▶ 0:10:23Chair Scott: The united states relies disproportionately on foreign-made drugs. Communist china is not our friend, they are the world's largest producers of these ingredients and india relies on
▶ 0:10:53Chair Scott: China for 70% of the pharmaceutical ingredients they use. 83% of the top 100 drugs consumed by U.S. citizens have no U.S.-based source of active ingredients. Not only is the U.S. over dependent on foreign drugs, they are often lower quality and more dangerous than drugs manufactured in the united states.
▶ 0:11:22Chair Scott: Earlier this year, a study showed that serious adverse events were 54% for foreign generic drugs compared to american made drugs. That quality doesn't just mean the drug is lower quality, it can kill. The drug heparin had contaminated ingredients in communist china, killing nearly 100 people. They devastated families.
▶ 0:11:55Chair Scott: Leroy lost his wife bonnie and his son randy weeks apart, due to contaminated heparin. They have a genetic kidney disease. People who relied on their medication to be safe died. This was an absolute tragedy and must never happen again.
▶ 0:12:21Chair Scott: Almost 20 years later we are still seeing many of the same problems and quality issues that existed back then. There's no routine testing done by the fda. In 2023, contaminated eyedrops killed four people and caused adverse events and at least 55 patients. Foreign drug manufacturing plants aren't subject to the same level of oversight as manufacturing plants in the united states.
▶ 0:12:52Chair Scott: That doesn't make sense to any american. Drug manufacturing plants in the united states, inspections are not announced. In china they are preannounced.
▶ 0:13:16Chair Scott: Quality issues present a threat to seniors and loved ones, this presents an existential threat to the country. It gets much worse. Communist china or india want to shut down the supply of prescription drugs to united states and can do so at any moment. Clearly the united states doesn't have a backup plan. If communist china or india stops supplying the U.S.
▶ 0:13:44Chair Scott: With prescription drugs, we will run out very quickly and people will die. Millions of americans will not have life-saving drugs available. Americans will get sick and die. We've seem china place expert restrictions on rare earth elements over trade negotiations and there's no reason they can't do that for drugs.
▶ 0:14:11Chair Scott: During the covid-19 pandemic, we saw india block the export of critical ingredients. Many were prompted by supply chain disruptions from communist china, the birthplace of the covid-19 pandemic. We cannot rely on other countries, especially those that want to destroy us for something as vital as essential medicines. Despite these dangers, we still depend almost entirely on communist china and india for generic medications and their grip on the market continues to grow.
▶ 0:14:43Chair Scott: As of 2021, china and india account for 85% of active drug application submission. In 2000, it was just 24%.
▶ 0:15:03Chair Scott: A federal agency that oversees the strategic national stockpile and ensures the nation has countermeasures, lacks the data to understand the supply chain for key starting materials that are key building blocks. There is a stranglehold on antibiotics with 90% of global antibiotics being on -- being of chinese origin. American manufacturing has withered away.
▶ 0:15:33Chair Scott: A 2024 report stated in the past decade, the number of facilities located in the U.S. that produced active pharmaceutical ingredients has decreased by 61%. 2024, the U.S. manufactured 37% of consumed pharmaceuticals. Just over 20 years ago, it was 83%. Over 40% of generic drugs in the U.S. have just one fda approved manufacturer.
▶ 0:16:03Chair Scott: I am a business guy, you would never rely on one supplier. This means in the event of a shortage, the fda must scramble to find alternatives. In 2023, a chemotherapy drug went to shortage because of the fda placing import restrictions on a manufacturer that accounted for 50% of the market.
▶ 0:16:23Chair Scott: There was no approved alternative which forced the fda to turn in unapproved company to fill the gap. The supply chain is vulnerable. If we can't solve this problem, our public health and national security are in danger and people will die.
▶ 0:16:43Chair Scott: We will soon hold another hearing to discuss solutions to these problems but the american people deserve to know the dangers of bad medications and a limited supply chain.
▶ 0:17:02Sen. Gillibrand: Thank you chairman scott and our witnesses. Combating drug shortages and providing high-quality drug production is one of the most important issues facing congress today. In 2023i heard from countless new york constituents who struggled to access to chemotherapy treatment due to shortages of essential cancer drugs.
▶ 0:17:30Sen. Gillibrand: When you are fighting a disease as devastating as cancer, the last thing you want to worry about is whether the life-saving drug you need is available. Another issue that's extremely concerning is the quality of generic drugs, especially those we import from overseas. I've heard time and again that the difficulties the fda informing spector's face when they are inspecting foreign facilities.
▶ 0:18:00Sen. Gillibrand: This can include basic logistical support or a third-party translator. When an inspector is abroad for months in a place where they may not speak the language, it can be very disheartening. Inspectors can be put in a position where they recommend the closure of a facility but this can have a cascading effect of domestic generic shortages.
▶ 0:18:26Sen. Gillibrand: The fda needs funding and support from congress to ensure they cannot only conduct these inspections but enforce violations to protect the health and safety of the american public. We also need to work on solutions that promote transparency and quality benchmarks in the generic drug supply chain. The pharmaceutical supply chain can be very long and opaque.
▶ 0:18:52Sen. Gillibrand: Several countries & co.'s are manufacturing various ingredients at various levels of quality. Purchasers need to be intensified to purchase high-quality drugs that have proven reliability and supply chain. Hospitals and practitioners are spending millions of dollars per year due to drug shortages. Ultimately it's the health and safety of our patients and constituents at risk. I'm looking forward to bipartisan solutions.
▶ 0:19:23Sen. Gillibrand: Thank you, Mr. chairman.
▶ 0:19:24Chair Scott: I like to welcome our witnesses. Experts are here to talk about why dangerous low-quality drugs have been allowed to enter the U.S. market and how reliant we are on foreign countries for the medications we need. First, a former fda inspector who spent time in india and china.
▶ 0:19:46Chair Scott: As an inspector, he witnessed firsthand the unsafe manufacturing conditions and tactics used by manufacturers to deceive and even obstruct the fda from conducting proper inspections of facilities. Thank you for being here today and I look forward to your testimony.
▶ 0:20:04Mr. Baker: Chairman scott, ranking member gillibrand, members of the committee, thank you the opportunity to testify. I want to thank you for the bipartisan focus on enhancing the pharmaceutical supply chain. When a patient, especially the most vulnerable, fill a prescription, which has a 91% chance of being generic in the U.S., there can be no doubt about the safety and efficacy of the medicine or if the generic will perform as well as a brand name.
▶ 0:20:32Mr. Baker: They are too many uncontrollable variables. The fda has long history of protecting public health and performs challenging work around the world on a daily basis. They conduct inspections often in remote corners of the world that don't have recognized regulatory bodies which I will refer to as on regular the markets.
▶ 0:20:55Mr. Baker: Inspectors have to deal with demanding travel conditions and can fall ill from winking unsafe water, communicable diseases or other risks often present and still developing nations. The majority of our overseas pharmaceutical inspections are preannounced, often up to two months before arrival.
▶ 0:21:15Mr. Baker: In my experience, upon arrival, a strong smell of paint, fresh paint is in the air, landscaping is immaculate, all garbage cans are empty, problem attic operations are shut down, some employees are sent home and actions are choreographed as if on a stage good -- on a stage. We refer to this as a dog and pony show, which is frustrating because this is a serious business.
▶ 0:21:44Mr. Baker: Having spent three years at seven different fda offices strategically located around the world, we were tasked with inspection techniques to identify of products exported to the U.S. from unregulated orchids were meeting our standards because it seemed too good to be true. No rejected batches, no issues at all? We had no idea what was happening outside our borders, especially in unregulated markets.
▶ 0:22:11Mr. Baker: We spent callous hours reviewing computer records, Dr. garbage and choked up at times -- showed up at times unannounced. What we found was terrifying. This testimony only addresses the tip of a massive iceberg. Laboratories pumping out hundreds of results of a that certify products as 100% pure when the product was never tested.
▶ 0:22:38Mr. Baker: For those that did get tested, any failing result was ignored and replaced by a fabricated passing value. We identified filthy shadow facilities that would funnel their drugs through modern and clean registered sites. We found fabricated manufacturing in wally records, painting the picture of a site in compliance when substandard or fake medicines were being shipped to the U.S. by the tens of thousands per day.
▶ 0:23:08Mr. Baker: I have no doubt that adverse advents including death happen on a daily basis in the U.S. as a of substandard generic products. The true culprit relies in shortcuts and fraud. Shocking inspection reports role in on a monthly basis. The bad players list is no secret and they continue to avoid significant consequences.
▶ 0:23:32Mr. Baker: Meanwhile, those most vulnerable in our society taking the drugs have no idea of the games being played and no idea that the game as designed today can never be won. I would never consume a drug product produced in an unrelated dutch unregulated market. When my 91-year-old grandmother was alive, we would go pharmacy hopping to find a batch made by a reliable producer. Sometimes we succeeded and sometimes not.
▶ 0:24:03Mr. Baker: One time I had to settle for product with a company who would just settled with the doj for faking countless data points. I tried to stay positive because causing her panic wouldn't help but inside I felt sick and I wasn't receiving cancer treatment. I arched a committee to consider these points.
▶ 0:24:23Mr. Baker: One, harsher penalties for -- companies that engage in illegal activities good two, changes to labeling so patients can see where their medications were made and put pressure on supply chain decision-makers to prevent them from taking a pill made from an unregulated market. Three, independent third-party testing of every batch of every product arriving from an unregulated market.
▶ 0:24:47Mr. Baker: The european union already does this pit four, support the pharmaceutical inspection program. The fda has made progress but they need additional resources to be directed to expand the number and quality of unannounced inspections is already outlined. Thank you for your time and attention and I welcome your questions.
▶ 0:25:10Chair Scott: Thank you Mr. baker. I like to introduce Dr. george ball from indiana university where his teaching and research focus on operations, supply chains and regulatory compliance in the drug industry. He's been at the forefront of generic drug quality research and lies at the intersection of global manufacturing, da oversight and patient safety. His work provides critical insights into how supply chain vulnerabilities translate into risk for american consumers.
▶ 0:25:43Chair Scott: This past february, he and his colleagues found in eric drugs manufactured in india have higher incidence of adverse events. This highlights in measurable terms what other witnesses have seen firsthand. Weaknesses and oversight of foreign manufacturing can directly affect the safety and quality of what reaches american patients per look forward to your testimony.
▶ 0:26:09Dr. Ball: Thank you for the invitation to speak with you. I am operations management professor at indiana university. For the past 15 years of researched causes of product quality problems in fda regulated industries. Prior to that I was a medical device manufacturing manager. Most recently I examine generic drug quality and fda policy. These topics are the focus of my written testimony which I will briefly overview.
▶ 0:26:38Dr. Ball: In my view, the root cause of the generic drug quality problem is the original design of the marketplace. While it lowered cost, it relies on an unrealistic assumption -- if an original drug is safe enough, it's generic will as well, requiring no transparency. Why is it unrealistic? Operation and sources of defects. Quality is not free.
▶ 0:27:10Dr. Ball: Higher quality products normally require higher production costs. Quality defects originate from two primary resources. The design must be equivalent to the original, but equivalently designed drugs can be made in different ways. One could use well-trained employees, sophisticated equipment and suppliers that make premium materials, another can use poorly trained employs, cheap equipment and corner cutting suppliers.
▶ 0:27:39Dr. Ball: In a market where quality is assumed to be high, the rational economic choice is to focus solely on cost and this will nearly guarantee poorly manufactured drugs. This assertion has remained predominantly theoretical because determining where drug is made which allows one to study factors that may influence quality, is onerous.
▶ 0:28:03Dr. Ball: A team of colleagues and I have published a study that begins to address the gap. We exactly match generic drugs made in the U.S. against equivalently designed generic drugs made in india. Generic drugs made in india, particularly older ones that have lower profit margins with greater incentives to cut costs, have a significantly more adverse effects than those made in the U.S.
▶ 0:28:30Dr. Ball: Two working papers we have under review provide two policy changes that might help mitigate the problem. Transparency is first and foremost. In an experian mental study with thousands of subjects, we find consumers and pharmacists are unconvinced I fda messaging that generic drug quality is to be trusted regardless of where it is made. See a strong preference for U.S. and canada made drugs over china and indian made ones when we only revealed manufacturing location.
▶ 0:28:59Dr. Ball: When location and quality are made transparent, quality tempers these effects. High-quality china or indian made drugs are preferred over lower but moderate quality U.S. or canada made drugs. When comparing high-quality drugs, subjects prefer U.S. and canada over china and india.
▶ 0:29:20Dr. Ball: Drug quality and location transparency can enable market forces to reward forms -- firms for high-quality regardless of where they are made while simultaneously incentivizing high-quality on shoring and near shoring of generic manufacturing. Second to that is an fda inspection strategy across the globe. The fda inspects china and india plans after giving weeks or months of advance notice versus conducting unannounced in the U.S.
▶ 0:29:47Dr. Ball: Bid in another working paper under review, we've examined newly available data from an unannounced inspection pilot conducted in india. We concluded that pre-announcing inspections hinders the fda ability to assess the true state of quality of foreign manufacturing plants. We show that such obscurity aggravates the cost only focus, harming generic drug quality. I advocate for drug quality and location transparency as well as global fda inspection parity.
▶ 0:30:20Dr. Ball: Our research indicates these two changes should help to meaningfully improve generic drug quality. Thank you.
▶ 0:30:26Chair Scott: Thank you. Brandon daniels is the chief executive officer of a global leader in supply chain risk management, transparency and compliance with gates of experience in regulatory compliance, he has helped governments and private industry strengthen the security integrity of critical supply chains, including pharmaceuticals, defense and health care.
▶ 0:30:55Chair Scott: He has overseen development of innovative tools that improve visibility and help ensure products and medicines reaching american consumers are safe, reliable and free from hidden risk. Thank you for being here and I look forward to your testimony.
▶ 0:31:12Mr. Daniels: Chairman, ranking member and distinguished members of the committee, thank you for the opportunity to testify today. For 20 years I've worked with pharmaceutical and medical device companies, supporting them through some of the most significant crisis management and location matters affecting their development, research and supply chains good during the covid-19 pandemic I served on the white house joint acquisition task force where I worked alongside federal partners to secure pp, medical
▶ 0:31:43Mr. Daniels: Devices and lifesaving pharmaceuticals. That underscored for me the fragility of our pharmaceutical supply change -- chains and the need for reform. I am leading the development of artificial intelligence to map supply chains down to their raw material origins. This work reveals and precise detail the vulnerabilities hidden in our health care system. The scope of this problem is enormous.
▶ 0:32:14Mr. Daniels: America's medicine cabinet is no longer made in america. Nearly three quarters of the essential medicines used in the united states are sourced overseas. India supplies about half the generic drugs we consume but 80% of the active pharmaceutical ingredients that make the drugs possible come from china.
▶ 0:32:31Mr. Daniels: In fiscal year 2024, chinese firms supplied 77% of india's penicillin g and noddy 4% of its 6 apa, which is essential for penicillin antibiotics. This creates a dangerous single point of failure for drugs that every hospital, clinic and pharmacy in this country depend on.
▶ 0:32:55Mr. Daniels: That means a medicaid prescription filled in ohio or processed in four to can often be traced back to a china supplier. The chokepoints for basic medicines are controlled by beijing. We are not just dependent, we are actively financing that dependency.
▶ 0:33:14Mr. Daniels: In 2024, medicaid reimbursed more than $150 million to a single generic drug for at least six chinese forms -- firms. Dual eligible patients are the most exposed to the fragile system.
▶ 0:33:38Mr. Daniels: Every taxpayer dollar spent on these medicines strengthens the leverage beijing has over our health care system. The consequences for seniors and all american citizens cannot be it nord. As the chairman mentioned, contaminated eyedrops from india have left american seniors permanently blind.
▶ 0:34:01Mr. Daniels: Blood pressure and diabetes medications imported from asia have been called after testing positive for carcinogenic impurities. These are not outliers. Over 30% of recent fda import alerts involve chinese producers and another 16% involve indian suppliers. These are the very countries we rely on most.
▶ 0:34:26Mr. Daniels: Even more troubling, our data shows forced labor is woven into these pharmaceutical supply chains. Chinese state owned enterprises with a documented labor, supply raw ingredients that ultimately find their way into drugs consumed by americans. This creates a competitiveness barrier inequality hazard for U.S. pharmaceutical supply chains.
▶ 0:34:55Mr. Daniels: The weakness in our medicine cabinet is also a weakness in national security. More than 54% of the department of wars of wars pharmaceutical supply chain is classified as high or very high risk because of reliance on foreign suppliers. Chinese state media has openly suggested drug exports could be withheld as a weapon in conflict. In that scenario the most basic medicines could become tools of coercion.
▶ 0:35:25Mr. Daniels: No adversary needs to fire a shot if they can choke off our access to antibiotics or insolent. The path forward is not simple but we must be clear, expand domestic production of critical medicines, particularly antibiotics and essential generics, we must ensure that no federal program relies on a single country, and we must enforce forced labor loss so no american patient consumes
▶ 0:35:58Mr. Daniels: Prescriptions produced by forced labor. The stakes could not be higher good every time a senior fills a prescription, every time a service member treatment, every time our children and grandchildren need to fight an ear infection, there's a chance the supply chain leads back to a compromised source. Thank you for your time and I look forward to answering any questions you have.
▶ 0:36:20Chair Scott: Thank you. The ranking member will introduce the next witness.
▶ 0:36:28Sen. Gillibrand: Thank you, I want to introduce Dr. ronald piervincenzi. He is responsible for providing strategic leadership to a global staff of over 1300 employees.
▶ 0:36:47Sen. Gillibrand: He has helped usp standardize and modernize operations including in digital medicine, advance biologics, quality manufacturing consulting and education. You may begin.
▶ 0:37:01Dr. Piervincenzi: Thank you. Thank you for the opportunity to provide testimony for the united states medicine supply chain that our nations seniors rely on .
▶ 0:37:20Dr. Piervincenzi: As ceo of the united states pharmacopeia, we are an independent scientific nonprofit organization founded on the first of january in 1820 111 physicians gathered in the old senate chamber, concerned about the safety and quality of imported medicines to the then new united states. They formed the world's first national pharmacopeia.
▶ 0:37:51Dr. Piervincenzi: The employees today work with scientific experts to set thousands of quality standards for medicine. We also offer ingredient verification, product quality testing and programs to advance the adoption of pharmaceutical manufacturing technologist. We work to strengthen medicine supply chains to ensure that patients and especially order americans antigen chronic conditions, can access the generic medicines they need when they need them and to trust in their consistent quality.
▶ 0:38:20Dr. Piervincenzi: Low-cost generic drugs that account for over 90% of the U.S. medicine supply have grown quantitatively and increasingly vulnerable to geopolitical tensions, national disasters, pandemics and market pressures. Globalization has expanded capacity but made supply chain's more fragmented and more transparent, jeopardizing patient care and national security.
▶ 0:38:47Dr. Piervincenzi: Since launching the medicine supply map in 2019 to gain insight into the supply chain, we analyze 94% of U.S. prescription drugs, providing unprecedented visibility into key public health and national secured vulnerabilities. Usp's work quantitatively points to interconnected drivers of our vulnerability.
▶ 0:39:12Dr. Piervincenzi: The first is a continual downward pricing pressure on generic drugs that creates an unsustainable market for these essential medicines. The vulnerability number two is manufacturing complexity, which is limiting capacity and causing even greater risk. The third is geographic concentration, exposing supplies to sickle points of failure. The fourth vulnerability is quality disruptions that destabilize supply.
▶ 0:39:39Dr. Piervincenzi: These factors create an environment that undervalues science, constraints redundancies. This leaves patients, especially vulnerable seniors at risk of delayed excess or reliant on less effective secondary treatments. It's unacceptable when we know practical solutions exist.
▶ 0:40:01Dr. Piervincenzi: No one stakeholder is to blame for the current state of our supply chain but our hurdle is our willingness to take this first up together. We must uphold quality, ensure stewardship of the supply and preserve the savings generic medicines have delivered to patients and seniors.
▶ 0:40:21Dr. Piervincenzi: I commend the chair and the ranking member for their holistic approach and respectfully urge the committee to consider the following solution in three parts but part one is identify key vulnerabilities and update the assessment continuously. Tools like the medicine supply map provide intelligence needed for proactive management. Understanding risks starts with increasing visibility into blind spots such as vulnerable essential medicines, and single source materials.
▶ 0:40:51Dr. Piervincenzi: We recommend authorizing annual assessment that provides insight into significant vulnerabilities and makes recommendations for mitigation. These could help guide commercial investment in short supply lines, involve supply making -- policymaking and puts funding where it is needed most. Part two is to innovate and scale new methods for manufacturing essential medicines.
▶ 0:41:16Dr. Piervincenzi: Advanced manufacturing, termed if synthesis and new biology based methods are no longer theoretical. We are partnering to explore wheat germ extract is a U.S.-based method for producing something critical, which is an example of how the U.S. might leverage manufacturing to reduce reliance on foreign sources for key ingredients. Finally, establish a benchmark for medicine supply.
▶ 0:41:50Dr. Piervincenzi: Pricing pressure on low-cost essential medicines drives generic drug purchases below sustainable production costs, discouraging investment in quality systems and pushing manufacturing offshore. Shifting the paradigm to reward a more resilient supply of medicines is central to promoting an environment that values reliability, reinvestment and quality systems, anticompetitive industrial base -- and a competitive industrial base.
▶ 0:42:20Dr. Piervincenzi: We propose a benchmark for manufacturers of important medicines. Incentives for those who need it, encouraging sustained full -- sustainable production. Two in short america's seniors have consistent access to quality, the government sued -- should leverage purchasing power to incentivize resilience. Strengthening supply is a national security imperative and critical to millions of seniors.
▶ 0:42:51Dr. Piervincenzi: Together we can and must forge a more secure future for america's medicine supply. The well-being of millions depends on it and I think you for this opportunity.
▶ 0:42:58Chair Scott: Thank you. Now we move to questions and I will turn it over to senator johnson.
▶ 0:43:11And -- Sen. Johnson: I first became aware of our vulnerability in february of 2020, with the pandemic, I had no idea we were dependent on china and india.
▶ 0:43:38And -- Sen. Johnson: We passed a one and a quarter trillion dollar infrastructure bill and it wasn't addressed. How do you bring the manufacturing back to the U.S. where it can be inspected properly? Not an easy task but part of the problem is the precursor chemicals, that is refining. That needs a permit and it's expensive and that's why we've offshore to china.
▶ 0:44:16And -- Sen. Johnson: I would love to cosponsor this bill with you, just simply requiring labeling in terms of where the drug comes from, putting pressure on companies to reassure. It won't happen overnight but government edicts, spending money -- what it could do potentially is not tax -- you've got to be able to permit.
▶ 0:44:45And -- Sen. Johnson: There are so many impediments to this. It's a complex issue but we've got to start doing the basics first. The first one is again understanding the problem, acknowledging we have it, understanding how vulnerable we truly are. Things like heparin. We have known about this for years and we have done nothing about it.
▶ 0:45:10And -- Sen. Johnson: I'm looking for the most practical first steps we can take. We can talk about complex solutions but would you agree that just the labeling itself -- that would be a pretty easy bill to pass. I guess from all four of you, what is your number one single first step we could take to address this? First it starts with information, we need more information.
▶ 0:45:41And -- Sen. Johnson: You've all mentioned pricing pressure. You're all beating up on drug companies overpricing. On generics, it is underpricing is what you are telling us. Let's go down the list and give me the one thing, the first step we ought to take.
▶ 0:45:59Mr. Baker: I think enforcing the existing laws as they are already written through the authority of fda and doj would let good players know it's going to be a level playing field for them.
▶ 0:46:12Sen. Johnson: We have laws that aren't being enforced, why? How would you enforce them?
▶ 0:46:19Mr. Baker: It's difficult to enforce them at the moment because of drug shortages. When issues are covered at factories, they are allowed -- they carveout the ability to supply these drugs because if they were prevented from entering the U.S. we would have a supply chain issue, a shortage issue. It would have to be weaning off of that situation. But it has to start with letting everybody know the laws will be enforced.
▶ 0:46:48Sen. Johnson: One thing congress relies on his whistleblowers. I've been trying to pull information out of government agencies for many years. They don't give up their secrets very well. Will there be whistleblowers who can tell us about those instances where there's a quality problem and the fda has looked the other way? We need examples of that.
▶ 0:47:10Mr. Baker: Absolutely, the fda works with whistleblowers all over the world on a daily or weekly basis.
▶ 0:47:18Sen. Johnson: I encourage whistleblowers to come forward to this committee and tell your story so we can highlight that and expose it and start enforcing the laws.
▶ 0:47:32Dr. Ball: I agree, that is some thing I talked about, it's the only marketplace where firms do not reveal their quality and consumers purchase a product and cannot assess it. The marketplace is not allowed to work properly with generic drugs. If quality and location are transparent, the market would fix in my view and from the research we've done, quite a bit of the problem.
▶ 0:47:59Dr. Ball: Market forces would start to reward high-quality manufacturers and punish low-quality one speed it's a relatively in expensive solution because the somewhat visible hit of the market would fix the issue if the market was no longer opaque. When it is opaque, the market is broken and we thought long and hard about other comparable markets and there are very few. I think transparency of quality and location is the answer.
▶ 0:48:25Sen. Johnson: It's about information, consumers need information they don't have right now.
▶ 0:48:32Mr. Daniels: I think the biggest thing from my perspective is right now we have economic coercion on the other side keeping these key starting materials in particular at artificially low prices. That's not actually how much they cost to manufacture.
▶ 0:48:53Mr. Daniels: They are significantly subsidized, in free economic zones, in many cases they are using labor that's insufficient to conduct these operations. There's got to be an economic disincentive. In order to create a U.S. domestic market that is available and viable.
▶ 0:49:19Mr. Daniels: There are today, whether it's in fermentation for critical key starting materials for antibiotics or for drugs like heparin, there are continuous flow capabilities we could bring to the U.S. and everyone thinks it will take a huge delta between the current price and the future price to bring investment into a market -- it is not. 2008 we had gas prices spiked up your ikea -- spike.
▶ 0:49:55Mr. Daniels: Ikea brought furniture manufacturing back to north carolina because of the small additional cost that sat on the top of every piece of furniture.
▶ 0:50:02Sen. Johnson: As long as we can permit. Help us identify those drugs or drug we need to start with. You start with one, succeed and move forward. Mr. piervincenzi, I think I got that right.
▶ 0:50:20Dr. Piervincenzi: Perfectly. I would suggest a market-based resiliency benchmark, which is a positive incentive. It would need to be market-based and would require the government to kickstart it. This would reward resiliency of having a secure facility with past inspections on a consistent basis.
▶ 0:50:44Dr. Piervincenzi: We have created a draft of these benchmarks and incorporated just about every factor we shared, including location of production, your own supply chain. And from that even if we were to start let's say in hospital systems, although that's not the whole solution, and put a hook on that were hospitals have to reward this through better contracts and slightly better price per these are the cheapest medicines, which means a better price is still not going to break the bank.
▶ 0:51:12Sen. Johnson: Hospitals can still be opaque, it's got to be consumers. If you have too many elements in the benchmark it's difficult to pass. That's why I'm looking for a starting point. But honestly this is an incredibly important hearing.
▶ 0:51:30Sen. Johnson: I want to work closely with you, when is this an expert speed and we need whistleblowers paid the only way this gets passed in converse is the american public has to understand how vulnerable we are and what risk they are at. Thank you for this hearing.
▶ 0:51:48Sen. Gillibrand: I'd like to turn it over to senator kim.
▶ 0:51:53Sen. Kim: Thank you chairman iraqi member, I agree this is an incredibly important issue and I hope this is something that can spur work in a bipartisan way. Certainly for my state of new jersey, a lot of what we need to be thinking about in terms of what comes next when it comes to medicine and pharmaceuticals, we are recognizing we need to do more when it comes to the manufacturing and supply side to make us more resilient I think is the right word.
▶ 0:52:25Sen. Kim: We see not only the national security side but a lot when it comes to the economic competitiveness of the united states and understanding where we need to go on a number of different fronts. I'd like to pick up or my colleague left off. I wanted to get more of a sense of the benchmark.
▶ 0:52:46Sen. Kim: Is there a comparable example or something being used in other industries or sectors that could help us understand how this might come about or structured?
▶ 0:52:56Dr. Piervincenzi: Thank you for the question. Yes. You don't have to leave the pharmaceutical industry. Let's take a sophisticated multinational company, generic or innovative, they do this on the goods they purchase. Let's say you are a large innovator pharmaceutical company and you're looking to ensure your product is never short because you have a huge economic incentive to do so.
▶ 0:53:25Dr. Piervincenzi: What you do in your own supply chain as you never buy key ingredients from one place, you would have two sources for every ingredient and you would inspect facilities to make sure they meet your quality standards. You create a contract that the long enough term that the supplier is committed to you just as you are to them. This is normal, nothing innovative. That process works and it's white innovator drugs are not on the shortage list except for unusual demand for something different.
▶ 0:53:56Sen. Kim: How do we take that model at a societal level? Not just a company looking out for its own bottom line. In particular what is the role of government, what can government do that others can't so we can understand how to fit this together?
▶ 0:54:12Dr. Piervincenzi: The key here is the buyer in the case I just described is a single company with a rational reason to create a resilient supply. The challenge in the U.S. is there are thousands and thousands of buyers who all wish this to be true and don't feel empowered to do so I don't have the mechanism to pay more money because they don't know what they are paying for.
▶ 0:54:38Dr. Piervincenzi: The answer would have to be the creation of the benchmark so they don't have the excuse and then you have to create an incentive or perhaps force there to be contracts that reward people for scoring high on those benchmarks. In different parts of our drug supply, it will be harder than others, but we believe where you see the most drug shortages today, which is in hospital administered drugs, is probably one of the easier places for leverage especially because the federal government has its own
▶ 0:55:09Dr. Piervincenzi: Leverage for how it purchases medicines and you see this in quality of care. I'm not saying it's extremely easy but is not unprecedented even in health care.
▶ 0:55:15Sen. Kim: Dr. ball, I want to pick up on some thing you said, the quality assessment and being able to have that. Can you give me a better sense of how that quality assessment could be done at the scale of what we are talking about?
▶ 0:55:31Dr. Ball: The paper I refer to assumes the fda site selection model scores, which are risk-adjusted scores the fda uses at the drug and plant level to determine when to inspect a plant, that some form of those would be amalgamated into a five-star rating on a drug. A five-star would be the lowest risk of facility and three-star would be moderate risk. That's what we used in this study. The fda has this data.
▶ 0:56:05Dr. Ball: In my experience, I believe they would be resistant to give it out and use it but it's a starting point and it's a combination of adverse events, recalls, inspection scores, anything that's happened at the plant or drug that is a negative experience creates a higher risk drug and that could be used to put a score on the label.
▶ 0:56:23Sen. Kim: Mr. baker, I want to end with you. You highlighted how fda investigators often have to deal with demanding travel schedules and conditions, can fall ill, how many of these inspections are in locations where english might not be the primary language yet there's no requirement for independent translators.
▶ 0:56:47Sen. Kim: I wanted to get more of a sense, what steps do you think congress should prioritize to ensure we are giving the fda workforce the support they need and also thinking through other steps like that are strengthening collaboration with foreign regulators and the steps we can do to address these needs.
▶ 0:57:05Mr. Baker: Thank you for the question. One of the things that can be done is to increase the level of investment in fda investigators. In the covid times, a lot of on-site and hands on training was moved to remote and that isn't as effective. Prior to that it would take two or three years to get qualified.
▶ 0:57:33Mr. Baker: Now due to resource constraints, you might be tasked with doing those challenging inspections you mentioned two months after hiring and you might not have the skills and training necessary to do those effectively. You will fly into an airport and get in it, especially unannounced, you get in a taxi with someone you don't know and drive four to six hours to your hotel that may or may not have air conditioning.
▶ 0:58:00Mr. Baker: May be additional support to enhance the existing program they know works. Unannounced inspections have a four-time greater chance of identifying a problem that will cause harm versus unannounced. They are very effective. Investment in that area is worth the effort.
▶ 0:58:18Sen. Kim: Thank you, I yield back.
▶ 0:58:22Chair Scott: Mr. baker, as a former fda inspector, are you confident in the quality and safety of generic drugs coming from foreign countries like china and india?
▶ 0:58:40Mr. Baker: Thank you for the question. The answer is no, I'm not confident about the quality. I'm confident in the sites I've been to end of scene world-class sites everywhere in the world, manufacturing drugs, and I'm confident in taking those products, but for the majority I would say no.
▶ 0:59:01Chair Scott: Dr. ball, what types of adverse events did you find foreign medications cost in your research?
▶ 0:59:10Dr. Ball: We found examples of cardiac arrest, gastrointestinal hemorrhage, delirium, cellulitis, acidosis pit that's a random sample I took tonight -- acidosis. That's a random sample I took tonight.
▶ 0:59:32Dr. Ball: If they are serious, and in this paper we only counted adverse events caused by the drug, reported by the manufacturer, mandatory report, and caused serious health outcomes and there are still millions of those.
▶ 0:59:47Chair Scott: You think they might be underreported?
▶ 0:59:51Dr. Ball: I think underreporting is a problem for recalls and adverse events and it leverages a lot with what peter mentioned -- the more fda is present in an unannounced matter, the less likely unreported will go because you can discover unreported offense in expressions but not if they are announced weeks or months and advanced. Those are the things a firm is likely to hide.
▶ 1:00:20Dr. Ball: If they don't have advanced notice, it's hard to hide.
▶ 1:00:27Chair Scott: How much supply of drugs do we have if communist china shuts supply off to the united states?
▶ 1:00:35Mr. Daniels: Thank you for the question. The supply chains are interwoven good I think that's the biggest issue because you will have specialty pharmaceuticals that are untouched for 6, 9 months.
▶ 1:01:01Mr. Daniels: But when you start to get to the end of that supply chain and manufacturing process, you might have severe runs on key starting materials or precursors that are necessary to support the drug manufacturing.
▶ 1:01:16Mr. Daniels: In the context of generics and specifically critical generics like antibiotics, heart medications, insulin, you could see all supply outside of what is used in emergency rooms shut down within months if china decided to stop supply to the united states, especially if they decided to stop supply chains on a supply chain like sanction that we've done on forced labor prevention in china.
▶ 1:01:46Mr. Daniels: They stopped the intermediaries from selling to us the goods manufactured utilizing their materials. It could be a severe constraint that could look cataclysmic.
▶ 1:02:00Chair Scott: Dr. piervincenzi, usp is a global organization. Our foreign-made drugs consistently meeting usp standards or do you see widespread quality failures?
▶ 1:02:15Dr. Piervincenzi: Thank you. I might also continue on Mr. daniel's comment. Quantifying the impact if china cuts off supply, is challenging but usp will show a report showing about 90% of generic supply, not all but a vast majority, that will map down to key starting material and location of origin.
▶ 1:02:47Dr. Piervincenzi: It will be the first time we can answer that. A rough number because we have to start with something, have our medicines come from india, 78 percent of their starting materials come from china. It won't be a majority but a large percentage of U.S. medicines that will become highly vulnerable. Some completely but many hiring -- highly disrupted.
▶ 1:03:09Chair Scott: You have a view of how much is in the supply chain already in the U.S.? I can't imagine, let's say a hospital coming, I don't think we've set a one year supply of drugs in case something happens. Any feel for what a typical doctor's office, or purchasing organization or hospital would have an inventory?
▶ 1:03:33Dr. Piervincenzi: The very end of the supply chain it's very little. If you were to look at onshore in the united states at a distributor, it varies but it is months, not years and not weeks. If you continue down to your starting materials, it gets a little longer and that matters because it makes it hard for us.
▶ 1:04:00Dr. Piervincenzi: A manufacturer might stop producing in every thing seems fine for a while nine months goes by and we have a shortage. It's not sudden but it seems sudden at the end because it takes a while and because we don't have good transparency we are not watching this as a comes along. So months is the answer. However, assume the summary notes it's been cut off, the shortage could take a matter of days because of hoarding.
▶ 1:04:32Dr. Piervincenzi: When a hurricane is going to hit, everything is bought up.
▶ 1:04:34Chair Scott: Stores empty and hours.
▶ 1:04:40Dr. Piervincenzi: Odds are is going to leak.
▶ 1:04:47Sen. Gillibrand: What are the risks of relying solely on the united states for production of drugs and what precautions can we take against such risk?
▶ 1:05:01Dr. Piervincenzi: Thank you. One of the four drivers over zones is geographic concentration in that's agnostic to location. There are different issues about quality we are also talking about. Some of the most acute drug shortages in the U.S. have been on U.S. shores with the unfortunate hurricane, natural disasters, things happen. It's impossible to create diversification in the U.S.
▶ 1:05:35Dr. Piervincenzi: There's a nuance to what geographic diversity looks like. If you have two plants in north carolina across the street from each other, thus not resilient, but one on the west coast and one on the east coast you might be in good shape.
▶ 1:05:47Sen. Kim: -- Sen. gillibrand: in your testimony you talk about more predictable and sustainable supply chain. How can the federal government promote a coordinated effort amongst different stakeholders to move toward a resilient supply chain?
▶ 1:06:02Dr. Piervincenzi: The sipple answer is some but he has to pay for it. I think we've heard four different versions of that same thing here. Somebody has to be not just willing to but able to. Willingness says I'm willing to pay $.13 rather than 10 sons propel, just about everyone is willing to do that. The problem is no one has evidence of how to do that. I can pay $.13 for the same pill but it doesn't by me more resilience.
▶ 1:06:30Dr. Piervincenzi: This is where a large organization, very much including the U.S. government, has that power, to say from now on, especially for a certain set of drugs we know are vulnerable, we will only pay with resilience. Meaning this is what we expect and you get this price. The market solution like that means if someone doesn't meet those benchmarks they will be less preferred. The market can fill in.
▶ 1:06:54Dr. Piervincenzi: It won't force it, it's not a binary decision, but because margins are so small, just having a tiny bit could make an enormous difference and I think that's the benefit of this problem, it could be solved with much less money.
▶ 1:07:13Sen. Gillibrand: Mr. daniels, you recommend the federal government conduct regular stress tests of the pharmaceutical supply chain to simulate worst-case scenarios. Can you speak a bit more about how the federal government could address, identify week points from these stress tests?
▶ 1:07:33Mr. Daniels: Absolutely and thank you. Two things. One, to speak about what Dr. piervincenzi mentioned, there are multiple ways to reduce the cost of these drugs as we reassure them. One of them is also relying on the innovation of allies.
▶ 1:07:59Mr. Daniels: There's a global market for pharmaceuticals and as we look at that market we need to diversify location but also platforms.
▶ 1:08:13Mr. Daniels: In many cases, there are multiple areas and supply chains where we are advising customers, which are the fortune 500, advising our customers to find two or three suppliers downstream to purchase metals, chemicals, goods from. They can do two things at that point.
▶ 1:08:34Mr. Daniels: They can utilize their purchasing power to actually reduce the cost of the underlying michaels, precursors -- chemicals, precursors. Two, they can give back some of that.
▶ 1:08:50Mr. Daniels: When customers do an embedded spend program, they can share some of that to get to a resilient supply chain and a supplier that is willing to agree to ethical quality standards.
▶ 1:09:09Mr. Daniels: These programs exist today in other industries, not as common in pharmaceutical supply chains but there are pharma companies in europe we are working with engaged in these activities and they are doing it specifically to address this. To get to your second question, which is on the stress test.
▶ 1:09:30Mr. Daniels: We've been working across a number of different federal agencies to map the critical medicines in our supply chains and understand what are the consequences of whether it's disruption, like the hurricane that knocked out our iv fluids capacity in the united states, or major shortages and wargaming
▶ 1:10:02Mr. Daniels: Due to conflicts, or significant changes in availability of underlying materials. When we are doing this analysis, it is simple supply chain planning. Companies do this t companies do this all the time.
▶ 1:10:24Mr. Daniels: We will probably have to work across companies to greet a complete view of the supply chain and that complete view doesn't stop at the specialty pharma or innovative pharma company or generic pharma company and their suppliers, it has to go all the way down. We have to see the preferred rating impact. Dr.
▶ 1:10:45Mr. Daniels: Piervincenzi said is true, many companies have 15 suppliers of the same product and then they have four suppliers, and then it goes back to one and no one knows it. That's what happened with ventilators during the covid-19 pandemic. All of our solenoid valves went back to one company in italy. Only one company had it.
▶ 1:11:15Mr. Daniels: We have to make sure the mapping is complete and we have to make sure we are assessing all the risks that can actually impact that environment, with or its geopolitical, natural disasters or material shortages.
▶ 1:11:28Sen. Gillibrand: Thank you.
▶ 1:11:31Chair Scott: Senator mccormick.
▶ 1:11:36Sen. Mccormick: Mr. baker, can you describe what level of transparency exist for american health care consumers with regard to what country it's medicine is from and what grievance could be made to make sure americans have better insight and understanding on the origins of their medicines?
▶ 1:11:55Mr. Baker: At the moment, transparency in the supply chain as far as patients knowing where medications are made is virtually nonexistent. It's a complicated issue because there are many players in the supply chain as outlined already from key starting materials all the way to the finished drug.
▶ 1:12:18Mr. Baker: You would have to take a risk-based approach, where the most critical step -- if it is intended for injection for example, it needs to be that it was filled in a sterile environment and that would be on the label. It's not a perfect solution but it's the best we could do to increase transparency and let the market fix the issues as already outlined by my calyx -- my colleagues.
▶ 1:12:46Sen. Mccormick: How can ai technology help with supply chains and what can be done to advance any reassuring or near shoring of drugs?
▶ 1:13:04Mr. Daniels: First, hospitals are mapping their supply chains, we work with multiple hospitals across united states to map their supply chains. They also in large part go back to large distributors that are intermediaries between the hospitals and the actual drug or medical advice -- device manufacturers.
▶ 1:13:31Mr. Daniels: The key first step is to use artificial intelligence to actually break down the bill of material of each of those pharmaceuticals and tie those back to the literal suppliers that the pharmaceuticals are coming from. The thing is, you can't just map the products we are buying, you should be wrapping the products you are not buying.
▶ 1:13:54Mr. Daniels: What I mean is you should understand the spectrum or the panoply of alternative suppliers you have available to you prior to a major disaster -- the customers of ours, we are endorsed by the american hospital association.
▶ 1:14:15Mr. Daniels: The customers of ours that have our software deployed new almost a month in advance the iv fluids would be subject to disruption due to hurricane helene. That kind of visibility -- of course it can lead to the stockpiling point we just made that it also can save american lives, especially in operating rooms.
▶ 1:14:43Mr. Daniels: The second question you had was henri3 the second question you had was on restoring. One of the biggest issues we have is permitting. We have a backlog in delays and permitting of new facilities and capabilities. A lot of this stuff is pretty dirty to make. Acetaminophen as an example creates a waste brought that the epa -- waste broth that the epa would not allow us to dispose of in the way that india or china does today.
▶ 1:15:14Mr. Daniels: There are novel ways to actually manufacture these. These are not novel ways that are not taken to scale yet through barta and multiple other programs looking for capabilities in emerging biotechnology. In bat in barta we have taken some of the continuous flow capabilities to scale. First, if we can permit, we can make a cost-effective.
▶ 1:15:40Mr. Daniels: The second thing is with ai and automation in the manufacturing line, we take away the single and only differentiation between us and emerging markets in manufacturing more suited -- manufacturing pharmaceuticals at scale, which is arbitrage. There are places in north texas that are cheaper than shenzhen.
▶ 1:16:08Mr. Daniels: We can build these factories and compete on a global basis.
▶ 1:16:12Sen. Mccormick: Thank you for having this hearing. Great talking.
▶ 1:16:24Sen. Alsobrooks: Thank you to our witnesses for being here. Far too many seniors face the cruel reality of needing medication they cannot reliably access or afford. High drug prices, unexpected shortages, and now secretary kennedy's policies are preventing americans from accessing the medicine and vaccines that will keep them safe and healthy. This could not be a more relevant topic.
▶ 1:16:54Sen. Alsobrooks: In the past few weeks I've heard from my constituents, so many seniors who are eligible for the latest covert vaccine, and -- covid vaccine, and now they are turned away because of the confusion caused by secretary kennedy's guidelines. Others are told of their local pharmacy is struggling to stock the vaccine because of the lag between fda approval and the forthcoming recommendations for the advisory committee on immunization practices.
▶ 1:17:25Sen. Alsobrooks: With a vaccines we know that so much doubt is being cast on life-saving vaccines as well as dismantling our public health infrastructure. That's why this conversation is so critical. Seniors deserve not just reliable medications, but I health system they can trust. My first question is for Dr. piervincenzi.
▶ 1:17:52Sen. Alsobrooks: When we see how fragile our drug supply chains can be, and vaccines are no different, this is a time when secretary kennedy is destabilizing public trust in vaccines and older americans cannot afford disruptions to flu, rsv, or covid. How has the confusion regarding vaccine approvals and recommendations this year made seniors across the country less safe?
▶ 1:18:21Dr. Piervincenzi: Thank you, senator. Interesting facts on the vaccines, in comparison to low-cost generics, there are quite a few manufacturers in the U.S. if you consider U.S., europe, canada, there is a disproportionately high quantity. There is the ability for fda to do more inspections.
▶ 1:18:50Dr. Piervincenzi: The public should have more confidence that they are able to rely on the quality of the vaccines. As a complex biologic, there are linkages to the complex generics that are showing up on the shortage lists the most. Because they are the kind of medicines used in hospital for that reason alone, they are impacting two groups the most. The most senior, especially in oncology, and the youngest pediatric population.
▶ 1:19:20Dr. Piervincenzi: Tending to be oncology also, but not always. These two populations have been most affected. An extra layer to this problem is these medicines are the least substitutable. We have not cured cancer, so the best we can do is slow it down. It is a slow change from one chemotherapy to the other. The progression advances, it is the person's life at stake.
▶ 1:19:45Dr. Piervincenzi: The vulnerability is not just about the medicine, but the patient and what the best next alternative is. From a quality standpoint, vaccines are different because they are given to a healthy patient, so you are measuring it in two different ways. However a poor quality vaccine, you will only test that 30 or 40 years later when you are exposed to a vaccine. When you need to rely on quality, I cannot think of a medicine more important than vaccines.
▶ 1:20:13Sen. Alsobrooks: I have another question, or two actually, regarding transparency, for seniors in particular. This is for any witness, it's not just about how or where the drug is manufactured, but whether that they can trust what is in their pill bottle is safe and effective.
▶ 1:20:34Sen. Alsobrooks: Too often our system reacts after a crisis, instead of putting preventive measures in place, to find out too late that medication is suddenly unavailable. How should we be thinking about transparency not just as a tool for regulators, but as a preventive measure that empowers patients to make informed choices about their medications and avoid being blindsided by shortages? That is for any witness.
▶ 1:21:11Mr. Daniels: I would emphasize pharmacy, if I might. There is a big gap to the patientunderstanding, but we hae patientunderstanding, but we han army of hundreds of thousands of healthcare practitioners called pharmacists across our country who are unusually close to patients. That is a huge positive. There is an opportunity to have them play a more active role when it comes to supply chain and quality.
▶ 1:21:41Mr. Daniels: Not typically a topic that they touch. If we want to empower patients, we will have to solve this through partnership with pharmacy organizations that I know are willing to have this conversation.
▶ 1:21:52Sen. Alsobrooks: Thank you. >> when my paper got introduction got published, my team got scared e-mails from the public, how can I find out where my drug is made, I don't know how to figure this out. This is something we were able to do in this study be published, but it is very difficult.
▶ 1:22:21Sen. Alsobrooks: This is why we advocate for forcing firms to put the location on the label so that it is transparent for everyone. We developed a website where you can type in a national drug code number and a flag will pop up to tell the consumer where it is made. It is a difficult step to go from a national drug code, which is on every drug label, to a country manufacturer, which is hard to find out.
▶ 1:22:51Sen. Alsobrooks: Thank you.
▶ 1:22:57Chair Scott: You mentioned indian generic drug manufacturers using fake labs to show a project was never tested. Can you talk us through what is supposed to be happening and what you found and how you found it? >> the fda publishes manufacturing standards in a code of federal regulations they are supposed to follow.
▶ 1:23:25Chair Scott: For example, you are supposed to report all the results that you generate. You cannot just pick one or two that you like and use that as the data to release the product. That is what is supposed to happen. What we found when we started the unannounced inspection pilot in 2012 and 2013 is that those standards are not being always followed. Some players are following those standards, but some aren't.
▶ 1:23:56Chair Scott: It's difficult because the ones that want to follow the rules often times won't be able to win a contract to ship those products to the U.S. because they cannot compete with the folks that are testing it. It costs a few more sense to do it right -- cents to do it right.
▶ 1:24:15Chair Scott: In a book, it talks about how foreign companies plan guided tours, but you rejected that and wanted to go to the quality control apps. Can you talk about your experiences with foreign companies? Why did you decide to change things up and go directly to quality control, and how has that changed in inspection process? You were the only one doing that, or do other inspectors do similar things?
▶ 1:24:43Mr. Baker: I remember the moment we decided to focus on the inspection pilot. I had been trained to do inspections in the U.S.. I did that before I got deployed to new delhi. Fraud happens here too, but it's much more limited. I remember the moment being over there. I was with a co-inspector. We looked at each other and thought, everyone is involved in this.
▶ 1:25:10Mr. Baker: It's not just a single person or small group, it comes from the top down. It was an aha moment, we have to do something about this. We worked with folks to develop ways where we could gain further insight into what is happening. That involved showing up unannounced, which had not been done prior to that. We would skip the conference room presentation and go straight to the lab.
▶ 1:25:37Mr. Baker: For example, one of the larger sites in the world, some the size of a small town, and instead of going to the conference room we went to the microbiology laboratory. This is a life or death test. We walked in and there was only one microbiologist on staff. That was unusual. We walked into the chambers where they were supposed to test all these products, and they were all there, but unlabeled. Where is the sample number?
▶ 1:26:09Mr. Baker: All the paperwork was completed. No growth, it is sterile. But in reality none of the products were getting tested. Once we caught on this was happening, that program expanded. When those inspections are performed, they result in an ability to find those problems that are causing these adverse events. About 40% of the time we find issues.
▶ 1:26:36Mr. Baker: In an unannounced inspection, that's a 5% to 10% chance of finding those problems. We don't do announced inspections in the U.S. you want to see the real quality of the product. This has shown that may be the playing field is not so level.
▶ 1:26:58Chair Scott: You mentioned the battle players list is no secret and these bad companies continue to avoid any significant consequences. The fda knows which are the problem companies, but they are not being inspected frequently enough or still being allowed to import drugs. Does the fda have a list of bad companies? What consequences should these companies be facing?
▶ 1:27:22Mr. Baker: That list exists. I can look into the database and see if I fill a prescription, which provider I would like to choose. I will do pharmacy hopping to find it. Sorry, what was the second part of your question?
▶ 1:27:39Chair Scott: What consequences should they?
▶ 1:27:42Mr. Baker: If you are caught breaking the law, as outlined in the regulations, you should be prevented from shipping product.
▶ 1:27:51Chair Scott: So they got a list and there is no consequences.
▶ 1:27:54Mr. Baker: Very little consequences. When the fda takes action, they will just shift those products to another facility in their network. It is this cat and mouse game. This facility gets shut down, so now they are shipping out of this one, but by that time this one is already back in the market. It will sometimes be an announced inspection and the game resets.
▶ 1:28:23Mr. Baker: And so enforcing the law, if you break the law you will not be able to participate, could go a long way.
▶ 1:28:31Chair Scott: And then we put that in our bodies?
▶ 1:28:34Mr. Baker: That is correct.
▶ 1:28:36Chair Scott: Ranking member.
▶ 1:28:39Sen. Gillibrand: Very depressing. For Dr. ball, you studied the impact of five-star quality ratings on consumer choice. Not everybody has the skill set that Mr. baker described in being able to know which vendors save, so patients don't have much choice in choosing which medicines their pharmacies or nursing homes choose to stock.
▶ 1:29:07Sen. Gillibrand: They arguably don't have the level of sophistication they need to choose anyway. In hospitals and some nursing homes, patients may not have access to containers where quality or country of origin labels be placed.
▶ 1:29:24Sen. Gillibrand: How can a five-star quality rating system and country of origin label promote the use of high-quality drugs when patients often don't have much choice, and how can this proposal incentivize hospitals to purchase high quality drugs when institutions often face pressures to keep costs low? And third, how would you recommend the fda conduct inspections and update their five-star quality ratings?
▶ 1:29:54Dr. Ball: Our solution we tested in our paper is a first step. I've had my parents and elderly family members ask me how do I know where this drug is made, and is it safe? Look at a bottle and say, why is this a three-star drug? That question can make a big difference. Groups like the aarp could suddenly have a voice. Why are we selling three or two star drugs to our constituents?
▶ 1:30:28Dr. Ball: You are correct it would not fix everything overnight, that hospitals may not have the stars on their packaging. Group purchasing organizations may be less sensitive, but the notion is if it becomes transparent for every level of the supply chain, the manufacturers are no longer able to hide, and they have to somehow compete on quality.
▶ 1:30:52Dr. Ball: It would not fix the problem overnight, but it would also allow group purchasing organizations who change suppliers based on pennies, which is often the case in our research, to say yes we may save a penny but this is going from a three-star to a two-star drug.
▶ 1:31:13Dr. Ball: That has consequences for those in the insurance program that they serve, or the elderly person that asks the pharmacist, why are you giving me a two star drug? That is the starting point to put pressure on firms. It is much better than what we have now.
▶ 1:31:28Sen. Gillibrand: Mr. baker, how should country of origin labeling be implemented to take into account the origins of a generic drug's components versus the manufacturing site of the generic in its final form?
▶ 1:31:46Mr. Baker: I've been thinking a lot about that. Over the years, having seen the sites and thinking this would eventually come based on what we were uncovering. There is no real perfect solution, but there is a different type of drug if you are talking about a solid oral product or injectable product. There is one step that is critical to quality for the purity and in some cases sterility.
▶ 1:32:14Mr. Baker: Putting that on the label would force companies to take that step seriously, and also possibly diversify supply chains for those critical steps to have those in areas that are reliable. An aseptically filled product, where is that being filled?
▶ 1:32:40Sen. Gillibrand: Dr. piervincenzi, your written testimony indicated the U.S. relies heavily on india and china. I think the chairman's questions about those two countries have been very insightful. The majority of these ksm's are produced in china. You highlighted how one ksm is produced only in china.
▶ 1:33:02Sen. Gillibrand: Can you speak to why the united states is currently unable to produce certain key starting materials beyond the environmental impacts of the manufacturing process?
▶ 1:33:12Dr. Piervincenzi: Thank you, senator. The key starting material -- senator scott, you said this earlier, it is only relevant to its use in a pharmaceutical treatment. They are chemicals. The chemistryy -- the chemical industry left the U.S., became pharma, so there is no mystery as to why it left the U.S.
▶ 1:33:41Dr. Piervincenzi: For environmental reasons and cost and all the reasons we know. There is something unique about medicines, they are very light users of very expensive chemicals.
▶ 1:33:54Dr. Piervincenzi: Many of the chemicals used in drugs are used for lots of other industrial and other purposes, but in much larger quantities, so that the chemical company, very rarely to have a key starting material company, they therefore are a small portion of their business.
▶ 1:34:15Dr. Piervincenzi: This further complicates the supply chain because later on these chemical companies are not even in the medical business. When we think about how we can, secure our key starting materials it's not only the area of greatest risk, it's what we least have in the U.S. it's also the harder of the three pieces to solve.
▶ 1:34:43Dr. Piervincenzi: We think we have to look at the ksm model and think, how do we start to source it? Do we need to be more flexible about the world? The current model is unsustainable. We will have real numbers in a couple months.
▶ 1:35:05Dr. Piervincenzi: Less than two months where we can look at them as tangible we have to have some data, otherwise it is hard to get action going. Hopefully this is the first time we have data on what key starting materials where, and we have the important next conversation, how else can we make them? There are some cases we can make them a different way that does not follow the chemical industry but uses biotech processes.
▶ 1:35:36Sen. Gillibrand: Thank you, Mr. chairman.
▶ 1:35:39Chair Scott: Mr. baker, you highlight the story of your grandmother. How many pharmacies did you visit? Did you find they had the same drugs or company? Was there a diversity of manufacturers?
▶ 1:35:54Mr. Baker: We come from a pretty small town in oregon. There is about three pharmacies in the area, so we went to all three. Each one had the same product by the same manufacturer. We reluctantly made that choice. At the first pharmacy I already hinted this was not going to go well. It was an experience that will stay with me the rest of my life.
▶ 1:36:25Mr. Baker: It shouldn't be like that. We can do better.
▶ 1:36:30Chair Scott: How did you feel buying a drug from a company that just settled with the doj for faking lab data?
▶ 1:36:37Mr. Baker: Yeah, it was a tough decision. As I mentioned, trying to stay positive is the one thing. You don't want to cause unnecessary panic in someone. A lot of people asked me, they will call or email, what do you think about this one?
▶ 1:36:58Mr. Baker: Over the years, sometimes I have to fake that advice because I know there is no alternative and I will have to send a positive e-mail when in fact inside I know that is not the truth.
▶ 1:37:09Chair Scott: How do you do it when you buy drugs for yourself?
▶ 1:37:12Mr. Baker: I would do the same thing. I live now in austin, so I have more choices. I try to do my best to shop around, or consider an online pharmacy if I can find out what manufacturer they will use to fill that prescription.
▶ 1:37:31Chair Scott: Do you believe americans are dying because of poor oversight at foreign generic drug facilities?
▶ 1:37:39Mr. Baker: Not poor oversight, but poor enforcement. But again, it's complicated to enforce because of the drug shortage issue. It is no one person or organization's fault, it's the system.
▶ 1:37:58Chair Scott: Why did the fda set up this foreign surveillance system the way they did?
▶ 1:38:03Mr. Baker: It was a collaboration to evaluate the tell the story. The main one why the foreign offices were established in strategic locations was to be that rapid response and gain further insight into what was happening with our supply chain. 15 years later, the picture is pretty clear.
▶ 1:38:36Chair Scott: Dr. ball, if they are all fda approved, what are some things that causes one to be different than the other?
▶ 1:38:45Dr. Ball: The notion that if it has the same active pharmaceutical ingredient and route to administration, if you match those, the drug will work. That discounts all the manufacturing influence on quality. These are subtle changes. My intuition is they are not often on purpose.
▶ 1:39:10Dr. Ball: If I was only competing on cost, I would find the cheapest place to make my product, the cheapest labor, the cheapest equipment, the cheapest suppliers. It's the rational thing to do. When peter says it is the system, it truly is. I believe these manufacturers are acting rationally. If you cannot judge quality, cost is the only thing that matters. That will inevitably produce quality.
▶ 1:39:40Dr. Ball: It must, it is a scientific fact. If you cut the corner in making every part of a product, if quality doesn't suffer, something is wrong, you have not cut corners enough. It's in every part of the supply chain.
▶ 1:39:53Chair Scott: When you did a foreign site inspection, did the fda or foreign facility pay for your translator? Is that a problem either way?
▶ 1:40:02Mr. Baker: My experience, most of the translation is provided by the sales department within that company, who often times has the best english because of their job. They don't know much about manufacturing, but they know they are supposed to tell the story well. That is often times what I experienced. Luckily I studied mandarin for 15 years prior to going to china, so I could overcome those challenges.
▶ 1:40:33Mr. Baker: That is the norm. Not always. Sometimes they will provide an independent translator, but it's voluntary.
▶ 1:40:40Chair Scott: When they let you go to china, did they let you go anywhere you want?
▶ 1:40:44Mr. Baker: Yes.
▶ 1:40:45Chair Scott: The government would let you go anywhere and you could walk into any facility he wanted?
▶ 1:40:50Mr. Baker: Oh yes. We had a good working relationship with cfda at that time. They would shadow us to learn our techniques.
▶ 1:41:02Chair Scott: Why would they shadow you?
▶ 1:41:04Mr. Baker: To learn how we uncovered the issues we were finding using forensic computer inspection techniques, things like that.
▶ 1:41:14Chair Scott: Give me an example of the facility you are most disappointed in.
▶ 1:41:19Mr. Baker: Most disappointed are the ones -- I mentioned this in the five-minute testimony where you show up at the show facility, the clean one, but you knew there was no way they are making the amount of products that I can see on the customs import list.
▶ 1:41:44Mr. Baker: You will show up at midnight and watch operations and eventually uncover a shadow facility, could be next door or somewhere else. When you find that shadow facility, that is one of the most concerning things, because those are totally off the radar. Exponentially worse when you don't do any inspections.
▶ 1:42:16Mr. Baker: We probably figured 10% of the api getting exported was from shadow facilities. I have no data to support that, that was just a rough number we came up with. Compounding pharmacies are suffering as a result of this because they are importing products. They really don't have any ability to determine where they are coming from.
▶ 1:42:44Chair Scott: How long could the facility that is doing the wrong thing stay in business before they are shut down?
▶ 1:42:54Mr. Baker: A longtime, especially if they had any drug on the shortage list. You could prevent some of their products from reaching the U.S., but they would continue to ship a couple, we call them car rout es. They will ask for reinspection in one to two years. Fda will go back and it is resource intensive to do unannounced all the time.
▶ 1:43:27Mr. Baker: The clock resets. They could hang on for years because we are addicted to these sites.
▶ 1:43:34Chair Scott: Dr. ball, you reviewed adverse data that the fda cross-referenced to drugs made in india.
▶ 1:43:43Dr. Ball: Correct.
▶ 1:43:44Chair Scott: Where does the adverse event data come from? What conditions were eliminated at an adverse event?
▶ 1:43:54Dr. Ball: An adverse event, we use fda's database. They make the determinations. The manufacturer must report an event that they hear about where a consumer was injured, hospitalized, or died because of a drug. Through the fda's analysis of these adverse events, there are flags put on to the adverse event.
▶ 1:44:24Dr. Ball: Things like a drug characterization field, that means the drug is the likely cause of the event. A de-challenge field means if the patient was taken off the drug, the problem that was discovered went away. We tested just the de-challenged drugs, which was convincing for us as an author team because our effects still hold on those drugs that cause death, hospitalization or injury.
▶ 1:44:56Dr. Ball: The firm must report it when they hear about it.
▶ 1:44:57Chair Scott: The firm, who is that?
▶ 1:45:00Dr. Ball: The manufacturer. They hear about adverse effects from patients, from lawyers.
▶ 1:45:06Chair Scott: There's no obligation that a patient say it, and no obligation to the doctor?
▶ 1:45:12Dr. Ball: Correct. The order you just gave, the nurses and physicians are much more attuned to how the physicians work than patients. They know this database is there and they have to report what they have found, but there is no obligation. It must be underreported, because it's not forced.
▶ 1:45:39Dr. Ball: This does come back to the fda enforcement authority because these reports come into firms and these firms maintain complaint databases. On an unannounced inspection you will get an honest look into how the quality of the firm is operating versus if you give them even a week's notice the look may not be the same.
▶ 1:46:01Chair Scott: What is the total list of adverse reactions?
▶ 1:46:06Dr. Ball: I can get that to you. It is incredibly long.
▶ 1:46:09Chair Scott: Half a million?
▶ 1:46:11Dr. Ball: I know it's in the thousands. It's a very long list.
▶ 1:46:15Chair Scott: Why do you think it is different in the U.S. if it is manufactured there versus india or china?
▶ 1:46:24Dr. Ball: This is speculation somewhat, because in the study we were not able to get at that core mechanism, but theoretically it makes a lot of logical sense that when you source a product in the lowest-cost place, where you are furthest from the regulators, the temptation to cut corners that will affect quality goes upa and up.
▶ 1:46:49Dr. Ball: If quality if assumed to be high, you have the fda stamp of approval, you no longer have to worry about quality. The difference lies in the fact that in the U.S. you are much closer to the fda, their authority is much more felt, and the costs of the suppliers and raw materials are more. As soon as you get that far away, the fda's authority is more distant and the cost of everything is lower.
▶ 1:47:19Dr. Ball: That lower cost will come through in lower quality.
▶ 1:47:23Chair Scott: And you don't have oversight?
▶ 1:47:25Dr. Ball: The oversight is much more distant. I don't envy the fda. It's much harder to enforce their standards.
▶ 1:47:34Chair Scott: Generic drugs manufactured in india have a 54% higher chance of an adverse event, which is hospitalization and death, compared to a similar drug made in the U.S.?
▶ 1:47:47Dr. Ball: Correct.
▶ 1:47:48Chair Scott: Let's say you are going to buy two cars. You buy one car, you know you have a 54% chance of something bad happening to you, what would you do?
▶ 1:48:01Dr. Ball: Because cars have quality ratings, I would buy the higher quality rated car. That cannot be done in drugs. If I knew the difference I would spend the money to buy the higher quality product.
▶ 1:48:14Chair Scott: Do you think the national highway traffic safety administration would love a car that was 54% more dangerous on the road?
▶ 1:48:21Dr. Ball: See, and nhtsa does not have to worry too much about that because car quality is accessible to the consumer before they buy it. That is the difference between that and the pharmaceutical industry. It is inaccessible before an evening -- before and even after you buy it. There are so many data points that it is easy for these increases to hide.
▶ 1:48:47Chair Scott: What was the fda reaction to your study?
▶ 1:48:53Dr. Ball: While I worked with the fda before, since we published that paper, I've not had a lot of interaction with the fda, and in the last several months some of my contacts have left. I don't honestly know what the fda reaction is.
▶ 1:49:12Chair Scott: Did your study show a difference in quality in drugs made in canada and the eu compared to india?
▶ 1:49:20Dr. Ball: There is an overall difference between emergent and advanced economies, but when we broke that difference out by countries, the only country difference was india to U.S. so no, there was not a difference between U.S. and canada, however the volume of drugs in our study was overwhelmingly advanced economy drugs for the U.S. and overwhelmingly emerging economy drugs for india.
▶ 1:49:47Dr. Ball: The volume made the difference findable, but not something we saw when we compared the U.S. to canada.
▶ 1:49:53Chair Scott: What was the landscape of generic drugs you looked at?
▶ 1:49:57Dr. Ball: We looked at everything we could get label data on.
▶ 1:50:01Chair Scott: So statins, antibodies, antibiotics and blood pressure medicine?
▶ 1:50:08Dr. Ball: Everything that had a label, we measured it.
▶ 1:50:12Chair Scott: Why do you think the fda does not put in country of origin ingredients?
▶ 1:50:21Dr. Ball: This is speculation. I believe that there is a few reasons. I have heard through some of our discussions with them that if they were to put quality or country labeling, it could cause some unexpected market reactions. It could cause shortages, for instance. If you look at a drug --
▶ 1:50:47Chair Scott: People might buy american first.
▶ 1:50:50Dr. Ball: If the supply is not there, all of a sudden we have overnight shortages because we made the market transparent. I believe the fda does not think they have the authority to force the manufacturer to put the countries on there. They believe that is confidential.
▶ 1:51:10Dr. Ball: The quality rating is something we have taken from data they possess and we have come up with a measure we believe they could translate it to, but not immediately available now.
▶ 1:51:23Chair Scott: I think you said china supplies 90% of antibiotic apis consumed in the U.S. can you talk about how you figured this out?
▶ 1:51:32Mr. Daniels: Yes. What we found was 90% of the antibiotic apis used by india, india being the vast majority of the generic antibiotics we were getting, were manufactured in china.
▶ 1:51:54Mr. Daniels: The way we mapped this, we took every single critical medicine that we had in our study. We built a bill of materials for each of them, so every single component of that drug, and once we had that bill of materials, we identified each supplier that
▶ 1:52:24Mr. Daniels: Was connected to every single one of those components. Once we identified the supplier, we knew how much of the active ingredient was in every dose, and we could see the doses being consumed in the U.S. we mapped that up to supplier capacity, supplier volumes, which we have a proprietary data and customs trade and invoicing data that informs us as to what is happening between those two companies.
▶ 1:52:54Mr. Daniels: We could see where the next company was sourcing their key starting materials at that next level. We kept tracing down the line to the facility, so we knew which facility was producing which chemical compounds.
▶ 1:53:14Mr. Daniels: Once we got down to the facility, we cross-referenced the data we had pulled through to ensure that capacity was visible and to identify things like shadow facilities, which there is a significant volume of that product coming through.
▶ 1:53:32Mr. Daniels: We roll that up to the supply chain and identified that essentially these manufacturers in india were using this significant cost differential between the locally made goods and what was being made in china and to expand margins.
▶ 1:53:55Chair Scott: Are there other drugs that you are aware of that has huge dependency on communist china?
▶ 1:54:05Mr. Daniels: About 50% of our medicines are in that category.
▶ 1:54:09Chair Scott: Do you think this is a national security risk?
▶ 1:54:11Mr. Daniels: 100%.
▶ 1:54:13Chair Scott: I'm a grandfather. If china were to limit antibiotic related apis from being exported, would it impact us?
▶ 1:54:26Mr. Daniels: Yes. You would see at least 50% of the antibiotics your kids have access to evaporate. The next time one of your grandchildren get a strep throat, I bet you dollars to donuts it's made by an indian manufacturer using chinese ksms and apis.
▶ 1:54:51Chair Scott: You think this could create a public health emergency?
▶ 1:54:55Mr. Daniels: It almost did during covid. I was working with stacy cummings. When they said they would drown us in a sea of covid, those calls happened.
▶ 1:55:11Chair Scott: If they shut it off tomorrow, how long do you think our supply is?
▶ 1:55:17Mr. Daniels: It is months, as Dr. piervincenzi said. It is months with severe constraints. You would probably be treating people on sepsis. Kids would have to weather through and that could be very dangerous.
▶ 1:55:36Chair Scott: Are there any drugs where there are only one supplier?
▶ 1:55:41Mr. Daniels: There are.
▶ 1:55:43Chair Scott: They are relying on china or india?
▶ 1:55:46Mr. Daniels: There are. I don't have the names off the top of my head, but I remember looking in the study there were significant volumes.
▶ 1:55:57Chair Scott: 95% is imported from china.
▶ 1:56:03Mr. Daniels: 95% of ibuprofen. There is a key starting material that is, that 95% of it is pulled from china. And that ingredient then goes into ibuprofen. There are other ways in which to source that same material.
▶ 1:56:35Mr. Daniels: The same goes for acetaminophen. There are other ways to source that material, but they are not cost advantageous and therefore not used.
▶ 1:56:43Chair Scott: 91% of hydrocortisone is imported from china? That sound right?
▶ 1:56:50Sen. Alsobrooks: So half os U.S. penicillin is imported from china?
▶ 1:56:55Mr. Daniels: Yes.
▶ 1:56:58Chair Scott: That does not make any sense. The federal government knows this and has done absolutely nothing about it?
▶ 1:57:05Mr. Daniels: At the moment -- after covid there was a huge fervor. It died. We started studying the problem and stopped executing against the re-and strategic activities. I am hopeful that hhs, particularly the fda, picks this up.
▶ 1:57:33Mr. Daniels: As of right now we are not actively policing these supply chains.
▶ 1:57:39Chair Scott: Are you familiar with the weaker forced labor prevention act? Do you think that is being complied with?
▶ 1:57:46Mr. Daniels: I do not believe we are conducting significant or thorough inspections in this space. At the beginning of the year there was a significant drop in detentions that would indicate a lower volume of enforcement. Those have since rebounded, chairman scott.
▶ 1:58:16Mr. Daniels: I think we could significantly stiffen and strengthen our policing of that law.
▶ 1:58:21Chair Scott: Have you tracked the department of defense lines on china for drugs?
▶ 1:58:27Mr. Daniels: I have, yes.
▶ 1:58:30Chair Scott: Do we have our own source so our military is never dependent on china?
▶ 1:58:35Mr. Daniels: We do not.
▶ 1:58:36Chair Scott: Why wouldn't we?
▶ 1:58:39Mr. Daniels: We in many areas are reliant on -- it's like in critical minerals and it magnets, chairman scott, where the commercial markets have so deeply been usurped by china that we don't have the investment capital coming in to offset it.
▶ 1:59:05Mr. Daniels: Just like we are doing in mp materials and magnets and things like that for our weapons systems, you have to make those same investments in our pharmaceutical supply chains.
▶ 1:59:17Chair Scott: If china invades taiwan or continues to attack the sovereignty of the philippines and we go to their defense, do you think they will keep shipping us drugs?
▶ 1:59:29Mr. Daniels: I think it would be a key tactic to stop.
▶ 1:59:33Chair Scott: Do you think it would be safe for our military to continue taking chinese drugs?
▶ 1:59:39Mr. Daniels: No sir.
▶ 1:59:41Chair Scott: Can you explain the role the chinese communist party plays in the generic drug supply chain?
▶ 1:59:52Mr. Daniels: The pla is infused into the chinese economy. It is called the military civil fusion. In many cases, several of the organizations that are producing these active pharmaceutical ingredients or ksms are sponsored and funded by pla funded entities.
▶ 2:00:27Mr. Daniels: Those situations create a significant amount of command and control, foreign ownership and influence risk in those companies, and make them essentially beholden to not only the ccp, but pla.
▶ 2:00:42Chair Scott: Would you say the U.S. healthcare system is entirely beholden to the communist party of china?
▶ 2:00:48Mr. Daniels: At the moment, yes.
▶ 2:00:50Sen. Alsobrooks: Dr.
▶ 2:00:51Piervincenzi - Chair Scott: Dr. piervincenzi, how many sourced api's come from communist china?
▶ 2:00:59Dr. Piervincenzi: Thank you, senator. We are aware of 11 that are directly coming from china. The real answer is apis are coming from china to india. We know that is where 95% of our challenge is.
▶ 2:01:23Dr. Piervincenzi: I think antibiotics are a real case and it was a choice in china many years ago to have that as a strategic asset. It was successful while the world was not really paying attention. That's a bit of an outlier. The vast majority of reliance on china is coming back to the starting materials and chemicals.
▶ 2:01:47Chair Scott: How many generic drugs use key starting materials from china?
▶ 2:01:52Dr. Piervincenzi: It will be somewhere in the range of 20% to 40% of my guess, but give me about two more months and we will have an answer.
▶ 2:02:02Chair Scott: How about brand-name drugs? Do they use apis from india or china?
▶ 2:02:09Dr. Piervincenzi: Rarely. It goes to the different incentives. It is not that they couldn't it is just not necessary. The incentive is a high-value product. We need a reliable supply chain. Their finished dose is rarely in those countries. They don't want a big complicated supply chain around the world, so they try to simplify. Therefore you see the apis manufactured mostly in U.S., europe, canada.
▶ 2:02:41Dr. Piervincenzi: A bit more in europe than the U.S. in this case.
▶ 2:02:45Chair Scott: What random testing of generics happen in our marketplace?
▶ 2:02:50Dr. Piervincenzi: The U.S. market is a bit unique today. There is a risk-based approach at the fda which is taking into account the known issues and that drives testing, but there is very little random testing and currently today there is no private sector solution to do so.
▶ 2:03:16Dr. Piervincenzi: This is relatively common practice in most markets, including europe, but middle income countries as well it is called post-market surveillance, where you buy something from a pharmacy and test it.
▶ 2:03:29Chair Scott: Does usp track the amount of drugs americans are taking their rely on chinese apis?
▶ 2:03:38Dr. Piervincenzi: Yes.
▶ 2:03:40Chair Scott: Does that present a risk to our supply chain?
▶ 2:03:43Dr. Piervincenzi: If you believe china supply in our drugs is a risk, then yes.
▶ 2:03:57Chair Scott: How many of you would buy generic drugs drug made in india or china if you knew there was an american made available? Anybody?
▶ 2:04:10Dr. Piervincenzi: I would if I had the assurance of the system. The system as described is tilted today, and that is the issue. It's an important nuance to me, because that is where the solution lies, that untilting.
▶ 2:04:33Chair Scott: If you listen today based on the testimony, americans -- we have hospitalizations, illness and death because of adverse effects from some foreign made generic drugs. Does anybody disagree? Bad drug quality does not just mean drugs are less effective, but they could also make you sicker or can kill you.
▶ 2:05:03Chair Scott: Every american senior needs to look into the medicine cabinet and ask this question, am I confident that the generic drugs I am taking are truly safe? Do you believe today they can say that? Two they have any ability to say that -- do they have any ability to say that? That they can go to their pharmacy, they can say it is safe?
▶ 2:05:37Chair Scott: I talked about leroy who lost his wife and son weeks apart due to contaminated heparin that they needed for dialysis treatment. It is horrible. This should never happen in this country. If americans don't know where the drugs they are taking are made, if there is no measurement system, there's no way they can feel confident they can feel safe. It's clear we have a big problem.
▶ 2:06:04Chair Scott: I'm from florida, we have hurricanes. At least with hurricanes you can get out of the way. I always tell people you can rebuild a house but cannot rebuild your life.
▶ 2:06:22Chair Scott: It seems like, number one, even if we did not have the concern about the way communist china acts, we say to ourselves it is crazy we are not focused on quality and supply.
▶ 2:06:38Chair Scott: But on top of that we know that we have communist china threatening taiwan and the philippines, so why on god's green earth would we allow our country to be dependent, whether anyone that takes a generic drug, or why would we ever put our military in that position? It does not make any sense.
▶ 2:07:07Chair Scott: I think the bottom line is we have no choice, but we have to make a significant change. I hope the new head of the fda will take this seriously. I think the way we will see change is if the american public demands it. As governor of florida, my experience is if people demand it, then it's going to happen. People continue to be complacent, it will not happen. I would like to thank everyone for being here today.
▶ 2:07:38Chair Scott: I look forward to working with members across the aisle. If any senators have additional questions for the witnesses, the record herein will be open until next wednesday at 5:00 p.m.. Anything anybody else wants to add? Thanks, everybody. Thanks for being here.