Hearings to examine foreign dependence, focusing on China and America's drug supply.

The US special committee on aging will now come to order. What if I told you that communist China, an adversary of the United States, and they made that decision, has sole control of the building blocks of many of the medicine seniors Americans rely on, completely dependent on. I'm not just talking about a few medicines, I'm talking about our antibiotics, our diabetes drugs, our blood pressure medications, essential life-saving medicines found in every hospital, every pharmacy, and every medicine cabinet in this country. This isn't speculation, it's a reality. Xi Jinping and his thugs in the CCCP have decided to be our enemies, and they're controlling the very medications our families rely on to live happy, healthy lives. Today's hearing is about getting to the bottom of why this is the case. I want to be very clear. It didn't happen because Communist China was clever or lucky. This happened because Washington was negligent, lobbyists are powerful, and politicians in both parties chose cheap over safe. For thirty years, we watched Communist China's government and its leaders execute a deliberate, documented, publicly stated plan to capture the global drug supply chain. They weren't trying to hide it, the signs were obvious, and our government did absolutely nothing to stop it. As a matter of fact, politicians created regulatory barriers and enacted policies that pushed manufacturing overseas and right into the CCP's hands. This committee has spent the last six months exposing this threat and building this case piece by piece hearing by hearing. In September, we exposed how our dependence on foreign generics is threatening drug safety and availability for American patients. In October, to examine solutions and discuss ideas like procurement reform and supply chain transparency. In November, we had American manufacturers testify what a rebuilt domestic industry could actually look like. In January, along with ranking member Gillibrand and several members of this committee, introduced the Clear Labels Act to inject transparency into our drug supply chain. Because the American people have a right to know whether drugs and the medicines keeping their mothers fathers and childrens alive come from. We have written to the FTA and the Secretary of HSS H HHS. We have written to drug distributors and group purchasing organizations, demanding answers about their foreign sourcing. We have written to Secretary Hedgeseth about what depends on communist China means for the health and readiness of our troops. We have even published an investigative report that documents in plain terms what decades of offshoring has done to the American drug manufacturing industry. Over the last twenty-four years, domestic production has collapsed. Dropping from eighty four percent of the US market in two thousand two, eighty four percent, to just thirty seven percent today. Eighty percent of APIs used in these essential medicines have no US source whatsoever. Think about that, eighty percent. During COVID-nineteen, the Chinese government nationalized its own medical supplies production turned off the exports turned off the exports and decided which country's got lifesaving drugs based on politics. Thirty-seven Chinese factories that made ingredients for American drugs shut down during the pandemic. US hospitals and healthcare workers fighting to keep Americans alive, ran out of sedatives, antibiotics and cancer drugs. That was a taste what it looks like when you let an adversary control your supply of essential medicines. Should serve as a warning to all of us, if we just sit here, hold this hearing, thank our witnesses and go home without acting, it will happen again, but worse. We didn't come here today to preside over another Washington exercise when all we do, when where all we do is identify the problem and then pat ourselves on the back for a nice hearing. This committee has been working since day one to sound the alarm, talk to experts and present real solutions to fix the problem. I hope today will be a moment that alarm becomes impossible to ignore. To all the members of this committee and all congressional colleagues, let's continue to work together to fix this problem. Let's find a path forward that will protect American patients and American lives, the lives of our constituents. And I'd like to recognize ranking member Gillibrand for her opening statement.

Thank you, Chairman Scott, and thank you to our witnesses being here today. As this committee continues to investigate the generic drug supply chain, its safety, its quality, there is one refrain that is repeated at each hearing. And that is that the United States has become reliant on China and India for key ingredients to manufacture generic drugs, active pharmaceutical ingredients, and key starting materials. A combination of factors has led to China's dominance in this space. Subsidies provided by the Chinese government, lax environmental regul regulations, and lower costs of labor. But China is not the sole reason that the United States is reliant on foreign manufacturers for these critical chemicals. Underlying market factors in the United States have led to a race to the bottom, where incentives for manufacturers are solely based on cost and not quality. While amongst all of the generic drugs that Americans take are while amou- sorry while almost all of the generic drugs that America takes is safe, Congress must empower the FDA to conduct rigorous oversight to make sure foreign manufacturers' with our safety standards. Congress must also work with industry to move away from costs being the only factor for purchasing. We must also incentivize manufacturers and purchasers to consider quality when they are sourcing active pharmaceutical ingredients and final dose form medicines. While the United States has unfortunately ceded much territory regarding the generic drug supply chain, There's st- there's still steps we can take to re-shore or friend-shore for sourcing. However, the United States must keep our global leadership in biopharmaceutical innovation. China has rapidly scaled up their innovation for these novel medicines and therapies. They've reformed their clinical trial system, invested government funding into development, and improved coordination between early research and commercial scale manufacturing. While the United States does not need to replicate the steps that the Chinese government has taken exactly, we have to realize that China is moving at a much faster pace than we are. The United States has been the standard bearer for clinical innovation for decades. It would be a detriment to our global leadership if we let China surpass us in innovation. I look forward to working with my fellow members of Congress to ensure that emerging biotechnology and innovation is supported in a way that incentivizes these companies to stay in the United States. I also urge my colleagues in Congress to adopt recommendations laid out by the National Security Commission on emerging biotechnology. Congress has the road map to continue our global leadership in biopharmaceutical innovation, and we must recognize this sector for the asset that it is. I look forward to continuing this robust conversation today And I look forward to collaborating with my colleagues across the aisle on this incredibly important issue.

Thank you, ranking member Gillibrand. Next, I'd like to welcome our witnesses. They're experts on communist China and supply chains, and they can explain how we got here and what we can do to address our reliance on the CCP. First, I'd like to welcome a fellow Floridian, Congressman Ted Yoho, served in Congress for eight years, formerly chairing the House Foreign Affairs Subcommittee on Asia and the Pacific. Thank you for coming, and well, and I uh look forward to hearing your testimony.

Chairman Scott and Ranking Member Gillibrand, thank you for the opportunity to address your committee on this important and timely topic. The integ- integrity of pharmaceuticals consumed by Americans, especially our seniors, must be of the highest standards in quality, purity, and effectiveness, and free of adulteration from toxins and cancer-causing substance substances, that cause illness or death. The responsibility lies with the pharmaceutical companies and US government agencies like the Food and Drug Administration and the offices, uh, or the Office of the United States Trade Representative. The medical community, including drug retail outlets, insurance companies, hospitals, and doctors, all share the responsibility of ensuring medications are of the highest standards. China took advantage of the US self-inflicted wounds, which was caused by overly burdensome regulations, tax policies imposed by the US government, as well as by corporations seeking higher profits to appraise uh to appease boardrooms and investors. China enticed US manufacturers to their shores with the lure of low taxes, lax regulations, cheap labor, and a one point four billion person market. However, the cost to drug makers, the danger to the US consumers, and the vulnerability to US national security were missed. Drug makers soon realized they were subject to Chinese rules, laws, patent agreements. They were required to have Chinese Communist Party members on their boards and relinquish up to forty fifty-one percent of their companies, to state-owned emmer enterprises. Corporations must give up their drug formula for approval. If not surrendered freely, they're stolen. Chinese companies then spring up, creating the exact s- same drug and selling it below cost. As a result, US manufacturers cannot compete and are forced to leave the market. The result is that China controls the world market, price and supply chain. This is a national security risk and a health risk to our country. As detrimental as that is, it gets worse. China does not adhere to or practice the good manufacturing practices set by the FDA, nor do they follow the standards set by US Pharmacopoeia, a two hundred year old US organization that establishes requirements for pharmaceutical manufacturers. to ensure the purity, quality and effectiveness of the medicines US consumers take. This results in adulterated products, products entering our markets that have been documented to contain toxins, cancer-causing agents like Nitrose dimethylamine, melanin, tainted heparin, or ineffective medications causing treatment failures or death. These and many other examples are well covered in Rosemary Gibson's book, China Rx two sixteen, uh printed in twenty sixteen. Pharm- pharmaceuticals are made from key starting materials and active pharmaceutical ingredients that create the final dose form. China controls thirty to sixty percent on many of these components, and up to one hundred percent on others. With this control over the raw ingredients in our drugs, it's easy to see how China has positioned themselves to control much of the US and world's drug market. The solution, change US policies. First, We must require all manufacturers and countries wishing to sell or import drugs into the US market, to meet the same FDA inspections as US manufacturers. That means an unannounced, twenty-four seven inspection, this is non-negotiable. Congress must create laws requiring all nations producing pharmaceuticals for sale in the US to meet US FDA inspections. Second, we must encourage US manufacturers to move back to the US with a combination of investment, tax incentives, trade policies and tariffs. President Trump's four executive orders have already brought back millions of dollars of pharmaceutical manufacturing investment to our shores. Third, we must require quality and purity inspections that adhere to USP, Inc.'s gold standard for drug manufactured in or entering the US. Fourth, we must forbid the FDA from relaxing regulations when drug shortages occur. Permitting this willingly allows inferior products to be sold, to and consumed by US military and citizen populations. Last, we must require all medicines for our military to be one hundred percent US made, from the KSM's APIs to the final dose store stage. The role of the pharmacy uh pharmacy benefit managers needs to be re-evaluated. Failure to address the nation's pharmaceutical dependency on China or any other nation jeopardizes our national security and our citizens' health security and it cannot be accepted. And I yield back and look forward to your questions.

Thank you, Congressman. Uh, now I'd like to welcome Mister Gordon Chang, who has decades of experience as an author and commentator on the CCP. Uh, Mister Chang has briefed our nation's top leaders and written extensively about the CCP. Uh, thank you for being here, and thank you for your wife being here, Lydia.

Chairman Scott, Ranking Member Gillibrand, and distinguished members of the committee. I am honored to be here, and thank you so much for the opportunity to appear today. China, as we just heard, has monopolies over many of our pharmaceuticals. And the question is, what's at stake? And the reason why this is so important is because China could deny these medications to us. This statement needs context. China's regime believes it's at war with us. In May two thousand nineteen, People's Daily, the most authoritative publication in China, in a landmark editorial, declared a people's war on us. March twenty twenty three, PLA Daily, the official publication of the Chinese military, defined people's war as total war. And China, to win this war, and they are serious, China to win this war has a doctrine of unrestricted warfare. In nineteen ninety nine, two Chinese Air Force colonels wrote a book by that title, and they argued that China could adopt any tactic to take down the United States. So unrestricted means unrestricted. China, we know, has weaponized its near-monopoly over rare earths in the trade discussions, but it hasn't weaponized its one hundred percent monopoly, hundred percent monopoly on the production of pharmaceuticals. But this is not just a theoretical threat. Because in March of twenty twenty, during the COVID epidemic, the Chinese regime threatened to throw the United States into what it called a mighty sea of coronavirus by cutting off um pharmaceuticals and other items that were needed during the epidemic. China we know has um monopoly on many of these, so for instance a hundred of America's most used antibiotics uh sorry um um uh pharmaceuticals, they require ingredients um that are made in in only one Chinese factory, a hundred pharmaceuticals only one Chinese factory. India, the other heavyweight production uh center for generics, they get eighty percent of their active pharmaceutical ingredients from China. And with regard to the key starting materials, forty-five percent of them are produced only in China. Generics are especially important because ninety-one percent of all US prescriptions are filled with them. the generics, they are produced in China as well. Eighty-three percent of the top generics are produced only in China. China is the supplier of at least one of the key starting materials for six hundred and seventy-nine of the active pharmaceutical ingredients. The Defense Department in twenty twenty three um issued a report that showed that twenty-seven percent of the medications it used were one hundred percent dependent on China. And antibiotics, as we just heard, is a particular American vulnerability. So for instance, the most widely used antibiotic in America is made from four separate key starting materials that are produced almost entirely in China. And America gets forty-five percent of its penicillin. That comes from China as well. FDA officials told us that they did not enforce America's standards on the um importation of foreign-made pharmaceuticals because they said, if they did that, it would cause severe shortages here. We know how we got into this prediction predicament. It was China's predatory trade policies, but it was also in America, in America that thought manufacturing was no longer important. And also thought that the nature of regimes was no longer important. We know that in emergencies, foreign countries, even our friends will hoard medications. And that happened in the two thousand nine swine flu epidemic, for instance. So of course we need to unsure our production. And to do that, we need to impose section two thirty two tariffs, invoke the Defense Production Act, enhance the investment tax credit for the production of medications, require the federal government to buy American-made pharmaceuticals and authorized federally backed loans for pharmaceutical production. Senators, we do not have a moment to lose. Thank you.

Thank you, Mr. Chang. Our next witness is a leading author and expert on communist China and the drug and drug quality issues. Rosemary Gibson is the author of China Rx a book that outlines our dependence on communist China for drugs and ingredients. She has been recognized for her work, including receiving the highest honor for the Medic- American Medical Writers Association. Ms. Gibson, thank you for being here. You please begin your testimony.

Uh, thank you, Chairman Scott, and uh, thank you, Ranking Member Gillibrand. ChinaRx was the first to expose how dependent the United States is on a single country. It also exposed that other countries like India are highly dependent. on China also. So all roads lead to the same source. My comments today are on generic medicines because they are so prominent in our supply chain. The centralization of the global supply in a single country is so open to catastrophic failure. An export ban would turn our healthcare system into chaos. And an export ban is not hypothetical. In June twenty twenty five last year, a statement came out of China, this was during the trade negotiations. And it was said that if China chose to restrict pharmaceutical raw materials from the United States, the situation in the US would be much worse than it is for critical minerals. We have been warned, and we have no time to waste. Today I'm uh very pleased to share with you the findings of the Department of War first uh generic drug testing program which highlights uh quality concerns in our medicine supply for the first time we have data on how well our generic drugs are made, and whether they meet our standards. The Department of War's uh work started in twenty nineteen when I was invited to the DLA and I asked them a question do you test your medicines? And so it began. The Department of War's work followed on the heels of Kaiser Health Plan, which started testing generic drugs right beforehand. Here are some of the highlights of the testing program to date. So far, thirteen different generic drugs have been tested, all the different mac- manufacturers and repackagers. Fifteen percent of what has been tested. fail basic quality standards. In any industry, products with fifteen percent manufacturing defects, it would be shut down. Here are some of the test findings. For people who are recipients of organ transplants, they their lives depend on taking a drug to prevent organ rejection. Some of those products were not manufactured right, they don't work right, and r- very reputable physicians believe patients have died as a result. Testing has found toxins including thallium, which is known as the poisoner's poison in some products, and then arsenic, lead, and carcinogens. Thirty years ago when we used to make generic drugs here for the most part, people would go to prison for this. The testing team led by the independent laboratory, we welcome the opportunity to brief um members of the committee on the full details all these the thirteen generic drugs. So what do we do? I have three recommendations. The first, as alluded to, we it's absolutely essential that a country that's a superpower have the capacity to make its own antibiotics. China Rx was the first to expose that we have no capacity to make antibiotics end-to-end here. We have no sovereignty and our survival is at risk. Let's do what we've done with critical minerals and bring that manufacturing back home now, and not only for antibiotics, but the most essential generics that are essential to st- sustain life. And there are a lot of good people in this country waiting on the sidelines to help do that. Second, the federal departments of HHS, the VA, and Department of War should be directed to use the quality data in their procurement decisions. When they do that, that quality is correlated with location. that will automatically, if we use the quality data, drive out sub-standard generics that are typically made in Asia. And it would support US manufacturers who would be able to enter and supply quality medicines uh to our military and veterans. And finally we have to go right to the tip of the spear and where the root cause of this is. There's a handful of US companies that source all the generics that are distributed in this country. And they scour the earth looking for the cheapest. Now going forward it's imperative that they are held accountable for quality, and not just cost. And the narrative that all generics are the same today, with this data shows, it's not true. Once again, we welcome the opportunity to brief the full committee on these findings, which we believe are game-changing. A total of forty-two drugs will be tested, and we look forward to the opportunity for this to really transform. our um drug supply system. Thank you.

Thank you, Miss Gibson, now I'd like to recognize ranking member, uh Gillibrand to introduce the next witness.

Thank you, Mister Chairman, I want to move to introduce our next witness, Doctor Chan um Harj Harjivan Harjivan um Mister Harjivan uh Doctor Harjivan is visiting fellow with the Duke Margolis Institute for Health Policy. Previously he was a special assistant to the White House where he reported directly to President Biden, working to strengthen the nation's readiness for biological threats. He was a key architect of Operation Warp Speed, the historic federal initiative developed uh to develop the COVID-19 vaccine. You may begin.

Thank you. Chairman Scott.

Chairman Scott, Ranking Member Jill Brand, and members of the committee, thank you for this opportunity to testify. Much of the discussion around pharmacy pharmaceutical supply chains have focused on admiring the problem, as Ranking Member um as Chairman Scott has mentioned. Foreign dependence, shortages, and market failure. Now, sound policy changes are being proposed, but today I would like to focus on an integrated solution set. America still has the world's largest pharmaceutical market, flexible allocation of capital, and the strongest research system with unparalleled talent. What we need is alignment between policy, markets, and resilience. In my view, America and its democratic allies should pursue what I call an allied life sciences platform. a strategy built around five mutually reinforcing pillars. First, know the chain. We cannot manage risk in a supply chain that we cannot see. Congress should require auditable end-to-end supply chain mapping. This is not about burdensome reporting. Much of this information already exists and it aligns with other industries and other country standards. What we need are common data frameworks and enforcement mechanisms that allow government and industry to v- identify vulnerabilities bef- before they become shortages or depend- dependencies. Transparency is the foundation of flexibility. Second, buy resilience. The second pillar is about providing predictability to makers of drugs. Federal purchasers, including the DOD, the VA, and CMS reimbursement systems, shape a significant share of a, of the pharmaceutical demand. They should reward supply redundancy, quality manufacturing, surge capacity, and geographic diversification. And in fact, Predictable co- contracts can lower the price for medications, not increase them. In general, I've always been struck by how these buyers seem not to understand how stable and reliable demand signals are valuable to their suppliers and enable them to build more efficient processes. Analysis by Rio's partners highlights a significant opportunity to strengthen procurement efficiency within the VA, as hospitals often purchase identical products at widely varying prices, often exceeding those paid by private sector providers. This is costing taxpayers hundreds of millions a year, while not securing the supply chain or serving patients optimally. If the DOD and the VHA don't value security of medical supply chain for the warfighter or veterans, who will? Third, build capacity at home and with allies. The goal should not be complete reshoring of global pharmaceutical production or creating trade barriers. That would be unrealistic and unnecessary. Instead, the United States should maintain domestic manufacturing capacity for a few essential medicines, while building a trusted supply network. Powerhouses such as India, South Africa, Sa- Canada, Europe and Japan already play critical roles in the global pharmaceutical system. Let's work with them to eliminate choke points and the same time lower costs. Fourth, win the biotech stack. The fourth pillar looks forward. Competition in life sciences increasingly spans the entire innovation pipeline, from AI in AI enabled discovery to clinical trials to advanced manufacturing. When I started consulting in two thousand, The cost to develop a drug was five hundred million dollars. In two thousand ten, it was one point, it's one billion. It's now two billion. We are not efficiently developing or harnessing technological innovation in drug development. The United States should invest in and enforce standards that catalyze technologies. The country that defines the architecture and sets standards will own the AI biology industrial revolution. We don't want to win the generic supply chain battle and lose the global war in life sciences. Fifth, mobilize long-duration capital, the final pillar. We must address the capital gap between scientific discovery industrial and industrial scale in the US. The implication is stark. A Chinese biotech asset is profitable at two hundred million. An American equivalent is considered a failure unless it hits one billion. This imbalance transformed the entire calculus of capital allocation. One idea to address this is the creation of strategic research investment vehicles, mission-oriented, professionally governed investment vehicles, designed to deploy existing long-term institutional capital into critical biotechnology platforms in manufacturing capacity. These entities would complement private venture markets by financing the hard middle between laboratory discovery and industrial scale-up, without a taxpayer funding. Let me close with three imperatives. First, if we improve supply chain visibility and reward resilience economically the private sector will deliver. This is easy. Second, the United States does not need to produce every medicine domestically, but together with trusted allies, we can eliminate systemic vulnerabilities. This is common sense. And the third, the larger strategic competition is not simply about today's drug supply chains. It is about who leads the life sciences platform for the twenty-first century. This is existential. For the past hundred years, United States and its allies built that platform. With the right strategy, we can continue to lead it. Thank you, and I look forward to your questions.

Thank you, our Commander Gillibrand, Mister Hodgman, we are appreciate you joining us today. Let's go to questions. Let me uh start with uh Senator Topofil.

Thank you, Mr. Chairman. Thank you for this, this hearing. Can't get any more important than this. Uh, Miss Gibson, it's becoming common knowledge that for whatever reason, China's often able to circumvent the FDA when producing generic medications so worldwide. That means Americans are often taking drugs that, if produced in United States, would meet higher standards. How can we move that leverage? uh that China has over our people making drugs.

Uh you're uh correct, Senator, that uh China has outmaneuvered the FDA. Uh the former FDA Commissioner, Doctor Robert Califf uh told the House Appropriations Committee in twenty twenty three that China quote " is a problem, it's not transparent, the FDA cannot get information from them to perform its regulatory functions." And he said we should cannot be allowed to depend on China. And as you may know, in twenty twenty three, they started a um anti-espionage law where regulators don't wanna travel there. I believe the way to get around this regulatory issue is, we are importing in my mind de facto unregulated products. And the quality data demonstrate that in countries that don't respect our regulations, then we should not be buying for them. If we use the quality data from the DOD testing program, that will churn out and take out manufacturers in countries who do not respect our laws, and we'll be able to use US manufacturers. So let's use the quality data to really clean up the system. I think it's sending a market signal rather than a regulatory signal.

Thank you. In your book, the China RX, you revealed that China controls approximately ninety percent of key starting materials to make APIs and generics. How do you think the US would be affected if China were to cease those

Uh, we'd, a lot of people would die in this country. We would not be able, our health care systems would cease to function.

We have a, yeah.

And if, yeah, and if China wanted to spread infectious disease, um, we would, would not have the tools to be able to treat people.

Mister Chang, you said in your testimony that China has a pharma death grip on America. How do we work to change that at the federal level?

The most important thing is, on an emergency basis, we need to bring back production here and the reason is um china has been able to outmaneuver the fda as you just talked about because they do have such a big monopoly on all parts of the chain and the only way to do that is to break that monopoly and unfortunately this is gonna take some time but it does it is possible um china develop this monopoly we can take it back but we've got to know that within two or three years there is a period of extreme vulnerability

Can we use tariffs to help us out with China?

Section two thirty two tariffs, I think um are very important in that regard. Um, other tariffs are also possible. The Supreme Court in the learning resources decision struck down the seventy seven act tariffs, but section three O one tariffs and two thirty twos could very well um create the conditions where if we had an enhanced investment tax credit, and if the president were to invoke the defense production act, These are things that could stimulate domestic production immediately.

Thank you. Last November we we we had a a a young man that uh came from my state in Birmingham, Oxford Pharmaceuticals, to testify the importance of onshore drug manufacturing. Mister Chang, what can we do to encourage pharmaceutical companies to acquire APIs domestically, instead of sourcing them from places like China or India? Is that possible?

It is possible, um, but the first thing I think we need to do is get the federal government to require the purchase of American-made pharmaceuticals or pharmaceuticals that are friend-shored if they're not available in the US. But it's an all of the above approach because, as I mentioned, China is able to, um, able to get around all of our rules because they know that if they cut off production, then, as Rosemary Gibson just told us, Americans are gonna die. So, um, it's an all above the approach on an emergency basis. I know that's not a satisfactory answer, but unfortunately, I think it's close to where we have to be. And if we don't do this, um, the problems are just gonna get worse because China's becoming more predatory.

Yeah. Congressman, you you served on the House Foreign Affairs Committee. You understand the risks. Uh, what is at stake if we do not gain control of what's going on here?

National security, I mean, we'd be beholden to another country, IE China. Uh, this is something that's imperative that we get this right, we get it done now. Uh, the Defense Production Act, as President Trump used in the his first term to create those products here, you know, the PPEs, is something we could do now. And the other thing is the ABCs of manufacturing anywhere but China, French Shore, Near Shore, Onshore. Use the tools we have to bring that stuff home now. We know where China's going, we know what their end intent is, and uh we need to do it now.

Yeah, this Clear as Label Act that the chairman has, uh of putting absolutely what is in the the the drugs that we take, how important is that?

It's real important. Um, I I like it, I think it's something that needs to, but for it to be effective people have to read it.

Yeah.

And we tried that on the Ag Committee with the Kool uh amendment. I think um, I think uh, legislation like that is strong, and I think we need to do it, but I think we need to put more force on the FDA to regulate drugs or inspect them, the same way they do here, and tell those countries, you're gonna do it our way or don't sell here, it's your choice.

Thank you. Thank you, Mr. Trump.

Senator Moody.

Thank you. thank you to all our witnesses for being here today. It's an honor to have uh some of our conference crew from Florida. Thank you for being here. Um, it seems like yesterday that our country was reeling when we received a rude awakening um from the COVID-19 pandemic and the millions of Americans that needed medical care so quickly. And in that moment of national vulnerability, we began to realize just how heavily our country depends on China for medical supplies, including pharmaceuticals. Since their entry into the World Trade Organization in two thousand and one, China has concentrated its efforts to circumvent international trade norms, committing economic espionage by stealing RIP and disrupting our economy. And this is one of the many ways I think our our Chairman and Ranking Member have um been great about holding hearings to show how vulnerable we are um to this dependence. on China for our drugs and specifically how it can be a a national security threat. And so I'm I'm grateful, Chairman, that you are willing to commit the time today to hold this hearing. I think it's one of the most important things we can be doing on this committee, since so many of our citizens in Florida, um, are seniors and and otherwise dependent on, um, recurring daily medications. This is so very important. Uh, many of the shortages that Americans have had to face are not because of natural market dynamics but because of the coordinated Chinese engine engineered multi-decade effort to subvert our economy and really much of the west in the past decade from what I can see we've seen a decrease of sixty-one percent in our domestic API manufacturing facilities which are essential for our drug production one of the things uh that we heard from in the wit in the opening statements was Something that concerns me, which is that they are notor- the Ch- Chinese notoriously ignore quality and safety standards, manipulate prices, and utilize dubious labor standards. FDA import alerts routinely cite cite carcinogenic impurities, falsified batch rec- records, and non-sterile conditions from manufacturers in China, with roughly one-third of all FDA import alerting uh on Chinese facilities. So I'm grateful for the administration, they are trying to fix this problem, at least they're they're focusing on it, they're aware of it. Uh, in the course of the last year, the administration announced multiple hundred billion dollar investments being made in the American economy. And of these investments, the White House announced in December that a hundred and fifty billion will be invested into American pharmaceutical manufacturing, reducing our reliance on foreign industries in places like China. So we know not only will this secure up our supply market and make sure that we can trust the ingredients in our our pharmaceuticals, but that we have ready access to them in times of vulnerability. Also, hopefully brings back American jobs uh in that industry. Mister Yoho, um again thank you for be a former Congressman Yoho, I would like to say. Um as you know, I have been very strong in in pushing back on the way um, China has, um, meant to infiltrate the strength of this country or undermine the strength of this country. I'm the lead sponsor of a bill to halt visas for Chinese nationals and students, when their laws require them to cooperate with the CCP. Uh, I'm fighting hard to keep illegal Chinese vapes from coming. Uh, they keep dumping them over and over and we have no idea what's in them, and our kids are, are being affected. This is another way I think that we can focus on, um, ways to protect Americans. Are there any ways that you can tell us today that we can take quick, concrete action here in the Senate that would um What is the most effective thing we can do right now as senators in terms of legislation or otherwise to make sure that we are reassuring domestic manufacturing of drugs?

Awareness. I think the biggest thing is fill this room up with people the news people, American people, knowing what's going into their pharmaceuticals. Second thing, is get on the FDA through legislation that you all can uh introduce, to require, and this is not directing the FDA, but you're saying any, any country producing um pharmaceuticals for the United States, will meet FDA standards anytime, anywhere, twenty four seven. If not, it's your choice not to sell in my market. If you, and, and you need to enforce that. I was with an FDA inspector last week, who was the one doing the inspections in China when we beefed it up. So they could go in there, but it was kind of like the IAEA with Iran. They would let you go where they wanted you to go, and you couldn't ask too many questions or they'd shut it down. So, the uh China saying they're more tolerant and and gonna abide by the rules, it's a joke. You know, we need to put the pressure on them and stop that. And the other thing is bring that production here, um, uh using any tool we have, whether it's the DFC, using the um defense production act or any other tool like that but we don't have time to play around with this this is imperative that we get this done within the next year and half two years period

well i wanna thank the people that showed up today because we almost filled this room,

that's good

that was a great recommendation thank you chairman

thank you sir nobody

thank you mr. chairman I really appreciate this testimony that you've all given. Um, you've highlighted for us why this is such an urgent crisis, and I could hear from each of your testimony how concerned you are. It's something the Chairman and I are very focused on, and we hope to have meaningful legislation to move us in the right direction in this Congress. Um, for Doctor Harjivan, um, the United States holds a key advantage over Indian China in the biomedical and biotechnological space, with its strong support for universities that produce world-renowned scientific research. Historically, We've um been able to recruit the top talent from nearly anywhere, including China and India. Uh, one of the pillars that you talked about in your written testimony was the importance of securing US biotech leadership. China has treated investments in biotech as strategic infrastructure. The final report that was recently released by the National Security Commission on emerging biotech created a robust framework for policy makers about what we can do to, rapidly support this advancing industry. Can you expand upon the role the federal government should play in securing our global leadership in biotech? And how important is it for the United States to set the global standard for biotech research and development? And what are the national security risks of the US losing its leadership to China in this space?

I mean, the threat is real, about losing leadership. Um, I think my analogy would be, in we're all of that age where we remember the internet and how it was developed. Uh, with the early days of the internet, it was a bit of chaos, right? We put structure around it, we put standards around it. we put HTTP and then HTTPS. Because of that, industry could coalesce around that, we had Facebook, we had Beta, we we had um Uber, we we had Netflix, these are all American companies. So we control the internet through innovation, but we set the standards for the internet. As we enter the age of AI and biology, we also need to be setting the standards. NIST, the FDA, need to work really hard so we set global standards, the the world trusts US standards, not Chinese standards. Once we set that, I trust industry to, to coalesce around that, develop innovation. We don't know where these innovations are gonna go. For the next fifty years, these innovations, innovations, innovations will be transformative in our society. We need to own that. Our allies will also trust our standards as well. We need to work with them. But we need to work at pace. I feel we're not working fast enough in developing innovations in standards. We use AI now to develop drugs, but the FDA still uses the same timelines to approve those drugs, we need to accelerate that. So we need to develop new metrology, we need to work with NIST, with FDA, to work with industry partners to develop standards that we can work against.

OK. Um, would anybody else like to answer that question?

China has certainly made the development of biotechnology a priority. If you go back to the Made in China twenty twenty five initiative, um, that's one big world trade organization violation but nonetheless the regime continued to do that and that's one of the reasons why china has become uh innovative in biotech where before it was just making drugs for other countries especially us um rosemary gibson has mentioned that we need to be as determined in this area as china has been that doesn't mean that we have to violate norms and guidelines on trade But it does m need that it does mean that we need to put the resources there. And that is of course gonna be a partnership. But the federal government does need to lead and to make it clear to industry that this is a critical national security threat and it's a something that must be done, as uh we have just heard.

Thank you. Um, in some of your testimony you talked about how um federal procurement reform through HHS, the VA and the DOD is a way to incentivize

Yeah, I'll start. I I think a way to do this expeditiously is to have the D uh the Department of Veterans Affairs, HHS, and the Department of War to use the data that Department of War paid for to guide procurement decisions. If we buy based on quality, you're more, they'll be more likely buying from products made in the United States and other countries that actually care about the quality of the drugs that they produce. So we'll automatically deal with some of these issues and bring in some of the companies that you had in the hearing back in November. But I think it's important to even go further upstream. China and India and other countries that don't respect our laws, their products cannot be sold here unless they have a buyer, unless they have those who source them. So who's sourcing them? There's a handful of companies, about six of them, that source all the generics and they um they go on the basis of cheapest product. And I know from talking with CEOs of ethical US companies say we can't compete if they're gonna be buying and sourcing from companies that have a litany of FDA recalls, warning li- letters, and four eighty- threes. So we have to go to the tip of the spear, the root cause. And this is might be tough to do politically, but I think the CEOs of these companies should be convened and to indicate that we can no longer, they should no longer be sourcing vital medicines only on the basis of cost. They have to include quality, and we have the testing data to begin to do that. And that will affect everything else that's distributed around the country. Thank you.

I would add that it does not need to be costly either. We can, with longer term contracts, with with visibility into the supply chain, we can actually have lower term contracts, because they allow predictability of demand. Visibility into that's very important. When I go buy a car, I can see where it's made. It'll tell me which parts come from which country. When I put a drug into my mouth, I have no idea about the quality, nor I, nor do I know where it's made. We also need diversity. When we buy um, you know, my rest, my favorite restaurant chain gets its tomatoes from three different sources, California, Mexico, and Texas maybe, right? When I buy a drug, it's often a single source supplier. I actually don't worry whether it comes from Idaho, India, or Ireland, or China. But I don't want it to come from only India, or China, or or Ireland. Quality issues often come up in the United States as well, because we have single source suppliers. So it's transparent supply chain and diversity of supply. But with long-term contracts, and building in these quality measures, I think will lower the cost. And I've talked to generic manufacturers who agree with me as well. We could actually lower the cost of generics by having this process process in place.