U.S. Senator Tommy Tuberville (R-AL) participated in a Senate Special Committee on Aging hearing, discussing the importance of producing pharmaceuticals within the United States. The hearing featured Andrew Rechenberg, Economist at Coalition for a Prosperous America, and Tony Paquin, President and CEO of iRemedy Healthcare, Inc.
Senator Tuberville questioned whether the U.S. currently has the capacity to produce all necessary drugs domestically if borders were closed. Rechenberg responded, “No, not currently. And that’s why in the TRQ plan that I’m proposing, we do work with trusted countries with regulatory standards equivalent to our own. And the FDA already recognizes this through mutual recognition agreements with the European Union, the United Kingdom, and Switzerland as well. And so, we do have enough capacity when working with trusted equivalent regulatory nations like that. But currently on our own, no, we do not. And that’s why we need to rebuild this capacity.”
Tuberville asked if China would be necessary for pharmaceutical production needs. Rechenberg replied, “No. We would not [have to use China].”
The discussion also highlighted Oxford Pharmaceuticals as an example of domestic manufacturing capabilities. Paquin stated, “That’s correct, Senator. They are a very well run, significantly sized, highly-automated production facility in Birmingham, Alabama. And they really can produce pretty competitively. And I think sometimes we sort of misunderstand a little bit of the cost factor of these drugs. Amlodipine, for example, it costs about two cents a dose to manufacture, but it’s reimbursed by Medicare Part D at ten cents.
So, actually the manufacturing cost is a very small part of the total cost that ends up going to the consumer [or] to the payer. And the manufacturers like Oxford Pharmaceutical here in the United States can operate pretty competitively if they’re not a target of unfair competitive practices coming out of India.”
When asked what changes are needed for domestic companies like Oxford Pharmaceuticals to compete fairly with foreign producers such as those in India or China, Paquin suggested two main actions: “I think there’s really two […] main things we can do, but there’s two immediate actions that we could be looking at. I think Andrew and the Coalition for Prosperous America made a good recommendation about quotas [being] based on the marketplace and not allowing a country like India to overwhelm our supply—thereby driving down the value of those drugs. And secondly is the VA and U.S Government should really prioritize domestic manufacturing over foreign manufacturing. And that is something that can be done without any major additional cost to government and is not happening currently.”
Paquin also noted issues with current contract awards: “Well first off I would say it doesn’t work very well in terms of recognizing national security implications and just good sense supporting domestic manufacturer… Those contracts they recently lost were probably lowest price technically acceptable type contract… All generic drugs I would argue are not equivalent… when we look at technically acceptable we should consider resilience issues: investing in our domestic manufacturing capability should be one considerations when somebody like VA is putting contract out for bid.”
Tuberville asked how tariff-rate quota systems could support U.S.-based pharmaceutical production and prevent supply shortages similar to those experienced during COVID-19 disruptions from reliance on foreign manufacturers: “Yes absolutely… main cause supply shortages market right now disruptions these very few sole manufacturers China India… But if give market space U.S producers through tariff rate quota system it very much encourages companies invest U.S bring production [here] because there’s guaranteed market space domestic producers can capture… so over time will bring back diversify supply base which lead less shortages over time as have more backup options more U.S domestic supply,” said Rechenberg.
Senator Tuberville represents Alabama in the United States Senate and serves on several committees including Armed Services; Agriculture; Veterans’ Affairs; HELP; and Aging.
