▶ 0:00:00Ranking member Khanna and distinguished members of the committee. Thank you for convening this hearing. My name is Patrick Cashman and I serve as president of US Antibiotics headquartered in Bristol, Tennessee. We are the last domestic manufacturer of amoxicillin, the most prescribed antibiotic in the United States. We formulate, fill, and finish the drug entirely in America and we have never purchased our active pharmaceutical ingredients from China.
▶ 0:00:29The amoxicillin supply chain has three layers: key starting materials, active pharmaceutical ingredients, and finished dosage forms. China dominates the foundational layers. In October 2025, US Pharmacopeia analysis found China is the sole supplier of at least one key starting material for 37% of all US-approved medicines.
▶ 0:00:54India, often is seen as an alternative, relies on China for about 90% of its amoxicillin precursor chemistry. The apparent diversity on pharmacy shelves is largely an illusion. One in three US hospitals experienced severe effects from the 2022-2023 amoxicillin shortage, which resulted from routine supply chain not foreign interference.
▶ 0:01:24A geopolitically motivated restriction, as seen recently with critical minerals, would be faster and more severe. The quality gap increases the security A 2025 study from Indiana University and Ohio State University found serious adverse events, including disability, and death were 54% higher for generic drugs made in India than those made in the United
▶ 0:01:56Domestic facilities received unannounced while foreign facilities have historically received up to 12 weeks allowing time to conceal issues. A 2023 Pentagon review found the API country of origin was unknown for 22% of drugs for service members. We cannot protect a supply chain we cannot see.
▶ 0:02:23Our facility has supplied amoxicillin to American patients for over 40 years. Until 2008, every US amoxicillin prescription was filled from our Bristol A decade of subsidized foreign eliminated our market share and forced our previous owners into bankruptcy. In 2021, Jackson Healthcare acquired us as a national security commitment, not a business investment.
▶ 0:02:54Our parent company has invested tens of millions of private dollars to restore domestic production while absorbing We compete with foreign manufacturers who benefit from state subsidies, lacks oversight, and prices that sometimes fall below our raw material We accept these disadvantages because the alternative poses a national security risk. However, our ability to overcome these challenges is not unlimited.
▶ 0:03:22If we close permanently, rebuilding from scratch would take a decade, assuming capital, regulatory approval, and a skilled workforce are available. None of these are guaranteed. This committee can take specific actions to help preserve US pharmaceutical manufacturing capacity.
▶ 0:03:43define domestic pharmaceutical manufacturing as the process of filling, and finishing drugs from API, so that the federal procurement preferences reward companies that actually manufacture, make medicine in Second, direct strategic national to prioritize domestic manufacturing through multi-year purchasing agreements.
▶ 0:04:12signal bipartisan support for the ongoing Section 232 investigations into pharmaceutical imports and urge prominent treatment for the upstream supply chain, the KSMs and the APIs, where China's chokehold is the tightest and the consequences of disruption are the most America's most prescribed antibiotic can be made in entirely in the United States and for more than 40 years it was.
▶ 0:04:42We have the facility, the expertise, and the production capacity to do it again. My colleagues and I are looking for this committee to help create a policy that treats domestic production of critical medicines as the national security priority it is. Thank you and I welcome your questions. Thank you very much. Dr. Wosinska, uh the floor is yours. Thank you, um Chairman Moolenaar, uh Ranking Member Khanna, and members of the committee.
▶ 0:05:13Thank you for the opportunity to testify. Uh my name is Marta Wosinska and I'm a senior fellow at the Brookings Institution. I am testifying today in my personal expert capacity. I am an economist with expertise in prescription drug markets and I have been studying resilience of generic drug supply chains for about 15 years. Over these years, I have seen many policy ideas in this space fall short.
▶ 0:05:38Many ideas sound good and strong and intuitive and but they often fail to grapple with four key questions. Today, I want to use those four questions to frame how we should think about de-risking our drug supply chain's dependence on China. Question number one. What problem are we trying to solve? We often hear that about 80% of plants that make active ingredients for our drugs are outside the United States.
▶ 0:06:08If we treat that as the problem, then onshoring those plants sounds like the obvious fix. But if our concern is China, we must recognize that China controls the chemical precursors those plants need. If China shuts off those chemicals, it won't help that an active ingredient plant sits on US soil. If we want to de-risk from China, we need to de-risk those chemical inputs. Question number two.
▶ 0:06:36For the solutions to work, what else must happen? Any serious efforts to de-risk from China will cost money. There is no free To make progress, Congress must be willing to allocate funding for a more secure chemical and generic manufacturing capacity and to pay more for the products that come from it.
▶ 0:06:57At this point, you might reasonably ask, "Aren't we already spending too much on drugs and you want us to spend more?" But please remember, I am only talking about generics. Generics account for more than 90% of prescriptions, but only a small share of drug spending. A life-saving hospital medicine may earn a generic manufacturer less than a cup of coffee. A 30-day supply of a chronic generic drug sells to pharmacies for less than a dollar 50.
▶ 0:07:29For these generic staples of American healthcare, we must be willing to pay more for supply chains that are not built on cheap Chinese inputs. Question number three. What is the best use of limited dollars?
▶ 0:07:43The scope of our dependence is so broad that we must prioritize which supply chains to secure first, recognizing that we must secure more than just the active ingredient and finished dosage form steps we normally call drug If policymakers sprinkle taxpayer dollars across many drug supply chains without clear priorities, they risk spending a lot and changing very little.
▶ 0:08:09The smart path is to reserve full end-to-end onshoring for critical drugs for which we are likely to compete with China and with others in in a pandemic or a major natural disaster. Think emergency room medicines, antibiotics, and uh intensive care um sedatives. For the widely used everyday medicines that treat hypertension, high cholesterol, and depression, we should lean on friend-shoring.
▶ 0:08:35Friend-shoring lets us leverage the fact that most of our exposure to China uh most of our exposure to Chinese chemicals is not direct, but runs through India and Europe, countries that supply our market, but rely on Chinese Those countries are also concerned about their own exposure to China and are working to decrease it, benefiting us along the way. Question number four. How do we avoid unintended consequences? Congress has a critical role here.
▶ 0:09:05If tariff policy, procurement rules, and payment reforms send weak or mixed signals and purchasers keep paying only for the cheapest version, manufacturers at home and in allied countries will keep leaning on low-cost Chinese inputs. We have already seen firms in allied countries shift critical manufacturing capacity toward China because buyers would not pay for the de-risked production. This is the opposite of what we want.
▶ 0:09:33So, as you consider legislation, the question is not only whether a policy sounds tough on China and enhances onshoring, but also whether it enhances friend-shoring. Congress can help by locking in clearer, long-term signals in statute on tariffs and reliability-based payments, so that our policies support our allies' efforts to lower their dependence on China and in doing so, make our own drug supply chains more If you would like more detail, I refer you to my written testimony,
▶ 0:10:03which um lays out these issues um in much more detail. And thank you again uh for inviting me to participate, and I look forward to your questions. Thank you very much, and uh I'll now recognize myself for 5 minutes of questions. Uh Dr. Becraft and and Dr. Jimenez, in the last 5 years, China went from 0 to 48% of large global pharmaceutical licensing We've seen this trajectory before in other sectors.
▶ 0:10:32At what point does the United States lose the ability to reverse course in biotech, the way we lost the ability to reverse course in in manufacturing I think we lose our ability to do so when we lose this unstructured interplay between all these uh components.
▶ 0:10:58So, when the financing environment moves to China, essentially the VCs move to that's going to hollow out our ability to have local biotech companies in the United States. And that's going to reduce the amount of clinical trials we have here, and then we are also going to have pharmas seeking to license drugs from China.
▶ 0:11:16So, I think from my perspective and in my vantage point, a lot of the system is managed through financial incentives, and that's going to be when we stop seeing it as valuable to invest in local China uh US-based companies. Uh that's really going to be to me the bellwether that it's over. Um to to [clears throat] actually build on my colleague's statement there, um I actually believe that this movement is very much underway and accelerating.
▶ 0:11:47One thing to understand about the biotech industrial base that we have here in the United States, uh as it relates to drug discovery, um is just how fragile it is. So, companies like mine, for instance, um we we don't make any money. We we don't sell any drugs. We're research and development organization that is 100% dependent on investor capital or partner capital to come in to pay for the very large prices of drug development.
▶ 0:12:15Um if you compare that to the manufacturing sector, which took decades to decay and go overseas to China and others, those are industries backed by both revenue, solid assets, real estate, CapEx, that took many, many years to decay.
▶ 0:12:29Um if the financial incentives, as as my colleague just mentioned, uh begin to shift where um investors and and partners want to invest into Chinese competitors and license Chinese assets, the the flywheel is on the order of of a few years to completely collapse the ecosystem. Most um a number of public biotech companies have less than 18 months of cash on hand, and so if you cannot raise money and you cannot sell things, your company will die, and that will happen very quickly.
▶ 0:12:59Thank you. Uh I'd like to address this to all four of you. Um as you know, in the budget recently signed into law uh by the president, uh increased funding for NIH. What can Congress do in the short term, in the next 2 years, to address clinical trial migration and early-stage drug development migration to China?
▶ 0:13:27In the next 2 years, what can Congress do? Very simply, I think the best thing we could possibly do is allow the FDA to get to first-in-human clinical data as quickly as possible, such that our biotech companies can compete with China on clinical trial Yep.
▶ 0:13:47Um between coupling and and incentivizing uh small-scale manufacturing, the FDA can also work with companies to to find um correct regulations for the stage at which a drug is being tested, manufacturing requirements on those drugs, especially for complex new medicines. Um and in addition, move um like I I also laid out in my written testimony, we need to move faster to first-in-human clinical data.
▶ 0:14:12I think that China today is uh is the best at running from idea to dosing a first-in-human and getting that critical early-stage uh first-in-human data. Um they don't aspire to be the greatest country at running first-in-human clinical data, and I think it's a it's on everyone here on this committee to to recognize that.
▶ 0:14:37In the in the case of generic manufacturing, I don't I don't know if we have a lot to offer in this particular thing, but one thing I would mention that was very favorable is recently the commissioner's voucher was very uh instrumental in us bringing some products back to the market quickly. And I think anything that would have moved products closer to approval such as a rapid review of data, would be beneficial to the industry.
▶ 0:15:06I'll just um you know, echo here what um uh Patrick uh Cashman just said in that this is, you know, the drug development uh piece of it is really for the other witnesses to offer. I have plenty of recommendations of what Congress could do in the next 2 years on generic drug supply chains, but I I think that's a different question. Thank you. And if I could just end by asking you a yes or no question.
▶ 0:15:30Um should Congress require the FDA to inspect and verify foreign trial data before accepting it? And what would that do to the economics of offshoring early trials, if so? But yes or no question. Do Do you want a response to the other piece of your question?
▶ 0:15:55I want to be sensitive to the time, but yes, uh if you just and then anyone who wants to add to it, but go ahead. I I think one piece about trying to change the economics is understanding two different things, right? Um so, there is the cost of first-in-human data and how that inflects the value of a given experimental asset, right? Um and then there is the use of that data in a future trial. The reason first-in-human data is so important is because it is the most hard to raise money for an idea to test.
▶ 0:16:24Changing those economics in terms of like making someone redo a phase one trial in the United States does not appreciably solve the problem if it is so radically cheaper to get that data in another country, increase your value, the the economics that follow behind that will will mostly remain the same.
▶ 0:16:44So, I'll answer yes, but the uh the second part of the question is a little bit more complex in that um I don't think it'll necessarily immediately drop the or uh better level the playing field of costs, because there's two things we have to think about here. One is data submitted to the FDA for uh and that of course will be important. But the other part is that when investors are looking at data, it doesn't necessarily mean it has to be FDA-reviewable.
▶ 0:17:10Frequently, it just has to be, you know, if you tested a drug in China and it worked on 30 people, an investor will put money behind it. They're happy to put a tremendous amount of money behind that to redo those studies in the US. So, it's really the time to information that's really the tricky part here. Uh and so, that's why it's just not immediately going to have an effect on costs. Uh the answer is yes.
▶ 0:17:35I think anytime as as we see with manufacturing and the FDA, it needs the resources, adequate resources, to do inspections, whether it's for manufacturing or for clinical Again, difficult for me to weigh in exactly. Um those are really good great questions. There's a lot of always a lot of considerations, and but then potential unintended consequences. So, I I can't really weigh in. I defer to my uh expert uh experts on this topic.
▶ 0:18:03Thank you very much, and after I have violated the 5-minute rule, I'll now recognize the ranking member. Thank you, Mr. Chair. Mr. Cashman, I found your uh testimony and your work uh very interesting. Appreciate what you're doing to try to bring amoxicillin production back to the US. My understanding from your testimony is that you don't think tariffs are going to be enough.
▶ 0:18:28And the way I understood your testimony is that we're not producing the key starting materials here. We're not producing the APIs here. They're sole source, they're being produced in China. So, even if we tariff them, we're still dependent on them, and we're basically paying them uh a higher amount because of the tariff, but it's not doing anything to bring the actual production here. Is that an accurate read of your testimony? Yes, uh Ranking Member Comer.
▶ 0:18:59That is ac- That is accurate. In fact, uh you know, there's so much The The Chinese government doesn't look at this as a profitable enterprise. They don't They don't look at it as a business enterprise. That I believe they look at it as a strategic asset that they love they can use to leverage against us. So, the cost of production is irrelevant to them. They're going to drive They'll work to drive anybody out of business if they have to.
▶ 0:19:21And that's what they've done in the past, and we've seen that in many, many different models across many So, it seems to me, while I'm a supporter of strategic tariffs to make sure that China isn't dumping, that certainly they're not dumping steel or things that we produce. In cases where we have lacked industrial capability, uh tariffs alone are not going to solve the issue.
▶ 0:19:44And what we need to do, in my view, is what we've done from the time of Alexander Hamilton, which is uh actually have an industrial policy in areas that are of critical national security and critical economic security. It seems to me that key starting materials and active pharmaceutical ingredients are one of those areas.
▶ 0:20:05How much do you think it would cost the United States if we were to have federal procurement agreements uh, and uh, help finance production for key starting materials uh, and for uh, the uh, APIs for something like amoxicillin? I mean, it seems to me it wouldn't be that big of an investment that we could uh, bring these industries back uh, on shore.
▶ 0:20:31In the overall scheme of things, uh, Ranking Member Comer and I, it would be a very modest investment. Um, when when I look at the cost of our medications versus versus competitors from India and China, we're literally a few cents a dose difference from those costs. Um, when we look at the cost of API from China compared to other sources, the difference can be as much as 40 to 20 to 40%.
▶ 0:20:57So, it's a significant cost But, to have an investment here in the United States to produce API uh, would would be, you know, a relatively modest investment compared to many things we spend money on. And that would be the biggest game-changer, right?
▶ 0:21:12I mean, if we had kind of a chip select like we did for semiconductors, if we did that for key starting materials and API, and if we had federal procurement for it, uh, like the president in his first term did with the Operation Warp Speed where we had federal procurement uh, for the vaccines. I mean, that kind of policy, in your view, could get a lot of the key starting material and API back into the United States? Uh, yes, Ranking Member Comer and I, believe that would be very helpful.
▶ 0:21:40But, we also have to keep in mind that the Chinese will continue to drive prices down. So, there needs to be mechanisms to control or restrict the market access of some of those products.
▶ 0:21:53I'm all for I'm I'm all for having restrictive tariffs on them. I just want to make sure we're making stuff, too. Because if we we don't make the stuff, we can tariff it all we want. There's no factory. There's no production. Uh, and uh, it seems to me that the key here is to to actually get the production. You said you're about 8% of the amoxicillin market, right? And I mean, and your biggest choke point is these materials, correct?
▶ 0:22:17Not getting the If we had more of the key starting materials and the API here, you'd be able to expand dramatically, correct? Ad- additional key uh, key starting materials and API would be helpful for us, yes, of course. But, we're also competing with very low-cost drugs coming from India and China. And we have to compete with those with those products. And it seems to me a combination of strategic tariffs and smart industrial policies is what we need.
▶ 0:22:44And uh, Chairman Molinari, if there's a a- a- a desire to have some kind of collaboration on this kind of a policy, I'd I'd welcome working on that. Thank you. And uh, next I'll go to Representative Dunn. Thank you very much, Mr. Chairman. I I I want to start with uh, something I know about first hand, uh, not from a briefing, but from 35 years of practice of medicine.
▶ 0:23:14Uh, when when a patient's on the table and you reach for a drug, you need that drug to be there. Uh, you need to know where it came from. You need to know that it works. And and there's no time for supply chain discussions at that point when somebody's bleeding out. Uh, the clinical reality is exactly what this hearing is about. Uh, except the patient on the table is now the United States of America. We've handed the Chinese Communist Party the instrument trade.
▶ 0:23:43And uh, you know, I've spent much of my career in two institutions, medicine and the Army, institutions that take readiness seriously. You don't wait until a crisis to build your supply chain. You harden it in advance. And you know your vulnerabilities. And um, you know, you never let a strategic adversary control your logistics. Uh, on all three counts, I think we have failed in pharmaceuticals in America. And this committee has an obligation to say so plainly.
▶ 0:24:13Here are some of the facts that we have stumbled upon it in the last few years, uh, Mr. Chairman. About 90% of the drugs Americans take are generics. Uh, the active pharmaceutical agreements and those ingredients in those drugs, the molecules that actually do the work, if you will, are overwhelmingly manufactured in or dependent upon China. And for generic antibiotics, roughly 90% of API supply originates in or flows through Chinese manufacturing.
▶ 0:24:44For heparin, a blood thinner I have frequently used over the years, essentially all global processing happens in China. All of it. All of it. That's not a trade policy problem. That's a medical readiness problem. And it's a national security problem. And uh, in in a conflict scenario or even a targeted export restriction, Americans are going to die because of this.
▶ 0:25:09Uh, I want this committee to understand this hearing is not about the supply chain uh, vulnerabilities we've already accepted. As serious those are, it's about where China's going next. China's executing a deliberate, patient strategy to move up the pharmaceutical value chain. And in 2020, Chinese communists were involved in the virtually 0% in 2020 of major global drug licensing deals.
▶ 0:25:38Today, they're involved in nearly In 2014, China ran fewer than 2,000 clinical trials. In '23, they ran over As a physician knows how long it takes to build genuine clinical trial infrastructure, those numbers don't happen by accident. They happen by design. And that's how the CCP is working.
▶ 0:26:01And they've done this with rare earth, solar energy batteries, electric vehicles, all these critical sectors that they dominate and they and they subsidize. And they move up the supply chain until they own the whole stack of the supply chain. China's goal is not to be a supplier to our pharma companies. Their goal is to replace our pharma companies. And based on the trajectory we're on, they're well-positioned to do just exactly that.
▶ 0:26:31As someone who's spent his career in both medicine and in military service, I can tell you this kind of does not announce itself until it's too Uh, we don't find out we have a supply chain problem when everything is fine. We find out when we're in a crisis and the shelves are empty. And I'm grateful to you, Mr. Chairman, for holding this this committee. Doctor uh, Vashintz- Vashintza. Sorry about that. Uh, uh, it's good to see you again. Thank you for your leadership in this space.
▶ 0:27:00When we met in December, we talked about uh, this very issue. When I read your reports, you highlighted many of the EPA exposure API exposure statistics are incredibly inconsistent, with some being reporting 8%, some 90%. So, how do we actually know you know, how exposed we are in terms of API supply? Thank you for this question. Um, y- you're right.
▶ 0:27:27It's it's almost pick your number on our exposure to China when it comes to API. Some um, sources will say it's 8% and some will say it's 90%. Um, I would say it's probably closer to 25%. And and and one reason is, I mean, it's really important to understand that it varies by therapeutic class. We definitely have significantly higher exposure for antibiotics than for a lot of other drugs.
▶ 0:27:52But, I think some of this is that those who are looking at these data are either mischaracterizing which part of the supply chain we're talking about. They're thinking about API as anything that precedes it as well. Um, but that's a different uh, vulnerability and different policy solutions um, that that are coming in. So, some of it is that. Some of it is misinterpreting um, India's reliance on China. We can really uh, very easily see how much they import from China. We don't see how much they make in terms of API.
▶ 0:28:23So, a lot of the mischaracterizations come from that. What I will say, even 25% is very concerning, especially that it's in other settings as well. Like in antibiotics, it's significantly higher. And what's also really important is that they're moving strongly in that direction. So, back to what Congress could do.
▶ 0:28:41I wanted to flag something really interesting about tariffs and how tariffs are structured and and the fact that India relies increasingly on Chinese uh, inputs, including API, because China's moving into API and really sort of growing the footprint. The way a tariff works for prescription drugs, almost almost always, it is the the finished dosage form manufacturer will pay it based on where the API comes from.
▶ 0:29:08So, an Indian manufacturer using Chinese API will actually pay the Chinese tariff. One reason why I was really concerned about tariffs on on India is that India is trying to de-risk their own supply chains. And if we were to impose a tariff on them, we would probably, you know, they would either not have enough of a margin and they would leave the market or they might want to go for the cheapest and go towards China.
▶ 0:29:35And we were basically potentially going to increase our exposure to China by pushing Indian manufacturers there. Where a tariff is great, and this is where I actually would would recommend uh, sending a much stronger signal to manufacturers in India. If you use Chinese API, you will pay a tariff.
▶ 0:29:53So, putting a tariff on Chinese, taking the existing 10% tariff on Chinese manufacturers, which is not very high, increasing it, and then uh and then putting this in place in statute would send a much stronger signal to Indian manufacturers not to use um Chinese API. So, this is an opportunity for Congress to actually be very strategic about tariffs. Well, we've exceeded my time, Mr. Chairman.
▶ 0:30:18I I want to thank you for your for your tolerance, and I obviously we can talk about this all day long. You know, you and I have, I think, yeah. I know you appreciate this given your Thank you very much. You're back. Thank you. Representative Brown. Thank you, Mr. Chairman, and thank you to our witnesses for being here today.
▶ 0:30:39Today's hearing is about something very real for the people I represent, um whether they can reliably and affordably access the medicines they depend on, and whether we as a nation are building that capacity here at home or outsourcing it In Ohio's 11th District, we have some of the best health care systems and research institutions in the country, from the Cleveland Clinic and MetroHealth to University Hospitals and Case Western Reserve, alongside a workforce with a long history in advanced manufacturing.
▶ 0:31:10So, when we talk about pharmaceutical supply chains, we're not just talking about global competition. We're talking about whether communities like the ones I represent are positioned to produce, innovate, and deliver the medicines we all rely on.
▶ 0:31:25Right now, we know that too much of the upstream supply chain, key ingredients and materials that go into essential drugs, is connect is concentrated in And at the same time, China is moving aggressively into drug development and clinical research. Those developments create both short-term vulnerabilities and access to components and long-term risk to American leadership in innovation and production. For Northeast Ohio, this is also about economic opportunity.
▶ 0:31:56We have the institutions, the talent, and the infrastructure to be part of the solution, but only if federal policy is aligned to support domestic manufacturing, strengthen our research ecosystem, and build resilient supply chains with trusted partners. Because at the end of the day, this is about more than competition.
▶ 0:32:18It's about health, health security, economic security, and making sure American communities are not lost or left behind. So, Dr. Voloshynska, you've highlighted that our greatest vulnerabilities are often upstream, such as the level of key starting materials or active ingredients.
▶ 0:32:38What are the top targeted actions we should take right now to reduce our dependence on China for essential medicine essential medicines that patients rely on every day? Thank you so much for this question.
▶ 0:32:54for essential medicines, uh the ones that we're likely to compete with China for in a conflict, and frankly with any other country, I really do think that full onshoring of those medicines, including figuring out ways to make the key starting materials here, either chemically or using synthetic biology, is the way to to do this. Um this is again not going to happen on its own. There there needs to be funding for this.
▶ 0:33:21And if you think about um you know, we're thinking about national security, and you know, it's it's good to put it in the context of how much DOD spends on, let's say, a fighter jet. It might be close to a hundred million dollars per fighter jet. The office in the office of industrial base um uh in in ASPIRE, over since I think the last 6 years, their budget was a hundred and eighty-eight million dollars.
▶ 0:33:48They're supposed to be the ones helping to build that infrastructure in the US. So, we're talking about two three jets over a 6 years. So, you know, again, this is a big call to Congress. Um uh Chair Moolenaar, this is this is a way for you Congress to step in, and you know, the money needs to to come with that. But, that's is actually those medicines are actually a very small slice of what we take.
▶ 0:34:12If you were to take the ASPIRE 86 top essential medicines, I would be surprised if they ever made even made up 1% of the patients that we that touched uh 1% of the patients that um that are in the US. We really need to be thinking strategically about what we're going to do about everything else. Statins, SSRIs, um blood pressure medications. This is where working with allies, I think, is really critical.
▶ 0:34:39In an ideal world, we would onshore everything, but again, where's the money coming from? So, we need to think about how can we work with India to have them de-risk themselves, so that we can continue to have those medicines, which is, you know, if you think about your constituents, they're probably more likely to be on a statin than end up in an emergency room and need a critical medicine. So, we need to be thinking about both. Thank you. And Mr.
▶ 0:35:05Cashman, from your perspective as a domestic manufacturer, we know the US has the capacity to produce more here, but we're not scaling at the level we need. In a region like mine, Northeast Ohio, one that has strong manufacturing base, skilled workforce, and proximity to major health care systems, what is the biggest barrier to bringing that production online? Probably the biggest barrier is is getting the right equipment and people trained and prepared to scale up manufacturing quickly.
▶ 0:35:36Um obviously, once you have demand, we can scale up very quickly at our facility. We have plenty of production We have a lot of equipment. Some of that equipment needs to be up updated and upgraded, so we can produce more And then we need to find good qualified people and train them to manufacture medications. Thank you so much. And if Mr. Chairman, you'll allow me to close.
▶ 0:35:59Um ultimately, this should be about making sure Americans can count on safe, affordable medicines that bring communities like Northeast Ohio um be a part of that building of the future. If we get this right, we can strengthen our supply chains, support American jobs, and maintain our leadership in innovation. And with that, I look forward to continuing to work with my colleagues on solutions that deliver for both our constituents and our country. I yield back. Thank you. Representative Newhouse. Thank you, Mr. Chairman and Mr.
▶ 0:36:29Ranking Member for having this important hearing, and also thanks to our guests here for your important testimony. It's a very important topic, and something that deals with not only our uh economic security, but also national security issues and the general health and well-being of our American citizens. um I want to start with Mr. Cashman, if I could. Um thank you for coming, Mr. Cashman. I appreciate your testimony.
▶ 0:36:57Uh and you talked about the amoxicillin shortage back in '22 and '23. So, if if you could, I'd like you to share a little bit more about what you went through that during that period, and but also uh think tell help us understand what the federal government could be doing to support manufacturers to help prevent shortages, and if they do occur, if shortages do occur, what thing kinds of things should
▶ 0:37:27we be thinking about to help mitigate those impacts? Thank you, Congressman. Excellent question. Uh in 2022-23, we were just getting back restarting our facility. So, we were starting to ramp up production, scaling up, hiring people, bringing the production back And unfortunately, we weren't fully fully ready to deal with a shortage like that. We did the best we could, and we ran as hard as we could to do that.
▶ 0:37:56And we were able to provide quite a bit of medication to people. Um what needs to be done? Uh I think there needs to be additional investment in equipment, in bringing people in training people, and bringing people online to train more uh to have higher levels of production. Um I think one thing that's very important to consider for this group is the federal government buys a lot of medication, and that can help drive US domestic manufacturing.
▶ 0:38:25Um the small business set-aside paradox is really something that is very quickly easy easily uh remedied. Um it requires no appropriations, no regulatory overs overhaul, no international negotiation. It just requires a narrow clarification that national conser security considerations can override set-aside classifications when a genuine domestic manufacturer of a critical medication is excluded from competition.
▶ 0:38:55so, just getting using that demand as a lever to help um generate and drive domestic manufacturing can be very helpful to domestic manufacturing. I appreciate that. Thank you. Can I chime in on the amoxicillin thing?
▶ 0:39:09Just real quickly. Sure. Uh just really quickly. So, amoxicillin was a really interesting shortage, and was really driven by a demand increase. And this is a great example of us competing with other countries, and us potentially losing because of how our system is structured. We pay a lot less for generics than other countries do. We pay a lot more for brands, but a lot less for generics.
▶ 0:39:33And what was really interesting is that for manufacturers to shift more of their sales to the United States, basically, they were getting paid more in Europe for these drugs, but if they were to sell them here at anything like the prices that they were getting somewhere else, they would have to pay Medicaid inflation rebates. So, we were sort of this in this very uncomfortable position manufacturers were to sort of how do you play here when somebody else outside of the United States was paying them more. And I'm not talking about China, I'm talking about Europe.
▶ 0:40:02So, you know, what is if you look at my testimony, I do and I have written in the past that we need to be also thinking about some of the payment mechanisms and potentially making adjustments there. Interesting. Thank Um Dr. Jimenez, in your written testimony you talked about the fact that your firm does not directly work with Chinese biotech industry.
▶ 0:40:25could you share a little bit more about your decision to not invest in Chinese biotech and also uh you mentioned that American firms with investments in Chinese biopharmaceuticals are often fearful of testifying or speaking publicly. Uh what have you heard firsthand from your colleagues in the industry uh particular particularly with those that have invested in China?
▶ 0:40:54uh despite the fact that we're saying that it's very uh they have great data and and it's uh uh much cheaper, you have to have boots on the ground in China to be able to do this correctly. Need to have people who go in, who speak the language, who you trust. You have to be able to diligence their documents.
▶ 0:41:08You need to have translators to read Chinese documents and it's actually pretty significant investment to be able to go there and uh truly diligence any kind of products So, uh we've seen this happen with farmers who set up joint ventures uh decade ago and then we've seen this with emerging bio life sciences groups who have spent uh a lot of resources and hired out teams local to China and that wasn't an investment we were willing to make.
▶ 0:41:35We've been offered and certainly had board level discussions with our companies to set up JVs in China. Uh our concerns there were basically that you're giving up your IP uh and you will end up seeing a copycat there. So, from a risk benefit decision, we decided not to. I see. Um Mr. Chairman, just going to follow your lead and going over time and I appreciate I yield back. Thank you. Representative Takuda. Thank you, Mr. Chair.
▶ 0:42:01You know, I also serve on the Armed Services Committee and I'm very concerned about the military's dependence um on Chinese supply chains for critical life-saving pharmaceuticals. Last year, uh Dr. Dunn and I, if you were here, we were trying to um include in the NDA a provision that the department had to develop and implement a plan to de-risk battlefield medicine specifically from China. Unfortunately, it was dropped in conference, so it did not pass through.
▶ 0:42:29I'm going ahead and doing another NDA amendment this year to specifically ask them to acquire penicillin and amoxicillin um as well as five other key battlefield drugs uh that we would completely decouple from China, but also to look at stockpiling at least amoxicillin and penicillin plus 10 additional drugs, some of which could component parts come from China. Again, just so that we have it uh there in our reserves because I think uh Dr.
▶ 0:42:56Wozinski to your Wozinska to your point, it's not just an essential list, it is actually the ones that could have the most harm if we were not able to get it. So, things like amoxicillin, uh blood clots, you know, blood clotting medication, those types of things. And so, uh I was very disappointed that the military came back actually and said that they could not support and they would oppose my specific amendment feeling that they were too small in terms of being a drug uh purchaser within the government.
▶ 0:43:25This should be instead a whole of government approach and they felt uh that this was um something that was too small for them to do. I'm not sure Dr. Wozinska, in your opinion, is the military too small of a buyer to make a difference when we are again trying to um make sure that the drugs that we have in our inventory and in our stockpile are those that have the most life-saving importance. So, thank thank you for this question. Um I think the role of DOD differs somewhat.
▶ 0:43:55I think there's another Sorry. Uh the role of DOD um differs, I think, and whether they're too large or too small depends on what you're looking what you're considering. So, for example, I think DOD is in a perfect position to be um doing research to understand uh really where the vulnerabilities are because they rely on exactly the same supply chains as the You know, granted, I I full disclosure, I'm actually a beneficiary of some of the DOD research and some of my testimony is based on this, but
▶ 0:44:25it benefits us broadly. So, here it's not they aren't too small, they're perfect for this. They do have tools um to you know, they have incredible sort of flexibility with procurement um and they also have a lot more money. I can't tell you how to think about their role uh in terms of you know, could they help build civilian infrastructure that would benefit civilians as well? That's another broader thing. Um where they are limited is as a buyer, they do have only 2% of the market.
▶ 0:44:56So, frequently you will say if only the you know, DOD and VA were to um start signing long-term contracts, it would be transformational. I think it could be transformational for some small firms and it could be helpful, but here I actually do agree that they themselves as a buyer are too small, but they do you know, as a in in other roles, they have a really important role to play.
▶ 0:45:18But essentially as a small buyer, they could show the pathway for the rest of the whole of government to be able to secure some of these life-saving drugs as you mentioned. If we have a stratified list that shows the top tier priority drugs um that really were necessary to save lives and have the most impact, it could also be a pathway to show how other departments and agencies should also follow in that decoupling from China.
▶ 0:45:42That That's right, but it would have to be followed by Congress because to change the incentives for all the other buyers that are not the you know, that that that are not there, you know, getting Medicare to do this. Senate Finance has a proposal for how to get hospitals to be uh taking uh this uh you know, to to be weighing this kind of resilience much more. So, yes, as a first step, absolutely agree, but Congress really does need to change the incentives outside of VA and DOD for this to really be transformational.
▶ 0:46:12Thank you. I have just two more quick questions. Um the second one being, are we maximizing our role in forums like the G7 to create a create and execute, quite frankly, a unified pharmaceutical strategy? Because what we're talking about to your point being too small, America can't do this by itself and we've got other allied countries, partners out there who are trying to also decouple the risk from China. Do you think that the G7 actually needs a unified strategy and execution plan so we can all work together to be able to decouple this risk?
▶ 0:46:43So, I can't speak to G7 specifically, but I absolutely agree with you that we need to be working with our allies. The example that I gave um in my testimony without naming the company, there is a manufacturer in Copenhagen who is shutting down their uh manufacturing facility for antibiotics. This is a great opportunity for us to work with Europeans who are little bit in sort of analysis paralysis mode themselves. They're far far behind sort of where India has been leaning in.
▶ 0:47:11Well, they have actually put money and policies in place, but those are the kinds of opportunities for us to to engage and and work with them together. I completely agree. Thank you. That's something I've been pushing in this particular forum that the G7 and other forums like that need to be um more of a tip of a spear in terms of how collectively we are going to work towards common threats like China.
▶ 0:47:33And I would just end with this rhetorical question that I've asked many times in this uh committee, whether or not America's ever going to get over its love for buying cheap stuff. And um Ms. Wozinski, you you mentioned supply reliability contracts. It's about us paying more, but understanding it's not about cheaper, it's more secure. And I think that is a very applicable to the discussion today when we talk about pharmaceuticals and how we de-risk and decouple ourselves from China.
▶ 0:48:00We have to get over this this cheap obsession and look at what is going to make us more secure as a country and taking care of our people. Thank you, Mr. Chair. I yield back. Thank you. Representative LaHood. Well, thank you, Mr. Chairman. Thanks for having this important hearing today. I want to welcome all of our witnesses today. Thank you for your testimony and the work you do in this space. Uh just as a point of personal privilege, I want to welcome uh Dr.
▶ 0:48:26Jake Beacraft who's from uh Metamora, Illinois uh in my district right outside of Peoria. Uh we're very proud uh Jake, Dr. Beacraft, on what you've accomplished uh at such a young age and your successes and have not forgotten about where you came from. You're still a Metamora Redbird uh and we're uh we're proud of that. Also a graduate of the University of Illinois in Champaign-Urbana. So, uh welcome. Glad to have you here today.
▶ 0:48:52Um as everybody knows, the title of today's hearing uh from lab to medicine cabinet, how China is cornering the market on our medicines uh is an important topic. And this committee has been focused on how do we win the strategic competition against China? And I don't think there's uh a more important space to do that than uh when it comes to pharmaceuticals or to medicine and we've heard a lot about that here today.
▶ 0:49:18China's rapid advancements in biotechnology are increasingly challenging Americans' leadership in developing cutting-edge life-saving pharmaceuticals. As we know, it takes 10 to 15 years and a minimum of $2 billion to turn a promising idea into a medicine that reaches pharmacy shelves and patients' homes.
▶ 0:49:39With costs for clinical trials in China costing up to 30% less than the United States, combined with less regulatory hurdles and faster patent recruitment, the US risks losing new investments while also creating potential health and national security concerns along with supply chain concerns.
▶ 0:49:59It's essential that the United States maintains its position as a global leader in the pharmaceutical innovation and recognizes that China's climb up the value chain could disrupt existing trade dynamics. Inadvertently shifting innovation overseas weakens our domestic biotech ecosystem at a time when strategic competition is obviously intensifying.
▶ 0:50:25And so I I look forward um at this hearing from hearing more from our witnesses on how we can reinforce US leadership in biomedicine innovation while protecting both patients and our long-term economic and national security interests. Um Dr.
▶ 0:50:40Beacraft, as the CEO and co-founder of Strand Therapeutics, you've led the development for the world's first synthetic uh biology programming program language for the M N uh N Your work underscores that life-changing innovation begins in early-stage R&D where clinical trials are often the make-or-break moment for getting new treatments to patients.
▶ 0:51:08Question for you, how is the US currently underutilizing our clinical infrastructure and decreasing clinical trial availability for patients who need treatments the Um thank you, Congressman, and uh thank you for the introduction or the the welcoming as well.
▶ 0:51:26I think that um so so maybe it's it's easy to look at it through the perspective of an early-stage cash-strapped biotechnology company who like uh like my colleague here uh has said they've made a commitment to not work in China. As a biotechnology company, when you make the commitment to not do the clinical trial in China, you you are taking on a number of of costs and time overruns, which a lot of times you don't have, right?
▶ 0:51:50It It takes longer and it's much more expensive to run a first-in-human trial here in the United United States, partially because of what I said in my opening statements and in my written testimony around the the hurdles it takes to run these INDs uh and the expense and time at which it takes them to run here in the United If we're able to simplify that process, if we're able to shorten it um and enable to uh make it much faster and much cheaper here in the United States through some of the policy pieces I um
▶ 0:52:20I believe that we can actually increase the amount of sites in the United States that will actually run clinical trials. So if we look at it through my or my board's perspective for for instance, when we're running a clinical trial, uh we know we're in for an IND around 20 to 25 uh of expense. Um that's just regulatory and and testing to to get the privilege to ask the FDA in order to run a clinical trial. That's before clinical trial expenses come into the picture.
▶ 0:52:48Once you're in that sort of a spend uh environment, of course, your your board, your investors, everyone behind you is going to pressure you, um you know, if we're going to bother running the trial here in the United States, if we're going to bother spending that much money, we better go to the best places that we possibly can. And so you see a clustering of clinical trials at these these high-end centers with who who are amazing, of course, but um we have all of these great hospitals spread throughout the United States, right?
▶ 0:53:16MD Anderson in Houston is is incredible, but OSF in Central Illinois and in Peoria is an incredible facility with incredible infrastructure, but no one runs first-in-human trials there. And And why? Because there's a sunk cost fallacy that a lot of companies do. Once you invest all that money to run those trials, you of course want to go to the Sloan Ketterings of the world. Your board wants you to go to the most famous person you can get to in the United States.
▶ 0:53:41If you make that an easier hurdle, if you make it a faster and cheaper amount, you not only open up the capital pools to power that, but you open up the types and places where we will run clinical trials. You create a private market incentive for those clinical trial sites to actually build the infrastructure to run first-in-human clinical trials, and you increase access to brand new, potentially life-saving medicines to patients across rural America that currently do not have any access except to get on a plane and spend
▶ 0:54:11what could be the last 3 months of their life in a city they've never been to before just to have the privilege of of a shot to extend their life. And that, I think, is unacceptable for Well said. Thank you. I yield back. Thank you, Representative Castor. Well, thank you, Mr. Chairman, for calling this hearing, and thank you to our witnesses for sharing your expertise uh how we de-risk the US supply chain, the drug supply, uh build greater resilience uh from China. Uh Dr.
▶ 0:54:41Wasinska, you you were very direct in your recommendations. Thank you very much. You uh stated the US cannot and should not try to buy its way out of every vulnerability in drug supply in the drug supply chain, instead focus on a realistic de-risking strategy to reduce the most serious China-related risks to American patients.
▶ 0:55:03And you started your testimony you gave us four four uh strategic things to think about, and your first was focusing on the chemical precursors, the the reagents, the solvents. They differ across drugs.
▶ 0:55:18Can you uh summarize for us what good is happening in the US government right now when it comes to to that recommendation, and what would you go a little deeper on your recommendations on what we should focus So um there are some efforts um to to engage. Again, I mentioned um Esper's budget. They are leaning in, but at last I remember it was $30 million that was appropriated uh assigned to to that effort.
▶ 0:55:46So again, it's it's uh not uh not enough. Uh there are efforts, there are domestic manufacturers that are trying to um de-risk their supply chains uh fully. Um we're actually lucky on the um antibiotic side. It's somewhat easier to fully de-risk it from China because the products um the API is still made in Europe.
▶ 0:56:11Uh so I I believe um Patrick is is actually procuring his product from European facilities. So there great opportunities. The first steps are actually not chemically synthesized, they're fermented. So we have there's a lot of action going on over there. We are thinking about stockpiling API to buy us time in case of a crisis. Um there are efforts um actually going back to NIH.
▶ 0:56:36There is uh there are some researchers in um Stanford um that um have developed a way to synthesize um to to create to basically grow API uh in yeast. So entirely avoiding chemical Um and now they are licensing it to a number of manufacturers and and and uh are working with one of them to actually entirely sidestep chemical synthesis.
▶ 0:57:03So there are pockets um that are really important, really great, but not at the scale that we would want. And again, this is where we need Congress to step And FDA has an indispensable role here as well, and I know uh at the Energy and Commerce Committee, where I also serve, we we're kind of debating uh the future of the FDA. They they've done critical work in predicting and responding to shortages, overall shortages, in the past.
▶ 0:57:31Uh but they have very limited authorities, and uh access to certain manufacturing data is very very opaque. You um you previously worked as the director of economics at FDA.
▶ 0:57:46And one of the things I look at the current administration that I think is so harmful when it comes to everything that we want to do and invest in, unfortunately, when you look at FDA to help better arm them uh and help address shortages, is that the administration eliminated over 3,500 positions at the FDA. That's 15 to 20% of the overall workforce.
▶ 0:58:11What impact will that have on America's ability to tackle some of these problems? So I am actually not aware of how the um the extent to which uh the cuts actually affected the staff at the drug shortage uh team and those that support it. What I can say where FDA is very limited and has been limited for a really long time is on manufacturing quality oversight.
▶ 0:58:39Um and you know, I I something that I would like to clarify, I am concerned about the manufacturing quality of products that are coming from India. And but when I suggest that we should work with India, I don't necessarily mean that we somehow swiped us under the rug. Um I do think that there other ways that we can um uh pursue that to support FDA. It's not just about um giving FDA more staff, although this is really important so they can do the inspections.
▶ 0:59:09Um you know, FDA is sort of like a traffic cop uh trying to enforce speed limits, and you know, they can only be in so many places, and they're also visible on the freeway a mile away. So we need to sort of think differently about how we um support FDA in this effort, and I have actually um last October proposed um a solution to this that would shift a lot more accountability towards Indian manufacturers when it comes to manufacturing quality, really supporting FDA
▶ 0:59:39and allowing FDA to be much more efficient in the work that they do. And I'm happy to share that proposal. Good. I'll look forward to that. Thank you very much. I yield back. Thank you, Representative Hinson. Thank you, Mr. Chairman. Um, good morning to our witnesses. Thank you so much for being here. Uh, it was just last summer, I think, in this very room, we actually had a round table where this committee heard directly from industry professionals about some of the risks to active pharmaceutical ingredients, um, in the Chinese supply chain.
▶ 1:00:06And we know that in the the broader public health sphere, of course, that China has invested billions of dollars into their own manufacturing capabilities. They are subsidizing, um, at government expense, advancing that research, um, and countering China with our domestic base is not only important to, um, protect American patients, but it's also important to our broader economy. We've heard about the risks of if this all bottoms out and it all goes over there, what that will do to, um, our our domestic workforce.
▶ 1:00:31So, this is about preserving our national security interests, as well as our, uh, public health, uh, pipeline for every single American. So, um, Mr. Jimenez, thank you so much for being here today and kind of giving your, uh, perspective on the the venture capital and the business side of how this all inter- intersects. And we know that, um, consistent improvement in the, um, coordination across public and private sectors is absolutely critical to making sure that we can maintain, um, a resilient posture in the pharmaceutical manufacturing and biotech space.
▶ 1:01:01So, uh, we know not one sector can do it alone. Clearly, we're hearing today about how interconnected they are. So, um, my question to you today is what does, um, in your mind, going forward, a successful partnership look like between the the private sector and then state, local, federal partners to make sure that we are, um, not only amplifying production for, uh, critical APIs, but also making sure we're not seeding that, uh, manufacturing ability, as well.
▶ 1:01:27So, with respect to manufacturing, I'll I'll kind of cede here who spent a lot more time thinking directly about that. that said, um, the the best things that we can do is strengthen the relationship between the FDA and kind of our research communities right now, as well as our, uh, clinical, research facilities that are generally funded by government, um, grants.
▶ 1:01:54And by strengthening the relationship, what is your, um, idea there on how that needs to improve? I mean, you talk about this the time, right? I heard you mention, let's get to 5 years, which would be great. Um, but what else do you think needs to to happen to improve that relationship? So, I think the FDA being, uh, much more open to getting to first-in-human clinical data is incredibly important. And so, we can follow the examples, not just of China, but actually through Australia and their CTM programs that allow people to get into clinical data first-in-human data quickly.
▶ 1:02:24I think we can do that also by, uh, as Jake has alluded to, um, allowing investigator-initiated trials, which is really the true mechanism that's working within China right now. Investigator-initiated trials are when clinical research institutions run trials and sponsor those trials, as opposed to private companies. And what that does is it allows, uh, a trial sponsor, who is generally going to be a well-trained expert in the field, to run a clinical trial and gather clinical data.
▶ 1:02:54Um, what has happened in China is that is the actual mechanism that people are running these fast trials. And that is not a mechanism that we've really fully elaborated on in the United States. It's done, but it's not done to the extent. And so, allowing our NIH and our granting agencies into clinical research facilities, and also giving the FDA the authority to accept data from there and move into fast clinical trials there, is one thing that the government could be doing that'd be fantastic. Uh, and then we'll take care of the rest.
▶ 1:03:24The private sector can fund in this this data. And do you think that actually saves money in the long run, as well? I mean, if that collaboration is able to happen, not only it's about speed, uh, truly like a warp speed operation, right? But do you do you think that will, uh, make its way down to the consumer on on saving money on these drug prices, as well? Oh, absolutely. I think that, um, the best way we've ever seen prices go down is with more competition. And more competition comes from the greater ability for many companies to test these things out and bring drugs to market.
▶ 1:03:52We often cite this $1 to $3 to get a drug to approval. If we drop that to 5 years, that number necessarily has to go down, and investment can be much more into many more high-risk activities, uh, that would be beneficial to more Americans. Yeah, and I see you're nodding your head. Um, do you have anything to add there? Obviously, I mean, driving down prices is one thing, but speed is another, and and competition is another. So, I I think you agree with all those things. Uh, I I I do. And if if I can just say, there's there's sort of two different pieces of of calculus to to think about here.
▶ 1:04:22One is, of course, the the the time and and the money. Um, when any whenever anyone makes an investment, whether it's a company like mine, an investment firm like Francisco's, um, they're thinking about risk-reward, right? And if the risk is exorbitantly high because of the time and cost it takes to to to develop a medicine, um, then the either the reward needs to be exceptionally large, or you need to decrease the risk in another sort of way.
▶ 1:04:45And that's where we get with this high cost and long time of development, we get a lot of new medications that are being tested that are next logical steps forward, instead of radical steps forward, right? Our goal with drug development should be to keep patients out of the hospital. That is [snorts] where we will actually find, regardless of drug pricing, we will find the highest health care savings writ large if we keep patients out of the hospital and if we keep people alive. That is better for patients, it's better for America.
▶ 1:05:13If you want to take those radical steps forward, then we need to radically change the calculus of the risk that investors, both companies and investment firms, are making on those drugs, and we can start tackling things as ambitious as aging. Thank you. I have a lot of questions about how we can stop the hamstringing of this investment, but I I see I'm out of time, so I'll yield back, Mr. Chairman. Thank you so much. Thank you, Representative Moran. Thank you, Mr. Chairman. Thanks to all the witnesses for being here today.
▶ 1:05:41It is important that the American people hear this, uh, testimony today. It's important for them to understand that Chinese Communist Party plays an a crucial role, an adversarial role, and a threat, uh, that will affect and impact every American life. This conversation is about something simple, but essential. The medicines that keep our citizens healthy and the system that produces them.
▶ 1:06:05More than 60%, as you guys know, of American adults, nearly 90% of seniors, and nearly 25% of children fill a prescription at least one time, uh, per year. The United States has historically led the world in medical innovation. And that leadership didn't happen by accident. It grew from the people of our nation who value scientific inquiry, intellectual property, and respect the dignity of every patient who participates in research. But the global landscape, as you guys noted today, has changed quickly.
▶ 1:06:36China has made biotechnology and pharmaceuticals a national priority, and their goal is clear, to increase their capabilities to compete with and ultimately surpass American firms. We can see this just in recent data. Let me give you one example. In 2014, if we go go back and look, China conducted about just over 1,800 clinical trials, while the United States led the world with over 7,200 clinical trials.
▶ 1:06:59Less than a decade later, in 2023, China had expanded to over 11,000 clinical trials, surpassing the 7,500 trials conducted in the United States. That's a telling and very significant, uh, statistic, many, many more. Today, for certain, for certain essential generic medicines, China is already the dominant or sometimes the sole producer of key active pharmaceutical ingredients. Mr.
▶ 1:07:24Chairman, this is why American leadership is in new and emerging pharmaceutical technologies is critical. Innovation in is America's strength, it always has been, and we must ensure that the US continues to spur that for the American people. Mr. Jimenez, I want to start with you.
▶ 1:07:45China, under its Made in China 2025 as a result, licensing agreements for early-stage Chinese medicines have grown from below $100 million in 2020 to more than $800 million in 2024. As China continues to scale its capacity in novel drug development, many view this as a direct challenge to the US leadership.
▶ 1:08:06What specific steps should Congress take to ensure that the US remains the global hub for early-stage biopharmaceutical innovation and venture investment, rather than ceding that leadership to again, I have an audacious goal, uh, which I think many of my colleagues will will, uh, uh, push back on, but I think we have to speed up a process that you can go from molecular discovery through approved drug, while retaining the highest possible standard
▶ 1:08:36that the FDA has held, uh, you know, globally. everything I suggest is is mechanisms to get there. That's going to be faster path to first-in-human trials. Once you have human proof of concept, the finance community will rally behind and fund these things as quickly as possible. It is very easy to raise money for a company that has a drug that we feel works. Then it's going to be better systems for the FDA to move more quickly on review.
▶ 1:09:05That means both in terms of labor and staffing and training, but it also means in terms of technological innovation. The FDA also has probably the largest trove in history of any kind of research materials. So, if a company fails and it goes under, all that information disappears into the ether, unless somebody kept it in their minds. The FDA holds that. They have the single greatest set of intellectual property with respect to life sciences medicine. And so using that and enabling that into companies I think is going to be hugely important.
▶ 1:09:34Yeah, I think of it a lot like uh the course of water. If you let water go, it's going to naturally find the easiest path through to its objective. Mr. Bucraft mentioned this earlier about the the blockades we put up, it just incentivizes companies to go somewhere else or to do something different. They're going to shift and take the easier path through on research and development to get to the end goal that they need to. So we need to take away those unnecessary blockades. We need to keep safety in place, no question, but we have gone way overboard in doing that. Let's talk about ethics for a second.
▶ 1:10:04In the US clinical trials, I'm going to come to you Mr. Cashman on this. In the US clinical trials operate under strict ethical guidelines. Uh patients must give informed and voluntary consent before participating in research. Their dignity and their rights are protected throughout. That commitment is foundational to how we conduct medical research. But reports indicate that the same safeguards are not always present. In fact, very few times are they present in China's clinical trial system. Mr.
▶ 1:10:31Cashman, given the differences in clinical trial standards and the rapid growth in pharmaceutical research activity in China, why should these developments uh create greater urgency for the US and our allies to strengthen pharmaceutical innovation and production at home to make sure that it's safe? Congressman, I want to make sure I understand your question. Um I'm focused on manufacturing, not clinical trials. And just want to just really want to understand what you're asking.
▶ 1:11:01Yeah, so China doesn't put near uh the guidelines around protecting humans through clinical trials as the United States does. So why is it important then to to make sure that we are continuing to lead in that area because uh frankly I can answer the question is pretty easy when you throw it up there. If you do not if we do not lead, we're going to seed this to somebody that doesn't care about the ethics of of human life. Doesn't value human life the way the United States does.
▶ 1:11:29And so that's the point I'm trying to make and I'd love for you to make a final comment and then I'm going to yield back to the to the chairman. Let me let me focus on what I know best and that's manufacturing. And I know there is a huge difference in how the FDA views domestic manufacturing compared to in international facilities like those in China and India. We we can be inspected at any time. We we can the FDA can show up at our doorstep any moment. And we have to receive them and we do. We welcome them and we we appreciate their input in our facility.
▶ 1:12:00We know in China that they have to give up to 12 days advance notice, which allows those companies to make corrections or obsc- uh hide some things they might not might not want the FDA to see. And that's just not a level playing field and it's not good for the safety and security of the medications that we get from those nations. It's a great It's a great way to end our conversation today. We're playing by two different sets of rules. We have two different standards, two different objectives.
▶ 1:12:27We need to support the United States in the development of pharmaceuticals here and we need to keep China from being the dominant force. I yield back, Mr. Chairman. Thank you for the time. Representative Stevens.
▶ 1:12:51with some of your tribes and we were talking about a thing in your district that we want to work on, but here's the deal. I want to know about these cuts to scientific research and the cuts to health care. Uh particularly when we're talking about the NIH and competing with China.
▶ 1:13:16You know, we have this uh bill that I wrote to reinstate the cuts that have gone down to public funding for um medical research, cancer trials and the like.
▶ 1:13:33how is this impacting the goal of being less dependent on China for the production of our medicines, our pills that you know, life-saving meds that we got to take.
▶ 1:13:48Cuz it strikes me that if we as the United States of America are seeding R&D, if we're seeding medical research particularly with the public dollar that's going to to China. And Dr. Gibbs, I think you wanted to jump jump in here. I could see you nodding, so I'll I'll pass it over to you.
▶ 1:14:15Yeah, um you know, having been uh a fellow that was funded by the NIH, I'm I'm eternally grateful uh to the NIH and so I I strongly believe in this. I think that there's many many parts of this that that um that NIH funding and broadly US funding is important for. The NIH funds clinical institutions that run trials.
▶ 1:14:39So all the names that we've named today, the major trialist institutions, are basically funded by the US government. Um they're paid for frequently the trials by biotech companies, but those entities exist because of the US government. The uh training that we have for the next generation of scientists almost entirely funded by our US government.
▶ 1:15:02Uh so when we talk about the sea turtle policy, those are postdocs who are also funded by the US government who are returned back to China who return back to China. So you know, in a macabre sense, you know, at least maybe if we shut down our our public funding for research, uh we're kind of shutting down China's too because we're training them.
▶ 1:15:21uh but I think that every single innovation that we've ever had in biomedicine has stemmed from our US research institutions, which are basically world-class, historical class, and all of that has basically trickled in either directly or indirectly into our life sciences and biosciences economy. So that is just innovation and people and institutions.
▶ 1:15:43And what about the brain drain? Uh as well. And you know, our resident economist here could maybe chime in on that front because you know, we're now worried about okay, if we're not funding the programs, we don't have the talent here. And in in terms of the long-term competitiveness of our biomedical innovation uh against the Chinese system is you know, are they taking our talent?
▶ 1:16:11What is going on with the you know, current workforce and the next I don't know if uh Dr. Marla wants to weigh in on that. So um I think the workforce uh whether on on the manufacturing side or on the drug development side and science, I think I would need to defer to my colleagues here who really are experts in this. Okay, so as a health care economist, you don't have a comment on the workforce. Okay.
▶ 1:16:41yeah, this is not an an area that I've studied. Okay. I I'm happy to talk on it as someone who was funded by these exact programs during my PhD and that PhD work uh did directly lead to the formation of my company, which now employs over 100 scientists in the Boston area. Um I think that right now what I'm seeing among my colleagues who did not enter private industry, who stayed in academia, is an incredible pull to to to other jurisdictions.
▶ 1:17:09Not just China, but even Europe and Canada as we cut funding or make it harder to achieve. Um perhaps injecting some unasked-for nuance into it is to examine how the NIH was dispersing money and the issues that existed there um that have been highlighted by academics for uh decades without really be having a real solution. Um the overhead costs uh you know, often exceeding 50% that go to some of the academic institutions, I think needed reined in.
▶ 1:17:38Whether or not the the approach that we took to rein them in and chop them off immediately was the right one, uh I can't really say. In addition to that, the the NIH and and a lot of federal funders need to think about what it is we are trying to fund. A lot of funding from those agencies goes to established labs that become mills for writing grants rather than places of intellectual curiosity. The RO1 NIH, the joke among academics is to do 80% of the work before you write the grant.
▶ 1:18:07Yeah. And that way you know you're successful. So to our basis, I I think it would be inappropriate for us to pretend that the funding mechanisms were working correctly as is. Thank you.
▶ 1:18:18That that's an important point and thank you. You know, I I know I got to yield back my time, but just for the record, you know, spending time on the science base and technology committee, I've applied for NSF grants in the past in my previous life before being elected to Congress, and you're spot on to talk about the that as well and that it's marching orders for us. With that, Mr. Chairman, I'll yield back. Thank you, Representative Bilirakis. No. Okay.
▶ 1:18:49again, uh good morning, Mr. Chairman. Thank you very much for holding this very important hearing. I was at the end of C, so But the the issue of Chinese influence on our domestic pharmaceutical supply chain is important for us uh lawmakers to understand and we must consider targeted returns to counter this influence. Absolutely true.
▶ 1:19:11I've heard from constituent companies that struggle to stay competitive with Chinese companies due to misaligned incentives in our health care ecosystem. Uh Uh that's why I launched the the American Made Medicines Caucus with Representative Carter and Representative Tenney Tenney.
▶ 1:19:33it's uh it's important that we pursue policies to incentivize domestic manufacturing, particularly as we face rising affordability concerns in the US. We've also seen safety concerns with many drugs made abroad. American patients should be able to access safe and effective American made um medicines without breaking the bank.
▶ 1:19:59Uh next year the uh Energy and Commerce Committee, which I serve on, has the opportunity to pursue targeted FDA reforms through the prescription generic drug user fee reauthorizations. As a senior member of the committee, the health care subcommittee, I look forward to this critical work in the next few months. So, my first question is for uh Dr. Becraft. Uh you have deep knowledge, sir, of the complex world of drug development.
▶ 1:20:30Uh what are your recommendations to Congress to maintain our leadership in the biopharmaceutical space either through FDA process or CMS reimbursement reforms? So, um focus on on the pieces I've around within my both written testimony and and oral piece. I think that the the thing that is the most critical for early stage discovery is that timeline to first in human data.
▶ 1:20:59Right, how does a either an academic researcher or a an entrepreneur or, you know, a hybrid of both take an idea and go from I think this could work, this could change how we treat X disease to now I know that it may work. I have human data in hand.
▶ 1:21:18Every animal model, every, you know, mouse, every, you know, cell culture in a dish will never uh at least not in the next uh 5 to 10 years be able to recapitulate the complexity of human disease to a way that it can get us an answer that the investment community will then stand behind it. And so, there's, you know, to in my experience two different major roadblocks to that. There is the, you know, regulatory uh pathway and how we get there.
▶ 1:21:44And I've I've in my written testimony uh laid out ways that I think the FDA could work hand-in-hand to simplify that process, to decentralize the process, maintain rigorous safety oversight and notification among the agency, while allowing uh institutional review boards or centralized IRBs, as the current director of the FDA has um spoken about reform a number of times in the past months.
▶ 1:22:08Um if we're able to decentralize that approval to the first in human pathway, that would massively both increase the amount of clinical sites that we could do first in human trials at and decrease the cost and time to that data. The second piece of this puzzle is, especially for complex medicines, how and where are we going to manufacture them?
▶ 1:22:27Um I think that both how gets to what are the regulations around, you uh how what do we need to know, what do we need to assay, what do we need to uh about these medicines to think that they're safe to put into patients as, you know, often a a last-ditch effort to save these patients' lives.
▶ 1:22:46Um I think there's a lot of round table incentive that private industry and the FDA could get around to say what is the correct level of oversight for this this GMP, what's what's called GMP, which is how these drugs are manufactured. Um that sort of oversight for for our companies and to to create a a more open dialogue so we can all learn together. A lot of the institutional knowledge around that manufacturing is locked inside of private companies.
▶ 1:23:14The FDA is doing their absolute best to keep up with it, but more dialogue I think would increase the rate of learning and allow the FDA to more uh effectively uh uh and and uh work with companies um to figure out what we need to do to make sure that we're putting safe drugs into patients.
▶ 1:23:31If we incentivize the buildout of that small-scale manufacturing here in the United States, usually geographically located somewhere near we may where we may be running clinical trials, that also um massively increases the logistics, the efficiency of manufacturing to clinical testing, and it serves as a flywheel for private industry to continue to invest in the buildout of domestic biomanufacturing.
▶ 1:23:54Once you have a manufacturing process set for that first trial, it is much more in your favor to continue building that out than to outsource as you get to a later stage and you need to make more drug or more diverse drugs. Once we start with that seed here for these advanced medications, we will we will then see that pay dividends into the future. Thank you. Thank you very much. Very valuable information. Appreciate it. I'll yield back, Mr. Chairman. I'll I'll submit the my questions the rest of my questions for the record. Without objection.
▶ 1:24:26Representative Nunn. Thank you, Chairman Moolenaar and the China Select for having this conversation today. Look, I've been on the front lines as a counterintelligence officer fighting against China for over the last two decades. And I think we all recognize when China starts to dominate in any sector, whether it's semiconductors, whether it's innovation, critical minerals, it becomes an unfair advantage they gain, particularly when it comes to health care and biotech.
▶ 1:24:52So, let's be clear, the United States becoming reliant on China for key ingredients of our generic generic medicines and the infrastructure that drives drug innovation is a loss for everybody. This panel has been fantastic in highlighting that this is bad for both patients, for physicians, and it's a bipartisan issue that we I think we all want to get after solutions for. I represent a rural district in Iowa with an urban core.
▶ 1:25:15And in every town and every community, we believe that life-saving innovations championing what helps Iowa across the country is a success story that we're able to drive here at home. Strengthening US drug innovation and reducing our dependency on China is a direct opportunity to improve health care for all Americans. Right now, as we noted, China has a dangerous advantage over our essential generic drugs. For example, about 90% of global API supply for generic antibiotics originates or depends on Chinese manufacturing.
▶ 1:25:43Ensuring we keep innovation and clinical trials here at home instead of in China means having confidence that diabetes patients have access to critical plan on biotics, no matter what's happening geopolitically in the world. And the cancer patients have the opportunity to be first in line for a life-saving drug, not overseas. Keeping these clinical trial opportunities in our communities improves health outcomes, increases specialized care. It's not just about our patients, either. We have research and capabilities that are strong in America.
▶ 1:26:09Every federal dollar invested in biotech here at home generates more than 150% return for local economic activity. I'll highlight in 2025, federal research dollars supported over 2,000 jobs in Iowa, nearly 485 million economic activity. This is a win-win-win. This fight with China isn't only about national security, it's about keeping Americans healthy, keeping innovation in the United States, and keeping jobs in our community. So, with that, I want to talk to the leader of Strand Technologies. Uh Dr.
▶ 1:26:37Becraft, you highlighted some of the real challenges that we're trying to get after here and the tragic impacts of cancer on communities across the country. I'll note that diseases like cancer don't impact everyone in the same way, but in my home state of Iowa, Palo Alto County has the second highest rate of cancer in the country. Equally, in my district, Jefferson County has one of the lowest cancer rates in Iowa. It's well below the national average.
▶ 1:27:07This disparity is deeply concerning, but it also gives us reason for hope. It means that we can take real actionable steps to improve patient outcomes. And I think everyone in this room agrees that no matter where you are, you deserve the opportunity to have access to cutting-edge materials like the research that you have done that's so encouraging for us. And a perfect example of that is what the University of Iowa, which conducts more than 200 clinical trials, many of them cancer related, are supporting not only thousands of jobs, spurring millions in the economy, but they're saving lives.
▶ 1:27:37Which leads me to my question. What would it mean if all this went out the door? If all of it was reshored on China and if our ecosystem sent most of our early stage clinical development to Beijing instead of right in the heart of So, this is um thank you, Congressman. This is what it has been going on in the biotech sector. And a lot of our uh the the rate of increase of early stage clinical development is increasingly going to China.
▶ 1:28:07Um first with US biotechnology companies going to China to run their early stage clinical development programs. Um but now, and as we've seen many time and time again with Chinese economic competition, Chinese domestic competitors now spinning up to run their own trials directly, selling those into America. Um Americans, by revenue, either from private insurers or from Medicare and Medicaid in the US government directly, account for roughly 50% of global drug revenues.
▶ 1:28:34So, as the center of gravity of drug development and drug sales shifts to China, it is the US citizen that is footing the bill for that either through their taxes or through their private insurance because in whatever way you model the cash payments, they go out the door. Um not only do I think that we can compete with them by reforming some of our early clinical trials. For a district like yours in in Iowa, which borders my home state of Illinois, um we know that we have incredible clinical resources, incre- incredible clinical centers.
▶ 1:29:05No one runs early stage breaking clinical trials at those centers because of the cost and time it takes to run a clinical trial. Often, once you're in the hole for 20 to 30 million dollars just to get a clinical trial started, your board, your investors, everyone around the table wants you to to go to the most famous institution you can.
▶ 1:29:25If you reformed that, if it was six months and five five million dollars to get that, and you allowed the these clinical sites to work more regularly with with companies like mine, you would see a a greater spread. And and in fact, when Australia reformed their early stage first-in-human trials to the clinical trial notification system, that's exactly what we saw.
▶ 1:29:46We saw the private sector build centralized IRBs, which allowed a greater spread to more hospital groups, and you would find that you know, people like my family who grew up in central Illinois, who lives there to this day, if they were to be diagnosed with a cancer that had no standard of care left to have, their options would be to spend the remaining years of their life in a city they'd never been to before in order to access a clinical trial, or accept their fate. And I think that as the richest and most powerful country in the world, America, that is unacceptable. Dr.
▶ 1:30:15Becraft, cannot agree more. And just highlight this as our closing argument, this is already happening. Phase one and phase two has already fled to China. Let's not let phase three happen, because the reality is all of us will be in a harder place. Thank you very much for your testimony today. I yield back my time. Thank you very much. And I want to give a special thanks to our witnesses today. Appreciate your candor and your insights. And uh for for our members, the questions for the record are due one week from today.
▶ 1:30:45And without objection, the committee hearing is adjourned.