Warren, Scott, Lawmakers Warn of Risks to National Security, Military Readiness Due to Reliance on Foreign Pharmaceuticals

September 17, 2024

Warren, Scott, Lawmakers Warn of Risks to National Security, Military Readiness Due to Reliance on Foreign Pharmaceuticals

"This decision (in Acetris Health, LLC v. United States) poses significant risks to the military's drug supply chain, which is already over-reliant on foreign sourced pharmaceuticals."

Text of Letter (PDF)

Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.), chair of the Senate Armed Service Subcommittee on Personnel, Rick Scott (R-Fla.), Ranking Member of the Senate Armed Services Subcommittee on Personnel, Marco Rubio (R-Fla.), Chris Murphy (D-Conn.), Joni Ernst (R-Iowa), and Mike Rounds (R-S.D.) wrote to the Department of Defense (DoD) seeking an update on its pharmaceutical acquisition strategy following the decision in Acetris Health, LLC v. United States (Acetris), which loosened requirements on federal agencies to preference American-made products in purchasing decisions. The lawmakers raised concerns about the decision's potential to increase DoD's reliance on foreign pharmaceuticals.

Federal agencies typically make decisions about acquiring medications and drugs based on the Federal Acquisition Regulations (FAR), which prohibit federal agencies from purchasing products from a country that does not comply with the Trade Agreements Act (TAA).

In Acetris, the Court considered the Department of Veterans Affairs' (VA) restriction on drugs manufactured by Acetris, a New Jersey-based pharmaceutical company, whose products were formed with active ingredients from India, a TAA non-compliant country. Evidence from Customs and Border Patrol showed that the Acetris manufacturing process did not substantially transform the India-sourced active ingredients, confirming "that the tablets were a product of India for purposes of US government procurement ..." Despite this evidence, the Court found that Acetris's drugs were in compliance with the FAR, thereby rendering the VA's restriction improper.

This decision poses significant risks to the military's drug supply chain, which is already over-reliant on foreign-sourced pharmaceuticals. DoD's interim report on Pharmaceutical Supply Chain Risks revealed that "54% of the DoD pharmaceutical supply chain is considered either high or very high risk, with dependency on non-(TAA) compliant suppliers, sourcing from China and India, or unknown."

At a hearing of the Senate Armed Services' Subcommittee on Personnel in April 2024, Col(ret) Victor Suarez explained that as a result of this decision, "a Chinese firm could make all the [active pharmaceutical ingredients] and precursor materials for a medicine, ship it to a U.S. subsidiary that does packaging and final labeling, and still be able to label it as American made. This would be considered an American-made drug and principally illustrates this loophole."

The senators requested that DoD explain how the Acetris decision has affected its pharmaceutical acquisition strategy by September 30, 2024.

Senator Warren has worked to end the United States' overreliance on foreign-made pharmaceuticals and to boost the nation's domestic manufacturing capacity:

• In April 2024, while chairing a hearing of the Senate Armed Services Subcommittee on Personnel, Senator Elizabeth Warren questioned officials from the Department of Defense and other experts on efforts to ensure service members are receiving safe, effective medicines.
• In March 2024, Senators Elizabeth Warren (D-Mass.) and Marco Rubio (R-Fla.) led a letter to Department of Defense (DoD) Secretary Lloyd Austin requesting an update on the Department's efforts to address risks to the military pharmaceutical supply chain.
• In December 2023, at a hearing of the Senate Finance Committee, Senator Elizabeth Warren highlighted the need for the public manufacturing of generic drugs to address critical drug shortages and ensure access and affordability of prescription drugs for consumers.
• In December 2023, Senator Elizabeth Warren and Representative Jan Schakowsky (D-Ill.) reintroduced the Affordable Drug Manufacturing Act, to address the skyrocketing price of prescription drugs and increase competition in the generic pharmaceutical market.
• In June 2022, during the NDAA negotiations, Senator Elizabeth Warren prioritized her bills to help prevent civilian harm, electrify the military's vehicle fleet, prevent conflicts of interests and corruption at the Department of Defense, prohibit price gouging by defense contractors, expand medical care for military families, lower the costs of prescription drugs, and reduce America's reliance on foreign countries for critical drugs.
• In December 2021, Senators Elizabeth Warren and Marco Rubio (R-Fla.) sent a letter to Gregory Kausner, who was performing the duties of Under Secretary of Defense for Acquisition and Sustainment at the Department of Defense (DoD), urging him to address DoD's overreliance on pharmaceuticals produced abroad.
• In November 2021, Senators Elizabeth Warren and Marco Rubio (R-Fla.) introduced the Strengthening Supply Chains for Servicemembers and Security Act to address the national security risk posed by the United States' reliance on foreign entities for pharmaceuticals.
• In April 2021, Senators Elizabeth Warren and Marco Rubio (R-Fla.) reintroduced the U.S. Pharmaceutical Supply Chain Review Act to direct the Federal Trade Commission and the Secretary of the Treasury to conduct a study on the United States' overreliance on foreign countries and the impact of foreign direct investment on the U.S. pharmaceutical industry.
• In April 2021, Senators Elizabeth Warren and Tina Smith (D-Minn.) reintroduced the Pharmaceutical Supply Chain Defense and Enhancement Act -- comprehensive legislation that takes bold steps to reinvigorate the United States' manufacturing capacity and end the nation's reliance on foreign countries for critical drugs used by millions of Americans.
• In September 2020, Senators Elizabeth Warren and Tina Smith (D-Minn.) wrote to President Donald Trump raising questions about the failure of his recent Executive Order to address the nation's overreliance on foreign nations for key drug products, and asking that he support their legislation, which would address this serious problem.
• In March 2020, Senators Elizbaeth Warren and Marco Rubio (R-Fla.) introduced bipartisan legislation to combat America's supply chain risk and dependence on China for pharmaceuticals, to address the loopholes left by the Acetris decision.
• In December 2019, Senator Elizabeth Warren, Tom Cotton (R-Ark.), Mitt Romney (R-Utah), and Tim Kaine (D-Va.), sent a letter to Secretary of Defense Mark Esper raising concerns about the national security risks posed by U.S. reliance on foreign-manufactured pharmaceutical products.

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