▶ 0:17:37>> we will take the model s production space and converted into the optimus goal of robots. >> applications for unemployment
▶ 0:45:03>> the U.S. special committee will come to order. This can be exposed the health risks and security threats posed by the overreliance on communist china and india for generic drugs and the ingredients that make them known in the medical industry as apis. Without a bipartisan effort to demand accountability.
▶ 0:45:29We sent letters to the food and drug administration, veterans affairs, and key stakeholders including large purchasers and major pharmacies. The aging committee exposed the dangers in america's medicine cabinet. We released of a report detailing the extent of the threats and held hearings. We heard from experts about the problems we face due to our massive overreliance on foreign-made generic drugs.
▶ 0:45:54We heard horrifying stories from a four inspector about how dangerous and unregulated these drugs from communist china and india can be. We learned about the tragic deaths caused by failures to make sure the medicines americans rely on the heel and treat them are safe. In the second hearing we discussed solutions for safer medicines, secure supply chains so we are not dependent on adversaries like communist china for medicines and create good paying american jobs by bringing back drug manufacturing back to america.
▶ 0:46:23The third hearing we heard from american drug manufacturers about the hurdles they face when they try to ramp up production. What we uncovered will shock you. 91% of prescriptions and united states are generic drugs. Of those, almost 94% use apis produced and processed overseas in factories predominantly in communist china and india that have little to no fda oversight.
▶ 0:46:50When the fda makes it abroad to inspect these facilities, the often warned them in advance which gives them time to cover up outstanding issues before inspectors see them. That is crazy. Even with all this time to prepare we see reports of lizards and birds flying around foreign facilities. Does that sound safe and sanitary to anybody here? Absolutely not. We face two problems every american needs to understand.
▶ 0:47:19Foreign manufacturing of generic drugs are made with untested and dangerous apis from countries like india and communist china. We cannot trust these drugs because we know they are less safe than those made in america. The second is that fixing the problem has been made difficult by our own government bureaucracy that blocks american drug manufacturers and fuels are overreliance of communist china and india to make generic drugs. We face a massive national security risk as well.
▶ 0:47:49Think about it. If the government of communist china, a self-described enemy of the united states or india wants to stop the supply of prescription drugs to the united states they can do so at any moment. If that happens, the united states has absolutely no plan to keep these generic life-saving drugs available and this may found sartre -- far-fetched but is being played out in real time. Communist china has rare earth minerals.
▶ 0:48:21And you blocked the export of criminal group -- pharmaceutical ingredients what can happen again. It's only a matter time before more american lives are unnecessarily lost. We cannot allow that to happen. We must act now. That's why I have taken action with the introduction of my clear labels act. It will require country of origin labeling for pharmaceutical so that physicians, pharmacists and most importantly the american families taking these medicines know where the drugs are coming from.
▶ 0:48:53Every american deserves honesty and transparency about what they are putting into their bodies. We label food, clothing and other products but we don't require that same standard of of medicines -- standard of medicines. Can anyone disagree with that? It is wholly irresponsible we are living the dark when it comes to our medicines are made.
▶ 0:49:17My bill changes that and drug s we need to identify the name and location of the apa's original manufacturer and the packer or distributor. Is the researchable electronic portale -- portal. This will bring accountability to our generic drug industry. Most americans would prefer to buy american when they can. With drugs, to up on the information about the country of origin is not readily available.
▶ 0:49:47They want to know what they are taking is safe and they want to support american jobs. By labeling these drugs americans will have more information to help them make well-informed decisions for themselves and their families. I encourage more domestic drug manufacturing making sure generic medicines are more effective and readily available. Country of origin transparency is not a consumer right, it's a matter of national security, public health and american pride.
▶ 0:50:19I invite all members to join me to sponsor this legislation. We can get country of origin labeling done now and allow stakeholders to be confident and informed about the medications they take. I look forward to hearing from witnesses today on how we can empower patients to make the best choices for themselves and families when it comes to whether medicines come from. I will turn it over to senator moody.
▶ 0:50:43I have to go to a foreign relations committee and she will take over. My colleague from florida, she has to worry about what her kids are putting in their body. >> good morning and thank you so much for being here. I would like to welcome all of our witnesses and everyone that is here today to witness this hearing.
▶ 0:51:13Our witnesses are leading experts on generic drugs and generic drug supply chains and can speak to how we ensure americans have access to medications that are safe and high-quality. I would like to introduce our first witness. If you would like to go ahead and begin your introduction and we will go from there. Dr. john gray. Dr.
▶ 0:51:37John gray is a just was professor of operations at the ohio state university's fisher college of business. Go ahead.
▶ 0:51:46Dr. Gray: Distinguished members of the committee, thank you for this opportunity and for bringing so much attention.
▶ 0:51:55Sen. Moody: I am not chairman scott. I have more here than he does. [laughter] thankfully. >> [inaudible]
▶ 0:52:03Sen. Moody: Go ahead.
▶ 0:52:05Dr. Gray: I strongly support giving consumers, doctors, pharmacists and other stakeholders access to drug information, including country of origin and some valid assessment of drug quality risk. This transparency would allowed generic manufacturers to compete on something other than price. If could help slow or stop the race to the bottom that has been present in the industry for the past several years.
▶ 0:52:29Dr. Gray: The fda has emphasized all generic drugs pattern up to the same original drug or exchangeable. That may have been through decades ago but today it is no longer defensible. There is no substantial evidence that meaningful quality differences exist among generic drugs. Reporting academic research and testimony to this committee have made clear that have made that clear.
▶ 0:52:53Dr. Gray: This is the result of cost pressure combined with a opec supply chain and product where quality is difficult to detect by touch or feel and the exchange ability assumption. The fda's approaches focused on inspecting the manufacturing process to verify compliance with good manufacturing practices. That is necessary but has become harder as manufacturing has moved offshore, especially when foreign inspections are often preannounced.
▶ 0:53:21Dr. Gray: Eight years working in the fda regulated manufacturing facility, I can say compliance is generally difficult. Day-to-day variability of materials, equipment, environments and human decision-making create risk. When firms are under pressure to deliver on time and compete on price, they can be tempted to overlook small compliance issues rather than investigate them fully. Even well-intentioned organizations can go down that slippery slope.
▶ 0:53:45Dr. Gray: In my research with co-authors over a decade ago we found pharmaceutical compliance tends to erode over time absent a clear observable reason to focus on quality. Transparency can change this dynamic. A congressionally mandated report in 2022 recommended country of origin labeling. Testing that recommendation we found that both consumers and hospital pharmacists showed a clear preference for drugs manufactured domestically or near short and away from drugs manufactured in india or china. Even when told they were all fda approved.
▶ 0:54:15Dr. Gray: The same report recommended public facing quality scores. When we tested quality scores alongside country of origin we found something important. While consumers prefer domestic drugs on average, high-quality quality offshore drugs were preferred over modern -- moderately domestic ones. While the industry remains opaque, some process that progress has been made. By co-authors and pro public and journalists have been able to link many drugs to the foreign manufacturing facilities using mostly public data.
▶ 0:54:46Dr. Gray: They are valuable but they are incomplete, difficult to maintain and require an enormous effort. Even including a lawsuit of the fda for some data. Even with these efforts we lack public data on active pharmaceutical ingredient manufacturing locations. There is real momentum for product transparency. The fda has requested releasing location information in its upcoming authorization.
▶ 0:55:12Dr. Gray: Hhs has emphasized transparency and the current commissioner was a leader in greeting transparency in hospital quality years ago as described in his book. I am part of a pentagon funded team developing drug level quality scores using existing data while I parallel team is conducting laboratory testing with drugs on the market. This is identified meaningful variation in quality and the resulting scores should be available later this year. Variation in manufacturing quality has real consequences for patient outcomes.
▶ 0:55:38Dr. Gray: Research has been slope not only because of supply chain's long overlooked as a cause but also because linking manufacturers to drugs was previously nearly impossible. As was discussed in your september hearing, many have human consequences. My recommendation is require a card on all -- qr code on all public facing drug packaging that links to a website searchable by ndc showing the manufacturing locations of the finished form and active ingredients along with the drug level quality score.
▶ 0:56:10Dr. Gray: This should allow the same information for other exchangeable versions of the same drug enabling informed comparison. For consumer facing quality scores should be designed carefully to avoid discouraging patients from taking necessary medications. One option is a five-star scale were all marketed drugs are at least three stars. Transparency should be one part of a broader policy approach.
▶ 0:56:31Dr. Gray: I support stronger inspections, increased testing of imported drugs and consideration of elite -- a legally accountable person. It would send a powerful signal to the market. Transparency will not solve every problem in the complex private market but it's a necessary foundation by allowing manufacturers to compete on quality and location and not just price. We can begin to reverse the race to the bottom and improve drug quality for patients. Thank you.
▶ 0:57:07Sen. Moody: -- can speak to drug quality and shortages. Dr. michael ganio's with the american society of health system pharmacists. Ashp is the largest in united states represent a 65,000 members in hospitals, ambulatory systems and health system community pharmacies.
▶ 0:57:36Sen. Moody: Ashp also maintains a drug shortages list and has worked with congress in a variety of stakeholders on supply chain resilience. Thank you for being here and you can begin your testimony.
▶ 0:57:45Dr. Ganio: Thank you, senator moody. Thank you for the invitation to today's hearing. Ashp appreciates the committee on aging's work over the past several months on crating a more resilient and reliable drug supply chain.
▶ 0:58:05Dr. Ganio: For over 20 years, ashp work to strengthen supply chain by public reporting shortages, providing resources to support patients and clinicians affected by supply disruptions, and advocating for policies that support a more reliable drug supply chain. Every american has a right to know where their prescription drugs are manufactured. Today the information can be voluntarily provided by manufacturers but it is not required.
▶ 0:58:32Dr. Ganio: Drug labels may include a name and address for company marketing a product but not the name and address of the manufacturing location. Ashp supports transparency in the pharmaceutical supply chain, including manufacturer and country of origin labeling for prescription drugs. Research we participated in alluded to with other colleagues has shown patients and pharmacy purchasers prefer to buy drugs manufactured in the U.S. or canada compared to the product any or china when the country of origin is made available.
▶ 0:59:01Dr. Ganio: Disclosure on the label has potential to realign incentives in the supply chain away from price and may increase market share for products manufactured domestically. Research conducted by Dr. gray and other colleagues revealed there may be a correlation between drug quality and country of origin. The studies provide motivation to increase mystic manufacturing and manufacturing in countries with higher reliability and fda accessibility.
▶ 0:59:27Dr. Ganio: Country of origin alone is not a reliable proxy for drug.audit quality there are examples of manufacturers both domestic and foreign that have faced quality challenges in recent years. Our research ignores key factors that affect purchasing decisions and practice. Patients will receive a product in a bottle that may not have the country of origin on the label. Choice is often an illusion.
▶ 0:59:53Dr. Ganio: Patient who have received medications in hospitals and clinics and surgery centers are often -- the drugs are often prepared and it administers patients seen the label. I want to reiterate ashp's support for the legislation. This is information every american has a right to know. I urge the committee to the -- incentivize domestic manufacturing, improve oversight or inspections of manufacturing facilities to ensure americans have access to high-quality pharmaceuticals.
▶ 1:00:21Dr. Ganio: Chronic drug shortages, concern over call quality and threats to national security are all related to the resilience and reliability of our pharmaceutical supply chain. Policies to address each of these risks involving -- and vulnerabilities can have multiple root causes and result in a resilient supply chain of high-quality pharmaceuticals that can withstand demand and supply shocks. There are two separate drug supply chains in the united states, brand-name, single source products and older generic multisource products.
▶ 1:00:50Dr. Ganio: Financial incentives and challenges separate the supply chains. Brandi manufacturers have a strong market incentive to invest in resiliency and their supply chains and produce high quality drugs. Price erosion and race to the bottom resulted in a brutal supply chain for older generic drugs.
▶ 1:01:07Dr. Ganio: For context, nearly every drug on the fda's 2020 of essential medicines.is a generic with slanted negative product mart -- margins they are less likely to invest in resiliency and quality management, generic manufacturers that are capable or willing to make the investments often lose market share due to drug price competition from manufacturers unwilling or unable to invest in resiliency and quality management.
▶ 1:01:32Dr. Ganio: The narrow profit margins result in the ossuary of the drug supply chain -- off shoring of the drug supply chain to countries with cheaper labor and less reg oversight. Without a public mechanism to evaluate quality in resiliency investments, purchases have no information other than price to leverage when buying drugs. This reinforces the race to the bottom market dynamics in the road to market resiliency. That results in a fragile supply chain, concerns about quality and chronic drug shortages.
▶ 1:02:00Dr. Ganio: To strengthen the supply chain, ashp recommend policies available in written testimony submit it to the committee. These are focused on improving transparency and manufacturing quality and encouraging new manufacturers and manufacturing sites supporting economic stability by encouraging long-term guaranteed volume purchasing contracts and diversifying manufacturing base. Ashp appreciates the senate special committee on aging's leadership in working to ensure america's seniors have access to safe and effective drugs.
▶ 1:02:32Dr. Ganio: Thank you and I look forward to today's discussion.
▶ 1:02:33Sen. Moody: I would like to introduce Dr. stephen schondelmeyer, a professor at the university of minnesota and the director of the prime institute which conducts research on policies related to pharmaceuticals. Through his decades of research and expense as a public researcher on pharmaceutical economics and pharmaceutical market, Dr.
▶ 1:02:55Sen. Moody: Schondelmeyer conducted research for the centers for medicare and medicaid services and the food and drug administration, as well as this committee. We thank you for being here today and we ask you will begin your testimony.
▶ 1:03:08Mr. Colvill: Thank you, senator moody. Ranking member gillibrand and numbers of the special committee on aging, I am pleased to be here today to talk about truth in labeling. It's an important topic to our marketplace and to consumers and health care. Historically, we have a drug shortages in the U.S. market. We understand that and characterized them and beginning to deal with that issue.
▶ 1:03:33Mr. Colvill: Though shortages have occurred for a variety of reasons, including quality issues of drug products in market economics and concerns related to that. However, the admin of covid-19 made us aware of and brought to the forefront another issue that causes drug shortages and lack of products in the market. That is geopolitical risk.
▶ 1:03:59Mr. Colvill: That the behavior of other countries in the world can affect our access to supply of drugs. Even some countries in an effort to maintain sufficient supply for the home population for inhibited exported drugs during the covid-19 process. We have seen drug supply be used as a weapon or as a leverage in the marketplace.
▶ 1:04:29Mr. Colvill: That could affect the U.S. dramatically. We are dangerously dependent on foreign sources for the drug supply in the U.S., with india and china dominating the market for active pharmaceutical ingredients and key starting materials. U.S. health care system is quite vulnerable to this geopolitical risk. If a dominant sourcing country decides to withhold drugs from our supply chain we would face a major health care crisis precipitously.
▶ 1:05:02Mr. Colvill: That brings us to the issue of how we deal with this. We need to change our drug supply system and shortage issues from a find and fix mentality, waiting until occurs and then fix it, to a predict and prevent. Let's predict where shortages are going to be a prevent them from occurring in the first place so we don't have people that go without the necessary medications. Country of origin labeling is an essential foundational component of that process.
▶ 1:05:35Mr. Colvill: It is standard practice for many consumer goods. There is country of origin labeling for food and clothing in automobiles and other things in our consumer goods market. When the americans go to the grocery store to buy a t-bone steak or the department store to buy a t-shirt, there's a label on the party that tells them where the product really was made and sourced from.
▶ 1:06:02Mr. Colvill: Consumers do read and respond to that information and use it. I find it unconscionable we require transparency for our dinner and our denim but not for the critical drugs that save lives. Cancer drugs, diabetes drugs and a variety of other medications. Real country of origin labeling for pharmaceuticals must be clear, specific and transparent.
▶ 1:06:30Mr. Colvill: We should know where the drug product was actually made, not just where it was packaged or warehoused or marketed. Clear labeling must disclose two things. The finished dosage product, where is made and where the active pharmaceutical ingredient was made. Currently, finding information about where a drug was made by the pharmacist who has to provide the information to the consumer today is very difficult, if not impossible.
▶ 1:07:00Mr. Colvill: It would often take a pharmacist -- they could go to the national library of medicine's website. If they dig around enough they can find for some products country of origin. You cannot find for all products. It may take up to 30 minutes to find the answer for one drug. Pharmacist can't operate a pharmacy efficiently if they have to spend 30 minutes for each prescription chasing down the country of origin.
▶ 1:07:30Mr. Colvill: Manufacturers hide behind claims of confidentiality. The fda allows the drug company the option to declare the information of where the product is made is confidential, trade secret. Trade secrets are important but a couple of things come to mind that suggest this may not be as much of a trade secret as we think. The major blockbuster drugs today for weight loss and diabetes are products that are labeled.
▶ 1:07:59Mr. Colvill: If you look on the box it says marketed by eli lilly. That's good. It tells us who marketed it would not he made it aware was made. Lilly made make them and from other databases I found they really do make their products. If you go to google for the lilly case and others it will not to leave where it is made.
▶ 1:08:26Mr. Colvill: You can find press releases from the company announcing their investment in a new production facility. They tell you where it is and everything else. What they told.the fda was confidential they turned around and issue public press releases to say look at what we are doing. I applaud lilly for building a new plant in the U.S. but it can be confidential if you're giving it to fda and not confidential when you put out press releases on the same product on the same plant by the.
▶ 1:08:53Mr. Colvill: Direct --the drug company itself this little duplicity in their approach to what confidentiality really is. There's been a change in the regulation of consumer product labeling. In june of 2024, the U.S. customs and border protection issued a new regulation and they shifted their position. They said the ultimate -- the consumer is the patient at the pharmacy, not the pharmacy when they buy it.
▶ 1:09:22Mr. Colvill: It was interpreted as manufacturers had represent to the pharmacy where was made. That was viewed as the end consumer. I'm a pharmacist. We work in the marketplace and we know the pharmacist is the last point at which the product gets to the patient. The pharmacist is the face of the patient. I do think there's a proven transparency process and that is in the country of new zealand.
▶ 1:09:49Mr. Colvill: New zealand has a process, public, transparent, online website that publishes the api source and the address where was made and the factory and many other things. I have given references in my presentation of where to find that and look at that and see what is there. New zealand's experience is transparency has not harmed the commercial interest of companies. Mandate country of origin transparency.
▶ 1:10:17Mr. Colvill: We need to amend federal statutes to require country of origin labeling for manufacturers at both the api in finished dosage form level. That will allow companies not to hide behind the claim.
▶ 1:10:30Sen. Moody: If you can wrap up in 30 seconds.
▶ 1:10:33Dr. Schondelmeyer: Labeling is not an end unto itself. It's a foundational building block of a broader database that helps the government and the country strategically plan for a secure drug supply and manage it. Labeling for the consumer is important but building that broader supply is important. We need to build a market white supply map and encourage you to look at the united states medicine supply map which does that.
▶ 1:11:02Dr. Schondelmeyer: We need -- congress needs to engage with and fund this and building it and ringing it within the government. Empowering consumers. The consumer is the ultimate purchaser. We need to make sure the law is implemented and enforced, not just past. -- passed.
▶ 1:11:22Sen. Moody: We appreciate you. I will turn it over to ranking member gillibrand to introduce her witness.
▶ 1:11:30Sen. Gillibrand: I want to introduce stephen colvill, assistant research director at the duke margolis institute for health policy where he leads the duke margolis revamped drug supply chain consortium. And policy work on supply chain environment -- supply chain that he served as advisor for medical supply chains. You may begin.
▶ 1:11:55Mr. Colvill: Thank you, ranking never gillibrand, senator moody, chairman scott and members of the committee. I leave the revamp drug supply chain consortium at the duke-margolis institute for health policy. I have seen the supply chain from many angles. I worked at one of the largest drug manufacturing plants in the U.S. and on the commercial business side of that drug manufacturer.
▶ 1:12:20Mr. Colvill: I cofounded a drug supply chain certification organization where work with health systems to help identify reliable suppliers and moved to the policy side where I served on the domestic policy council. Throughout this one common thread has been obvious. We need to revamp how the supply chain works to better care for patients. Before discussing solutions, we need to identify the distinct overlapping problems in the drug supply chain. Chronic drug shortages.
▶ 1:12:48Mr. Colvill: These occur when a drug is simply not available, usually because of a supply chain break down a manufacturing delay. Second, questions run pharmaceutical quality assurance when a drug is available but there are questions run if it was manufactured and tested appropriately. Third, a pressing geopolitical health security risk. Fourth, the treatment domestic manufacturing. We need to address all of these.
▶ 1:13:17Mr. Colvill: As a consortium we focus on policy solutions in the drawer -- chronic drug shortages that have been causing devastating impacts the patient care for 20 plus years. We focus where shortages have been most prevalent, inexpensive generic injectables which are usually administered by health care providers such as in a hospital setting. Generic prices are on average 33% lower in the U.S. than in other high-end countries that high income countries.
▶ 1:13:45Mr. Colvill: Generics are cheap and not available because the current provider payment system set by cms and private insurers encourages providers to seek low-cost generic drugs without enough consideration for reliable availability. Providers are not adequately rewarded in and they take steps to prevent shortages. There is an alternative. Aligning incentives to focus on reliable availability for critical generics. I co-authored a proposal in october on how to make this happen.
▶ 1:14:14Mr. Colvill: The proposal offers a simplified version of a medicare incentive payment program originally outlined in the 2024 senate finance committee discussion draft. It would incentivize health-care providers to do two things. Purchased purchase through permitting contract models and meet reliability benchmarks. Addressing chronic drug shortages in this way is clearly aligned with cms's mission to improve health outcomes.
▶ 1:14:41Mr. Colvill: Cms is positioned to move the needle in the inpatient setting where medicare and medicaid together account for about 75% of inpatient days. Since 2023, cms has taken actions to incentivize domestic production, including a notice this week about a potential upcoming hospital incentive program. Cms actions should also encourage the reliable availability of critical generics by supporting contracts and benchmarks.
▶ 1:15:12Mr. Colvill: In the meantime, it is great this committee is considering legislation to make better information available about suppliers. My top priority would be to kickstart reliability benchmarking pilots. Three prominent examples include the health care industry resilience collaboratives resiliency badge program, U.S. pharmacopeia resiliency benchmark program and the quality management maturity program.
▶ 1:15:37Mr. Colvill: These programs evaluate data about various manufacturing supply chains and communicate findings about the reliability of the manufacturers. Upticks of approach eggs -- approaches like this could be increased through hhs and dod funding and support. This could set a foundation for future cms reform. Regarding labeling, americans deserve to know whether drugs come from.
▶ 1:16:03Mr. Colvill: An effective labeling change could over time possibly drive more demand to domestic manufacturers. Labeling reforms alone are likely to have a limited impact. Many already know where api and finished dosage forms are made in patients of limited influence over what drugs are stocked. Some of the most significant shortages have resulted from manufacturing issues in the U.S. plants.
▶ 1:16:32Mr. Colvill: Other assessments are needed such as reliability benchmarking programs like I mentioned. My testimony provides points on how unintended consequences of labeling reforms could be mitigated. Two specific considerations on labeling. Place of business may not be the best term to use in labeling requirements as place of business is not necessarily the same as the location of manufacturing.
▶ 1:16:59Mr. Colvill: It might be beneficial as the fda requested in the legislative proposals under the prior administration and in the current administration to require manufacturers to conclude in their digital labeling information unique facility identifier numbers for the original api manufacturer and original finish drug product manufacturer. We need to clearly define the problems. I would focus first and foremost on cms payment reforms to support committee contracting models between purchasers and manufacturers that meet reliability benchmarks.
▶ 1:17:31Mr. Colvill: Consider requiring unique facility identifiers to be included in digital labeling information. I look forward to the discussion.
▶ 1:17:36Chair Moody: Thank you for your testimony. Without objection, I let senator johnson kick us off of questions.
▶ 1:17:45Sen. Johnson: I supplied materials to the medical device industry for 30 years. Fully understand good manufacturing processes and the benchmark is traceability. We need to know what a, what box of resin produced that role of sheet stock that went into packaging that particular medical device. That is just for packaging material.
▶ 1:18:17Sen. Johnson: Dr. gray, does the fda not require that verse is just a package that surrounds a medical device?
▶ 1:18:29Dr. Gray: My understanding is within the facility they have requirements like you are talking about. The manufacturer does have to trace lots of things from it suppliers but -- mike can help me with this book the hospitals receive the drugs -- they don't have the information. Buyers don't have the information.
▶ 1:18:51Sen. Johnson: Do they require it back to the precursor chemicals, the apa, the compounding of the drug to the marketer?
▶ 1:19:01Dr. Gray: Api, yes. Precursor chemicals, no, is my understanding. I'm not 100% sure on that.
▶ 1:19:10Sen. Johnson: How critical would be for us to know where the precursor chemicals come from? Is it ok just a focus on api? Dr. schondelmeyer?
▶ 1:19:23Dr. Schondelmeyer: Certainly, it is important to know where it came from for purposes of his equality, product we want to put in human bodies in america. It's also important to know and see how dependent we are on specific sources of supply and countries of supply. They may be putting quality product in there but if we find 30% to 50% of our api supply is from china --
▶ 1:19:53Sen. Johnson: I understand supply chain issue. What about the quality issue? Do we need to know with the precursor chemical came from? Can we do the quality check on the api before it gets compounded to a drug?
▶ 1:20:10Dr. Schondelmeyer: A lot of that is based on voluntary compliance with the continuous good manufacturing practices act. It is not required in the fda does not -- it is not like a meatpacking plant with a inspect -- where they inspect every piece of meat.
▶ 1:20:25Sen. Johnson: It is not required by the fda. >> the key starting materials, no. I would be less concerned about the quality and more about the national security. The api is tested by manufacturers. They will confirm what they receive from api is suitable for production. Anything up to that should be ok from a quality perspective. Vulnerabilities revealed are important.
▶ 1:20:49Sen. Johnson: The 2008 heparin contamination issue. Have we done anything to address what went wrong there?
▶ 1:20:57Dr. Ganio: Scientifically, they revised the monograph for that to make sure the testing would be detected in the assay. That should address if the gmp's are being followed and record-keeping is being followed.
▶ 1:21:17Sen. Johnson: Mr. colvill, key mentioned generic drugs are about 33% less expensive than other first world nation countries. Why is that? Is a greater competition are the rules and regulations it placed on those countries that increase that cost of the drug?
▶ 1:21:44Mr. Colvill: They can be incentives in the market. What are purchasers incentivized the value? In the U.S., there's an emphasis on low cost which is important. There is not enough emphasis on other things that are important to reliability, availability, quality, everything going into the fold value proposition.
▶ 1:22:06Sen. Johnson: Generic drugs are pretty cheap, correct? We have problems with high drug prices and the patentable drugs until they go off patent and become generic. When we talk about -- senator scott is proposing labeling. That's an incredibly important first step. There may be rules and regulations in terms of quality and testing and statistical sampling and gmp's filing those things and making them available as well.
▶ 1:22:37Sen. Johnson: That would at a price to that. Anybody want to opine in terms of with that increase prices by 33%? When you look at the total drug buying in the U.S., we don't have extremely expensive health care here because of drugs. That's a component but it's a small component. I personally think most consumers would pay a little more to be sure of quality so they don't get -- die from a heparin contamination or something like that.
▶ 1:23:09Sen. Johnson: Does anybody want to opine with the right rules, regulations and laws to consider quality and how much I would increase the price of generic drugs? Would that be the 33%, with a doublet? >> that would vary by manufacturing. There are incidents where we probably don't pay enough for generic drugs and that's the result of questionable quality.
▶ 1:23:33Sen. Johnson: All we have to buy drugs is the price. It is clearly not sufficient. I did I purchase as we have a reason to spend 10% or 15% more. We conducted a survey and found members are willing to spend about 10% to 50% more on drugs. You have to look on the other side. The supply chain issues, almost $900 million in labor expenses alone.
▶ 1:24:05Sen. Johnson: Research shows increased cost of drugs. If you make that trade-off, pay more for guaranteed supply chain of quality drugs, it theoretically could pay for itself.
▶ 1:24:14Sen. Johnson: Having been a manufacturer and followed gmp, I had audits every six months. He cost a little more but not that much more. It's a far better manufacture. High quality customer service, less scrap. I would not believe any manufacturing markers would increase the cost dramatically. It shouldn't. It is good manufacturing practice that will be insisted on again.
▶ 1:24:47Sen. Johnson: I appreciate what senator scott is doing with these hearings.
▶ 1:24:51Sen. Johnson: --
▶ 1:24:56Sen. Gillibrand: We have been talking about terms of art correct. People say marketed for, distribute it by, packaged by. What is the best term you want for this labeling? I would like all the witnesses to answer this question. Starting with you, Dr. schondelmeyer.
▶ 1:25:18Dr. Schondelmeyer: The simplest is product of or made by. Then specify when you talk about the finished doses form or api. Fda may have all this information and other information on quality but either are not authorized or as a model policy don't choose to release a lot of it.
▶ 1:25:43Dr. Schondelmeyer: Just having information at the fda does not necessarily improve the quality and ability of decision-makers to make decisions whether it is the consumer, prescriber or pharmacist or purchaser. They need to know what fda knows to make those decisions. Made by or product of. Api product of. Finished dosage product.
▶ 1:26:06Mr. Colvill: You are referring to what is on the physical label, which is important. We also should think about the digital information. We live in a digital world. What is information provided digitally? You can have more information provided that way. There is limited real estate and some are really tiny. As I mentioned in my opening remarks, unique facility identifier numbers.
▶ 1:26:33Sen. Gillibrand: I think that would be smart to say exactly where the plant was in india or china.
▶ 1:26:39Mr. Colvill: It would all be listed on the database several others have mentioned. Third parties could easily put together publicly available user-friendly databases where patients and others can look up where the drugs were made.
▶ 1:26:58Dr. Schondelmeyer: That's a great source but if you look at it, they have api manufacturer for some products and they have an entity identifier for the ones that are named. It is complex and consumers have a difficult time sorting out what is there.
▶ 1:27:18Dr. Schondelmeyer: I included as an appendix to my longer testimony printouts from the new zealand med save database that would support the same information but it's much more easily understandable by a consumer if they look it up with a qr code or other things. Look at the way it is presented in the new zealand med safe database. It is more user-friendly and easier to follow.
▶ 1:27:45Chair Scott: Dr. ganio. --Sen. gillibrand: Dr. ganio.
▶ 1:27:52Dr. Ganio: The physical label should be easier to understand and easy to read. Having the unique facility identifier in a database can help identify vulnerabilities, chokepoints, things where we will rely on the same site where now might be under contract and not necessarily easily discernible. Stakeholders could find out where the chokepoints are and invest.
▶ 1:28:14Sen. Gillibrand: Dr. gray. 4 active farmers --
▶ 1:28:19Dr. Gray: Active pharmaceutical manufacturing locations should be on the label. As I mentioned, quality.
▶ 1:28:30Sen. Gillibrand: Several testimonies today have mentioned the data that is collected by the customs and border protection and food and drug administration when pharmaceuticals are imported into the U.S. what is required to be listed is labeled and what is required to be listed on the label by fda. There have been allusions to country of origin disclosures provided rather than mandated by the current cpb regulations.
▶ 1:29:00Sen. Gillibrand: At times disclosure regulations required by cpb seem to be direct at odds with those of the fda. For any or all witnesses, howshould congress work to harmonize information to ensure that the information received is not to click provides consumers with clear understanding of products and country of origin?
▶ 1:29:24Dr. Gray: Fda has requested authorization to be able to release a bunch of manufacturing location, api, dosage form, recipients, etc. Allowing them to do that, the fda feels bounded to not do that by confidential information. That would align them, I think. >> has policymakers you need to look across both the cpb and fda and what the regulations are and integrate them.
▶ 1:29:56Dr. Gray: Cbp is limited only to imports. They don't even require a listing on the label made in the usa when it is made in the usa. That is not an import.
▶ 1:30:04Sen. Gillibrand: I see.
▶ 1:30:07Dr. Schondelmeyer: Do it under one set of regulations placed at fda rather than cpb. Make it really clear what the language is. As important as the made or manufactured is the proposition that follows it. Made by is different and made first. Very different. Put clear definitions forward.
▶ 1:30:34Dr. Schondelmeyer: Don't allow companies to declare where it is actually made is confidential or trade secret. That is public information that needs to be disclosed.
▶ 1:30:43Sen. Gillibrand: Thank you, Mr. chairman. >> to examine what sounds like a very urgent need for transparency in the drug supply chain, everyday millions rely on a wide range of medications to maintain their health and quality of life.
▶ 1:31:04Sen. Gillibrand: As parents we often take prescriptions to the pharmacy and get medications we then tell our children to take, trusting there are no quality control issues. I think this should be top of mind for every american and certainly every parent. Unfortunately, throughout the hearings on this issue and this committee on drug supply transparency it is increasingly clear there is not enough transparency.
▶ 1:31:32Sen. Gillibrand: Fda import alerts routinely cite carcinogenic impurities, falsified batch records, and nonsterile conditions from manufacturers in china and india. One third of all fda imports alerts target chinese facilities. Another 16% target indian producers.
▶ 1:31:52Sen. Gillibrand: Last year, I and many colleagues on this committee sent a letter to the fda raising the alarm have problems with drug quality due to poor foreign inspections in countries like china and india who account for 60% of apis globally. That is not even include as we have discussed already the key starting materials.
▶ 1:32:11Sen. Gillibrand: Many americans who rely on prescription medications, particularly seniors which is why this committee is paying such close attention, have no way to determine where medications are manufactured, denying them to a choose american-made drugs. What we found is the failure stems from a combination of loopholes and insufficient fda enforcement which allows for necessary such as china to exert control over the production of drugs americans depend on to stay alive.
▶ 1:32:40Sen. Gillibrand: It is crucial and what I'm hearing from everyone is today that we take immediate action to increase transparency in the drug supply chain so consumers can make informed decisions about the medications they use. A study found that 80% of top 100 generic drugs consumed by U.S. citizens have no U.S.-based source of active pharmaceutical ingredients.
▶ 1:33:06Sen. Gillibrand: With that said, I would like to turn to one of the witnesses I had to cut short when we were getting the time limits on introductions. Dr. schondelmeyer, you wanted to further explain I believe about how in new zealand they have a model for providing drug supply chain transparency. That the new zealand med say it has active ingredient information which is available to the public.
▶ 1:33:33Sen. Gillibrand: What aspects are most crucial to be included in the united states were to ever enact transparency measures on our drug supply chain?
▶ 1:33:40Dr. Schondelmeyer: The new zealand system takes their equipment of fda. They collect all of the information we have talked about. Where are the key starting materials from, the inactive ingredients, the active ingredient made in the factory name and address, the finished dosage form manufacturing name and address, who labels it, every step along the way is transparent.
▶ 1:34:05Dr. Schondelmeyer: For every drug on the market in new zealand, it is put in a database. Any consumer in new zealand or the rest of the world can look up those products at the product specific level and identify where it came from. We should have nothing less in america. In fact, if one looks at these days the pharmaceutical supply system is a global supply system. We talked about the U.S. drug supply but if we take that, that's probably 70% to 80% of the world's global supply.
▶ 1:34:39Dr. Schondelmeyer: We need a system equivalent and I applaud fda and the daily med website maintained but it's not nearly as consumer from the best consumer from me as new zealand's system. We need to make transparent the information fda does have.
▶ 1:34:58Sen. Moody: D believe the new zealand model for transparency, the things they have enacted, do you believe that has decreased the amount of contaminated drugs that are consumed by the public there?
▶ 1:35:11Dr. Schondelmeyer: I believe it has. I have not seen studies from new zealand about the number and types of shortages. I think if they were at the same level as we see in the U.S., we would probably have seen studies of that type. I would not draw a conclusion yet. I don't think they have asked of your drug shortage problem is we do in the U.S. for a variety of reasons.
▶ 1:35:36Dr. Schondelmeyer: I have talked with officials at med safe in new zealand and they say they are not aware of any commercial problems in the marketplace from making that information public.
▶ 1:35:45Sen. Moody: Thank you, Mr. chairman.
▶ 1:35:48Chair Scott: Thank you, senator moody. To start, when we go to the pharmacy and we have a choice between a generic drug and a brand-name drug, are they exactly -- we are taking the exact same drug? If each of you can respond. >> generics typically do not follow the same production process. The excipients can be different.
▶ 1:36:18Chair Scott: There is a range of viability allowed upon approval. Generics go through an approval process that is somewhat rigorous and includes in vitro testing on a small number of individuals. It is a lot less the original drug. That's at approval. What I have researched and thought about his after approval when the manufacturing facility has been operating for years with light regulation, how things go.
▶ 1:36:47Chair Scott: It is not the same excipients necessarily. Not the same process. There is a range of availability. >> I agree they are not the same. They should behave the way of the body -- behave the same way in the body. I have no problem taking a generic.
▶ 1:37:08Chair Scott: I will tell you if the label shows where it is made, I will opt for domestic remanufactured or "friend shored" manufacturing. I don't think there's an issue with generic equivalency. There are a battery of tests done to make sure it behaves in the body the same way as a brand-name product is.
▶ 1:37:34Dr. Schondelmeyer: Are they the same drug? What do you mean by drug? A drug can be the molecule, the active ingredient that causes the positive effects in the body we are after the health care system. We also use the word drug to mean the drug product. That is the active ingredient plus all the extra things we added in to make the tablet hold together and preserve it. The excipients as Dr.
▶ 1:38:00Dr. Schondelmeyer: Gray described. When you are baking cookies, each cook has their own recipe, their secret ingredient in making the cookies. They might be a little different. They might all taste similar and I'll be cookies but there are slight differences. They all have the same chocolate chips and chocolate chip cookies. The molecule is essentially the same in almost all cases.
▶ 1:38:32Dr. Schondelmeyer: The other things you add into it may differ. Some may have an effect positively or negatively on the health of the patient. Our current process of inspecting and evaluating equivalency of products does not take into account all those other things perhaps as well as it should.
▶ 1:38:53Mr. Colvill: Thank you for the question. I don't have any problem taking generics. These two are the pharmacists. I'm interested and glad they shared their perspective. The most stark difference between a branded drug in a generic drug is not the chemical properties themselves but the supply chain, the robustness of the supply chain.
▶ 1:39:18Mr. Colvill: A branded drug has every incentive to have redundancy, extra manufacturing capacity, backup plans, buffer stock. They take steps to avoid shortages. Generic supply chains are very lean. If there's a disruption in the supply chain frequently, that leads to patient issues. Issues with patient care being impacted.
▶ 1:39:41Sen. Gillibrand: You don't --
▶ 1:39:44Chair Scott: You don't care if it is a generic or branded drug?
▶ 1:39:47Dr. Gray: At the moment I don't take any drugs. I would generally take a generic drug if prescribed. I would try to investigate rich from. -- where it is from. It allows you to find out where the finished dosage form is made easily, unlike the daily med approach.
▶ 1:40:18Dr. Gray: I would investigate. I pay more for over-the-counter drugs. I would not take a generic eyedrop. It depends on what it is, if it is going directly into the bloodstream, the eyes were tablet.
▶ 1:40:32Chair Scott: Dr. ganio, the pharmacist no where the active ingredients of the drugs are made? Do they tell their customers?
▶ 1:40:43Dr. Ganio: In general, the pharmacist will not know. It is possible to find that and there's nothing on a prescription label that would tell the patient. I have never been asked as a pharmacist where the api was from. Not anyone I dispense medication to.
▶ 1:41:02Chair Scott: I have asked my pharmacist and they look at me like I have two heads.
▶ 1:41:06Dr. Ganio: I ask every time. They all know who I am. I have told him about our hearing. They now expected. They have more information now than before. Mr. colvill, why is is important to labeling?
▶ 1:41:30Mr. Colvill: Supply chain mapping is important because you want to identify if there is redundancy in the supply chain or concentration. If there is concentration, that could cause issues. For example, from a natural disaster or any sort of disruption. Being able to identify where there is diversification versus concentration. Also identifying vulnerabilities. There are different problems that we need to assess.
▶ 1:41:58Mr. Colvill: If you're thinking about national security issues or geopolitical risk, obviously mapping the supply chain to determine where drugs that are heavily reliant on adversarial countries are coming from as well.
▶ 1:42:09Chair Scott: Dr. schondelmeyer, what country labeling -- what country of origin labeling encourage manufacturing? U.S. manufacturing?
▶ 1:42:22Dr. Schondelmeyer: I think it will provide some encouragement for the U.S. and near shoring manufacturing in canada. Perhaps mexico or the neighbors in latin america. They may be encouraged. Issues that come to play -- one reason china and india have become dominant is because they had lower environmental regulations, lower labor laws and lower pay in many other restrictions are eliminated in this countries.
▶ 1:42:52Dr. Schondelmeyer: The companies take advantage of that and they also have an economy of scale larger than the U.S. or the western hemisphere. I think we can overcome those and with advanced manufacturing that is being developed in the U.S. they can make products leaner and greener. I think we could get to a point where we could compete in the U.S. and our nearshore neighbors. Recall puerto rico used to be a hotbed of production.
▶ 1:43:20Dr. Schondelmeyer: It has declined over time but I think that could be reinvigorated along with other neighboring entities.
▶ 1:43:27Chair Scott: Ranking member gillibrand, any other questions?
▶ 1:43:34Sen. Gillibrand: Dr. ganio, I want to explore more about your testimony about supply chain. Specifically you mentioned fragile supply chains and the need for buffer inventory to insulate united states from drug shortages in times of geopolitical conflict. Can you discuss the national security risks in more detail?
▶ 1:44:00Dr. Ganio: We have covered some of it today but thank you for the question. Thank you for the question. We know based on data out of the farm appear that we have an overreliance on china for key materials. Kpi sources in china and india also.
▶ 1:44:22Dr. Ganio: In the event of an trade convent or an armed conflict, if china decides to make a move on the taiwanese territory and things escalate we are extremely vulnerable to sources in china and they can hold those supplies from the united states, which would cut us off from essential medicines. Knowing exactly where those vulnerabilities are, data and transparency only gives you enough to act.
▶ 1:44:53Dr. Ganio: We can't take action into we have the data. We believe strongly the transparency to help the united states understand how much we rely on the sources and how to find alternative sources is critical to our national health curses -- security.
▶ 1:45:05Sen. Gillibrand: Led a hearing on this before but we talked a lot about fta's ability to inspect foreign and domestic manufacturing process very significantly. Creating concerns about oversight and quality of imported drugs. You talk a little bit about that ? Same question for all of the witnesses.
▶ 1:45:22Dr. Ganio: Thank you for the hearing. In september, I cannot say it did not keep me up at night after hearing testimony about some of the inspections. This is where I think it is important -- domestic manufacturing is important. The fda has the ability to walk in unannounced but I think in other countries that are considered allies, we should be investing in a diversified supply chain both in the U.S. and other countries where we have vulnerabilities.
▶ 1:45:52Dr. Ganio: We have hurricanes, other disruptions that can happen. More diversity geographically creates more robust supply chain. Incentivizing it in countries where the fda has the ability to walk in unannounced, I think is important.
▶ 1:46:05Sen. Gillibrand: When asked by the chairman would you guys to generics, all said, well, if I could figure out where it is from I would maybe consider that. Obviously, for you as the most knowledgeable stakeholders where things are manufactured is highly relevant to you and highly relevant to me because we don't have the same inspections. To close out the testimony, if each of the other witnesses could add whatever you want to add on these topics. Go ahead, Dr. gray.
▶ 1:46:32Dr. Gray: On the inspections, I would like to add one big difference is the legal ramifications for the individuals, managers, quality and plant manager, you can go to jl for your overseas you can't. We can't -- I think that is another incentive. You heard a lot from peter baker . That shows the need to do unannounced inspections globally.
▶ 1:47:05Dr. Gray: I have a research paper, think you where the congressman did an unannounced inspection in india and in late 2022 and we are finding three to four times more likely to shoot a warning letter -- to issue a warning letter. Some of the worst things you write about were plants that had clean inspections in years prior to the unannounced inspections. I will stop there.
▶ 1:47:33Sen. Gillibrand: Dr. schondelmeyer?
▶ 1:47:38Dr. Schondelmeyer: [inaudible] india is certainly there are good quality products that come out of india. Not all of them but some of them. One of the issues is india does not participate in international counsel on harmonization of regulation. Fda type regulations. Most all of our other suppliers, including china, collaborate in that. We should begin to pressure and encourage india to participate in the ich.
▶ 1:48:11Dr. Schondelmeyer: Within india, they regulate manufacturing of drugs not at the national level but at the equivalent of the state level. They have like 40 states. Even within india, they know some states have pretty poor quality production and others have better quality. So they differentiate internally in the country yet we don't as a country when we buy from india. We need to encourage india to step up within their system, the quality, and make it more consistent and uniform.
▶ 1:48:36Sen. Gillibrand: Mr. colvill?
▶ 1:48:39Mr. Colvill: The first thought, image and location of production and that is an important thing to consider. The best thing to address that issue is leveling the playing field. One of the best things to do that is ensure data has the resources to do foreign inspections at the level that is needed. Second, location of production is only one thing that should be considered. You should also consider reliable supply chains and quality.
▶ 1:49:09Mr. Colvill: You can do that through reliability benchmarking programs. I mentioned a few programs early on in doing that. You could also do independent quality testing to ensure a high level of quality assurance.
▶ 1:49:21Sen. Gillibrand: Thank you.
▶ 1:49:24Chair Scott: I want to thank each of you for being here. It has been enlightening. Today's hearing made one thing unmistakably clear, americans are being asked to trust a system that refuses to tell them the truth. We labor our food, clothing but when it comes to life-saving medicine, patients are kept in the dark about where they are made. That doesn't make any sense.
▶ 1:49:48Chair Scott: This isn't about banning drugs or raising prices, this could actually lower prices for american families while delivering transparency in support of american jobs. Manufacturing location matters. Oversight great secrecy doesn't protect patients it protects the status quo and bad actors. Americans deserve to know what they're putting in their bodies and whether there medicine is truly made in america. Honesty and transparency strengthens markets, accountability, national security. I step will be reaching out -- my staff will be reaching out in the coming days.
▶ 1:50:18Chair Scott: I want to thank ranking member gillibrand. Her team has been wonderful to work with. Remaining senators, if you have additional questions or state was to be added to the record, it will be open until next wednesday at 5:00 p.m. Thank you, everybody.