uh because of all of the biioharmaceutical uh research uh and innovation that occurs in California particularly to our public institutions uh it it's obviously of critical interest that we uh make sure that our supply chains are resilient. Uh if I could start with uh Mr. Cashman, I was really interested in your testimony uh about how to make our supply chains more resilient.
▶ 3:28:19And I thought it was poignant, you know, the story that you told about when uh when we allow our supply chains to be uh opaque and complex, how when we have an unforeseen shortage, those supply chains can't respond. And you offered, I thought, some really meaningful suggestions for improving that situation. But uh one of the things I was curious about it seems like as a free market guy myself would seem like market uh reactions would catalyze some of the solution to that problem.
▶ 3:28:48I mean for example one of the things you suggested was long-term supply contracts. But if you are uh someone that has consistent demand for a drug like amoxicylin uh and you've experienced a situation where supply is constrained and therefore the market reacts by raising prices up to astronomical levels, you would think that would incentivize you just from a financial perspective to diversify your supply chains. Why why is that not the case?
▶ 3:29:19exactly. It's exactly that. Um we've had commercial um people in the commercial market, customers of ours approach us for long-term contracts because of the instability of supply supply during 2022 and 2023. Those are I think very knowledgeable and innovative people who want to avoid problems for a critical drug like amoxicylin. Unfortunately, much of the market is still very much focused on price.
▶ 3:29:48And as I said earlier, 10 cents a bottle for a product that sells for Sometimes people will walk away from us as a US supplier for a foreign supplier. Well, it would just seem to me that that uh there's a commercial incentive to not do that when you're aware that locking yourself into a foreign supply might mean a lack of availability and paying just a couple cents more. now for a long-term contract would would ensure that that doesn't happen.
▶ 3:30:16Just from dollars and cents standpoint would seem like people would be incentivized. But uh thank you for their response. Dr. uh Pier Venchenzi, if one of the things that I thought was really interesting about your testimony is uh how the criticality of manufacturing innovation here in the United States. And obviously that's something that would make our domestic manufacturers more competitive. It would simplify our supply chain. you would incentivize domestic production.
▶ 3:30:43But I mean just to be play devil's advocate for a moment, uh even if we came up with innovation here in short order, isn't that going to be duplicated elsewhere in the country? It doesn't seem to me like although it's a desirable thing, it doesn't seem to me like that's a long-term solution to the problem. Yeah. So 100% we should assume so. I think that's that's safe to say for just about any innovation anywhere ever.
▶ 3:31:06Um however the advantage of advanced manufacturing in the US it's a bigger advantage in the US domestically meaning it offers you lower environmental footprint it is works with lower labor costs these are bigger advantages here than they'll be in a lower cost environment and so while it's just as useful a technology the benefit compared to the older technology is higher in the US interesting so it it gets right at some of the things that make US manufacturers uncompetitive that's interesting it's true and if might just add
▶ 3:31:37one thing is the the challenge is that the facilities that we currently have they their 20 25 year lifespans the cost of a new facility including for advanced manufacturing is doesn't seem extremely high when you look at an innovator drug and the potential for for revenue but for generic companies it's it's out of reach at the moment and so USP and we're working with some other partners to try to reduce that barrier at least somewhat but it's going to take something more it's going to take some incentives to get over that hurdle sure yeah I think Mr. was talking about hundreds of millions of dollars. Yeah.
▶ 3:32:07Uh Mr. Murphy, if I could end with you, uh in your testimony, you said that one of the things that's constraining domestic the our domestic ability to create supply to manufacture supply is a labor shortage. What can we do about that? Yeah, that's that's the most long-term con that we have, right? Because we have to start imbuing more STEM education and more uh embodiment of of trade type type education into our system.
▶ 3:32:33I mean, I I I don't like always talking about that because it's it's the one that's the most difficult to address. We we had a long discussion in this country earlier last year about H-1B visas because we realized so much high skill manufacturing was necessary. Uh and we didn't have the supply, but I think we we need a mobilization of how we educate and and how we prioritize the education system in the United States to show what the jobs of the future will look like. Right. I completely agree. And it's not just pharmaceutical manufacturing that's suffering from this problem.
▶ 3:33:01It's lots of different fields that we want to keep America at the forefront of. Well, I want to thank everyone for their testimony. I've really enjoyed the hearing. I yield back. The gentleman yields. The chair will uh yield to the ranking member for a few brief comments. It it looks like we're about to end. And I really want to thank you, Madam Chair, and also the actual chair of the subcommittee, Mr. Carter. Um listening to this panel, it's really clear that these are issues. They've always been bipartisan issues.
▶ 3:33:30They're American issues and I think we can all work together to solve them. We need to recognize the situation we're being faced with right now and then work on that. I just do want to expand on the record a minute. The gentle lady from Iowa talked about a North Carolina facility that's being built right now and that's for pipet tips that was funded with $79.9 million from the American Rescue Plan.
▶ 3:33:57And so we all we all think that there's a role for government in this and we we should really work together to figure out how we can make it happen. And I yield back. The general the ranking member yields. Uh at this time I ask unanimous consent consent to enter into the record documents included on the staff hearing document list. Without objection. So ordered. And I'd like to thank again all our witnesses for being here today.
▶ 3:34:25members may have additional written questions for you all. I'll remind members that they have 10 business days to submit questions for the record, which really means staff. Uh, and I ask the witnesses to respond to the questions promptly. Members should submit their questions by the close of business Wednesday, June 25th. So, without objection, the commit subcommittee is adjourned.