Trump wants to bolster US drug manufacturing factories. Will this plan work?
Amid a trade war that could strain imports of lifesaving pharmaceuticals, President Donald Trump wants to ease regulations and bolster domestic drug manufacturing.
The president signed an order on May 5 that directs the Food and Drug Administration to speed approvals and eliminate duplicate or unnecessary regulations that slow companies seeking to build pharmaceutical factories in the United States.
The order comes as the Trump administration plans to assess tariffs on drug imports and pushes proposals to tie drug prices to lower amounts paid by foreign nations.
While the pharmaceutical industry remains wary about tariffs and price setting, officials welcomed the push to revitalize domestic manufacturing because it seeks to reverse a long-term trend of drug companies moving factories overseas. While the global drug supply chain has allowed drug companies to make cheaper drugs with fewer regulatory barriers, experts said it has coincided with persistent challenges such as drug shortages.
CivicaRx is a nonprofit generic drug company formed by hospitals and philanthropic groups. The entity has built a U.S. facility to bolster supplies of drugs that have faced shortages.
"We've got a 30-year trend of this industry moving out of the U.S.," said Allan Coukell, CivicaRx's chief government affairs and public policy officer.
While shortages also occur at U.S. facilities such as Baxter's North Carolina factory, a major supplier of IV fluids that temporarily closed last year due to flooding following Hurricane Helene, Coukell cited shortages of drugs made overseas in low-cost countries with less oversight. The trend, in part, is driven by economic pressure to make cheap generics.
"So, making sure that we have a robust industry for domestic medicines is a good thing," Coukell said.
Trump touts new drug factories as tariffs loom
In a fact sheet distributed May 5 by the White House, Trump said building factories can take 5 to 10 years, "which is unacceptable from a national security standpoint."
The White House highlighted Gilead Sciences' plans announced May 7 to spend another $11 billion on projects in the United States through this decade. In addition to $21 billion in previously announced investments, Gilead said the spending will pay for three new facilities, upgrades to three existing sites, and new technology. The president also touted projects announced by 10 drug companies, including Abbott Laboratories' $500 million at sites in Texas and Illinois and Eli Lilly's plans to spend $27 billion to build four new U.S. factories.
The spotlight on domestic manufacturing comes as Trump said he will announce a "major tariff on pharmaceuticals" imported to the U.S. within two weeks.
Drug industry experts warn patients will likely eventually see higher prices and possibly some shortages from tariffs.
While the drug industry trade group PhRMA lauded Trump's plans to accelerate domestic manufacturing, the group said drugmakers have historically been exempt from tariffs due to the potential for higher costs and drug shortages.
"Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures for patients," said Alex Schriver, PhRMA's senior vice president of public affairs.
Schriver added that drug companies share Trump's goal of revitalizing U.S. manufacturing and have recently announced billions in domestic investment. But "placing tariffs on medicines would be counterproductive to these efforts," Schriver said.
In a May 7 comment letter to the Department of Commerce about potential tariffs, the American Cancer Society warned that the market for generic, sterile injectable cancer drugs is "multinational and fragile."
In 2023, a shortage of the chemotherapy drug cisplatin jeopardized access for patients. The shortage happened when a factory in India that supplied half of the U.S. market shut down to fix quality issues.
Assessing tariffs on drug imports risks damaging supply chains, "making shortages worse and endangering the health and safety of Americans with cancer," the cancer patient advocacy group said in the letter.
Other groups warned of potential disruptions should the Trump administration plan to tie drug prices for Medicaid to the same amount foreign nations pay for these drugs. The drug pricing proposal could cost drug companies as much as $1 trillion over a decade, Bloomberg reported.
The Alliance for Aging Research said the White House proposal and a broader bill introduced on such pricing is a "scam for America’s beneficiaries."
Overseas inspections to be overhauled
Trump's order on domestic manufacturing seeks to eliminate what FDA Commissioner Marty Makary said is a "double standard" − overseas drug factories get advanced warning before an inspection, "while American manufacturers are held to rigorous standards with no such warning."
The FDA suspended most routine, on-site inspections of overseas drug factories during the first two years of the COVID-19 pandemic. From October 2020 through April 2021, the agency completed 18 "high priority" overseas inspections of factories, mainly in China, according to a 2022 report by the U.S. Government Accountability Office.
In a May 6 statement, the FDA said it completes about 12,000 domestic inspections and 3,000 foreign inspections each year.
Even with the advanced notice, the FDA said it finds deficiencies twice as often in overseas facilities.
The FDA said it will review policies to improve the agency's foreign inspection program. Among the changes: The FDA said it will develop policies that specify FDA inspectors must refuse lodging and transportation from drug and device companies to "maintain the integrity of the oversight process."
The FDA said it is authorized to take action against any company that "seeks to delay, deny, or limit" an inspection or refuses FDA inspectors access to a site.
"This is a key step for the FDA as part of a broader strategy to get foreign inspections back on track," Makary said.
Some analysts question what authority the FDA would have if overseas drug manufacturers refused to allow inspectors on site.
"What if a trading partner simply refuses inspections? What leverage does FDA have? Zip. Zero," Rosemary Gibson, a senior advisor at the Hastings Center, said in a social media post.
Gibson investigated China's growing role in the global pharmaceutical industry in her book, "China Rx: Exposing the Risks of America's Dependence on China for Medicine."
While she acknowledges the FDA might not have the authority to force an overseas inspection from a factory that refuses, she said drug purchasers could benefit in other ways.
The executive order directs the FDA to disclose inspections by country and manufacturer. Government agencies and U.S. companies that purchase drugs might want to know if overseas factories follow U.S. rules and standards, Gibson said.
"That information can be used to inform purchasing decisions," Gibson told Paste BN. "And they can direct procurement of medicines from manufacturers that respect and comply with U.S. standards."