\t\t\t\tEditor’s note:<\/p>\n
The following is adapted from a testimony given to the U.S. House Select Committee on the Chinese Communist Party on March 18, 2026. Video of the hearing is available\u00a0here<\/a>. Please note that the full 13-page written testimony is attached as a download.<\/p>\n \t\t\tIntroduction<\/p>\n Few things unsettle patients and clinicians more than hearing that a standard treatment \u201cjust isn\u2019t available right now.\u201d Modern U.S. health care runs on a continuous supply of medications, whose production and sourcing are largely invisible,\u00a0from routine antibiotics to intensive\u2011care medicines, and that dependence means fragile supply chains can quickly turn into real harm when they fail.\u200b<\/p>\n More than 60% of U.S. adults take at least one prescription drug<\/a>, and roughly one in four take four or more<\/a>. Among older adults, taking five or more medicines<\/a> at once is now common. Those prescriptions span thousands of distinct drug products and strengths, but the vast majority are filled with low\u2011cost generics rather than brand\u2011name drugs. In retail and mail\u2011order settings, generics account for over 90% of prescriptions dispensed<\/a>, even though they make up only a fraction of overall drug spending. In 2024 alone, Americans took roughly 187 billion generic tablets and capsules<\/a>\u2014about 550 pills per person\u2014covering routine treatments for hypertension, diabetes, depression, infections, and many other conditions.<\/p>\n Because these medicines are inexpensive and usually available, it is easy to overlook how dependent modern care is on a reliable supply. When a routine drug goes into shortage, there are often no easy substitutes at scale, and the consequences range<\/a> from delayed surgeries, substitutions with less effective or less safe alternatives, medication errors, and avoidable deaths.<\/p>\n Historically<\/a>, drug shortages in the U.S. have mostly affected generic sterile injectables and have typically been driven by manufacturing quality problems<\/a> in sterile fill-and-finish operations. But shortages caused by geopolitical export restrictions have not historically contributed to U.S. shortages; they are a forward\u2011looking risk. Should major geopolitical shocks occur, I expect they would look very different<\/a>: they could affect a much broader set of drugs, including oral solids, and would more likely hit earlier stages of the supply chain because that is where geopolitical exposure exists, as I explain below.<\/p>\n Even as concern about these geopolitical vulnerabilities has grown, federal industrial policy has focused far more on other strategic supply chains than on medicines. Through the CHIPS and Science Act of 2022<\/a>, Congress has committed $52.7 billion in direct incentives<\/a> and research funding to revitalize domestic semiconductor manufacturing, but it has not provided comparable funding to strengthen the resilience of generic drug manufacturing\u2014even though disruptions in the medicines supply pose more direct and immediate risks of harm to Americans.<\/p>\n Whereas a chip shortage may mean waiting longer to replace a car or phone, a drug shortage can mean that treatment is delayed or missed altogether, with real consequences for controlling seizures, treating infections, or managing severe pain\u2014conditions that do not stand still while supply catches up.<\/p>\n To date, congressional action on drug supply chains has largely focused on commissioning more studies and transparency requirements rather than on decisive investments in the most fragile, high\u2011stakes parts of the market where we already know supply is vulnerable.\u200b<\/p>\n In deciding where to act now, it is important to recognize that we cannot \u201cboil the ocean.\u201d\u00a0So far, Congress has not committed anything close to the kind of money it devoted to the CHIPS and Science Act, and it would be unrealistic to assume that drug supply chains will suddenly receive even close to the resources devoted to semiconductors.\u00a0If we simply try to onshore broadly without clear priorities, we risk spending whatever we allocate and changing little about our true points of vulnerability.<\/p>\n Given those limits, it matters what kind of China\u2011related risk we are trying to address. China\u2011related risks also depend on\u00a0how China might disrupt supply. Some drugs are most exposed when China competes with us for scarce supply to meet its own needs, while others would be more attractive targets if Beijing chose to weaponize export controls. The rest of my testimony, therefore, focuses on three questions: where in the supply chain U.S. exposure to China is greatest, which medicines matter most under those different China\u2011related shocks, and how Congress can prioritize tools\u2014onshoring, friendshoring, and crisis planning\u2014so that limited public dollars do the most to reduce actual patient harm.<\/p>\n \t\t\tU.S. exposure to China in drug supply chains<\/p>\n To understand where the United States is most exposed to China in drug supply chains, it helps to distinguish manufacturing stages of the drug supply chain.<\/p>\n Production starts with key starting materials and other commodity chemicals such as reagents, solvents, and catalysts. These compounds are chemically synthesized into active ingredients, also called active pharmaceutical ingredients (APIs), the substances that produce the intended therapeutic effect. Sometimes producing active ingredients requires several synthesis steps, with the output of each step called an intermediate.<\/p>\n Figure 1 illustrates these steps from basic chemicals through active ingredients to finished products. In Figure 1, the orange steps indicate upstream chemical inputs that sit earlier in the supply chain and are generally treated as part of the broader chemicals sector rather than as pharmaceutical manufacturing itself\u2014some intermediates do fall under the Food and Drug Administration (FDA) oversight, but many of these inputs are regulated primarily as industrial chemicals\u2014even though active ingredient and finished\u2011dose plants cannot run without them.<\/p>\n \n \t\t\tFigure 1: Manufacturing steps for small molecule drugs<\/p>\n The final stages look different. Turning APIs into finished dosage forms such as tablets, capsules, and vials is less about chemical synthesis and more about making a usable product: combining the active ingredient with inactive ingredients like fillers, binders, and stabilizers, then granulating, tableting or filling, and finally packaging and labeling so that patients receive a stable, safe medicine.<\/p>\n China currently plays a relatively small role in finished\u2011dose manufacturing for the U.S. market, as Figure 2 indicates. For generic oral solid doses in 2024<\/a>, India accounts for about 61% of the volume dispensed in U.S. pharmacies, the United States for roughly 22%, and the European Union for about 5%, while China supplied around 3.5%. In contrast, for generic sterile injectables in 2024<\/a>, the U.S. led with 42%, India supplied 21%, Europe 13%, and China 12%.<\/p>\n \n \t\t\tFigure 2: Generic drug volume by location (2024)<\/p>\n The picture changes as we move upstream to the active ingredient stage. In my recent work, I find that Chinese\u2011produced active ingredients are included in perhaps a quarter of the generic drug unit volume<\/a> sold in the United States\u2014far less than some of the more alarmist claims, but still a substantial share of the generic market. That pattern reflects a steadily expanding footprint. Over the past decade, an increasing number of Chinese firms have notified FDA<\/a> that they are ready to supply active ingredients for the U.S. market, signaling a shift from commodity chemicals into higher\u2011value ingredients that is unlikely to reverse on its own.<\/p>\n The current footprint masks sharp differences across drug categories. Exposure to Chinese active ingredients is especially acute for many antibiotics<\/a>, and China also carries a meaningful share of active ingredient production<\/a> for other widely used small\u2011molecule generics. China is no longer confined to simple commodity active ingredients: Chinese firms are moving into complex peptide synthesis for GLP\u20111s<\/a> and other advanced therapies, signaling a shift up the technological ladder that is unlikely to slow down or pause.<\/p>\n The upstream part of the chain is least well mapped, but there is broad agreement that this is where U.S. exposure to China is greatest. A recent study suggests that nearly 41% of key starting materials<\/a> used in U.S.\u2011approved active ingredients are sole-sourced from China. But even that understates true exposure because it does not capture the other chemicals needed to make drugs. We know, for example, that India\u2014our main supplier of retail pharmacy generics<\/a>\u2014relies heavily on Chinese suppliers for the solvents and reagents<\/a> it uses to make active ingredients, and is likewise heavily dependent on Chinese intermediates for antibiotics as well as major fluorine\u2011rich drug classes<\/a> such as statins, SSRIs, and key blood\u2011pressure medicines.<\/p>\n Taken together, these data suggest four broad features of U.S. exposure:<\/p>\n Our dependence on China is not uniform across all medicines. It is concentrated in particular classes of small\u2011molecule generics and is especially pronounced for the chemical inputs and intermediates that those drugs require. Figure 3 provides a visual snapshot of how different countries\u2019 presence in the medicines value chain varies by stage. Even though it is constructed from Europe\u2019s point of view, where Indian finished\u2011dosage products play a smaller role, the overall pattern is instructive: U.S. capacity is concentrated in finished\u2011dosage forms, while European producers have a stronger footprint in both active ingredients and finished doses, as well as some intermediate steps. China\u2019s deepest presence is in upstream starting materials and intermediates on which downstream plants depend, and India straddles the chain\u2014supplying finished generics while still relying heavily on Chinese inputs for key starting materials and intermediates. For the U.S. market specifically, India\u2019s role as a finished\u2011dose generic supplier would be larger than this Europe\u2011focused snapshot suggests.<\/p>\n \n \t\t\tFigure 3: Regional presence across the medicine value chain (EU perspective)<\/p>\n \t\t\tChina-related shocks: Competition, weaponization, and systemic risk<\/p>\n Mapping where we rely on China reveals our points of vulnerability, but policymakers should focus on which of those supply chains are most likely to be disrupted. In that context, it is useful to consider three different scenarios:<\/p>\n Competition for scarce supply \u2013 when China retains product to meet its own needs during crises, for example, during pandemics or after major natural disasters that disrupt production. Of these scenarios, competition for scarce supply received the most attention during COVID\u201119, when many countries\u2014including China\u2014restricted exports of a wide range of medical products<\/a> to meet domestic needs. More recently, concerns have shifted toward deliberate weaponization<\/a>. China has a track record of using trade and market\u2011access measures<\/a> to pressure individual partners. That experience raises a natural question for drug supply chains: if Beijing chose to use similar tactics in pharmaceuticals, which drug supply chains are most at risk?<\/p>\n Different products are likely to be salient under the first two channels. For competition over scarce supply, the focus is on medicines that other countries themselves deem essential, because those are the products they are most likely to hold back in a pandemic or other emergency. For weaponization, the most tempting targets are not necessarily the drugs at the top of clinical\u2011essential lists, but products with very high patient reach that leave many people in pain or with noticeably worse symptoms when they are unavailable, combined with a large budget impact that makes it hard to backfill or justify major contingency spending in advance. In other words, competition risk and weaponization risk point to different subsets of drugs, and a one\u2011size\u2011fits\u2011all \u201cessential medicines\u201d list will miss those distinctions.<\/p>\n In thinking about weaponization in this context, it also matters how China has used these tools elsewhere. Much of Beijing\u2019s past economic coercion<\/a> has been murky rather than \u201cin your face\u201d: pressure applied through opaque customs delays, informal bans, or sudden drops in orders that let officials deny they are targeting a specific country or firm. By contrast, the recent export controls on critical minerals and rare earths<\/a> were explicit and not exclusively direct: Beijing not only overtly restricted shipments to the United States, but it also squeezed key allies whose firms are embedded in U.S. supply chains, underscoring that targeting the United States in practice can mean constraining exports to its partners as well.<\/p>\n In pharmaceuticals, by contrast, little U.S. exposure to China is direct<\/a>. Instead, our dependence runs through intermediaries such as Indian and European manufacturers<\/a> rather than through large, visible bilateral drug flows, so any attempt to weaponize these links would most likely work by constraining exports of key inputs to third\u2011country producers, making the pressure even harder to see and the bargaining more roundabout than in earlier cases. That pattern also means Beijing would need to exert leverage over the U.S.\u00a0by restricting exports to allies whose plants supply U.S. markets, forcing any confrontation over medicines to spread beyond a bilateral U.S.\u2013China dispute.<\/p>\n That indirect exposure does not eliminate the supply disruption risk, but it does mean that any serious playbook for drug\u2011supply shocks must run through cooperation with allies whose plants sit between U.S. patients and Chinese chemical exports.\u00a0These different shock channels are why, in the next section, I turn to how to prioritize which drugs and supply chains to protect first.<\/p>\n \t\t\tPrioritizing where to de-risk<\/p>\n Any serious effort to de\u2011risk U.S. drug supply chain dependence on China will cost money. That money will show up somewhere in the system, either as higher drug prices or premiums for patients, employers, and government programs, or as higher public spending were Congress to appropriate funds or change reimbursement rules. Because any meaningful change in law, payment policy, or sourcing requirements of the kind often described as \u201cBuy American\u201d carries a budget impact, Congress must decide how much we are willing to spend on resilience.<\/p>\n There is no free lunch here, and that reality also limits how far the administration can move on its own without Congress. Onshoring has become a central objective<\/a>, but it is expensive and slow to scale<\/a>. Broad pharmaceutical tariffs<\/a> were one option the Trump administration explored, but without greater certainty that such tariffs would be durable, and without parallel changes to payment systems, they would have done little<\/a> to create lasting incentives to onshore generics while driving some foreign generic drugs out of the market, increasing shortage risk. The administration is now focusing instead on a narrower effort to stockpile active ingredients for a limited set of top\u2011priority medicines<\/a>\u2014an important step, but one that still falls short of the broader resilience goals that cannot be met without sustained congressional support.<\/p>\n Given the scale of our dependence on Chinese inputs, and the fiscal reality that drug supply chains are unlikely to receive even close to the resources devoted to sectors like semiconductors, the question is not whether to spend but how to spend wisely. We cannot de\u2011risk every China\u2011exposed supply chain at once, and trying to spread resources thinly across many products risks accomplishing little beyond symbolic onshoring.<\/p>\n Even if Congress moves beyond today\u2019s focus on studies and transparency and starts committing real money to de\u2011risking, those dollars will still be weighed against other budget priorities and are unlikely to be appropriated all at once. That means we will face budgetary and operational limits in the near term, no matter what.<\/p>\n With limited dollars and limited operational bandwidth, the problem is essentially one of constrained optimization: we cannot protect every supply chain at once, so we must decide what outcome we are trying to maximize. Congress will ultimately decide what objective to prioritize in that optimization, but my recommendations are grounded in one that focuses on patients: minimizing expected harm to patients rather than minimizing political discomfort when shortages occur.<\/p>\n A useful way to turn that optimization problem into concrete decisions is the Criticality\u2013Reach\u2013Vulnerability framework<\/a>. In this approach, Criticality captures how severe the clinical harm is when therapy is interrupted, Reach reflects how many patients and settings depend on a product, and Vulnerability reflects how fragile the supply chain is and how easily shocks turn into shortages. Applied to the three shock scenarios I described\u2014competition for scarce supply, deliberate weaponization, and system\u2011wide disruption\u2014this framework points us toward drugs where loss of therapy would cause the greatest harm for the greatest number of people, and toward those supply chains where shocks are most likely to translate into actual shortages.<\/p>\n Crucially, the China\u2011related shock scenarios do not all highlight the same drugs. Competition for scarce supply would reasonably elevate medicines that China and other countries also deem essential for their own patients, while weaponization risk would most likely center on high\u2011volume maintenance drugs that are politically salient in the United States but less clinically acute. A single, undifferentiated \u201cessential medicines\u201d list will blur these distinctions and encourage one\u2011size\u2011fits\u2011all responses that are either too costly or misdirected.<\/p>\n This is where a stratified list becomes important.<\/a> Rather than a single \u201cessential drugs\u201d list, a tiered structure ranks products by criticality and reach, with higher tiers capturing drugs where loss of therapy causes severe harm and where many patients would be affected. Such a list lets policymakers go further down the tiers as more resources become available\u2014expanding protection without redoing the list\u2014and helps determine how far down that list we can go with expensive tools like onshoring, and where we instead need to supplement with lower\u2011cost tools such as stockpiles or friendshoring.<\/p>\n In thinking about which drugs are most important to protect, it is crucial to distinguish between patients who are affected by a disruption and patients who are harmed by it. Statins are a great example of a political-headache drug: about 90 million Americans use them<\/a>, so a disruption would touch many people and generate intense attention, but because clinical harm builds slowly<\/a>, even a year\u2011long interruption would cause far less immediate harm in aggregate than shortages of many acute\u2011care drugs. By contrast, there are medicines with a much smaller number of users\u2014such as certain trauma, critical\u2011care, and resuscitation drugs\u2014where a large share of patients deprived of treatment would die or face irreversible harm<\/a> within hours or days.<\/p>\n Under tight budgets, investments that protect the latter group typically produce far more health benefit per dollar than broad efforts to insulate high\u2011volume maintenance drugs like statins. A strategy focused on minimizing total patient harm will therefore sometimes skip over a higher\u2011visibility drug when the additional cost of securing it is so high that the same resources could protect several other products with greater combined benefit.<\/p>\n These trade\u2011offs become even sharper in weaponization scenarios. It is in these situations where good policy and political incentives can diverge most sharply: the drugs that generate the most calls to congressional offices are not always the ones where each dollar of resilience spending prevents the most harm.<\/p>\n For political\u2011headache drugs like statins, the return on investment in avoided clinical harm is relatively low, so they are poor candidates for the most expensive tools, even if shortages would be highly visible and politically painful. Pursuing full onshoring for statins would not only crowd out funding for clinically more critical medicines, but it also would not meaningfully reduce weaponization risk, because China could quickly shift pressure to another widely used chronic medicine. For these high\u2011volume maintenance drugs, the better path is to rely on lighter\u2011touch interventions that can minimize the risk of disruptive, headline\u2011grabbing shortages without displacing investments in drugs where shortages translate directly into preventable death.<\/p>\n If Congress uses this kind of stratified, China\u2011aware framework to guide spending, it can avoid the temptation to \u201csprinkle\u201d funds across many visible products and instead concentrate the most expensive tools where they deliver the greatest reduction in expected harm.<\/p>\n \t\t\tBuilding a smart de-risking strategy<\/p>\n De\u2011risking U.S. dependence on China will require a portfolio of tools, in part because it is neither fiscally nor operationally feasible to onshore every vulnerable supply chain. That portfolio has three main pillars: targeted onshoring of the most critical supply chains, friendshoring and trade policy that shift broader production into allied jurisdictions, and advance planning for allocation and communication when shortages still occur. A realistic strategy uses these tools together under tight budget and time constraints, reserving the most expensive options for the highest\u2011stakes products. The goal is not to eliminate every China\u2011related risk, which is impossible, but to align each tool with the parts of the China\u2011exposed system where it can prevent the most harm.<\/p>\n \t\t\tOnshoring<\/p>\n Policymakers often fixate on \u201cmaking more API in the United States,\u201d but if the key starting materials still come from China, making active ingredients on U.S. soil does little to change our underlying risk. For drugs that rank high on importance and exposure, onshoring only helps if we treat drug manufacturing as a full supply chain problem rather than focusing solely on the visible, later stages that are usually labeled as \u201cdrug manufacturing.\u201d That means looking beyond finished dose and even beyond active ingredients to critical starting materials and intermediates, many of which are now produced almost entirely in China.<\/p>\n For the earliest, chemical stages of the chain\u2014key starting materials, intermediates, and auxiliary chemicals like reagents and solvents\u2014one option is to rely more on cost\u2011competitive production in allied countries rather than trying to recreate all of China\u2019s capacity inside the United States. But for some strategically sensitive inputs, we will still want domestic capability, and here it is important not to imagine that we can simply replay China\u2019s old model of cheap, highly polluting chemistry. China undercut Indian and Western producers<\/a> in part by operating with weaker environmental and workplace protections and by exploiting large economies of scale. Even if the United States were willing to lower standards below India\u2019s, we would still face a cost gap because we cannot easily match China\u2019s scale.<\/p>\n That is why any serious onshoring strategy for chemicals has to look forward rather than backward, focusing on innovation, cleaner and more efficient technologies, and shared infrastructure<\/a> instead of stand\u2011alone, legacy plants. Green\u2011chemistry approaches<\/a> and chemical industrial parks<\/a>\u2014where multiple firms share wastewater treatment, utilities, testing facilities, safety systems, and logistics\u2014offer a way to support multiple high\u2011priority supply chains while meeting U.S. environmental standards and keeping per\u2011unit costs competitive. Parks also make public dollars work harder<\/a>: if one producer exits, another can plug into the same infrastructure, protecting the investment and maintaining supply continuity. Over time, technologies like synthetic biology may provide alternative routes to some inputs,<\/a> but they are not yet at the scale we would need in a crisis, so a pragmatic strategy starts with building innovative, modern chemical capacity now.<\/p>\n For active ingredients and finished doses, the first priority is to avoid losing the U.S. capacity we already have, especially for acute\u2011care and hospital drugs that serve as a backstop in crises. Targeted capital investment support<\/a>\u2014through grants, tax credits, or loans\u2014for facilities that commit to resilient, non\u2011Chinese supply chains can help preserve and expand that base, and it should also make it easier for new, reliable entrants to scale up. But bricks and mortar alone are not enough.<\/p>\n Those investments will not be sustainable<\/a>\u00a0if the drug reimbursement system continues to reward only the lowest price. Generic manufacturers that invest in resilience also need predictable demand and reimbursement that recognizes reliability, not just cost. The Centers for Medicare & Medicaid Services (CMS) has begun to test this idea\u2014most recently by\u00a0proposing to pay differently for certain domestically produced acute\u2011care drugs<\/a>\u2014and that is a welcome step toward aligning payment with reliability. But because CMS\u2019s approach is limited to U.S. plants, it cannot by itself support the broader base of reliable, non\u2011Chinese capacity in allied countries that already supply much of the U.S. market.<\/p>\n The\u00a0bipartisan Senate Finance proposal for add\u2011on payments tied to supply\u2011reliability contracts<\/a>\u00a0points toward the broader framework we actually need and deserves to be revisited and\u00a0further developed<\/a>, rather than left on the shelf. A reliability\u2011based add\u2011on can be structured to reward both high\u2011performing U.S. manufacturers and those in allied countries, making it realistic for firms to invest in non\u2011Chinese inputs and capacity without assuming that competitors relying on cheaper Chinese chemicals will undercut them as soon as public attention moves on. In other words, CMS\u2019s domestic initiative is a useful start, but payment reform ultimately needs to extend to the friendshored suppliers that will anchor many of the most practical alternatives to China.<\/p>\n \t\t\tFriendshoring<\/p>\n Because we will only have the money and bandwidth to onshore a limited set of the most critical supply chains, we need a strategy for the rest. For many drugs, that strategy is friendshoring\u2014shifting and strengthening production in allied countries that are already major suppliers to the U.S. market and have their own reasons to reduce dependence on China.<\/p>\n Most generic active ingredient and finished\u2011dose production for the U.S. market already takes place abroad, so it is Indian and European manufacturers that buy Chinese chemicals and intermediates. Their governments are now moving to reduce that reliance through targeted subsidies and industrial policy: since 2020, India has launched production\u2011linked incentive schemes<\/a> and bulk\u2011drug parks<\/a> to rebuild domestic capacity for critical starting materials, intermediates, and active ingredients, while the EU\u2019s pending Critical Medicines Act<\/a> would channel state aid and fast\u2011tracked permits<\/a> into strengthening supply chains for selected critical medicines with high China exposure. Japan is likewise investing to restart and upgrade domestic fermentation\u2011based capacity for key antibiotics<\/a> to reduce reliance on Chinese inputs. These moves can benefit the U.S. without the commitment of additional American taxpayer dollars.<\/p>\n Taken together, these efforts create potential non\u2011Chinese supply options for U.S. patients without new American subsidies\u2014but only if buyers are willing to pay enough to keep that capacity viable.<\/p>\n One recent example is Xellia, a Danish producer of critical antibiotic active ingredients and injectables that is winding down its Copenhagen facility<\/a> and shifting production to lower\u2011cost sites, including in China, because purchasers have not been willing to pay enough to sustain local capacity\u2014even though many of its products are on FDA and European Union critical\u2011medicine lists. From a U.S. perspective, that is both a warning and an opportunity: without changing how we pay for generics, American buyers will continue to default to the cheapest China\u2011linked option, but with the right payment signals, U.S. purchasers could instead help anchor production in allied facilities like these. That argues for reliability\u2011linked payment policies that apply not only to onshored plants but also to friendshored, non\u2011Chinese suppliers, so that de\u2011risked capacity in Europe is commercially viable for U.S.\u2011bound products.<\/p>\n In that environment, U.S. policy needs to work with\u2014rather than undercut\u2014partners that are already doing the hard work of de\u2011risking. India, in particular, should be a central counterpart in ongoing trade discussions, with U.S. policy reinforcing its efforts to rebuild capacity not only for active ingredients but also for auxiliary chemicals for which it now relies heavily on China. Concerns about product quality in some foreign plants are real, but they are not a reason to ignore friendshoring; they are a reason to pair friendshoring with stronger, risk\u2011based oversight and quality incentives<\/a>, as I have argued elsewhere. We can and should address quality and China\u2011related dependence as distinct, complementary problems rather than treating them as an all\u2011or\u2011nothing choice between \u201ccheap but risky\u201d imports and \u201conshore everything.\u201d\u00a0<\/p>\n Deepening that cooperation can expand India\u2019s role as a low\u2011cost, non\u2011Chinese supplier of critical steps in the chain, building on de\u2011risking strategies it is already implementing and allowing capacity to come online faster than if the United States tried to start from scratch. A complementary step is to treat Mexico as a friendshoring platform<\/a>, especially to leverage its significant chemicals capacity<\/a>. Other partners can play similar roles, provided that trade, regulatory, and payment policies support high\u2011quality, reliable production in those friendshored facilities.<\/p>\n Within that cooperative frame, tariffs can still play a useful role if they are targeted. Right now, there is a 10% tariff<\/a> on products that use Chinese\u2011sourced active ingredients, but broader U.S. tariff policy remains uncertain, so the signal to manufacturers is weak. A wedge between tariffs on pharmaceuticals with Chinese active ingredients and the same products from other locations<\/a> can push active ingredient production away from China toward lower\u2011cost allies, creating more friendshoring than reshoring but still reducing direct exposure to China. Having Congress step in to expand and lock in that wedge in statute would make the signal durable and predictable, reinforcing the economic incentive to source inputs outside China rather than waiting to see whether tariffs will be reversed.<\/p>\n Done well, friendshoring takes seriously the fact that if we tried to de\u2011risk chemical inputs from China purely through U.S. production, we would effectively have to move all stages of production onshore, because Indian manufacturers are unlikely to buy U.S. chemicals without China\u2011like prices and low shipping costs. Our allies, by contrast, have their own strong reasons to keep medicines flowing and are already investing in de\u2011risking their supply chains, and we should be leveraging that rather than trying to go it alone. A smarter approach is to use taxpayer dollars to underwrite deeper de\u2011risking for a relatively small set of the most clinically critical medicines, while working with allies so that they take on a larger share of the effort for many other drugs. That strategy stretches public funds far more effectively than an \u201conshore everything\u201d vision, which may be attractive in theory but is not achievable in practice.<\/p>\n \t\t\tPlanning for crisis management<\/p>\n Even with significant engagement on onshoring and friendshoring, the United States will remain exposed in the short and medium term to shortages if China chooses to curtail exports of necessary chemicals and intermediates, especially for widely used maintenance drugs, where full de\u2011risking would be extremely costly and a less efficient use of taxpayer dollars, given the lower return in avoided clinical harm. For this reason, we should be prepared for potential disruptions with playbooks that minimize harm when shortages do occur. In those cases, the key tool is not more capacity overnight, but smarter use of the doses we have and clear communication with patients and clinicians about allocation, available substitutes, and what to do when substitutes are limited or unavailable.<\/p>\n For drugs where patients differ sharply in how much harm they suffer from missed doses, planning ahead is especially important.\u00a0Statins illustrate this heterogeneity clearly: about 90 million Americans use them, so a disruption would touch many people.\u00a0Yet for most users, the risk from temporarily stopping therapy accumulates only gradually,\u00a0so even a prolonged interruption would cause far less immediate harm for them than for the smaller group of patients at very high cardiovascular risk\u2014such as those with recent heart attacks, strokes, or severe hypercholesterolemia.<\/p>\n If we want to minimize harm, those very high\u2011risk patients should be first in line for scarce lipid\u2011lowering therapy\u2014if not for statins themselves, then for PCSK9 inhibitors, a newer class of injectable cholesterol\u2011lowering drugs used when statins are not enough or not tolerated. The same logic applies to other \u201cpolitical\u2011headache\u201d products whose shortages are highly visible but clinically heterogeneous: if the goal is to minimize harm,\u00a0allocation plans should explicitly prioritize the patients and indications where loss of therapy truly changes outcomes,\u00a0rather than letting first\u2011come\u2011first\u2011served or hoarding determine who gets treated.<\/p>\n Looking back at recent crises, it is clear that we would have benefited from more of this kind of advance planning. Rollout of COVID\u201119 monoclonal antibodies would have benefited from agreed\u2011upon criteria, referral pathways, and communication tools<\/a> ready to activate as soon as doses were available; instead, the drugs were sent to settings to which COVID-19 patients, many of them in nursing homes, had difficulties in accessing. The recent National Academies assessment on the 2022 infant formula shortage<\/a> similarly underscored that communication and expectation\u2011setting are part of resilience: agencies need plans for how they will explain shortages, triage rules, and available substitutes to the public and to front\u2011line clinicians, so that panic buying and misinformation do not magnify the harm.<\/p>\n A pragmatic way forward is to treat these structured, clinically grounded use\u2011and\u2011communication plans as part of basic preparedness, much like playbooks that federal<\/a> and state agencies<\/a> rely on in natural disasters and other large\u2011scale emergencies. Evidence from disaster preparedness<\/a> shows that modest investments in advance planning yield a high return in avoided disruption and economic loss, so for selected high\u2011priority drugs, relevant agencies should develop and periodically test such plans in advance, tied to the same criticality tiers I described earlier. In the China context, these playbooks are the main way to manage residual risk for high\u2011volume drugs where full de\u2011risking would be prohibitively expensive or slow, ensuring that when shocks occur, we still allocate scarce supply in ways that minimize preventable harm.<\/p>\n \t\t\tConclusion<\/p>\n The United States cannot and should not try to buy its way out of every vulnerability in the drug supply chain. Public dollars are limited, and poorly targeted interventions can waste taxpayer money while doing little to keep patients safe. The goal must be to get the most health and security benefit for every dollar we spend\u2014using the most expensive tools sparingly, where they protect the most patients from the most serious harm, and relying on lighter\u2011touch tools elsewhere.<\/p>\n To do that, policymakers need to act on the information we already have, rather than waiting for perfect data. We should use today\u2019s imperfect but sufficient map to move quickly on the highest\u2011stakes drugs and supply chains, even as we continue to improve transparency and measurement in the background.<\/p>\n In practical terms, this points to several priorities for Congress:<\/p>\n Direct the Department of Health and Human Services to develop and maintain a stratification framework for medicines that integrates clinical criticality, patient reach, and China\u2011related supply\u2011chain exposure, and use that framework to guide de\u2011risking investments and interventions rather than relying on a single, undifferentiated \u201cessential medicines\u201d list. A de\u2011risking strategy built on these principles will not eliminate every vulnerability, but it will\u00a0shift resources away from symbolic gestures and toward a focused, fiscally realistic effort that reduces the most serious China\u2011related risks to American patients.<\/p>\n The Brookings Institution is committed to quality, independence, and impact.
\nSome widely cited statistics overstate U.S. reliance<\/a> on Chinese active ingredients, often by misreading India\u2019s import data or misattributing exposure to wrong production stages, but they nonetheless point toward a real and non\u2011trivial dependence.
\nThe most opaque parts of the system\u2014the key starting materials and intermediate stages\u2014are also where China\u2019s footprint is largest, making it harder for policymakers to see and manage the real points of vulnerability.
\nChina\u2019s role is not static. FDA data show Chinese firms moving more aggressively into higher\u2011value active ingredients and, in some cases, finished\u2011dose generics, which means U.S. exposure is likely to increase over time if current trends continue.<\/p>\n
\nDeliberate weaponization of supply chains \u2013 when export controls or other trade restrictions are used to gain leverage over trading partners by exploiting their dependence on key materials or products.
\nSystem\u2011wide disruption \u2013 when exports from China are broadly curtailed across the board, not just for specific drugs or inputs, creating a generalized shortfall that ripples through U.S. and global supply chains.<\/p>\n
\nReserve costly full\u2011chain onshoring\u2014including key starting materials and intermediates\u2014for drugs that HHS identifies as highest tier under that framework, and pair those efforts with payment reforms that reward manufacturers for resilient, non\u2011Chinese supply chains rather than just the lowest price.
\nGive the administration clear direction and tools to work with allies to expand their role as non\u2011Chinese suppliers of critical inputs and finished products by authorizing and funding programs that support trade discussions explicitly focused on de\u2011risking U.S.\u2011bound drug supply chains from China and establishing a durable tariff wedge that favors non\u2011Chinese sourcing, while ensuring that downstream payment rules do not undercut those ally\u2011based supply chains.
\nTo ensure this does not simply swap China dependence for fragile or low\u2011quality alternatives, align regulatory and payment policies to reward both non\u2011Chinese sourcing and demonstrably high\u2011quality, reliable production\u2014for example, by tying support to stronger oversight and performance metrics for Indian and other foreign plants, rather than assuming that any move away from China is an improvement.
\nRequire relevant federal agencies to develop and periodically test crisis allocation and communication playbooks for selected high\u2011priority drugs with significant China exposure, drawing on that same framework so that, when shortages occur, scarce supply is allocated in ways that minimize preventable harm rather than simply responding to political pressure.<\/p>\n
We are supported by a diverse array of funders<\/a>. In line with our values and policies<\/a>, each Brookings publication represents the sole views of its author(s).<\/p>\n","protected":false},"excerpt":{"rendered":"Editor’s note: The following is adapted from a testimony given to the U.S. House Select Committee on the…\n","protected":false},"author":2,"featured_media":532978,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,966,37269,3200,34619,252,28936,3,37268,16673,21,19,22,20,25,24],"class_list":["post-532977","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-states","tag-america","tag-article","tag-center-on-health-policy","tag-commentary","tag-economic-studies","tag-health-care","tag-health-care-policy","tag-news","tag-pharmaceutical-drug-policy","tag-testimony","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-usa"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/532977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=532977"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/532977\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/532978"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=532977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=532977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=532977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}