Hearings to examine truth in drug labeling.

1[Senate Hearing 119-359]2[From the U.S. Government Publishing Office]34                                                      S. Hrg. 119-35956                           TRUTH IN LABELING:7                       AMERICANS DESERVE TO KNOW8                      WHERE THEIR DRUGS COME FROM9=======================================================================1011                                HEARING1213                               BEFORE THE1415                       SPECIAL COMMITTEE ON AGING1617                          UNITED STATES SENATE1819                    ONE HUNDRED NINETEENTH CONGRESS2021                             SECOND SESSION2223                               __________2425                             WASHINGTON, DC2627                               __________2829                            JANUARY 29, 20263031                               __________3233                           Serial No. 119-233435         Printed for the use of the Special Committee on Aging3637[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3839        Available via the World Wide Web: http://www.govinfo.gov4041                               __________4243                   U.S. GOVERNMENT PUBLISHING OFFICE4463-403 PDF                WASHINGTON : 202645=======================================================================4647                       SPECIAL COMMITTEE ON AGING4849                     RICK SCOTT, Florida, Chairman5051DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York52JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts53TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona54RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia55ASHLEY MOODY, Florida                ANDY KIM, New Jersey56JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland57                              ----------58                McKinley Lewis, Majority Staff Director59                Claire Descamps, Minority Staff Director6061                         C  O  N  T  E  N  T  S6263                              ----------6465                                                                   Page6667Opening Statement of Senator Rick Scott, Chairman................     16869                           PANEL OF WITNESSES7071John Gray, Ph.D., Dean's Distinguished Professor of Operations,72  Fisher College of Business, The Ohio State University,73  Columbus, Ohio.................................................     374Michael Ganio, Pharm.D., Senior Director, Pharmacy Practice and75  Quality, ASHP, Bethesda, Maryland..............................     576Stephen W. Schondelmeyer, Pharm.D., Ph.D., Professor of77  Pharmaceutical Management & Economics, College Of Pharmacy,78  University of Minnesota, Minneapolis, Minnesota................     779Stephen Colvill, Assistant Research Director, Duke-Margolis80  Institute for Health Policy, Washington, D.C...................    108182                                APPENDIX83                      Prepared Witness Statements8485John Gray, Ph.D., Dean's Distinguished Professor of Operations,86  Fisher College of Business, The Ohio State University,87  Columbus, Ohio.................................................    2888Michael Ganio, Pharm.D., Senior Director, Pharmacy Practice and89  Quality, ASHP, Bethesda, Maryland..............................    3490Stephen W. Schondelmeyer, Pharm.D., Ph.D., Professor of91  Pharmaceutical Management & Economics, College Of Pharmacy,92  University of Minnesota, Minneapolis, Minnesota................    4293Stephen Colvill, Assistant Research Director, Duke-Margolis94  Institute for Health Policy, Washington, D.C...................    719596                        Questions for the Record9798Michael Ganio, Pharm.D., Senior Director, Pharmacy Practice and99  Quality, ASHP, Bethesda, Maryland..............................    85100Stephen W. Schondelmeyer, Pharm.D., Ph.D., Professor of101  Pharmaceutical Management & Economics, College Of Pharmacy,102  University of Minnesota, Minneapolis, Minnesota................    87103Stephen Colvill, Assistant Research Director, Duke-Margolis104  Institute for Health Policy, Washington, D.C...................   109105106                       Statements for the Record107108Opening Statement of Senator Kirsten E. Gillibrand, Ranking109  Member.........................................................   115110Association of Accessible Medicines Statement....................   116111112                           TRUTH IN LABELING:113                       AMERICANS DESERVE TO KNOW114                      WHERE THEIR DRUGS COME FROM115116                              ----------117118                       Thursday, January 29, 2026119120                                        U.S. Senate121                                 Special Committee on Aging122                                                    Washington, DC.123    The Committee met, pursuant to notice, at 9:30 a.m., Room124608, Dirksen Senate Office Building, Hon. Rick Scott, Chairman125of the Committee, presiding.126    Present: Senator Scott, Johnson, Moody, and Gillibrand.127128                 OPENING STATEMENT OF SENATOR129                      RICK SCOTT, CHAIRMAN130131    The Chairman. The U.S. Senate Special Committee on Aging132will now come to order. Last year, this Committee exposed the133public health risk and national security threat posed by134America's over-reliance on Communist China and India for135generic drugs and the drug ingredients that make them, known in136the medical industry as APIs.137    Together, Ranking Member Gillibrand and I led a bipartisan138effort to demand accountability. We sent letters to the Food139and Drug Administration, the Department of Veteran Affairs, and140key industry stakeholders, including large drug purchasers,141distributors, and major pharmacies.142    The Aging Committee sounded the alarm and exposed the143dangers in Americans' medicine cabinets. Our Committee also144released a bipartisan report detailing the extent of these145threats and held three hearings. In the first hearing, we heard146from experts about the problems we face due to our massive147over-reliance on foreign made generic drugs. We heard148horrifying stories from a former FDA Inspector about how149dangerous and unregulated these drugs from Communist China and150India can be.151    We learned about the tragic deaths caused by failures to152make sure the medicines Americans rely on to heal and treat153them are actually safe. In the second hearing, we discussed154solutions that create safer medicines, secure supply chains, so155we aren't dependent on adversaries like Communist China for our156medicines and create good paying American jobs by bringing back157drug manufacturing back to America.158    In the third hearing, we heard from American drug159manufacturers about the hurdles they face when they try to ramp160up domestic production. What we uncovered during this161investigation will shock you. Ninety-one percent of162prescriptions in the United States are generic drugs.163    Of those drugs, almost 94 percent use APIs, produced and164processed overseas in factories predominantly in Communist165China and India that have little to no FDA oversight. When the166FDA does make it abroad to inspect these facilities, they often167warn them in advance, which gives them time to cover up any168outstanding issues before inspectors see them. That is crazy.169Somehow, even with all this time to prepare, we still see170reports of skittering lizards and birds flying around foreign171facilities. Does that sound safe and sanitary to anybody here?172Absolutely not.173    Here is the deal, we face two problems that every American174needs to understand. One is that foreign manufactured generic175drugs are made with untested and dangerous APIs from countries176like India and Communist China. That means we can't trust these177drugs because we know they are less safe than those made in178America.179    The second is that fixing that problem is made difficult by180our own Government bureaucracy that blocks American drug181manufacturers and fuels our over-reliance on Communist China182and India to make generic drugs. We face not just a serious183public health risk, but a massive national security risk as184well.185    Think about it. If the government of Communist China, a186self-described enemy of the United States, or India wants to187stop the supply of prescription drugs to the United States,188they can do so at any moment. If that happens, the United Sates189has absolutely no plan to keep these generic, life-saving drugs190needed by millions of Americans available.191    This may sound far-fetched, but we are seeing it play out192in real time. Communist China has already limited exports of193items like rare earth minerals during the COVID pandemic. India194blocked the export of critical pharmaceutical ingredients, so,195it can happen again. If we can't solve this problem, it is only196a matter of time before more American lives are unnecessarily197lost. We cannot allow that to happen.198    We must act now. This is why I am taking action to address199these threats immediately with the introduction of my CLEAR200LABELS Act. This bill will require country of origin labeling201for pharmaceuticals so that physicians, pharmacists, and most202importantly the American families taking these medicines know203where these essential drugs are coming from.204    Every American deserves honesty and transparency about what205they are putting into their bodies. We label food, clothes, and206other products, but we don't require that same standard of207medicines that Americans and especially our aging population208rely on. Can anybody really disagree with that? It is wholly209irresponsible that we are living in the dark when it comes to210where our medicines are made.211    My bill changes that. Under my bill, finished drug products212prescribed and sold in the United States would need to identify213the name and location of each, including API's original214manufacturer, as well as the packer or distributor, right on215the label or through a searchable electronic portal. This is a216simple and common-sense reform that will bring transparency and217accountability to our generic drug industry.218    The fact is, most Americans would prefer to buy American219when they can. Unfortunately, with drugs, too often the220information about the country of origin isn't readily221available. They want to know what they are taking is safe, and222they want to support American jobs. By labeling these essential223drugs, Americans will have more information to help them make224well-informed decisions for themselves and their families.225    It will also encourage more domestic drug manufacturing,226making sure generic medicines that our aging population and all227Americans rely on are more effective and readily available.228Country of origin transparency is not just a consumer right, it229is a matter of national security, public health, and American230pride.231    I invite all members of the Committee to join me and co-232sponsor this legislation. We can get country of origin labeling233done now to allow stakeholders at every stage of healthcare,234especially the patient, to be confident, informed about the235medications they take. I look forward to hearing from witnesses236today on how we can empower patients to make the best choices237for themselves and their families when it comes to where their238medicines come from.239    Now, I am going to turn it over to Senator Moody. I have to240go to a Foreign Relations Committee for a few minutes, and she241will take over and she is my colleague from Florida and as a242mom, she has to worry about not only the drugs she puts in her243body, but what her kids are putting in their body.244    Senator Moody. Thank you, Chairman. Good morning. Thank you245so much for being here. I would like to welcome all of our246witnesses and everyone that is here today to witness this247hearing. Our witnesses are leading experts on generic drugs and248generic drug supply chains and can speak to how we ensure249Americans have access to medications that are safe and high250quality.251    I would now like to introduce our first witness and if you252would like to, after I introduce you, go ahead and begin your253introduction and we will go from there. We will begin with Dr.254John Gray. Dr. John Gray is a Dean's Distinguished Professor of255Operations at the Ohio State University's Fisher College of256Business. Go ahead.257    Mr. Gray. Chairman Scott, Ranking Member Gillibrand, and258distinguished members of the Committee, thank you for this259opportunity, and thank you very much for bringing so much260attention to this important----261    Senator Moody. Well, I am not Chairman Scott. I have more262hair than he does. [Laughter.]. Thankfully.263    You may go ahead.264265             STATEMENT OF JOHN GRAY, PH.D., DEAN'S266267         DISTINGUISHED PROFESSOR OF OPERATIONS, FISHER268269              COLLEGE OF BUSINESS, THE OHIO STATE270271                   UNIVERSITY, COLUMBUS, OHIO272273    Dr. Gray. I want to start by saying I strongly support274giving consumers, doctors, pharmacists, and other stakeholders'275access to basic drug level information, including country of276origin and some valid assessment of drug quality risk.277    This kind of transparency would allow generic manufacturers278to compete on something other than price, and it could help279slow or even stop the race to the bottom that has been present280in this industry for the past several years. For many years,281the FDA has emphasized that all generic drugs patterned after282the same original drug are exchangeable. That may have been283largely true decades ago, but today it is no longer a284defensible assumption.285    There is now substantial evidence, both anecdotal and286academic, that meaningful quality differences exist among287generic drugs. Investigative reporting, academic research, and288testimony to this Committee have made clear--have made that289clear. These problems are the predictable result of intense290cost pressure combined with a highly opaque supply chain, a291product where quality is difficult to detect by touch or feel,292and as mentioned, the exchangeability assumption.293    The FDA's traditional approach to ensuring quality is294focused on inspecting manufacturing process to verify295compliance with good manufacturing practices. That approach is296necessary but has become much harder as manufacturing has moved297offshore, especially when foreign inspections are often pre-298announced. From my own experience, 8 years working as an299engineer and manager in an FDA regulated manufacturing300facility, I can say that consistent compliance is genuinely301difficult.302    Day to day variability in materials, equipment,303environments, and human decision-making creates constant risk.304When firms are under pressure to deliver on time and compete on305price, it can be tempting to overlook small compliance issues306rather than investigate them fully. Over time, even well-307intentioned organizations can go down that slippery slope.308Indeed, in my research with co-authors over a decade ago, we309found that pharmaceutical compliance tends to erode over time,310absent a clear observable reason to refocus on quality.311    Transparency can help change this dynamic. A312congressionally mandated National Academies Report in 2022313recommended country of origin labeling. In our research testing314that recommendation, we found that both consumers and hospital315pharmacists showed a clear preference for drugs manufactured316domestically or near shore and away from drugs manufactured in317India or China, even when told that all drugs were FDA318approved.319    That same report also recommended public facing quality320scores. When we tested quality scores alongside country of321origin, we have found something important. While consumers322preferred domestic drugs on average, high-quality offshore323drugs were preferred over moderate quality domestic ones.324    This tells us that transparency can promote competition on325quality, not just location or cost. While the industry remains326opaque, some progress has been made, my co-authors and more327recently ProPublica investigative journalists have been able to328link many drugs to their finished dosage form manufacturing329facilities using mostly public data.330    These efforts are valuable, but they are incomplete,331difficult to maintain, and require enormous effort. In the case332of ProPublica, even including a lawsuit of the FDA for some333data. Critically, even with these efforts, we still lack334reliable public data on active pharmaceutical ingredient335manufacturing locations. There is real momentum for broader336transparency.337    The FDA has requested the authority to release338manufacturing location information in its upcoming339authorization. HHS has emphasized radical transparency, and the340current FDA Commissioner was a leader in creating transparency341in hospital quality years ago, as described in his book,342Unaccountable. I am part of a Pentagon-funded team developing343drug-level quality scores using existing data, while a parallel344team is conducting laboratory testing of drugs in the market.345    These efforts have already identified meaningful variation346in quality, and the resulting scores should be available later347this year. Variation in manufacturing quality has real348consequences for patient outcomes. Research in this area has349been slow, not only because supply chains were long overlooked350as a cause, but also because linking manufacturers to drugs was351previously nearly impossible.352    As discussed in your September hearing, and in many recent353news articles, low quality drugs have human consequences. My354specific recommendation is this, require a QR code on all355public facing drug packaging that links to a website searchable356by NDC, showing the manufacturing locations of both the357finished dosage form and the active ingredient, along with the358drug level quality score.359    The site should also allow the same information for other360exchangeable versions of the same drug, enabling informed361comparison. For consumer facing use, quality scores should be362designed carefully to avoid discouraging patients from taking363necessary medications. One option would be a five-star scale364where all marketed drugs are at least three stars.365    Transparency should be one part of a broader policy366approach. I support stronger foreign inspections, increased367testing, especially of imported drugs, and consideration of a368legally accountable, U.S. based qualified person for imported369batches. Federal purchasing decisions that incorporate quality370and country of origin would send a powerful signal to the371market.372    Transparency alone will not solve every problem,373particularly in the complex private market, but is a necessary374foundation. By allowing manufacturers to compete on quality and375location and not just price, we can begin to reverse the race376to the bottom and improve drug quality for patients. Thank you.377    Senator Moody. Technical problems]--can speak to drug378quality and shortages. Dr. Michael Ganio is Senior Director of379Pharmacy Practice and Quality with the American Society of380Health System Pharmacists, or ASHP.381    ASHP is the largest association of pharmacy professionals382in the United States, representing its 65,000 members in383hospitals, ambulatory systems, and health system community384pharmacies. ASHP also maintains a drug shortages list and has385worked with Congress and a variety of stakeholders on supply386chain resiliency. Thank you for being here, and you can begin387your testimony.388389             STATEMENT OF MICHAEL GANIO, PHARM.D.,390391             SENIOR DIRECTOR, PHARMACY PRACTICE AND392393               QUALITY, ASHP, BETHESDA, MARYLAND394395    Dr. Ganio. Thank you, Senator Moody, Chair Scott, Ranking396Member Gillibrand, Senator Johnson, and members of the Special397Committee on Aging. Thank you for the invitation to today's398hearing.399    ASHP appreciates the Special Committee on Aging's400comprehensive work over the past several months on creating a401more resilient and reliable drug supply chain. For over 20402years, ASHP has worked to strengthen the drug supply change by403publicly reporting drug shortages, providing resources to404support patients and clinicians who are affected by supply405disruptions, and advocating for policies that support a more406reliable and resilient drug supply chain.407    Every American has a right to know where their prescription408drugs are manufactured. Today, that information can be409voluntarily provided by manufacturers, but it is not required.410Drug labels may include a name and address for a company411marketing a product, but not the name and the address of a412manufacturing location. ASHP strongly supports transparency in413the pharmaceutical supply chain, including manufacturer and414country of origin labeling for prescription drugs.415    Research that Dr. Gray and I participated in, that he416alluded to, and with other colleagues, has shown that patients417and pharmacy purchasers prefer to buy drugs manufactured in the418U.S. or Canada compared to products from India or China when419the country of origin is made available.420    Disclosure of this information on the label has the421potential to realign incentives in the supply chain away from422price and may increase market share for products manufactured423domestically.424    Research also conducted by Dr. Gray and other colleagues425reveal there may be a correlation between drug quality and426country of origin. These studies provide motivation to increase427domestic manufacturing and manufacturing in countries with high428reliability and FDA accessibility.429    However, country of origin alone is not a reliable proxy430for drug product quality. There are many examples of431manufacturers, both domestic and foreign, that have faced432quality challenges in recent years. Our research also ignores433key factors that affect purchasing decisions in practice. For434example, patients will receive a product in an amber bottle435that may not have the country of origin on the label.436    Choice is often an illusion. Patients who have received437medications in hospitals and clinics and surgery centers are438often--the drugs are often prepared and administered without a439patient ever seeing the label. I do want to reiterate ASHP's440support for this legislation.441    This is basic information that every American has a right442to know. I urge the Committee to consider additional policies443to directly incentivize domestic manufacturing, improve444regulatory oversight or inspections of manufacturing facilities445to ensure Americans have access to high quality446pharmaceuticals.447    Chronic drug shortages, concern over drug product quality,448and threats to national security are all related to the449resilience and reliability of our pharmaceutical supply chain.450Policies to address each of these risks and vulnerabilities can451actually solve multiple root causes and result in a resilient452supply chain of high quality pharmaceuticals that can withstand453demand and supply shocks.454    There are two separate drug supply chains in the United455States, brand name, single source products and older generic456multi-source products. Financial incentives and challenges457separate these two supply chains. Brand name manufacturers have458a strong market incentive to invest in the resiliency of their459supply chains and produce high quality drugs.460    However, price erosion and race to the bottom market461dynamics result in a brittle supply chain for older generic462drugs. For context, nearly every drug on the FDA's 2020 list of463essential medicines is generic. With slim to negative profit464margins, generic manufacturers are less likely to invest in465resiliency and quality management.466    Generic manufacturers that are capable and willing to make467those investments often lose market share due to drug price468competition from manufacturers that unwilling or unable to469invest in resiliency and quality management. The narrow profit470margins also result in the offshoring of our drug supply chain,471API manufacturing to countries with cheaper labor and less472rigorous regulatory oversight.473    Without a public mechanism to evaluate quality and474resiliency investments, purchasers have no information other475than price to leverage when buying drugs. This reinforces the476race to the bottom market dynamics and erodes market477resiliency, resulting in a fragile supply chain, concerns about478product quality, and chronic drug shortages.479    To strengthen the drug supply chain, ASHP also recommends480additional policies that are available in the written testimony481submitted to the Committee. These policies are focused on482improving transparency into manufacturing quality, encouraging483new manufacturers and new manufacturing sites, supporting484economic stability by encouraging long-term guaranteed volume485purchasing contracts, and diversifying the manufacturing base.486    ASHP greatly appreciates the Senate Special Committee on487Aging's leadership in working to ensure America's seniors have488access to safe and effective drugs. Thank you, and I look489forward to today's discussion.490    Senator Moody. Thank you. Now, I would like to introduce491Dr. Stephen Schondelmeyer. Dr. Schondelmeyer is a Professor of492Pharmaceutical Economics and Management at the University of493Minnesota, as well as the Director of the PRIME Institute,494which conducts research on policies related to pharmaceuticals.495    Through his decades of research experience as a published496researcher on pharmaceutical economics and the pharmaceutical497market, Dr. Schondelmeyer has conducted research for the498Centers for Medicare and Medicaid Services and the Food and499Drug Administration, as well as this Committee. We thank you500for being here today, and we ask that you begin your testimony.501502             STATEMENT OF STEPHEN W. SCHONDELMEYER,503504          PHARM.D., PH.D., PROFESSOR OF PHARMACEUTICAL505506               MANAGEMENT & ECONOMICS, COLLEGE OF507508                    PHARMACY, UNIVERSITY OF509510               MINNESOTA, MINNEAPOLIS, MINNESOTA511512    Dr. Schondelmeyer. Thank you, Senator Moody, and Ranking513Member Gillibrand, and members of the Special Committee on514Aging. I am pleased to be here today to talk about truth in515labeling. It is an important topic to our marketplace and to516consumers and to health care.517    Historically, we have had drug shortages in the U.S.518market. We understand that. We have characterized them, and we519are beginning to deal with that issue. Those shortages have520occurred for a variety of reasons, including quality issues521with drug products and concerns related to market economics.522    However, the advent of COVID-19 made us aware of and523brought to the forefront another issue that causes drug524shortages and lack of product in the market, and that is525geopolitical risk--the behavior of other countries in the world526can affect our access to supply of drugs and even some527countries, in an effort to maintain sufficient supply for their528own populations, prohibited export of drugs from their country529to other countries during the COVID-19 process.530    Now we have seen now drug supply used as a weapon or as a531leverage in the marketplace, and that could affect the U.S.532dramatically. We are dangerously dependent on foreign sources533for our drug supply in the U.S., with India and China534dominating the market for active pharmaceutical ingredients and535key starting materials.536    The U.S. health care system is quite vulnerable to this537geopolitical risk. If a dominant sourcing country decides to538withhold drugs from our supply chain, we would face a major539health care crisis precipitously. That brings us to the issue540of how do we deal with this?541    We need to change our drug supply system and our drug542shortage response process from a "find and fix" mentality--that543is, we will wait till it occurs then we will fix it--to a544"predict and prevent" approach. Let's predict where the545shortages are going to be and prevent them from occurring in546the first place, so we don't have people that go without547necessary medications. I think "country of origin labeling" is548an essential, foundational component of that process. It is549standard practice for many consumer goods.550    As Chairman Scott pointed out, there is country of origin551labeling for food and clothing and automobiles and other things552in our consumer goods market. As you know, when an American553goes to the grocery store to buy a T-bone steak, or they go to554the department store to buy a T-shirt, there is a label on the555product that tells them where the product was really was made,556where it was sourced.557    Consumers do read and respond to that information and use558it. I find it unconscionable though that we require559transparency for our dinner and for our denims, but not for the560critical drugs that save people's lives, cancer drugs, diabetes561drugs, and a variety of other medications.562    Real country of origin labeling for pharmaceuticals must be563clear, specific, and transparent. We should know where the drug564product was actually made, not just where it was packaged, or565warehoused, or marketed. Clear labeling must disclose two566things, where the finished dosage product was made, and where567the active pharmaceutical ingredient was made.568    Currently, finding information about where a drug was made,569by the pharmacist who has to provide that information to the570consumer, is very difficult, if not impossible. To find this571information, a pharmacist can go to sources like the National572Library of Medicine's DailyMed website, and if they dig around573enough they can find, for some products, the country of origin.574You can't find it for all products. It is not always there.575    It may take up to 30 minutes to find the answer for one576drug, and pharmacists can't operate a pharmacy efficiently if577they have to spend 30 minutes for each prescription chasing578down what is the country of origin.579    Furthermore, manufacturers hide behind claims of580confidentiality. FDA allows a drug company the option to581declare that the information of where their product is made is582confidential and a trade secret and I understand trade secrets583are important, but a couple of things come to mind that suggest584that this may not be as much of a trade secrets as we think.585    For example, the major blockbuster drugs today, like586Mounjaro and Zepbound for weight loss and diabetes, are587products that are labeled--if you look on the box or the588package, it says "marketed by Eli Lilly," and that is good. It589tells us who marketed it. It doesn't tell us who made it or590where it was made.591    Lilly may well make these products, from other data bases I592was able to find that Lilly really does make their products,593For the Lilly case, and for many other drugs, the product594labeling says who the product is "marketed by" but it does not595tell you where it was made. However, if you go to Google, you596can find press releases from the company announcing their597investment in a new production facility, and they tell you598where the product was actually made.599    What the company told FDA was confidential, they turn600around and issue public press releases to say, look at what we601are doing and I applaud Lilly for building a new plant in the602U.S., but the point is it can't be confidential when you are603giving it to FDA, and not confidential when the drug company604puts out press releases on same product and the same plant605where it is made.606    There is a little bit of duplicity in their approach to607what confidentiality really is. There has been a recent change608in the regulation of consumer product labeling. In June 2024,609the U.S. Customs and Border Protection issued a new regulation,610and they shifted their position.611    They said the consumer is really the patient at the612pharmacy counter, not the pharmacy when it buys the product.613They used to interpret that manufacturers had to represent to614the pharmacy where the drug was made, and the pharmacy was615viewed as the end consumer. I am a pharmacist. We work in the616marketplace, and we know that the pharmacist is the last point617at which the product gets to the patient.618    The pharmacist is the face of the drug product to the619patient. I do think there is a proven transparency process, and620that is in the country of New Zealand. New Zealand has a621process, a public transparent online website that publishes the622API source and the address where it was made in the factory,623the finished dose form, and many other things.624    I encourage you to look. I have given references in my625written testimony about where to find that and look at that and626see what is there and New Zealand's experience has been that627transparency has not harmed the commercial interest of628companies. Three things I recommend to Congress.629    One, mandate country of origin transparency. We need to630amend Federal statutes to require country of origins labeling631for manufacturers at both the API and the finished dosage form632level. Don't allow companies to hide behind that633confidentiality claim.634    Senator Moody. Sir, if you could wrap up your testimony----635    Dr. Schondelmeyer. I am----636    Senator Moody [continuing]. in just 30 seconds, that would637be great.638    Dr. Schondelmeyer. Yes.639    Senator Moody. Thank you.640    Dr. Schondelmeyer. Labeling for consumers is not an end641unto itself. It is a foundational building block of a broader642data base that helps the Government, and the country643strategically plan for a secure drug supply and manage it.644Labeling for the consumer is important, but building that645broader supply is important.646    In other words, we need to build a market wide supply map,647and I encourage you to look at the United States Pharmacopeia's648Medicine Supply Map which does that and Congress needs to649engage with, and fund building this and bring it within the650work of the Government.651    Finally, empowering consumers. The consumer is the ultimate652purchaser, and we need to make sure that this law is653implemented and enforced, not just passed.654    Senator Moody. Thank you, sir. Thank you so much and I am655sure that the questions will elicit a lot more of what you have656to say today. We appreciate you. I am going to turn it over to657Ranking Member Gillibrand now to introduce her witness.658    Senator Gillibrand. Thank you, Chairwoman Moody. I want to659introduce Stephen Colvill.660    Mr. Colvill is an Assistant Research Director at the Duke-661Margolis Institute for Health Policy where he leads the Duke-662Margolis Revamp Drug Supply Chain Consortium and policy work on663other supply chain and biomedical innovation topics.664    Previously, Mr. Colvill served in the White House Domestic665Policy Council as Senior Policy Advisor for Medical Supply666Chains. You may begin.667668            STATEMENT OF STEPHEN COLVILL, ASSISTANT669670           RESEARCH DIRECTOR, DUKE-MARGOLIS INSTITUTE671672              FOR HEALTH POLICY, WASHINGTON, D.C.673674    Mr. Colvill. Thank you, Ranking Member Gillibrand, Senator675Moody, and Chairman Scott, and members of the Committee for676holding this hearing. I am Stephen Colvill, and as Ranking677member mentioned, I lead the Revamp Drug Supply Chain678Consortium at the Duke-Margolis Institute for Health Policy.679    I have seen the drug supply chain from many different680angles. I have worked at one of the largest drug manufacturing681plants in the U.S., and then on the commercial business side of682that drug manufacturer.683    I co-founded a drug supply chain certification684organization, where I worked with health systems to help them685identify reliable suppliers.686    Then moved to the policy side where I have served in the687White House Domestic Policy Council, and then my current role688and throughout all this, one common thread has been obvious, we689need to revamp how our supply chain works to better care for690patients.691    Before discussing solutions, we need to identify the692distinct yet overlapping problems in the drug supply chain.693First, chronic drug shortages. These occur when a drug is694simply not available, usually because of a supply chain695breakdown like a manufacturing delay. Second, questions around696pharmaceutical quality assurance.697    This is when a drug is available, but there are questions698around if it was manufactured and tested appropriately. Then699third, addressing geopolitical and national health security700risks from foreign dependency and fourth, a desire to grow the701economy through domestic manufacturing.702    As a Nation, we obviously need to address all of these. At703the Revamp Consortium, we focus on policy solutions to the704chronic drug shortages that have been causing devastating705impacts to patient care for 20 plus years. We focus where706shortages have been most prevalent, inexpensive generic sterile707injectables, which are usually administered by healthcare708providers such as in a hospital setting.709    Generic drug prices are on average about 33 percent lower710in the U.S. than in other high income countries. Generics are711cheap here, yet too frequently not available because the712current provider payment system set by CMS and private insurers713encourages providers to seek low cost generic drugs without714enough consideration for reliable availability.715    Providers are not adequately rewarded when they take steps716to prevent shortages. However, there is an alternative,717aligning incentives to focus more on reliable availability for718critical generics. I coauthored a proposal in October on how to719make this happen.720    Our proposal offers up a simplified version of a Medicare721incentive payment program originally outlined in the 2024722Senate Finance Committee discussion draft. The proposal would723incentivize health care providers to do two things. One,724purchase through committed contracting models.725    Second, identify and purchase drugs that meet reliability726or resiliency benchmarks. Addressing chronic drug shortages in727this way is clearly aligned with CMS's mission to improve728health outcomes.729    CMS is also well positioned to move the needle,730particularly in the inpatient setting where Medicare and731Medicaid together account for about 75 percent of inpatient732days. Since 2023, CMS has taken several actions to incentivize733domestic production, including a notice earlier this week--just734this week about a potential upcoming hospital incentive735program.736    CMS actions should also encourage the reliable availability737of critical generics by supporting committed contracts and738reliability benchmarks. I encourage this Committee to739collaborate with the Finance Committee on that. In the740meantime, it is great that this Committee is considering741legislation to make better information available about742suppliers. My top priority here would be to kickstart743reliability benchmarking pilots.744    Three prominent examples of such programs include the745Healthcare Industry Resilience Collaborative's Resiliency746Badging Program, U.S. Pharmacopeia's Resiliency Benchmarking747Program, and FDA's Quality Management Maturity Program. These748voluntary programs evaluate confidential data about various749manufacturer supply chains.750    They then can communicate findings to the market about the751reliability of those manufacturers. Uptakes of approaches like752these has been relatively limited but could be significantly753increased through HHS and DOD funding and support.754    This could also set a foundation for future CMS reform.755Regarding pharmaceutical labeling, Americans deserve to know756where their drugs come from, and effective labeling changes757could, over time, possibly drive some more demand to domestic758manufacturers. However, labeling reforms alone are likely to759have a limited impact.760    Many decisionmaker already know where API and finished761dosage forms are made, and patients have limited influence over762what drugs are stocked. Also, just because a drug is made in763the U.S. doesn't necessarily mean it is always the best choice.764Some of the most significant shortages have resulted from765manufacturing issues in U.S. plants.766    Other assessments are also needed, such as from reliability767benchmarking programs, like I mentioned. My written testimony768provides additional points on how potential unintended769consequences of labeling reforms could be mitigated. Before I770close, two specific considerations on labeling.771    Place of business may not be the best term to use in772labeling requirements, as place of business is not necessarily773the same as the location of manufacturing.774    It may be more beneficial as FDA requested in their775legislative proposals under the prior Administration, and again776in the current Administration, to require manufacturers to777include in their digital labeling information unique facility778identifier numbers for the original API manufacturer and779original finished drug product manufacturer.780    Finally, to summarize, one, we need to clearly define the781problems. Two, I would focus first and foremost on CMS payment782reforms to support committed contracting models between783purchasers and manufacturers that meet reliability benchmarks784and third, consider requiring unique facility identifiers to be785included in digital labeling information. Thank you, and I look786forward to the discussion.787    Senator Moody. Thank you very much for your testimony and788without any objection, I am going to let Senator Johnson kick789us off with questions.790    Senator Johnson. Thanks, Senator Moody. I supplied plastic791packaging materials to the medical device industry for about 30792years and, you know, fully understand good manufacturing793process, GMPs, benchmark of that is traceability.794    You know, we need to know, you know, what rail car, what795box of resin produced that roll of sheet stock that went into796packaging that particular medical device, okay and that is just797for packaging material.798    Dr. Gray, does the FDA not require that level of799traceability on drugs, I mean, things we actually put in our800bodies versus just a package that surrounds a medical device?801    Dr. Gray. My understanding is within the facility, they802have requirements, and GMP requirements like you are talking803about. The manufacturer itself does have to trace lots and804things from its suppliers, but--and Mike can help me with this805one--but when the hospitals receive the drugs----806    Senator Johnson. They don't have the information.807    Dr. Gray. They don't have the information. The buyers don't808have the information.809    Senator Johnson. Does the FDA require that traceability810back to the precursor chemicals--to the API, to the actual811compounding of the drug, to the marketer?812    Dr. Gray. My understanding is API, yes. Precursor813chemicals, no, is my understanding. At least--and I am not 100814percent sure on that.815    Senator Johnson. Anybody who can answer that question to816me. How critical would be for us to know where the precursor817chemicals come from, or is it okay just to focus on API? Dr.818Schondelmeyer.819    Dr. Schondelmeyer. Yes. Certainly, it is important to know820where the KSM came from for purposes of, is it quality, is it a821product that we want to put in human bodies in America, but it822is also important to see how dependent we are on specific823sources of supply and countries of supply so they may be824putting quality product in there, but if we find that 30, 40,82550 percent of our API supply is from China, and China is an826adversary----827    Senator Johnson. I got to--so I understand the supply chain828issue, the precursor chemical. What about a quality issue? I829mean, do we need to know what the--you know, where that830precursor chemical came from, or can we do the quality check on831the API before it gets compounded into a drug?832    Dr. Schondelmeyer. Well, I would describe it this way. A833lot of that is based on voluntary compliance with the834Continuous Good Manufacturing Practices Act. It is not835required, and FDA doesn't--it is not like a meatpacking plant836where they inspect everybody, you know----837    Senator Johnson. Mr. Ganio, you want to answer this again?838    Dr. Ganio. Sure.839    Senator Johnson. It is not required by the FDA?840    Dr. Ganio. The key starting materials, no and to answer841your question about quality, I would be less concerned about842the quality and more of the national security vulnerabilities843associated with it. The API is tested by manufacturers. They844will confirm that what they receive from an API manufacturer is845suitable for production. Anything that is manufactured up to846that point should be okay from a quality perspective, but the847vulnerabilities that need to be revealed are important.848    Senator Johnson. We had the 2008 heparin contamination849issue. Have we done anything to address what went wrong there?850    Dr. Ganio. Scientifically, United States Pharmacopeia851revised the monograph for that to make sure that oversulfated852chondroitin sulfate would be detected when testing. From a853national security standpoint, that should address if the GMPs854are being followed and record keeping is being followed.855    Senator Johnson. If we--you know, Mr. Colvill, you856mentioned that U.S. generic drugs are about 33 percent less857expensive than in other countries, you know, first world nation858countries. Why is that? Is it just greater competition, or are859there rules and regulations in place in those countries that860increase that cost of drug?861    Mr. Colvill. It could be a result of incentives in the862market. What are the purchasers incentivized to value? I think863in the U.S., there is an emphasis on low cost, which is864important, of course, but there is not enough emphasis on other865things that are important too--reliable availability, quality,866you know, everything else that goes into the full value867proposition for these products.868    Senator Johnson. I mean, in general generic drugs are869pretty cheap, correct? I mean, where we have problems with high870drug prices in the patentable drugs that, you know, until they871go off patent and become generic.872    When we are talking about--and I think, you know, what873Senator Scott is proposing, labeling, I think that is an874incredibly important first step. I think all the witnesses are875saying that as well, but you know, there may be rules and876regulations in terms of quality, and testing, and statistical877sampling, and GMPs, and following those things and making those878available as well, that would add a price to that.879    Anybody want to opine in terms of, would that increase880prices by 33 percent? Which still, when you look at the total881drug buy in the U.S.--you know, we don't have extremely882expensive health care here because of drugs. It is a component883of it, but it is a small component.884    If you want--I personally think most consumers would pay a885little bit more to be assured of quality, so they don't get--so886they won't die from a heparin contamination or something like887that. Anybody want to opine in terms of what the right rules888and regulations and laws to ensure quality, how much that would889increase the price of generic drugs? Would it be the 33890percent? Would it double it? Mr. Ganio, you look like you want891to answer.892    Dr. Ganio. I couldn't give you an exact number. That would893vary by manufacturer, but as you mentioned, and as I mentioned894in my testimony, the two supply chains--there is instances895where we probably don't pay enough for generic drugs, and this896is the result, the questionable quality, but all we have to897value when we buy drugs is the price.898    Everything is pass, fail, which is clearly not sufficient.899If additional information about quality is made available, then900purchasers would have a reason to spend 10 percent, 15 percent901more. We conducted a survey in 2023 and found our members are902willing to spend about 10 to 15 percent on drugs.903    You have to look on the other side that the supply chain904issues, the shortages, what they cost--over almost $900 million905in labor expenses alone, according to a report from Vizien, a906group purchasing organization. Our research also shows907increased costs of drug supply chain concerns.908    If you make that tradeoff, pay a little bit more for909guaranteed supply chain high quality drugs, it theoretically910could pay for itself.911    Senator Johnson. By the way, I will say that having been a912manufacturer, had to follow GMP, got ISO audits every 6 months,913it costs a little bit more but not that much more. What you end914up being is just a far better manufacturer.915    You have higher quality. You have higher level customer916service, greater reliability, less scrap. You know, so I917wouldn't believe any manufacturer or any of these marketers918saying, well, it is going to increase our cost dramatically. It919really shouldn't. It is just good manufacturing practices. That920ought to be insisted on again. I really appreciate what Senator921Scott is doing here with these hearings. Thank you.922    The Chairman. Thank you, Senator Johnson. Ranking Member923Gillibrand.924    Senator Gillibrand. Thank you, Mr. Chairman. Dr.925Schondelmeyer and Dr. Colvill, we have been talking about, we926talked about terms of art, that we have to get the terms of our927correct. People say marketed for, distributed by, repackaged928by. What is the best term of art for this labeling? I would929like all the witnesses to answer this question, but starting930with you, Dr. Schondelmeyer.931    Dr. Schondelmeyer. I think the simplest is "product of" or932"made by" and then it should specify, are they talking about933the finished dosage form or the API? Both should be disclosed.934FDA may well have all of this information and other information935on quality, but they either aren't authorized, or as a matter936of policy don't choose, to release a lot of it.937    Just having the information at FDA doesn't necessarily938improve the quality and the ability of decisionmakers to make939decisions, whether it is the consumer, or the prescriber, or940the pharmacist, or the purchaser.941    They need to know what FDA knows to make those decisions,942so "made by" or "product of," and "API product of," "finished943dosage form product of" and the country.944    Senator Gillibrand. Mr. Colvill.945    Mr. Colvill. Dr. Schondelmeyer, you are referring to what946is on the physical label, which is important, obviously. I947think we also should think about the digital information. We948live in a digital world.949    What is the information that is provided digitally? You can950have a lot more information that is provided that way. There is951limited real estate on these labels. Some of them are really,952really tiny. As I mentioned in my opening remarks, unique953facility identifier numbers could be considered to be required.954    Senator Gillibrand. I think that it would be very smart for955the digital labeling to say exactly where the plant was in956India or where the plan was in China.957    Mr. Colvill. If that was done, it would all be listed on958DailyMed, the data base that several others have mentioned.959Third parties could easily put together publicly available,960user-friendly data bases where patients and others could easily961look up where these drugs were made.962    Senator Gillibrand. Doctor Ganio.963    Dr. Schondelmeyer. I would quickly comment that I agree,964the DailyMed is a great source, but if you look at their data_965they do sometimes have API manufacturer and finished dosage966form manufacturer for some products, and they have an entity967identifier on there for the ones that are named, but it is968pretty complex, and consumers have a difficult time sorting out969what is there.970    I included as an appendix to my written testimony printouts971from the New Zealand MedSafe data base that report the same972information, but it is much more easily understandable by a973consumer if they look it up with a QR code or other things.974    I encourage you to look at the way it's presented in the975New Zealand MedSafe data base. It is much more consumer and976user friendly, and easier to follow.977    Senator Gillibrand. Okay, and Dr. Ganio.978    Dr. Ganio. Yes, I completely agree with both--I agree with979both Dr. Schondelmeyer and Mr. Colvill. The physical label980should be easy to understand and easy to read. It should say981manufactured by the name of the facility.982    Having the unique facility identifiers in a searchable data983base can help identify vulnerabilities, choke points, things984where we are all relying on the same site, where right now985might be under a contract and not necessarily easily986discernible, but stakeholders could find out where those choke987points are and invest.988    Senator Gillibrand. Thank you. Dr. Gray.989    Dr. Gray. Finished dosage manufacturing location, active990pharmaceutical ingredient manufacturing location should both be991on the label and then I agree with the searchable data, the992easy to access data base that includes more details on that,993and also as I mentioned in my testimony, quality ratings.994    Senator Gillibrand. Thank you. In several of the995testimonies today, there have been mentions of the data that is996collected by the Customs and Border Protection and the Food and997Drug Administration when pharmaceuticals are imported into the998U.S. However, what is required to be listed on the label by CPB999is different than what's required to listed on a label by FDA.1000    There also been allusions to country of origin disclosures1001being voluntary provided rather than mandated by the current1002CPB regulations. At times, disclosure regulations required by1003CPB seem to be in direct odds with those by the FDA.1004    For any or all of the witnesses, how should Congress work1005to harmonize the information gathered by the FDA and the CBP to1006ensure that the information received by them is not1007duplicative, but also provides consumers with clear1008understanding of a product's country of origin?1009    Dr. Gray. I will just say quickly, and hopefully this will1010sort of answer your question, that FDA has requested1011authorization to be able to release a bunch of manufacturing1012location, API, active ingredient--API finished dosage form,1013excipients, critical excipient, etcetera--allowing them to do1014that. The FDA feels bounded to not be able do that by company1015confidential information. That would align them, I think.1016    Dr. Schondelmeyer. I think as policymakers, you need to1017look across both the CPB and FDA, and what their regulations1018are, and integrate them. This--CBP is limited only to imports.1019They don't even require listing on the label "made in the USA"1020when it is made in the USA because that is not an import.1021    Senator Gillibrand. I see.1022    Dr. Schondelmeyer. That needs to be cleaned up. I think do1023it under one set of regulations, probably placed at FDA rather1024than CBP because of that and then make it really clear what the1025language is, you know, what goes--as important as the made or1026manufactured is the preposition that follows it. Made "by" is1027different than made "for."1028    Senator Gillibrand. Yes. Understood.1029    Dr. Schondelmeyer. Very different and so, clear that up and1030put clear definitions for it and then also, don't allow1031companies to declare that where it is actually made as1032confidential or trade secret.1033    Senator Gillibrand. Correct.1034    Dr. Schondelmeyer. Declare that is public information that1035needs to be disclosed.1036    Senator Gillibrand. Understood. Thank you. Thank you, Mr.1037Chairman.1038    The Chairman. Senator Moody.1039    Senator Moody. Thank you, Chairman Scott and Ranking Member1040Gillibrand for convening this hearing to examine what sounds1041like a very urgent need for transparency in our drug supply1042chain. Every day, millions of Americans rely on a wide range of1043medications to maintain their health and quality of life.1044    As parents, we often take prescriptions to the pharmacy and1045get medications that we then tell our children to take,1046trusting that there are no quality control issues. I think this1047should be top of mind for every American and certainly every1048parent.1049    Unfortunately, throughout the hearings that we have had on1050this issue and this Committee on drug supply transparency, it1051has become increasingly clear there's simply not enough1052transparency and what is worse, FDA import alerts routinely1053cite carcinogenic impurities, falsified batch records, and non-1054sterile conditions from manufacturers in China and India.1055    Roughly one-third of all FDA import alerts target Chinese1056facilities, and another 16 percent target Indian producers.1057Just last year, I and many of my colleagues on this Committee1058sent a letter to the FDA raising the alarm at problems with1059drug quality due to poor foreign inspections in countries like1060China and in India who together account for 60 percent of APIs1061globally.1062    That doesn't even include, as we have discussed already,1063the key starting materials. Many Americans who rely on1064prescription medications, particularly seniors, which is why1065this Committee is paying such close attention, have no1066reasonable way to determine where their medications are1067manufactured, effectively denying them an opportunity to choose1068American made drugs.1069    What we found is that this failure stems from a combination1070of loopholes and insufficient FDA enforcement, which allows1071foreign adversaries such as China to exert control over the1072production of drugs that Americans depend on to stay alive.1073    It is crucial, and what I am hearing from every witness1074today, that we take immediate action to increase transparency1075in our drug supply chain so that consumers can make informed1076decisions about the medications they use. Important, a study1077from 2022 found that 83 percent of top 100 generic drugs1078consumed by U.S. citizens have no U.S. based source of active1079pharmaceutical ingredients.1080    With that said, I would like to turn to one of the1081witnesses that I had to cut short when we were getting to time1082limits on introductions. Mr. Schondelmeyer, in your testimony,1083you wanted to further explain, I believe, about how in New1084Zealand they have a model for providing drug supply chain1085transparency.1086    That the New Zealand MedSafe program maintains updated1087information regarding active ingredients which is available to1088the public. What aspects of that model would you say are most1089crucial to be included if the United States were to ever enact1090transparency measures on our drug supply chain?1091    Dr. Schondelmeyer. The New Zealand system collects all of1092the information we have talked about, where are the key1093starting materials from, what are the inactive ingredients,1094where is the active ingredient made, and the factory name and1095address, the finished dosage form, manufacturer name and1096address, who packages the product, and who labels it.1097    Every step along the way is transparent and for every1098prescription drug on the market in New Zealand, it is put in a1099data base and any consumer in New Zealand, or the rest of the1100world, can look up those products at the product-specific level1101and identify where did it come from. We should have nothing1102less in America.1103    In fact, these days the pharmaceutical supply system is1104really a global supply system. We talk about the U.S. drug1105supply, but if we take that, the same sources are probably 701106or 80 percent of the worlds global supply.1107    It really is the same system. We need a system equivalent1108to New Zealand. I applaud FDA and the DailyMed website that is1109maintained, but it is not nearly as consumer friendly as New1110Zealand's system is and we need to look at, and emulate their1111process, and then make transparent the information that FDA1112does have.1113    Senator Moody. Do you believe that the New Zealand model1114for transparency, the things that they have enacted, do you1115believe that has decreased the amount of contaminated drugs1116that are consumed by the public there?1117    Dr. Schondelmeyer. I believe it has and I haven't seen1118studies from New Zealand about the number and types of1119shortages, but I think if they were at the same level as we see1120in the U.S., we would probably have seen studies of that type.1121    I wouldn't draw a conclusion from it yet, but I don't think1122they have as severe a drug shortage problem as we do in the1123U.S. for a variety of reasons and I have talked with the1124officials at MedSafe in New Zealand, and they say they aren't1125aware of any commercial problems in the marketplace from making1126that information public.1127    Senator Moody. Thank you. Thank you, Mr. Chairman.1128    The Chairman. Thank you, Senator Moody. I guess to start,1129maybe each of you, when we go to the pharmacy and we have a1130choice between a generic drug and a brand name drug, are they1131exactly--we are taking the exact same drug? If each of could1132respond.1133    Dr. Gray. Yes. Generics typically do not follow the same1134production process. The excipients can be different, and there1135is a range of bioavailability that is allowed even upon1136approval. Generics do go through an approval process that is1137somewhat rigorous and includes in-vitro testing on a small1138number of individuals, but it is a lot less than the original1139drug and that is at approval.1140    Then I think what I have researched most and thought about1141is after approval, when the manufacturing facility has been1142operating for years under light regulation, how things go, you1143know, how consistent is compliance, but no, it is not the same1144excipients necessarily. It is not same process and there is--1145again, there is a range of availability.1146    Dr. Ganio. I would agree that they are not the same.1147However, they should behave the same in the body. When I talk1148to my family, I myself, I have no problem taking a generic. I1149will tell you that if the label shows where it is made, I will1150opt for domestically manufactured, or "French," or "friend-1151shored" manufacturing because I am not sure the quality of1152where the product is made.1153    However, I don't think there's any issue with generic1154equivalency. There are, as Dr. Gray mentioned, a battery of1155tests that are done to make sure that it behaves in the body1156the exact same way as the brand name product does.1157    Dr. Schondelmeyer. Embedded in your question is, are they1158the same drug? What do we mean by drug? On the one hand, a drug1159can be the molecule, the active ingredient that causes the1160positive effects in the body that we are after in the1161healthcare system.1162    We also use the word drug to mean the drug product. That is1163the active ingredients, plus all of the extra things we added1164in to make the tablet hold together and to preserve it. The1165excipients, as Dr. Gray described, so there may be differences1166in the excipients and other things.1167    Think about it when you are baking cookies. You know, each1168cook has their own recipe, their secret ingredient in making1169their cookies and they may be a little bit different. They may1170all taste similar. They may be all chocolate chip cookies, but1171there are slight differences across them.1172    They all have the same ingredients, they have chocolate1173chips in them, and they are chocolate chip cookies. The1174molecule, I think, is essentially the same in almost all cases.1175The other things you add into it may differ, and some of those1176may have an effect positively or negatively on the health of a1177patient.1178    Our current process of inspecting and evaluating1179equivalency of products doesn't take into account all of those1180other things perhaps as well as it should.1181    Mr. Colvill. Thank you for the question, Chairman. For1182myself, I don't have any problem taking generics. These two are1183pharmacists, so I, you know, would--I am very interested in,1184you know--glad that they shared their perspective.1185    I think the most stark difference between a branded drug1186and a generic drug isn't the chemical properties themselves of1187the drug, but it is the supply chain, the robustness of the1188supply chain. A branded drug has every incentive to have1189redundancy, extra manufacturing capacity, backup plans, buffer1190stock. They take all these steps to make sure they avoid1191shortages.1192    Whereas generic supply chains are very lean. If there is a1193disruption in the supply chain, frequently that leads to1194patient issues, and, you know, issues with patient care being1195impacted. I think that is the most stark difference.1196    The Chairman. Dr. Gray, would you take--you don't care if1197it is a generic or branded drug?1198    Dr. Gray. At the moment, I don't take any drugs, but I1199would generally take a generic drug if prescribed but would try1200to investigate where it is from, but again, some of my family1201do, and ProPublica's Rx Inspector, which came out just a month1202ago, allows you to find out where the finished dosage form of1203your drug is made easily, unlike the DailyMed approach.1204    I would certainly investigate. I do pay more for brand1205over-the-counter drugs. I wouldn't take a generic eye drop. It1206kind of depends on what it is, right. If it is going directly1207into the bloodstream, or the eyes, or a tablet.1208    The Chairman. Good. Dr. Ganio, so, do pharmacists know1209where the active ingredients of the drugs are made? If so, do1210they tell their customers?1211    Dr. Ganio. No, in general, the pharmacist would not know1212where the active pharmaceutical ingredient is from. It is1213possible to research and find that and there is nothing on a1214prescription label that would tell the patient. I have never1215been asked as a pharmacist where the API was from by anyone1216that I have dispensed the medication to.1217    Dr. Gray. Can I just say, I have asked my pharmacist, and1218they look at me like I have two heads, so.1219    The Chairman. Oh, no, I ask them every time.1220    Dr. Gray. Yes.1221    The Chairman. I have done enough ads. They all know who I1222am, so and I have told them about our hearings. They now expect1223it. They actually have more information now than before. Mr.1224Colvill, why is supply chain mapping important to country of1225origin labeling?1226    Mr. Colvill. Well, a few different reasons. Supply chain1227mapping would be important because you want to identify if1228there is redundancy in the supply chain or if there is1229concentration. If there is concentration, that can cause1230issues. For example, you know, from a natural disaster or any1231sort of disruption.1232    Being able to identify where there is diversification1233versus concentration, and also just identifying1234vulnerabilities. There is different problems, like I mentioned1235earlier, different problems that we need to assess.1236    If you are thinking about national security issues or1237geopolitical risks, then obviously mapping the supply chain to1238determine where drugs that are heavily reliant on more1239adversarial countries are coming from is important.1240    The Chairman. Dr. Schondelmeyer, what county of origin1241labeling--would country of origin labeling encourage investment1242in U.S. pharmaceutical manufacturing?1243    Dr. Schondelmeyer. Would it encourage what?1244    The Chairman. U.S. manufacturing.1245    Dr. Schondelmeyer. I think it will provide some1246encouragement for U.S. and for nearshoring manufacturing in1247Canada, perhaps Mexico, or our neighbors in Latin America may1248be encouraged.1249    Issues that come to play--one reason why China and India1250have become dominant is because they had lower environmental1251regulations, lower labor laws, and lower pay, and many other1252restrictions are eliminated in those countries and the1253companies take advantage of that and make it--and they also1254have an economy of scale larger than the U.S. or the Western1255Hemisphere.1256    I think we can overcome those though and with advanced1257manufacturing that is being developed in the U.S., they can1258make products leaner and greener and I think, we could get to a1259point where we could compete in the U.S. and in our nearshore1260neighbors and recall, Puerto Rico used to be a hotbed of1261production. It has declined over time, but I think that could1262be reinvigorated along with other neighboring countries.1263    The Chairman. Ranking Member Gillibrand, do you have any1264other questions?1265    Senator Gillibrand. Just a couple more. Dr. Ganio, I want1266to explore a little bit more about your testimony about supply1267chain. You specifically mentioned fragile supply chains and the1268need for buffer inventory to insulate the United States from1269potential drug shortages in times of geopolitical conflict. Can1270you discuss some of the national security risks in more detail?1271    Dr. Ganio. Yes, I think we have covered some of it today1272but thank you for the question. I keep forgetting to unmute my1273microphone. Thank you for that question. We know, based on data1274out of the United States Pharmacopeia, that we have an1275overreliance on China for key starting materials, API sources1276in China and in India also.1277    In the event of escalating trade conflict, in the event an1278armed conflict, if China decides to make a move on the1279Taiwanese territory, for example, and that things escalate, we1280are extremely vulnerable to sources in China and they could1281hold those supplies from the United States, which would cut us1282off from essential medicines.1283    Knowing exactly where those vulnerabilities are--the data1284and transparency only gives you enough to act, and we can't1285take action until we have that data. We think--we believe1286strongly that the transparency--to help the United States1287understand how much we rely on those sources and how to find1288alternative sources is critical to our national health care1289security.1290    Senator Gillibrand. We have had a hearing on this topic1291before, but we talked a lot about FDA's ability to inspect1292foreign domestic manufacturing process very significantly,1293creating concerns about oversight and quality of imported1294drugs. Can you talk a little bit about that? That is same1295question for all the witnesses.1296    Dr. Ganio. Yes. Thank you for the hearing in September. I1297cannot say that that hearing did not keep me up at night after1298hearing testimony about some of the inspections, but this is1299where I think it is important. Domestic manufacturing is great.1300    FDA has the ability to walk in unannounced, but I also1301think in other countries that are considered allies, we should1302be investing in a diverse supply chain, both in the U.S., in1303other countries where--we have vulnerabilities, we have1304hurricanes here, we have other disruptions that can happen.1305    More diversity geographically creates a more robust supply1306chain, so by incentivizing it in countries where the FDA has1307that ability to walk in unannounced, I think is important.1308    Senator Gillibrand. Yes. Because it was interesting when1309asked by the Chairman, would you guys take generics? You all1310said, well, if I could figure out where it is from, I would1311maybe consider that.1312    Obviously, for you as the most knowledgeable stakeholders,1313where things are manufactured is highly relevant to you and it1314is highly relevant to me because we don't have the same1315inspections. Just to close out the testimony, if each of the1316other witnesses could just add whatever you think is relevant1317to add on these topics. Go ahead, Dr. Gray.1318    Dr. Gray. On the inspections, I would like to also add that1319one big difference is the legal ramifications for the1320individuals, the managers, the quality manager, the plant1321manager of sending adulterated drugs in the U.S., you can go to1322jail. If you are overseas, you can't, right. We can't1323prosecute.1324    I think that is another incentive. I think the--you know,1325you heard a lot from Peter Baker on the unannounced inspection1326pilot, and that shows the need to do unannounced inspections1327globally. I think--I have a research paper now exploring the1328current pilot.1329    I think you are aware that the Congress mandated an1330unannounced inspection pilot in India that began in late 2022,1331and we are finding three to four times more likely to issue a1332warning letter of the unannounced inspections relative to the1333pre-announced inspection, meaning things weren't being found.1334    Some of the worst--the worst things you have read about the1335last few years were plants that had had clean inspections years1336prior to the unannounced inspection pilot. I was thinking about1337that. I will stop there.1338    Senator Gillibrand. Dr. Schondelmeyer.1339    Dr. Schondelmeyer. Yes. A couple of points I would make.1340First of all, India is our major supplier of generic1341pharmaceuticals and in India, certainly, there are good quality1342products that come out of India. Not all of them, but some of1343them. One of the issues is India does not participate in the1344International Council on Harmonization of Regulation, FDA type1345regulations.1346    Most all of our other suppliers, including China,1347collaborate in that. We should begin to pressure and encourage1348India to participate in the ICH. Second, within India, they1349regulate manufacturing of drugs, not at the national level, but1350at the equivalent of the state level, and they have like 401351states.1352    Even within India, they know that some states have pretty1353poor quality production and others have better quality. They1354differentiate internally in the country, yet we don't as a1355country when we buy from India. We need to encourage India to1356step up within their system, the quality, and make it more1357consistent and uniform.1358    Senator Gillibrand. Thank you.1359    Mr. Colvill. Thank you, Senator. Two thoughts from me. The1360first is, you mentioned location of production and that is an1361important thing to consider. I think the best thing to address1362that issue is leveling the playing field, and one of the best1363things that can be done to do that is ensure FDA has the1364resources to do foreign inspections at the level that is1365needed.1366    Then second point is location of production is only one1367thing that should be considered. You also need to consider1368reliable supply chains and quality and so, you can do that1369through reliability benchmarking programs.1370    I mentioned a few examples of programs that are early on in1371doing that and then also you could do independent quality1372testing to ensure a high level of quality assurance.1373    Senator Gillibrand. Thank you. Thank you, Mr. Chairman.1374    The Chairman. Well, I want to thank each of you for being1375here. It has been enlightening. Today's hearing made one thing1376unmistakably clear, Americans are being asked to trust a system1377that refuses to tell them the truth. We label our food, we1378label our clothes.1379    When it comes to lifesaving medicine, patients are kept in1380the dark about where they are made. I mean, that doesn't make1381any sense. This isn't about banning drugs or raising prices.1382This could actually lower prices for American families, while1383delivering needed transparency and support American jobs.1384Manufacturing location matters. Oversight isn't equals. Secrecy1385doesn't protect patients. It protects the status quo and bad1386actors.1387    Americans deserve to know what they are putting in their1388bodies and whether their medicine is truly made in America.1389Honesty and transparency strengthens markets, accountability,1390and national security.1391    My staff will be reaching out to share the bill text with1392everybody's office in the coming days. I just want to thank1393Ranking Member Gillibrand. Her team has been great to work1394with, and this has been a great bipartisan effort to try to1395come up with a solution that is going to be workable.1396    If any Senators have additional questions for the witnesses1397or statements to be added, the hearing record will be open1398until next Wednesday at 5:00 p.m. Thanks everybody.1399    [Whereupon, at 10:35 a.m., the hearing was adjourned.]1400=======================================================================14011402                                APPENDIX14031404=======================================================================14051406                      Prepared Witness Statements14071408=======================================================================1409[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]14101411=======================================================================14121413                        Questions for the Record14141415=======================================================================14161417                 U.S. Senate Special Committee on Aging14181419 "Truth in Labeling: Americans Deserve to Know Where Their Drugs Come1420                                 From"14211422                            January 29, 202614231424                        Questions for the Record14251426                           Dr. Michael Ganio14271428    There were two questions during the hearing that I'd like1429to expand on.1430    The first was Chairman Scott's question about brand and1431generic being exactly the same. I would like to affirm my1432response during the hearing, but add that the question we1433should be considering is whether generic drugs, as originally1434approved by the FDA, are exactly the same as manufactured1435decades later. The generics approved under an abbreviated new1436drug application (ANDA) must match the characteristics of the1437brand-name product approved under the new drug application1438(NDA), even if the inactive ingredients are different. What we1439have seen through recent research and from FDA inspections is1440that not all generics are manufactured to the same high quality1441standards, especially older generic drugs.1442    The second was Senator Johnson's question about the 20081443heparin issue. Again, my response to the question is accurate-1444that specific issue has been resolved. However, I would like to1445add that the circumstances that led to that issue still exist1446today. If a manufacturer knowingly included an impurity or a1447false active ingredient in a pharmaceutical, it may not be1448detected immediately. Only regular testing of pharmaceuticals1449could catch or prevent that. To be 100% transparent, I'm not1450sure that a regular testing program would have caught the1451heparin contamination in 2008 -- the heparin test at the time1452was not designed to detect the oversulfated chondroitin sulfate1453contaminant. Regardless, the U.S. relies extensively on the1454manufacturer's own testing programs. Falsified results or1455knowingly contaminated products very likely would reach1456patients before detected.14571458                           Senator Jon Husted14591460    Question:14611462    How do large purchasers of medicines such as hospitals, and1463health systems currently assess supply-chain risk when1464selecting drugs?14651466    Response:14671468    Large purchasers base buying decisions almost exclusively1469on price. Purchasing contracts can also influence decisions,1470but buying is still based solely on financial evaluation and1471not differences in the drug product. Occasionally, specific1472buyers may avoid a product due to past experiences, for1473example, problems with vial stoppers when inserting a needle.1474    In most cases, generic drugs are all assumed to be the1475same. All are evaluated and approved through the FDA's1476abbreviated new drug application process. Because this is a1477pass-or-fail method of approval, there is no reason to expect1478differences between generic products. However, based on1479outcomes research and on FDA inspection reports, there are1480clearly differences in the quality of manufacturing.14811482    Question:14831484    Beyond transparent information on a medicine's country of1485origin, what other information would be meaningful to large1486purchasers as it relates to how a purchaser evaluates the1487resiliency of a manufacturer's supply chain?14881489    Response:14901491    Currently, the only information readily available to1492purchasers is the price. In the current environment,1493manufacturers compete on a pass/fail system with the FDA, so1494all products available on the market are assumed to be equal.1495That puts an overemphasis on price and will shift purchasers1496away from manufacturers able to invest in quality and1497resiliency and toward higher risk manufacturers.1498    If purchasers had more information about a manufacturer's1499quality management and investments in resiliency, it could1500realign incentives toward reliability and away from buying the1501cheapest product.1502    Question:15031504    Given the recent shortage of cancer drugs such as1505carboplatin and cisplatin, why did the market for these drugs1506end with such little redundancy despite the importance of these1507drugs for cancer patients?15081509    Response:15101511    With most generic drugs that have been around for decades,1512the manufacturer with the cheapest price is likely to win most1513of the market share. In the case of cisplatin, a single1514manufacturer had 50% of the market. Unfortunately, an FDA1515inspection revealed that manufacturer was cutting corners,1516leading to a halt in production and shortage of an essential1517cancer treatment.1518    It's difficult for high-reliability manufacturers to1519compete with companies that cut corners or are subsidized by1520foreign governments. If they are continually undercut on price,1521they will eventually stop making a product, leading to less1522resiliency in the marketplace for that drug. This happens1523regularly with generic drugs that have been around for decades.15241525    Question:15261527    How does the low reimbursement for these drugs shape the1528supply chain fragility?15291530    Response:15311532    Hospitals and providers are not separately paid for older1533generic drugs by Medicare or Medicaid. When a hospital or1534provider submits a claim for older generic drugs, like decades-1535old chemotherapy drugs, the drugs are reimbursed as part of a1536bundled payment that is assumed to account for the cost of1537care.1538    This type of reimbursement overemphasizes low price when1539determining which products to buy for patients. Buying the1540cheapest product generally results in a more favorable margin-a1541margin that is often negative, but less negative than buying1542and billing a more expensive version of that same generic1543product.15441545    Question:15461547    What vulnerabilities exposed by these shortages still exist1548today?15491550    Response:15511552    Several vulnerabilities - concentrated market share1553anywhere can be a vulnerability, both geographically (see1554Hurricanes Maria and Helene) or with quality-related1555disruptions (cisplatin).1556    Concentrated market share in a country that can be1557challenging for FDA inspections is another vulnerability.1558    The underlying market dynamics (described in previous1559answers) also still exist today and will continually reinforce1560purchasers buying the cheapest product.1561    Additional vulnerabilities that may or may not exist1562related to the upstream supply chain (i.e. active1563pharmaceutical ingredients or key starting materials) for1564cisplatin and other essential drugs. Not knowing how much the1565supply chain relies on sources of API and key inputs that are1566in countries at risk of trade wars or geopolitical tensions is1567an unknown vulnerability.15681569    Question:15701571    According to recent reporting, the number of ongoing1572prescription drug shortages rose slightly in the last quarter1573of 2025, but remained significantly lower than the all-time1574high reached in the beginning of 2024. Moreover, the number of1575new shortages identified last year was just 89, the lowest1576figure since 2006, and considerably less than 130 medicines1577that were in shortly supply in 2024, according to a new report1578from the American Society of Health-System Pharmacists (ASHP).1579And notably, long-standing shortages are beginning to resolve;158075% of all the active shortages started in 2022 or later.1581    Could new mandates on companies with respect to either the1582label or labeling contribute to new drug shortages? Could any1583new requirements and their associated penalties for non-1584compliance create a situation in which certain manufacturers1585prematurely leave the U.S. market and, as such, create new drug1586shortages?15871588    Response:15891590    I don't foresee this being a significant contributor to1591future drug shortages. New mandates on label or labeling1592requirements should have realistic timelines for compliance.1593Otherwise, this should not result in manufacturers leaving the1594U.S. market.15951596                 U.S. Senate Special Committee on Aging15971598 "Truth in Labeling: Americans Deserve to Know Where Their Drugs Come1599                                 From"16001601                            January 29, 202616021603                        Questions for the Record16041605                       Dr. Stephen Schondelmeyer16061607                        Senator Raphael Warnock16081609    Question:16101611    Dr. Schondelmeyer, you emphasized the role of advanced data1612analytics in identifying vulnerabilities before crises and1613mitigating pharmaceutical drug shortages.1614    How can Congress improve the employment of predictive1615analytics across federal agencies to forecast drug shortages1616for scenarios such as natural disasters or international trade1617disruptions?16181619    Response:16201621The Current Landscape and Supply Chain Vulnerabilities16221623    The resilience of the United States prescription drug1624supply is a matter of critical national security and public1625health. Currently, the U.S. reacts to drug shortages rather1626than proactively forecasting them. Congress has the opportunity1627to authorize systematic changes across federal agencies,1628specifically by permitting data to be shared across agencies1629and by improving the employment of predictive analytics.1630Through comprehensive supply chain mapping and enhanced1631predictive analytics with data transparency, the U.S. can1632transition to a "predict and prevent" paradigm to forecast and1633mitigate drug shortages resulting from natural disasters,1634pandemics, or international trade disruptions.1635    The U.S. pharmaceutical market is heavily dependent on1636foreign sources for key starting materials (KSMs), active1637pharmaceutical ingredients (APIs) and finished dosage forms1638(FDFs). This geographically concentrated reliance introduces1639substantial vulnerabilities during geopolitical disruptions.1640Currently, the U.S. Food and Drug Administration (FDA) is1641tasked with reviewing and approving drug products to ensure1642they are safe and effective for the market. While the FDA1643possesses a tremendous amount of information regarding the1644clinical and safety profiles of these drugs, it has not been1645tasked with, or given resources for, managing economic and1646commercial data to conduct a comprehensive, market-wide1647analysis of the U.S. drug supply.1648    While the federal government has the authority to collect1649certain types of information to assist in managing drug1650shortages, other critical intelligence gaps prevent the1651effective construction of a comprehensive drug supply database.1652Although the FDA can request details concerning the1653manufacturing processes, as well as lists of active and1654inactive ingredients used, it remains unclear whether the FDA1655actually receives all of this data or the extent to which this1656information can be integrated internally or with external1657datasets. Most alarmingly, the FDA acknowledges that it lacks1658the requisite information to assess how quickly U.S.-based1659manufacturers could scale up domestic production of APIs or1660finished dose forms if a primary supplying nation-such as China1661or India-were to suddenly cease supply to the U.S. market.1662    For decades, the pharmaceutical supply chain has operated1663under a reactive "fail and fix" framework, leaving the nation1664vulnerable to disruptions stemming from manufacturing failures,1665natural disasters, or geopolitical tensions. To be sure, these1666"fail and fix" efforts are a necessary part of mitigating the1667impact of drug shortages, but they will not change the1668trajectory or magnitude of future drug shortages and their1669prevention. In order to shift toward a "predict and prevent"1670model, a multifaceted approach is required: (1) construct and1671maintain a dynamic and comprehensive national drug supply map;1672(2) overhaul data collection to ensure seamless coordination1673between all government agencies and appropriate private1674entities; (3) proactively manage market demand and use data and1675risk management plans on a market-wide basis; and (4) deploy1676advanced artificial intelligence and predictive analytics to1677forecast disruptions, implement structural changes, and1678circumvent the impact of potential new and recurring threats.1679    To effectively employ predictive analytics, federal1680agencies require reliable inputs, inter-agency coordination,1681and comprehensive market visibility and strategic visioning.1682Congress should enact legislation to implement the following1683structural and data-driven improvements.1684      A. Authorize, Fund, and Build an Ongoing, Comprehensive1685National Drug Supply Map16861687    Predictive analytics algorithms cannot forecast disruptions1688in a supply chain that is undocumented or poorly understood. To1689address this, an in-depth, comprehensive, and ongoing map of1690the U.S. drug supply chain is needed to pinpoint exactly where1691each drug product-including its key starting materials, APIs,1692and finished products-are manufactured. Congress should1693authorize and fund a national agency or entity responsible for:1694(1) building this comprehensive supply map; (2) making1695transparent to the public appropriate data elements; (3)1696linking to commercial sources with prescription drug use and1697expenditure data; and (4) analyzing the data to estimate the1698probability and risk of consequences of specific events that1699can lead to drug shortages.1700    The foundation of a resilient pharmaceutical market is a1701comprehensive, real-time map of the drug supply chain. An in-1702depth mapping initiative is required to identify the precise1703manufacturing pathways and geographical origins of key starting1704materials (KSMs), active pharmaceutical ingredients (APIs), and1705finished dose forms (FDFs).17061707      
The USP Medicine Supply Map: The United States1708Pharmacopeia (USP) has developed a global Medicine Supply Map1709that aggregates insights from over 22,000 global sites. This1710tool successfully maps 91% of FDFs and 55% of APIs, calculating1711vulnerability scores to offer quantifiable risk metrics. The1712federal government should support, fund, expand, and utilize1713such initiatives to ensure that it has a real-time,1714comprehensive drug supply map. The government should1715collaborate with and build upon the USP Medicines Supply Map.17161717      
Identifying Geographical Vulnerabilities: The U.S.1718market relies heavily on foreign manufacturing, particularly in1719China and India, which creates acute geographical1720vulnerabilities and "single points of failure". A robust supply1721map must pinpoint these dependencies to facilitate priorities1722for re-shoring, near-shoring, and friend-shoring among critical1723drug products.17241725      
Adopting the "New Zealand Transparency Model": To1726maximize the utility of the supply map, the U.S. should adopt1727transparency standards akin to New Zealand's MedSafe, which1728maintains a public, searchable database of every approved1729manufacturing site for every drug product on the market. This1730transparency enables analysts to use product-specific, market-1731wide, real-time data to provide insight into the potential and1732real market impact of a quality failure, factory closure,1733climate disaster, trade barriers, or other market disruptions.17341735      B. Collect and Coordinate Data from Government and1736Private Sources17371738    A drug supply map is only as effective as the data1739supporting it. Currently, pharmaceutical data is highly1740fragmented across various federal and state agencies, including1741the FDA, DEA, CDC, Department of Defense (DOD), Veterans1742Affairs (VA), Department of Commerce, the Federal Trade1743Commission (FTC) and a variety of other government entities.17441745      
Legislative Mandates for Data Collection: The CARES Act1746significantly expanded the FDA's authority to collect supply1747chain data. It expanded requirements for manufacturers to1748notify the FDA of permanent discontinuances or interruptions in1749manufacturing that could disrupt U.S. supply. Furthermore,1750Section 510(j)(3) mandates annual reports from drug1751manufacturers on monthly production totals for APIs and1752finished drug products, providing the FDA insight into national1753production capacity and output.17541755      
Upstream Sourcing Transparency: Drug manufacturers must1756be required to report all sources of APIs and major excipients.1757When an FDF manufacturer utilizes APIs from multiple sources,1758they should disclose the percentage of the API originating from1759each distinct source to facilitate accurate utilization, excess1760capacity estimates, risk management, and remediation efforts.17611762      
COOL and Technological Integration: To effectively1763utilize this data, the industry should integrate Country-Of-1764Origin Labeling (COOL) into the digital supply chain. By1765leveraging the 2D DataMatrix barcodes and Blockchain systems1766already implemented for the Drug Supply Chain Security Act1767(DSCSA), the origin data of every drug product can be tracked1768securely from the factory to the patient. While pieces of this1769data are known at various points in the market, it is not1770aggregated comprehensively across the U.S. market to analyze1771for structural and functional factors that can lead to market1772and supply disruptions.17731774      C. Prospectively Monitor and Manage the U.S. Drug Supply17751776    Data collection must be paired with proactive data1777management and interpretation. The U.S. government needs a1778centralized infrastructure to analyze, predict, and coordinate1779supply chain structure and function to minimize, prevent, and1780mitigate real and potential drug shortages.17811782      
Establishing a Centralized Coordination Entity: The U.S.1783should authorize a dedicated entity-such as a new Strategic1784Pharmaceutical Policy Advisory Commission (Strategic PharmPAC),1785an independent commission, or a public-private hybrid model.1786This effort should work in coordination with the United States1787Pharmacopeial Convention (USP)-to oversee the market-wide1788health and security of the drug supply chain. This entity and1789its efforts would integrate data across the federal government1790and the private sector.17911792      
Prioritizing Critical Medications: Management efforts1793should first focus on defining the set of "Critical Acute1794Drugs" (drugs necessary in acute care, where a lack of1795substitutes leads to severe health outcomes or death) and1796"Essential Chronic Drugs" (drugs necessary to prevent patients1797from seriously deteriorating from lack of therapy). The list of1798critical drugs also needs to be regularly maintained and1799updated.18001801      
Mandatory Risk Management Plans (RMPs): Under the CARES1802Act, manufacturers of critical drugs and associated APIs are1803required to develop, maintain, and implement Risk Management1804Plans. Reporting of these RMPs to the FDA is mandatory for1805critical drug products and the data from these plans should be1806used to contribute to a comprehensive, ongoing data set and1807related analysis to proactively identify and mitigate hazards1808that could cause supply disruptions.18091810      
Develop and Adopt an OSCR Model for Drug Products: The1811FDA's Office of Supply Chain Resilience (OSCR), which monitors1812medical device supply chains, uses a structural model that1813employs advanced analytics to identify risks, maintains a1814Critical Medical Device List (CMDL), and enacts proactive1815interventions to preserve availability. A similar, expanded1816approach to supply chain resilience is needed for prescription1817pharmaceuticals.18181819      D. Predictive Analytics to Prepare for Challenges and1820Threats18211822    The final pillar of a resilient supply chain is the1823employment of predictive analytics. Congress must fund public-1824private research programs to develop "sentinel systems" that1825can access and utilize big data to detect signals of strategic1826change and security threats in the pharmaceutical network1827serving the U.S. market.18281829      
AI and Machine Learning for Demand Forecasting:1830Artificial intelligence and machine learning algorithms are1831revolutionizing most industries by analyzing vast datasets of1832historical trends, real-time supply chain updates, changes in1833demand, and expected as well as unanticipated external factors.1834Used effectively these tools can accurately forecast medication1835demand, allowing companies and the market to anticipate1836seasonal variations and demand surges, thereby reducing or1837preventing stockouts.18381839      
Network-Level Intelligence Platforms: Modern predictive1840analytics rely on massive, multi-enterprise data networks.1841Platforms like TraceLink analyze flow data from over 38 billion1842serialized units across 283,000 healthcare organizations to1843predict drug shortages up to 90 days in advance with high1844accuracy.18451846      
Pharmacy-Level Data Modeling: Predictive models can also1847assess downstream vulnerabilities by evaluating data at the1848level of individual National Drug Code (NDC) and Drug1849Identification Number (DIN). Machine learning algorithms assess1850variables such as the average days of supply (DOS) per patient1851and month-to-month changes in the ratio of drugs dispensed1852within therapeutic classes to signal impending clinical1853shortages.18541855      
Sentinel and Early Warning Systems (EWS): Advanced1856cognitive models can identify drugs at risk of shortage far1857earlier than manual reporting. For instance, Premier Inc.'s1858CognitiveRx AI model has reported an average accuracy of 75% in1859early shortage detection, identifying at-risk drugs by an1860average of 128 days before they were officially announced on1861the FDA shortage list. The federal government should encourage,1862fund, and develop sentinel models and systems based on1863historical drug shortages patterns as well as systems to detect1864new root causes for drug shortages such as geopolitical risk or1865other new sources of disruption.18661867Summary1868    Assuring the resilience and security of the U.S. drug1869supply requires an unprecedented level of data, transparency,1870and technological integration. By establishing a National Drug1871Supply Map, enforcing stringent upstream data reporting,1872centralizing market-wide analysis and oversight, and leveraging1873AI-driven predictive analytics, the United States can transcend1874the inherent vulnerabilities of the globalized pharmaceutical1875market. A framework for "Building a Strategic Pharmaceutical1876Policy Advisory Commission" to accomplish these tasks is1877presented in Appendix A. This integrated framework (when1878properly authorized, funded, and managed) can ensure that1879patients consistently receive life-saving medications,1880regardless of manufacturing and quality failures, natural1881events and disasters, or international trade disputes.18821883    Question:18841885    Dr. Schondelmeyer, you mentioned that transparency into1886where and how medicines are made is critical for both patient1887safety and supply chain security.1888    How would requiring country of origin or manufacturing1889facility information on labels improve the security of our drug1890supply chain, particularly for seniors in states like Georgia?18911892    Response:18931894    Thank you for this important and relevant question.1895Everyone needs, or uses, prescription drugs at various points1896during their lifetime. The quality and security of the1897prescription drug supply in the United States is a critical1898part of the national infrastructure that assures the1899availability of effective drug therapy for all in America.1900Seniors and other vulnerable populations, in particular, rely1901heavily on daily medications to manage chronic conditions and1902to improve their health status. The U.S. drug supply faces1903serious challenges with respect to quality, recalls, and1904shortages affecting many critical medicines. In addition, the1905drug supply chain has become highly concentrated economically1906and geographically and is heavily dependent upon two countries,1907China and India, for key starting materials (KSMs), active1908pharmaceutical ingredients (API), and finished dosage forms1909(FDFs).1910    A senior filling a prescription in Georgia for a generic1911blood pressure medication has no way of knowing whether their1912tablets were manufactured in a state-of-the-art facility in the1913United States or a sweat-shop facility in China or India with a1914history of FDA warning letters or "Official Action Indicated"1915(OAI) safety violations.\1\1916---------------------------------------------------------------------------1917    \1\ Schondelmeyer, S.W. (2026, January 29). Statement on Real1918Country-Of-Origin-Labeling (COOL) Transparency in the U.S.1919Pharmaceutical Market: Foundation for a Secure & Resilient Drug Supply.1920Testimony before the U.S. Senate Special Committee on Aging. See, also,1921Schondelmeyer, S.W. (2024, February 6). Statement on A Resilient U.S.1922Drug Supply: Current & Emerging Vulnerabilities. Testimony before the1923U.S. House Committee on Ways & Means.1924---------------------------------------------------------------------------1925    Prescribing physicians and pharmacists in Georgia could1926actively choose to source drugs from manufacturers with1927superior safety records, if this information was reliably and1928publicly available. Thus, protecting seniors from recurring1929risk due to economically-motivated adulteration or1930contamination-such as the deadly global recalls of tainted1931heparin from China or the generic blood pressure medications1932(e.g., valsartan) made in India that were found to have1933carcinogenic impurities.\2\1934---------------------------------------------------------------------------1935    \2\ Schondelmeyer, S.W. (2025, June 5). Designing A Resilient U.S.1936Drug Supply: Efficient Strategies to Address Vulnerabilities. Testimony1937before the U.S.-China Economic and Security Review Commission.1938---------------------------------------------------------------------------1939    Under the current opaque system, when a foreign1940manufacturing plant suffers a catastrophic failure, quality1941breach, or natural disaster, the U.S. market often experiences1942cascading, panic-driven shortages. The exact origin of the1943drugs dispensed to the patient are invisible to the physician,1944the pharmacist, and the patient. Therefore, an FDA recall of a1945drug product from a specific plant in China or India can cause1946a nationwide panic, as pharmacists struggle to identify which1947of their drug products are actually affected. Mandatory country1948of origin labeling (COOL) transparency helps to correct this1949market failure. By making a product's origin visible, it allows1950group purchasing organizations (GPOs), Medicare plans,1951physicians, pharmacists, and consumers to actively prefer and1952reward resilience. This can provide the financial incentives1953necessary for companies to "re-shore" or "near-shore" their1954manufacturing, ultimately reducing the U.S. supply chain's1955dangerous over-reliance on geopolitical rivals for life-saving1956drugs. With clear labeling of the manufacturing source,1957pharmacists could pull the tainted batches while confidently1958dispensing the safe, unaffected batches to seniors, thereby1959preventing substantial risks and disruptions of care.1960    U.S. law\3\ currently requires that "all products of1961foreign origin imported into the United States must be marked1962with their country of origin."\4\ The intent of this1963requirement is to compel the manufacturer to disclose to the1964public the country where their drug product is made. On June196514, 2024, a ruling by the U.S. Customs and Border Protection1966(CBP) Headquarters in a letter (HQ H283420) to CVS Health\5\1967declared that the `consumer at retail' is the `ultimate1968purchaser', rather than the previous interpretation that it is1969the `manufacturer selling to a pharmacy' This change makes1970sense; however, it means that pharmacists are now responsible1971to report the `country of origin' on the prescription label1972when the medication is dispensed to a patient.\6\ Although this1973is a good policy on its surface, its weakness comes because the1974pharmacist is held responsible for labeling a prescription with1975the `country of origin' which is information that must1976ultimately come from the manufacturer who may, or may not,1977report that information to the FDA, the pharmacist, or the1978public.1979---------------------------------------------------------------------------1980    \3\ U.S.C.  1304 and 19 C.F.R.  134.11.1981    \4\ U.S. Customs and Border Protection. "Fact Sheet: Marking of1982Prescription Medication for Retail Sale." CBP Publication No. 3812-19830824. Accessed on January 24, 2026 at: https://www.cbp.gov/sites/1984default/files/2024-08/1985FACT%20SHEET%20Marking%20Prescription%20Medication%20for%20Retail%20Sale1986.pdf.1987    \5\ U.S. Customs and Border Protection, Letter from Yuliya A.1988Gulis, Director, Commercial and Trade Facilitation Division to JoAnne1989Colonnello, Center Director, Pharmaceuticals, Health, and Chemicals,1990Center of Excellence and Expertise, U.S. Customs and Border Protection,19916747 Engle Road, Middleburg Heights, OH 44130, dated June 14, 2024; HQ1992H283420, OT:RR:CTF:CPMMA H283420 RRB, CATEGORY: Marking; RE: Internal1993Advice; Country of origin marking requirements for repackaged1994prescription medication sold by CVS Health; ultimate purchaser; 191995U.S.C.  1304; 19 C.F.R.  134.1(d)(1); 19 C.F.R.1996 134.25. Accessed on January 24, 2026 at: https://1997rulings.cbp.gov/ruling/H283420.1998    \6\ U.S. Customs and Border Protection, Letter to Yulia A. Gulis,1999June 14, 2024.2000---------------------------------------------------------------------------2001    When a customer in Georgia fills a prescription at their2002retail pharmacy such as CVS or their independent community2003pharmacy, the pharmacist must provide the `country of origin'2004for the drug product on the prescription label. This process2005sounds simple enough; however, not all drug companies marketing2006prescription drugs in the U.S. report the `country of origin'2007identifying where their drug product is actually made. And,2008some manufacturers report this information only to the FDA who2009may, or may not, make the data public. If the manufacturer does2010not report the `country of origin', the pharmacist is still2011responsible to find and report the `country of origin' to their2012patients. The large chain pharmacies such as CVS can assign2013staff at their corporate office to research and compile this2014information across the 70,000 to 100,000 drug products on the2015market, so that their in-store pharmacists can comply with this2016requirement. However, for an independent community pharmacy,2017the process to search for the "country of origin" for each2018prescription drug product may take the pharmacist 10 minutes to201930 minutes or more per prescription to search for this2020information. And, the pharmacist may not be able to find the2021`country of origin' if it is not made public by the2022manufacturer.2023    While this policy appears workable in theory, it simply is2024not practical. First, this process is dependent upon the2025importer (i.e., manufacturer) to publicly report the `country2026of origin' to the FDA as required and in a clearly understood2027manner. Second, it is dependent upon the FDA passing the2028information on to the public in a useable format. Third, the2029search process by a pharmacist, at the store level, to find the2030`country of origin' for many thousands of drug products so it2031can be included on the prescription label is very time2032consuming and is clearly not sustainable economically. Even2033though the FDA may have this information for each specific2034prescription drug product in its files or in electronic data2035sets, if the data is not made public, the pharmacist cannot2036report what he or she does not have and cannot obtain.2037    Clearly, this policy-no matter how well intended-will have2038a severe differential negative impact on independent community2039pharmacies and their patients. In a state, like Georgia, where2040more than one-third of its pharmacies are locally and2041independently owned, the economic burden of chasing `country of2042origin' data that manufacturers may, or may not, have reported2043to the FDA or the public is overwhelming. Absence of this2044information will mean that physicians, pharmacists, and2045patients cannot make purchase decisions that take into account2046the geographic origin of a drug product. This impact will be2047especially noticed by Georgians in rural and distressed urban2048areas which often have a higher share of independent2049pharmacies. This will also have a greater impact on seniors and2050other vulnerable populations served in these communities.2051    While chain pharmacies dominate the overall share of2052pharmacies in Georgia, especially in densely populated metro2053areas (like Atlanta), independent pharmacies carry the vast2054majority of the burden in rural and stressed regions of2055Georgia. According to Georgia's Rural Center, 25% of all2056Georgia counties (42 counties) have no corporate [chain]2057pharmacies and rely entirely on local, independently owned2058community pharmacies for their prescription drug access.\7\2059Other types of pharmacies (such as Federally Qualified Health2060Centers (FQHCs), hospital outpatient pharmacies, and2061specialized clinics) are expected to have `country of origin'2062labeling problems similar to those experienced by independent2063community pharmacies. When these other pharmacy types are taken2064into account, nearly one-half of all Georgia pharmacies could2065be impacted by these short-comings and lack of public data on2066`country of origin' information needed to support the2067prescription labeling requirements. Only with two pre-requisite2068obligations can community pharmacies meet the otherwise2069impossible task of placing the `country of origin' on each2070prescription label.2071---------------------------------------------------------------------------2072    \7\Georgia's Rural Center. Rural Pharmacies and Patients at Risk:2073PBM Practices Pose Risks to Independent Pharmacies, Updated Feb. 6,20742025. Accessed on February 12, 2026 at the website: https://2075www.ruralga.org/post/rural-pharmacies-and-patients-at-risk-pbm-2076practices-pose-risks-to-independent-2077pharmacies#:text=the20National20Community20Pharmacy20Association,a20phar2078macy20(Figure%201).20792080      (1) Manufacturers (and marketers) should be required to2081report to the FDA the `country of origin' for both the active2082pharmaceutical ingredients and the finished dose form for all2083---------------------------------------------------------------------------2084prescription products marketed in the United States.20852086      (2) The FDA should be required to compile this `country2087of origin' information into easily machine-readable digital2088files and publicly report the data through online web sites.20892090    In summary, Georgia and other states, would benefit from2091publicly disclosed `country of origin' on prescription labels.2092This information can: (1) empower prescribers, pharmacists, and2093patients to make wise purchase decisions based on the quality2094history and geographic origin of drug products; (2) enable2095rapid and targeted identification and removal of drug products2096made in specific locations with known quality or contamination2097problems; (3) support market-based incentives intended to2098encourage and reward domestic or friend-shored production of2099pharmaceuticals; and (4) utilize existing infrastructure and2100data that has been reported in an opaque system including the2101data collected under the Drug Supply Chain Security Act2102(DSCSA).2103    Routine provision of "country of origin labeling" for2104prescription medications would greatly improve transparency for2105physicians and pharmacists, as well as purchasers and payers,2106and most importantly for patients. Transparency regarding where2107one's medications are actually being made is not merely a2108matter of consumer preference; it is a matter vital to public2109health and national security. Knowing where a drug comes from2110can build trust in the quality and dependability of our U.S.2111drug supply.2112    That trust begins with "truth and openness" from CLEAR2113LABELS.21142115    Question:21162117    What steps can Congress take to enforce existing reporting2118requirements and ensure greater transparency overall?21192120    Response:21212122    A number of recommendations are reported in my written2123comments provided to the Senate Special Committee on Aging at2124its Hearing on: "Truth in Labeling: Americans Deserve to Know2125Where Their Drugs Come From" on January 29, 2026.\8\ Those2126recommendations, and others, are re-stated and further2127described here. Many of these recommendations can be2128implemented as administrative actions and regulatory guidance,2129while other recommendations may require statutory revisions or2130additions. The Senate Special Committee on Aging members and2131their staffs should work with FDA to identify the necessary and2132most efficient way to accomplish the intent of the2133recommendations described herein.2134---------------------------------------------------------------------------2135    \8\ Schondelmeyer Stephen, "Real Country-Of-Origin-Labeling (COOL)2136Transparency in the U.S. Pharmaceutical Market: Foundation for a Secure2137& Resilient Drug Supply, presented at the Senate Hearing on Truth in2138Labeling: Americans Deserve to Know Where Their Drugs Come From,2139Statement before the Special Committee on Aging United States Senate,2140Congress of the United States, Thursday, January 29, 2026, Washington,2141DC.2142---------------------------------------------------------------------------2143    The overall intent of the recommendations provided here is2144to require country of origin labeling that provides the2145ultimate purchaser-the American patient-with pharmaceutical2146product labeling that clearly indicates where their2147prescription medication was made. The term `country of origin'2148may be abbreviated as COO, while the term `country of origin2149labeling' may be abbreviated as COOL.2150    As noted in my written testimony, `country of origin2151labeling' has emerged as a critical element in the contemporary2152landscape of consumer goods, in general, and prescription2153pharmaceuticals, in particular. COOL involves marking the drug2154product received by the end-consumer with the name of the2155country in which the product was actually manufactured or made.2156For some industries, and in some trade agreements, the concept2157of COOL is the place where the product was "manufactured,2158processed, or substantially transformed." The definition of2159where a pharmaceutical product is made is critical and should2160be carefully and clearly defined. For pharmaceutical products,2161the primary essence and value of the drug product is embodied2162in its active pharmaceutical ingredient(s) (API), and not2163necessarily in how or where it was processed or packaged. For2164prescription drug products, the `country of origin' for the API2165should be clearly defined as "the country which contains the2166geographical location where the API is actually made."2167Similarly, the `country of origin' for the finished product2168should be clearly defined as "the country which contains the2169geographical location where the finished product is actually2170made."2171    First, Section 502 of the FD&C Act (21 U.S.C. 352)2172should be reviewed and revised, if necessary, to ensure that it2173includes a requirement that "the country of origin for the API2174and the country of origin for the finished drug product must be2175clearly marked on the label of the container in which the2176finished product is sold in the U.S. market." Both the COO for2177the API and the COO for the finished product are required. This2178requirement for labeling of a drug product with both the COO2179for the API and the COO for the finished product should apply2180to any drug product at the National Drug Code (NDC) level being2181sold by any labeler in the U.S. market. Recall that a `labeler'2182"may be either a manufacturer, including a repackager or2183relabeler, or, for drugs subject to private labeling2184arrangements, the entity under whose own label or trade name2185the product will be distributed."\9\2186---------------------------------------------------------------------------2187    \9\ U.S. Food & Drug Administration. NDC Package File Definitions.2188Content current as of July 21, 2022 and found on February 12, 2026 at2189the website: https://www.fda.gov/drugs/drug-approvals-and-databases/2190ndc-package-file-definitions.2191---------------------------------------------------------------------------2192    Failure to include the country of origin for either the API2193or the finished product should render a drug product as2194`misbranded' and it should be subject to any and all remedies2195available including, but not limited to, civil penalties and2196fines, product seizures and destruction, injunctions to stop2197manufacturing or distribution, refusal to import, voluntary or2198mandatory recalls, and criminal prosecution including2199misdemeanor to felony charges against the corporation and its2200executives. In particular, misbranded products with respect to2201lack of COO for either API or finished product on the end2202product label should result in refusal to import to the U.S. or2203recall and removal from the market for product originating in,2204or otherwise being sold in, the U.S. market.2205    The intended net effect of the `country of origin labeling'2206policy is that:22072208      
Any labeler of a prescription drug product at the NDC2209level being marketed in the U.S. is responsible for placing the2210COO for the API on the label of the end product container.22112212      
Any labeler of a prescription drug product at the NDC2213level being marketed in the U.S. is responsible for placing the2214COO for the finished product on the label of the end product2215container.22162217      
The FDA or the Department of Justice may pursue civil2218penalties and fines, product seizures and destruction,2219injunctions to stop manufacturing or distribution, voluntary or2220mandatory recalls, and criminal prosecution including2221misdemeanor to felony charges against the corporation and its2222executives of labelers not complying with the COO labeling2223requirement for either the API or the finished product.22242225      
The Customs and Border Protection agency may refuse to2226import any drug product not complying with the COO labeling2227requirement for either the API or the finished product.22282229      
The requirement to comply with COOL for the API and COOL2230for the finished drug product applies not only to a2231prescription drug product manufacturer, but also to any2232labeler, repackager, relabeler, marketer, distributor, or2233private labeler of a drug product at the NDC level.22342235      
Simply reporting another drug product's NDC or FDA2236approval number does not suffice for providing the COO for the2237API or the finished product on the actual label for the2238container holding the end product.22392240      
FDA sponsors, manufacturers, labelers, repackagers,2241relabelers, marketers, distributors, private labeler of2242products, or any other firm responsible for a prescription drug2243product at the NDC level in the U.S. market is responsible to2244report the COO for the API and for the finished product to the2245FDA and its Structured Product Label (SPL) electronic listing2246file system.22472248      
The COO for the API and the COO for the finished product2249are required public information for marketing a prescription2250drug product in the U.S. market, and this information may not2251be declared as "Confidential Commercial Information".22522253      
The requirement for COOL for the API or the finished2254product is not met by a manufacturer, labeler, marketer,2255distributor, repackager, relabeler, or private labeler who2256reports only the location of:2257          (1) the warehouse shipping the product;2258          (2) the corporate headquarters of the firm labeling,2259marketing, selling, or distributing the product;2260          (3) the U.S. address of a subsidiary of a foreign-2261owned company operating in the United States;2262          (4) the facility repackaging or relabeling the2263product; or2264          (5) the pharmacy or healthcare entity dispensing the2265medication.2266    Second, the labeler of any drug product at the NDC level in2267the U.S. market should be required to report to the FDA, the2268COO for the API and the COO for the finished product. The FDA2269should be authorized, and required, to collect in text form the2270COO for the API and the COO for the finished product. FDA2271should add, or include data variables, if not already present2272for reporting this required information in text form in its2273Structured Product Labeling (SPL)\10\ electronic file for each2274drug product at the NDC level.2275---------------------------------------------------------------------------2276    \10\ U.S. Food & Drug Administration. Structured Product Labeling2277Resources. Content current as of January 8, 2025 and found on February227812, 2026 at the website: https://www.fda.gov/industry/fda-data-2279standards-advisory-board/structured-product-labeling-resources.2280---------------------------------------------------------------------------2281    The FDA has traditionally treated the specific factory2282location of an Active Pharmaceutical Ingredient (API) as2283"Confidential Commercial Information" (CCI).\11\ FDA2284Regulations (21 CFR  20.61) define "Confidential2285Commercial Information" (CCI) as valuable data that is2286"customarily held in strict confidence." As noted in my2287testimony, there are numerous examples of drug firms (i.e.,2288manufacturers and labelers) issuing public press releases about2289building new facilities for production of specific API and2290finished products to be sold as prescription drugs in the U.S.2291market. The public and widespread disclosure of such2292information clearly contravenes the current FDA definition of2293"Confidential Commercial Information". This regulation, and2294related FDA guidance, regarding "Confidential Commercial2295Information" should be reviewed and revised, if necessary, to2296exclude COO for the API and COO for the finished product from2297the definition of CCI. Both the COO for the API and the COO for2298the finished product should be defined as `required public2299information' that must be disclosed at the NDC level for any2300prescription drug product marketed in the United States.2301Consequently, labelers reporting prescription drug product2302information to the FDA's SPL electronic file system should not2303be permitted to declare the COO for the API and the COO for the2304finished product as "Commercial Confidential Information"2305resulting in this information being suppressed or withheld from2306the public.2307---------------------------------------------------------------------------2308    \11\ U.S. Food & Drug Administration. FDA Fact Sheet: Information2309Sharing: 20.88 Agreements & Commissioning. Content current as of2310February 12, 2026 and found on February 12, 2026 at the website:https:/2311/www.fda.gov/media/109437/download.2312---------------------------------------------------------------------------2313    The data submitted by labelers to the FDA's SPL electronic2314file system is used by the National Library of Medicine (NLM)2315to populate a drug profile on the consumer-facing DailyMed2316website.\12\ The `About DailyMed' section on the website2317describes that it provides to the public "the most recent2318labeling submitted to the Food and Drug Administration (FDA) by2319companies and currently in use (i.e., "in use" labeling)."\13\2320As of February 12, 2026, the DailyMed database contained2321154,834 products with labeling information submitted to the FDA2322by the product's labeler.\14\ For each drug product, with2323related NDC numbers grouped together, there are 17 enumerated2324sections as well as several other sections including: SPL2325Unclassified Section; Medication Guide; Package/Label Principal2326Display Panel; and Ingredients and Appearance.2327---------------------------------------------------------------------------2328    \12\ National Library of Medicine, DailyMed. About DailyMed.2329Content accessed on February 12, 2026 at the website:2330dailymed.nlm.nih.gov/dailymed/about-dailymed.cfm.2331    \13\ The FDA-approved Prescribing Information (PI) for approved2332human prescription drug and biological products contains a summary of2333the essential scientific information needed for the safe and effective2334use of the product. The PI includes boxed warnings, indications, dosage2335and administration, contraindications, warnings and precautions,2336adverse reactions, drug interactions, information about use in specific2337populations, and other important information for healthcare2338practitioners. FDA-approved patient labeling (e.g., Patient2339Information, Medication Guide, Instructions for Use) is directed to the2340patient, family, or caregiver. FDA-approved carton and container2341labeling communicate information that is critical to the safe use of2342prescription drug and biological products from the initial2343prescription, to procurement, to preparation and dispensing of the2344drug, to the time it is given to the patient.2345    \14\ National Library of Medicine, DailyMed. Content accessed on2346February 12, 2026 at the website: dailymed.nlm.nih.gov/dailymed/2347index.cfm.2348---------------------------------------------------------------------------2349    Looking on the DailyMed website for information related to2350`country of origin' for the API or the finished dose form is2351somewhat like playing `Hide and Seek'-the information may, or2352may not, be there but you have to look for it; and, it is not2353always contained in the same location for each drug product or2354DailyMed profile. The DailyMed website reports various types of2355information in each of the 17 enumerated sections of the FDA-2356approved Prescribing Information. Typically, none of the first235716 sections contain any country of origin (COO) information,2358and only sometimes do Section "17 PATIENT COUNSELING2359INFORMATION" or later sections contain country of origin2360information. If there is COO information in Section 17 it is2361usually found only at the very end of the FDA-approved Patient2362Labeling information where the `Medication Guide' is presented.2363    The drug product, Revlimid (lenalidomide), was used as an2364example from the DailyMed website to show what information is2365provided with respect to the `country of origin' for the2366manufacturer of the API and the manufacturer of the finished2367product for this specific drug product\15\ (See Appendix B). At2368the very top of the DailyMed Profile is a heading that2369indicates the "Packager" of the Revlimid product is "Celgene2370Corporation" and no country is reported as the location for2371this corporate entity (Appendix B.1.). Eight different sections2372on the DailyMed website (i.e., Section "17 Patient Counseling2373Information"; "Medication Guide"; and six versions of the2374"Package/Label Display Principal Panel" with one label (as only2375a jpg image) for each of 6 different strengths of Revlimid)2376report that the product is "Marketed by: Bristol-Myers Squibb2377Company, Princeton, NJ 08543 USA" (Appendix B.2., B.3., and2378B.4). One additional place at the very end of the DailyMed2379website (i.e., the Ingredients and Appearance section)2380indicates that the "Labeler" for this product is "Celgene2381Corporation (174201137)" (Appendix B.5.). In the DailyMed2382profiles for other drugs, this section sometimes lists specific2383`Establishments' or companies involved in the supply chain for2384the specific drug product such as Revlimid. Among the `Business2385Operations' listed are `API Manufacture' and `Manufacture' (of2386finished dose form). There was no list of `Establishments' or2387manufacturing functions on the DailyMed website for Revlimid.2388This implies that the `Labeler' for Revlimid has indicated in2389the SPL electronic submission system that information on the2390API manufacturer and the finished dose form manufacturer were2391considered `Commercial Confidential Information' or that they2392were not reported at all, thus suppressing this information2393from being reported on the DailyMed profile. An example of a2394DailyMed profile showing business operation information is2395provided using the generic version of lenalidomide (Cipla USA2396Inc.) to illustrate what types of information are available and2397are sometimes reported (Appendix B.6.).2398---------------------------------------------------------------------------2399    \15\ National Library of Medicine, DailyMed, LABEL: REVLIMID-2400lenalidomide capsule. Content updated as of March 24, 2023 and found on2401February 12, 2026 at the website: dailymed.nlm.nih.gov/dailymed/2402drugInfo.cfm?setid=5fa97bf5-28a2-48f1-8955-f56012d296be.2403---------------------------------------------------------------------------2404    The overall finding from examining the Revlimid profile on2405the DailyMed website is that the public information included2406identifies the `Packager' as Celgene Corporation; that it is2407`Marketed by' Bristol-Myers Squibb Company; that it is a2408`Product of Switzerland'; and that the `labeler' is Celgene2409Corporation. The Revlimid DailyMed profile did not identify the2410source of the API or the country of origin for the `API2411Manufacturer', although a generic version of this drug2412(lenalidomide) does identify both the source of the API and the2413country of origin for the `API Manufacturer'. Because there was2414no standardized location for the `country of origin'2415information in the DailyMed profile and there was a lot of text2416material to be reviewed, it took about an hour to read through2417and search the entire DailyMed profile of Revlimid to check for2418information on the `country of origin' for the API and the2419`country of origin' for the finished product.2420    From experience reviewing DailyMed profiles and looking for2421country of origin information, the locations where this2422information is most likely to be found were:24232424          (1) near the end of the section titled "17 PATIENT2425COUNSELING INFORMATION;"2426          (2) near the end of the section titled "Patient2427Package Insert", if present;2428          (3) in the section titled "PACKAGE LABEL PRINCIPAL2429DISPLAY PANEL;" which may have jpg images of the drug product2430label; or jpg images of the outer carton surrounding the bulk2431package; or2432          (4) near the end of the section under the heading2433"INGREDIENTS AND APPEARANCE" under the sub-heading titled2434"Establishment" and listing `Business Operations'.24352436    In contrast to searching for the `country of origin'2437information on the DailyMed profile and website, as described2438above, a similar search was performed on the New Zealand2439MedSafe website.\16\ The information found on the MedSafe2440website for Revlimid capsules 10 mg (Bristol-Myers Squibb (NZ)2441Limited is shown in Appendix C. Within 2 minutes this2442information was found and it reported not only the country of2443origin for API and the finished dose form, but also the name of2444each manufacturing company and its address. This MedSafe2445example demonstrates that the `country of origin' information2446can be provided in a more consumer-friendly and easy to find2447format. Also, the disclosure of the `country of origin'2448information is, and can be, made available in a public-facing2449environment.2450---------------------------------------------------------------------------2451    \16\ New Zealand Medicines and Medical Devices Safety Authority.2452MedSafe. MedSafe Product Detail. Revlimid Capsule 10 mg. Accessed on2453February 12, 2026 at the website: https://www.medsafe.govt.nz/DbSearch/2454ProductDetail.asp?ID=13399.2455---------------------------------------------------------------------------2456    One final comment on the information found in the DailyMed2457product profiles concerns the quality of the jpg images2458published on the site. The FDA and NLM rely on the product2459sponsor and/or labeler to provide jpg images of the container,2460carton, and label for prescription products listed in the SPL2461database and presented on the DailyMed website. Some of the jpg2462images are of such poor quality that they cannot be accurately2463read or understood. One such example is provided in Appendix D.2464Appendix D first shows the DailyMed listing for the Metformin2465Hydrochloride-Tablet, Extended Release (Appendix D.1.). In2466Appendix D.2. the jpg image of the product label is shown. Upon2467examining this label: Can you read the NDC number of the2468product? Can you find the Labeler Name? Can you find the2469Manufacturer for the API or the Finished Product? Can you find2470the `Country of Origin' for the API or the Finished Product?2471Not all of this information is on the label provided. However,2472even if all of this information was there, clearly one cannot2473read it. The point is, if the FDA SPL electronic data system is2474going to request label images (and they should), the images are2475of no value if they are not readable. At present, some2476information on the label images (such as `country of origin"2477for the API or the finished product) is found nowhere else in2478the data presented on the DailyMed product profile. The FDA2479should require submission of label images through its SPL2480electronic data system, and it should require that jpg images2481meet minimum readability and pixel density requirements.2482    The FDA should address the following issues to facilitate2483making `country of origin' labeling publicly accessible2484including reporting of the information on the NLM DailyMed2485profiles of prescription products:24862487      
The `country of origin' for the API should be required,2488publicly accessible, and reported in a text format in a2489standard place on the DailyMed website.24902491      
The `country of origin' for the finished product should2492be required, publicly accessible, and reported in a text format2493in a standard place on the DailyMed website.24942495      
The `country of origin' for API should be reported using2496the phrase: "API Made in ----------" immediately preceding the2497country where the API is actually manufactured and no variation2498in this preceding phrase is acceptable.24992500      
The `country of origin' for finished product should be2501reported using the phrase: "Product Made in ----------"2502immediately preceding the country where the finished product is2503actually manufactured and no variation in this preceding phrase2504is acceptable.25052506      
FDA should add a text field variable for the API2507`country of origin' to its National Drug Code Directory\17\ NDC2508product file\18\ list of variables.2509---------------------------------------------------------------------------2510    \17\ U.S. Food and Drug Administration. National Drug Code2511Directory. Content current as of February 5, 2026 and accessed on2512February 12, 2026 at: https://www.fda.gov/drugs/drug-approvals-and-2513databases/national-drug-code-directory.2514    \18\ U.S. Food and Drug Administration. NDC Product File2515Definitions. Content current as of March 12, 2024 and accessed on2516February 12, 2026 at: https://www.fda.gov/drugs/drug-approvals-and-2517databases/ndc-product-file-definitions.25182519      
FDA should add a text field variable for the finished2520product `country of origin' to its National Drug Code Directory2521---------------------------------------------------------------------------2522NDC product file list of variables.25232524      
FDA should encourage commercial databases such as2525MediSpan and First DataBank to add text variables for the API2526`country of origin' and the finished product `country of2527origin' in their drug product reference and dispensing system2528data files.25292530      
FDA should require reporting of both API and finished2531product `country of origin' in a standard location in the FDA-2532approved Prescribing Information (PI).25332534      
FDA should require reporting of both API and finished2535product `country of origin' in a standard location in the FDA-2536approved Patient Medication Guide.25372538      
FDA should require reporting of both API and finished2539product `country of origin' in a standard location in the FDA-2540approved product carton labeling.25412542      
FDA should require reporting of both API and finished2543product `country of origin' in a standard location in the FDA-2544approved product package labeling.25452546      
FDA and NLM should report in the "Ingredients and2547Appearances" Section of the DailyMed profile the API2548Manufacturer firm name, the ID/FEI, and the `Country of2549Origin'.25502551      
FDA and NLM should report in the "Ingredients and2552Appearances" Section of the DailyMed profile the finished2553product Manufacturer firm name, the ID/FEI, and the `Country of2554Origin'.2555    The intent of the `country of origin' labeling (COOL)2556requirement is to provide the consumer (i.e., the patient) with2557easily accessible and understandable information about where2558their prescription medications were made. Both the country of2559origin for the active pharmaceutical ingredient (API) and the2560finished product should be disclosed to the public so that2561they, along with their physician and pharmacist, can make a2562conscious selection of the medicines they choose and use. When2563a prescription medicine is made using API from a factory in2564China and a finished product prepared in India, that is then2565marketed by a business entity in the United States; it is2566misleading to give the impression that the product is made in2567the USA. Yet, this is the situation for many prescription2568products in the U.S. market, and they are assumed to be made in2569the USA when actually they are not. If all prescription2570products are not clearly labeled with the true `country of2571origin', consumers may lose trust in the quality and confidence2572in the effectiveness of the U.S. medicines supply.2573    `Country of origin labeling' (COOL) serves as a mechanism2574to inform buyers about their product's origin and to inform2575their perceptions of quality, safety, economics, or even their2576presumed patriotism and support of free markets. With respect2577to pharmaceuticals, safety, efficacy, and quality assurance of2578the medication are paramount. Knowing the country of origin for2579the product can directly affect consumer trust in the2580regulatory scrutiny and oversight of pharmaceutical production.2581Furthermore, COOL indicates the regulatory frameworks, economic2582strategies, environmental conditions, political systems, and2583international trade policies that may have surrounded and2584influenced the making of the end-product. COOL is a tangible2585means to provide transparency, support consumer decision-2586making, and encourage a fair and competitive market.2587    Knowing where a drug comes from can build trust in the2588quality and dependability of our U.S. drug supply. That trust2589begins with "truth and openness" from CLEAR LABELS.25902591[GRAPHICS NOT AVAILABLBE IN TIFF FORMAT]25922593                 U.S. Senate Special Committee on Aging25942595 "Truth in Labeling: Americans Deserve to Know Where Their Drugs Come2596                                 From"25972598                            January 29, 202625992600                        Questions for the Record26012602                            Stephen Colvill26032604                        Senator Raphael Warnock26052606    Question:26072608    The Federal Trade Commission and the U.S. Department of2609Health and Human Services launched an investigation into group2610purchasing organizations (GPOs) in 2024 to understand their2611potential contribution to generic drug shortages, which2612affected Georgians' access to cancer and rheumatoid arthritis2613medications.2614    What role do GPOs play in the stability of the domestic2615pharmaceutical supply chain?26162617    Response:26182619    Distinguishing between various health care settings,2620including the health system setting, independent oncology2621clinic setting, and retail setting, is important to understand2622the roles of various types of GPOs and other entities in the2623generic drug supply chain. Drug reimbursement methodologies,2624contracting practices, and other market dynamics differ in each2625of these settings.2626    In the health system setting, traditional GPOs (Vizient,2627Premier, HealthTrust) negotiate contract prices and terms2628between their member health systems and manufacturers. These2629traditional GPOs do not take possession of or title to the2630drugs and do not markup the drugs. Traditional GPO contracts2631impact drug usage in hospitals along with other sites of care.2632    In the independent oncology clinic setting, wholesalers2633(Cencora, McKesson) and wholesaler-affiliated GPOs often2634negotiate contracts with manufacturers of oncology drugs used2635in community oncology clinics. Wholesalers take possession of2636and title to the drugs before distributing them.2637    In the retail setting, retail GPOs (RedOak, Walgreens Boots2638Alliance, ClarusOne) negotiate contracts with manufacturers on2639behalf of retail pharmacies. Pharmacy benefit managers (PBMs)2640are most influential in this retail setting, but PBMs are2641markedly different from GPOs.2642    In all these settings, GPOs have significant negotiating2643power, in part due to consolidation, and they use that power to2644secure favorable contract pricing and terms from manufacturers.2645My professional experience has mostly involved the hospital and2646health system setting, where I have observed contract2647negotiations from both the manufacturer and GPO perspective. In2648this setting, I have observed traditional GPOs use their market2649power to pursue the interests of their health system members.2650    The "Race to the Bottom" section of my full written2651testimony provides a detailed overview of the interests of2652health systems related to generic drug purchasing. In summary,2653for already-inexpensive generic drugs, resource-constrained2654health systems focus significant efforts on obtaining the2655lowest cost at a point in time without adequate consideration2656for reliable availability over time. These health system2657priorities shape the actions of their GPOs.2658    In recent years, some limited progress has been made on2659better valuing reliable availability of critical generics. Some2660health care providers have begun entering into new committed2661contracting models that have been pioneered by new entities2662such as Civica Rx, and traditional GPOs and wholesalers also2663now offer committed contracting models. These committed2664contracting models are designed to offer greater assurance of2665demand for manufacturers and assurance of supply for providers.2666The committed nature of these models creates a greater2667incentive for purchasers to vet suppliers and for manufacturers2668to ensure reliable delivery of products over time. However,2669while such committed contracting models have demonstrated some2670success, they currently represent a small share of generic drug2671contracts in the U.S., and drug shortages persist. Many2672resource-constrained health systems opt not to participate in2673committed contracting models (or participate minimally) and2674instead continue to seek out the lowest cost short term2675suppliers. In addition, health systems and their GPOs could2676also take other important steps to identify and purchase from2677reliable manufacturers. For example, health systems and their2678GPOs could require manufacturers to be evaluated through third-2679party drug supply chain reliability benchmarking programs.2680However, uptake of such benchmarking programs has also thus far2681been limited.2682    In the "An Alternative: Aligning Incentives Towards2683Reliable Availability" section of my full written testimony and2684the response to Question 2 below, I outline how Congress could2685address drug shortages by aligning health care provider2686incentives to better value the reliable availability of2687critical generic drugs.26882689    Question:26902691    How can Congress keep GPOs accountable and improve older2692adults' access to quality and affordable drugs?26932694    Response:26952696    Congress should enact Medicare payment reforms to2697incentivize health care providers to take steps to support the2698reliable availability of critical generic drugs.2699    In a recent white paper, Duke-Margolis proposed a2700simplified version of the Medicare Drug Shortage Prevention and2701Mitigation Program originally outlined in a 2024 Senate Finance2702Committee Discussion Draft. Our proposal would reward health2703care providers when they 1) purchase through committed2704contracting models and 2) identify and purchase drugs that meet2705reliability benchmarks. If this proposal is implemented, GPOs2706would be well-positioned to support a shift towards a more2707reliable supply chain. Rather than focusing their negotiating2708power too much on obtaining the lowest cost, GPOs could instead2709use that same negotiating power to demand reliable availability2710and higher levels of quality assurance from manufacturers. The2711market could also use reliability benchmarking programs to2712observe the extent to which GPOs and health systems contract2713with reliable manufacturers.2714    Lastly, healthy competition is essential for a well-2715functioning market. Congress should ensure that health care2716providers have the opportunity to select from a range of2717different competing GPOs and other service providers and that2718new entrants (both new GPO entrants and new manufacturer2719entrants) have an opportunity to succeed in a competitive2720market. Levels of market concentration and consolidation should2721be continually assessed.27222723                            Senator Andy Kim27242725    Question:27262727Current Requirements for Country-of-Origin Information2728    There are current requirements for country-of-origin2729information involving multiple government entities, however,2730this could also lead to confusing or conflicting requirements.2731Currently drug manufacturers must comply with label and2732labeling requirements of the Food and Drug Administration,2733country of origin information requirements by Customs and2734Border Protection (CBP) (which is further influenced by trade2735agreements such as the USMCA), and government procurement2736requirements.2737    Can you detail the current regulatory environment and where2738there may be gaps and potential overlap?27392740    Response:27412742    Customs and Border Protection (CBP) generally relies on a2743"substantial transformation" standard to determine country-of-2744origin for the purpose of determining tariffs and other2745requirements that apply to U.S. imports. The final "substantial2746transformation" for drugs most commonly (but not always) occurs2747when the active pharmaceutical ingredient (API) is produced.2748The Tariff Act of 1930 also requires that imported goods be2749marked with the country-of-origin in a manner visible to the2750"ultimate purchaser" in the United States. A controversial 20242751CBP ruling determined that the "ultimate purchaser" in the2752retail pharmacy setting should be the patient rather than the2753dispensing pharmacy.2754    Direct federal procurement, such as purchases by VA and DoD2755governed by the Federal Acquisition Regulation (FAR), generally2756preferences pharmaceuticals that have a country-of-origin in a2757Trade Agreements Act (TAA) compliant country. Prior to the U.S.2758Federal Appeals Court decision in Acetris Health, LLC v. United2759States, federal agencies generally deferred to CBP's2760"substantial transformation" country-of-origin determinations2761for the purposes of direct federal procurement. However,2762following the Acetris decision in 2020, country-of-origin2763determinations for the purposes of direct federal procurement2764may now be based on where the product is "manufactured". This2765is different from CBP's standard and means that a product with2766an API from China that is "manufactured" into its final dosage2767form in a TAA-compliant country may now be considered TAA-2768compliant for the purposes of direct federal procurement, even2769if the most important production step occurred in China.2770    FDA labeling requirements in the Federal Food, Drug, and2771Cosmetic Act (FD&C Act) currently dictate that a drug is2772misbranded unless its label includes the name and "place of2773business" of the manufacturer, packer, or distributor. In many2774cases, the "place of business" of the final manufacturer,2775packer, or distributor differs from the country-of-origin as2776determined by the CBP and direct federal procurement standards2777described above. The "place of business" may be a company's2778corporate headquarters and may not be a manufacturing site at2779all. The CLEAR Labels Act introduced by Sen. Scott and Sen.2780Gillibrand in February 2026 would require unique facility2781identifiers for both the original API manufacturer and the2782original finished drug product manufacturer to be listed in the2783drug's labeling information. This CLEAR Labels Act approach2784would provide much more useful public information regarding2785locations of production than the current FD&C Act requirements.27862787Potential Next Steps on Labeling27882789    Requiring manufacturers to include unique facility2790identifiers in their labeling information would make it fairly2791straightforward for third parties to create user-friendly2792databases that allow patients, purchasers, researchers, and the2793public to identify where drugs are made. Congress should note2794that exempting manufacturers from the labeling requirements in2795the Tariff Act of 1930 may cause patients picking up a2796prescription at a retail pharmacy to not be able to see the2797country-of-origin on the physical drug label. That said, having2798one common set of labeling requirements through the FD&C Act2799(rather than divergent requirements from FDA and CBP) that2800enables the creation of user-friendly databases that patients2801and others can use to identify where drugs are made could be a2802common-sense approach. Ensuring the right information is2803available digitally may be more important than what is listed2804on the physical label.2805    Country-of-origin determinations for the purposes of direct2806federal procurement would need to be addressed separately.2807Legislation could close the "Acetris loophole" by directing2808revision of the FAR definition such that country-of-origin2809would be determined only by where a drug is "substantially2810transformed" rather than where a drug is "manufactured". This2811would refocus country-of-origin determinations for the purposes2812of direct federal procurement on the most important production2813step.28142815    Question:28162817Accessible Country-of-Origin Information28182819    Information about where prescription drugs are manufactured2820is not always visible to patients or policymakers, and2821purchasing decisions for prescription drugs are often made be2822entities other than the end user, including hospitals,2823pharmacies, and group purchasing organizations. These dynamics2824affect the potential impact of pharmaceutical labeling reforms2825in both provider-administrated and retail drug settings.2826Additionally, as we consider increasing transparency, we must2827also balance how we achieve more accessible information with2828security risks from sharing too much about key manufacturing2829sites. What practical changes should pharmaceutical labeling2830reforms be expected to achieve on their own? Beyond country-of-2831origin labeling, are there additional reforms we can focus on2832here in Congress to strengthen our domestic supply chain of2833quality active pharmaceutical ingredients and drugs and protect2834our national security?28352836    Response:28372838    Pharmaceutical labeling reforms, if effectively designed,2839could have a positive, yet limited, impact. Americans deserve2840to know where their drugs come from, and better availability of2841information about manufacturing locations of drugs might, over2842time, cause more drugs to be sourced domestically. However, for2843provider-administered drugs, impacts of labeling reforms are2844likely to be limited, as many decision makers already know2845where API and finished drug products are made or can acquire2846this information if desired. For retail drugs, impacts of2847labeling reforms are also likely to be limited, as patients2848have minimal influence over what drugs the retail pharmacies2849and retail GPOs decide to stock.2850    The Committee should carefully weigh any negative2851consequences that may arise from labeling reforms and consider2852how to mitigate them. Just because a drug is made in the U.S.2853does not necessarily mean that it is the best choice - some of2854the most significant past shortages have resulted from2855manufacturing issues in U.S. plants. Site location alone is not2856necessarily indicative of reliability or quality. Other2857assessments of reliability and quality, such as through the2858benchmarking programs described previously, are also needed.2859Pharmaceutical labels also may illuminate certain stages of2860production while obscuring other risks, such as from upstream2861key starting material (KSM) dependencies. KSM mapping and2862vulnerability assessment exercises will remain critical. The2863Committee should also consider that any labeling reforms may2864impact the information that is ultimately available to2865institutional buyers, health care providers, and patients in2866different ways. Other potential negative consequences include2867increased regulatory burden, potential impacts to patient2868medication adherence, and potentially more easily enabling bad2869actors to identify potential targets. The Committee could2870consider whether FDA should be provided with the authority to2871exempt some drugs from a requirement to disclose unique2872facility identifiers if there is a compelling safety or2873national security reason to do so, such as for some controlled2874substances.2875    Regarding other steps to more meaningfully improve the2876reliability of our domestic supply chain, financial incentives2877for purchasers is the most important area to focus. See more in2878the answer to Question 3 below.28792880    Question:28812882Financial Incentives for Purchasers28832884    Purchasers of prescription drugs, including pharmacies and2885providers often, face financial pressure that influence which2886products are selected and stocked. Without targeted incentives,2887efforts to encourage the use of more reliable or domestic2888suppliers may be limited. Financial incentives for purchasers2889are a critical component of addressing drug shortages and2890maintaining a resilient supply chain. What limitations remain2891as we think through how to meaningfully reduce chronic drug2892shortages?28932894    Response:28952896    I agree that targeted financial incentives for purchasers2897are needed to meaningfully address drug shortages and create a2898resilient supply chain for critical generic drugs.2899    In a recent white paper, Duke-Margolis proposed a2900simplified version of the Medicare Drug Shortage Prevention and2901Mitigation Program originally outlined in a 2024 Senate Finance2902Committee Discussion Draft. Our proposal would create new CMS2903incentives for health care providers to 1) purchase through2904committed contracting models and 2) identify and purchase drugs2905that meet drug supply chain reliability benchmarks. Costs from2906such a program would likely equate to <0.1% of total U.S. drug2907spending.2908    An additional limitation to meaningfully addressing chronic2909drug shortages is that drug supply chain reliability2910benchmarking programs are not yet widely adopted. Supply chain2911reliability benchmarking programs can objectively assess2912aspects of manufacturer supply chains such as redundancies,2913available manufacturing capacity, buffer stock, risk mitigation2914plans, and commitment to quality culture. These programs can2915then communicate insights to the market regarding which2916manufacturers, product supply chains, and/or manufacturing2917facilities are more reliable than their competition.2918Unfortunately, these benchmarking programs are not yet widely2919adopted on the supply-side or the demand-side. Wide supply-side2920adoption would entail a substantial share of manufacturer2921supply chains for critical products being evaluated through the2922programs. Wide demand-side adoption would entail the2923incorporation of resulting program insights into a substantial2924share of purchasing and contracting decisions.2925    To address this limitation, Congress could provide funding2926to HHS and DoD to de-risk the development, testing, and2927adoption of reliability benchmarking programs. This could set a2928foundation for future CMS payment reform that could target2929incentive payments to providers that purchase from reliable2930suppliers.29312932=======================================================================29332934                       Statements for the Record29352936=======================================================================29372938                 U.S. Senate Special Committee on Aging29392940 "Made in China, Paid by Seniors: Stopping the Surge of International2941                                 Scams"29422943                            January 14, 202629442945                        Statement for the Record29462947   Opening Statement of Senator Kirsten E. Gillibrand, Ranking Member29482949    Chairman Scott, thank you for calling today's hearing and2950thank you to our witnesses for being here.I'm looking forward2951to continuing our conversation on how we can improve the2952quality and reliability of our generic drug supply chain,2953particularly the role of increased transparency.2954    As we have heard in our previous hearings, these supply2955chains are vulnerable to disruption, and with decreased2956domestic manufacturing, we are putting ourselves in an2957increasingly perilous position.2958    Given recent instability in geopolitics and international2959trade policy, this reliance on foreign drugs increases the risk2960that Americans may not have access to life-saving drugs in2961times of crisis, threatening our national security.2962    However, we must approach strengthening and reforming this2963extremely complex supply chain thoughtfully and thoroughly.2964    One piece of this puzzle is increasing supply chain2965transparency through country-of-origin labeling.Country-of-2966origin labeling is a common tool that is used on thousands of2967products, most prominently in textiles and food.2968    It gives consumers clear information on the origins of2969their products, providing them with additional information that2970may influence whether they purchase an item.2971    Pharmaceuticals are also required to disclose this2972information; however, it may be difficult for patients to track2973it down.2974    As we will hear from our witnesses today, providing2975transparency to consumers is extremely important, but it is not2976the only solution to improve the reliability and quality of the2977drug supply chain.2978    Country-of-origin labeling does not necessarily equate to2979higher or lower quality drugs, and there are additional steps2980that Congress can take to ensure that all drugs in our supply2981chain, both domestic and foreign, are of the highest quality.2982    We must examine the underlying economic dynamics in the2983current marketplace and adjust incentives to fix the "race to2984the bottom" in generic drug pricing, which can create drug2985quality issues, drive manufacturing outside of the United2986States, or cause companies to stop production of certain drugs2987or chemicals altogether.2988    Transparency must also be coupled with expanded supply2989chain mapping as well as quality benchmarking.Coupled together,2990these proposals will create a more resilient drug supply chain2991that can lead to improved stability for manufacturers and2992purchasers, increased consumer confidence in the quality of2993their medications, and a potential resurgence of domestic2994production.2995    While the vast majority of the medications that patients2996use are both safe and effective, increased transparency and2997supply chain mapping will improve long-term decision making for2998manufacturers to invest in quality and reliability.2999    I am excited to hear from our witnesses today as they are3000discussing policy proposals that can be undertaken by Congress.3001    I look forward to working with Chairman Scott and other3002committees of jurisdiction as we work to increase the3003transparency and reliability of our drug supply chain.3004[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]30053006                               [all]