Most of the drugs Americans take — as much as 90 percent — are generics. But before such drugs arrive at pharmacies in pill form, they start as active pharmaceutical ingredients (APIs). China now dominates that market globally. And though India is a large manufacturer of the finished product along with China, Indian companies get 80 percent of their ingredients from China.
There is no single accounting of the percentage of active ingredients in U.S. drugs that are manufactured in China, but it’s significant and growing. The Food and Drug Administration has said approximately 80 percent of active-ingredient manufacturers are located outside the United States, and for some key drugs, China is the only supplier. For instance, China produces the ingredients found in almost every antibiotic and blood pressure medicine and hundreds of other drugs. Thus, China has a virtual monopoly on the ingredients required to manufacture critical medicines.
The supply chain already poses a significant public safety issue due to the quality deficiencies that keep arising in the manufacturing of drugs overseas — but the problems run deeper. Depending on any single supplier for such lifesaving goods would be troubling, but when that supplier is China at a time of rising tensions and conflict, it’s a national security issue that demands the attention of the administration and Congress.
While national security experts have frequently warned about U.S. dependence on Chinese rare-earth metals, which are essential components in many high-technology military and commercial products, the pharmaceutical ingredient supply chain is far less understood — though potentially every bit as dire. Why? Because, as Rosemary Gibson, a senior adviser at the Hastings Center, recently testified: “If China shut the door on exports of medicines and their key ingredients and raw material, U.S. hospitals and military hospitals and clinics would cease to function within months, if not days.”
President Trump’s trade war with China shows no signs of abating, and tensions with China over human rights abuses in Xinjiang province, Hong Kong and elsewhere are increasing. Additional flash points, such as China’s aggressive and illegal actions in the South China Sea and its belligerent posture toward Taiwan, could further sour the relationship. We need to plan for the possibility of a sustained period of antagonistic relations with the world’s second-largest economy.
If relations decline further, the Chinese government could look for “pressure points” where it can wield outsize leverage or force a change of U.S. policy. Pharmaceutical ingredients could be such a vulnerability: By cutting back their supply or manipulating prices, China could cause pharmaceutical costs to surge. Or worse, we could experience shortages.
Key officials have begun to acknowledge the gravity of the problem. The U.S.-China Economic and Security Review Commission, a federally chartered commission tasked with monitoring the security implications of the U.S.-China economic relationship, recently examined supply-chain vulnerabilities for pharmaceutical ingredients. Christopher Priest, the acting deputy assistant director of the Defense Health Agency, testified that “the national security risks of increased Chinese dominance of the global API market cannot be overstated.” Janet Woodcock, director of the Center for Drug Evaluation and Research and the person in charge of coping with essential drug shortages, has also called it a national security issue. Our colleagues in Britain, the Netherlands and even India have also declared the Chinese supply chokehold a national security issue.
To address this urgent matter, policymakers need to understand where the potential choke points exist and how we can develop capacity outside of China to make up for any possible supply disruptions. Government agencies should work with the private sector to find ways to rebuild our domestic manufacturing capacity for generic drugs, if necessary, and to diversify our sourcing.
In the coming weeks, we are planning to hold joint committee hearings on these issues to shine a light on the problem and to develop bipartisan solutions. We need to think of pharmaceuticals as what they are for millions of Americans: a critical good that we literally can’t live without. It’s unacceptable to become fully dependent on any single foreign country for those goods — all the more so when it’s China.