May 02, 2024

ICYMI: Chairing Personnel Subcommittee, Warren Highlights DoD Drug Quality and Pharmaceutical Supply Chain Risks, Overreliance on Foreign Manufacturers and its Impact on Service Member Health

Senator Warren announced plans to introduce the Keep DoD's Drug Supply Secure Act to direct DoD to manufacture drugs, devices, vaccines, and other medical products when there is a risk of shortage or quality concerns.

Video of Hearing

Washington, D.C. - Yesterday, chairing a hearing of the U.S. Senate Armed Services Subcommittee on Personnel, Senator Warren questioned officials from the Department of Defense (DoD) and other experts on efforts to ensure service members are receiving safe, effective medicines. During the hearing, Senator Warren raised concerns about drug shortages and their impact on service members' health and national security; addressed the DoD's overreliance on foreign drug manufacturers and ensuing supply chain risks; and announced plans to introduce the Keep DoD's Drug Supply Secure Act, legislation that would direct DoD to manufacture drugs, devices, and other products when DoD determines there are risks to the supply chain or to pharmaceutical quality. The legislation would increase domestic supply and production capabilities and decrease reliance, ensuring quality care for service members and their families.

Dr. Lester Martínez-López, Assistant Secretary for Health Affairs for the Department of Defense, shared that when a drug is in shortage, military providers may have to use alternative medications that could degrade quality of care, or in some instances, hinder lifesaving and timely treatment. In response to questioning from Senator Warren, Dr. Martínez also committed to adding requirements on quality for medications the Defense Health Agency purchases, ensuring drugs the Department dispenses are safe and effective.

Dr. David J. Smith, Deputy Assistant Secretary of Defense for Health Readiness Policy and Oversight, highlighted a DoD pilot study looking at 12 drugs on DoD's Operational Medicines List and predeployment medicines list for safety and effectiveness. Dr. Smith explained that the study will help make DoD "a better buyer" and ensure the best care possible for service members.

Mr. Matthew R. Beebe, Director of Acquisition for the Defense Logistics Agency, discussed the risks of the current drug supply chain, including the vulnerabilities of relying on overseas manufacturing of finished drugs and active pharmaceutical ingredients (APIs). Mr. Beebe explained that, in some cases, DoD is not able to identify where a drug, or its component parts, were manufactured. Mr. Beebe agreed that greater investment in domestic drug manufacturing is necessary to increase access and minimize supply chain risks.

Dr. Mark Dertzbaugh, Principal Assistant for Research & Technology for U.S. Army Medical Research & Development Command, highlighted the successes in biodefense research and vaccine development at the Walter Reed Army Institute for Research (WRAIR). The facility has developed numerous vaccines to protect American soldiers in combat and during training. Dr. Dertzbaugh explained that WRAIR's "capabilities help [DoD] find countermeasures for solutions to medical infectious disease threats that are not commercially viable in the U.S. because there's no market for [these products]."

Mr. Bryce H. P. Mendez, Specialist in Defense Health Care Policy for the Congressional Research Service, and Dr. Melissa Barber, Postdoctoral Fellow for the Collaboration for Regulatory Rigor, Integrity, and Transparency, detailed that DoD developed capabilities like WRAIR, in part because of private-sector pharmaceutical companies' unwillingness to partner with DoD to manufacture vaccines that are critical to service member health, describing increased infections, hospitalizations, and deaths that could be prevented with increased DoD capabilities. Mr. Mendez shared that in the case of adenovirus, the DoD "estimated that the absence of that supply of vaccine would lead to about over 10,000 preventable infections…and over 850 hospitalizations." Further, Mr. Mendez explained that adenovirus is not unique and the DoD experiences these challenges with a number of products ranging from anthrax, cholera, tularemia, and other health threats.

Dr. Melissa Barber shared that it took DoD $100 million and 10 years to incentivize another drug manufacture to produce the adenovirus vaccine. Lastly, Dr. Barber raised that DoD could cut costs, secure more reliable supply, and restore domestic production capacity by directly manufacturing drugs, devices, and other components itself.

The full text of Senator Warren's opening and closing statements, as well her questioning, can be found below:

Transcript: To Receive Testimony on the Department of Defense's Efforts to Ensure Service Members' Access to Safe, High-Quality Pharmaceuticals
U.S. Senate Committee on Armed Services Subcommittee on Personnel
April 30, 2024

Senator Warren's Opening Remarks

Senator Warren: This hearing will come to order.

We welcome everyone to today's hearing to receive testimony on the efforts of the Department of Defense to ensure service members' access to prescription drugs that are safe, high quality, and effective.

We owe our service members and their families the best possible health care. This is a morale issue. It is a recruiting issue. And ultimately, it is a national security issue.

DoD spends about $5 billion every year on pharmaceuticals- that is about 2% of the entire U.S. commercial pharmaceutical market. Now, to make these purchases, DoD must navigate many of the same challenges as the civilian health systems. For example, according to the FDA, almost half of the drugs on DoD's operational medicines list, a list that contains drugs necessary for warfighting that are essential for meeting the medical needs of our service members, about half those drugs are in shortage. This includes the blood thinner Heparin, a common anesthesia drug called - did I get this right - Midazolam. I probably still didn't get it right. Close enough; and morphine for pain management.

The impact of these drug shortages can be devastating.

A shortage could mean using a drug with worse side effects. Or it could mean having to use the second or third line treatments for an illness, rather than the treatment that is most effective.

While there are many factors that can cause shortages from spikes in demand to natural disasters to inspection failures, most drugs in shortage share a common feature: They are generics. That means they are no longer protected by patents, and they can be made by any manufacturer with approval from the FDA.

Now, despite this, most generic drugs have very little competition. In fact, 40% of the generic drugs sold in the United States have just one manufacturer. Why? Because the profit margins for some generic drugs is so low that American manufacturers just aren't interested in making them. As a result, more of DoD's generic drug supply is coming from foreign manufacturers who can produce the drugs at even lower costs.

DoD's reliance on overseas manufacturers is not limited to finished drug products. The ingredients used to make the medicines, called active pharmaceutical ingredients - or API's - and the ingredients used to make API's, known as key starting materials - or KSMs - are also increasingly sourced from abroad.

The COVID 19 pandemic exposed the risks we face by importing more and more of our commercial drugs supply overall. DoD relies on those imported drugs that gives potential adversaries the power to restrict DoD's access which can result in harm to our service members, to their families, and to our national security.

In addition, the US has less and less visibility into and oversight of foreign manufacturers and their manufacturing practices. And that is particularly true with China. These problems have concerned me for a long time. And that is why I partnered with Senator Rubio to secure language in the fiscal year 2023 NDAA, requiring DoD to develop guidance for risk management of the department's pharmaceutical supply chain to report on supply chain vulnerabilities and to establish a working group to develop policies for allocating scarce pharmaceutical resources.

When a drug doesn't work properly, it can have serious consequences for service members.

Bloomberg reported last year that an outside lab tested tacrolimus, an immunosuppressant that's used to treat soldiers who have lost limbs in combat. The results were revealed that some generic versions of the drug might not work. Worse yet, they could cause kidney failure or seizures.

So, last summer, in accordance with Senator Rubio's and my provision, DoD entered into a cooperative agreement with an independent lab to conduct a pilot study to test the quality of 12 finished drugs in the military's drug supply.

And in November, DoD revealed that 27% of the drugs on the FDAs essential medicines list are at, quote, "very high risk" because they are either dependent on Chinese manufacturers using Chinese ingredients, or were derived from unknown sources.

So, we are holding this hearing today to learn more about these challenges and to discuss DoD's capacity to address them.

I want to thank Ranking Member Scott for his commitment to improve the quality of life for our service members and for their families. And to our witnesses. I say welcome and thank you for appearing today. We will have two panels. The first panel consists of officials from the Department of Defense, who will explain how DoD is currently addressing drug shortages and DoD's existing capabilities for biomedical research and development.

I am pleased to have the opportunity to introduce them, which I will do in just a minute, but I want to see if Senator Scott has any remarks he would like to make first.

Panel 1, Round 1: DoD Drug Quality & Testing

Senator Warren: So, I'm going to start with the first round of questions.

The Defense Health Agency provides care for about 9 million people in the Military Health System, and that includes by dispensing prescription drugs to service members and to their families. Earlier this month, the American Society of Health System Pharmacists announced that there were a record 323 active drug shortages during the first quarter of 2024. That is an all-time high in the United States.

Dr. Martinez, you are in charge of ensuring the health and safety of our service members. When DHA can't get a critical drug because it's in shortage, can you just explain to everyone what options you have to ensure that service members and their families are receiving the care they need?

Dr. Lester Martinez-Lopez, Assistant Secretary for Health Affairs, DoD: Chairwoman, thank you for the question.

You know, the health of our beneficiaries is most important to all of us. And when you face the issue of not having the right drug for that patient, then your choices are to go and look at alternate drugs that may not be exactly the same one for a condition of that patient - may have a different side effect profile.

So, let me give you an example. Amoxicillin may be the drug. It's a typical antibiotic made overseas, generic, used everywhere for basic infections. But, let's say I don't have it. Now I have to take other antibiotic. And now we're, at the same time, trying to combat resistance to antibiotics. I'm using an antibiotic that is not indicated for that condition. So, there I lose twice. One, because I'm not given the right antibiotic to my patient. But, on top of that, I'm losing ground on my fight against antibiotic resistance.

In other events, like in an epinephrine injection, that can be life or death, we don't have hours to decide what the alternate is. So, that may translate into a life right on the spot. So, this creates a conundrum for all health care professionals. And the thing is, across the nation, we're facing this.

Senator Warren: Okay, so worse health outcomes for the patient and worse health outcomes for the system overall, is what I'm hearing you say.

Now, according to the FDA, one of the leading factors contributing to drug shortages is quality issues. For example, an FDA inspection of a manufacturing plant in India revealed a quote, "cascade of failure" at the plants quality control unit. Investigators found problems with systems to prevent microbial contamination to keep processing areas sterile, and to protect critical production documents including, they found a trash bag full of records that had been torn and doused in acid.

The plant temporarily closed, resulting in widespread shortages of common chemotherapy drugs across the United States, affecting both civilian and service members.

Now, as more of our drug supply chains move overseas, these kinds of quality concerns are going to become even more common. So, last summer, DoD launched a pilot with an independent lab to test drug products for safety and effectiveness. For example, it will test whether the drug contains any contaminants, whether it contains the correct dosage, and whether it has the expected potency.

The pilot study is going to look at 12 drugs on DoD's operational medicines list, which includes drugs that are necessary for warfighting and its predeployment medicines list, which includes drugs that help service members control chronic conditions to meet standards for deployment. Together, the pilot will test medicines needed to stabilize wounds, alleviate pain, and treat infections.

Dr. Smith, can you share why DoD thought it was necessary to conduct this pilot study?

Dr. David J. Smith, Deputy Assistant Secretary of Defense, Health Readiness Policy and Oversight, DoD: Thank you for the question, Senator Warren.

As we've noted, we are most concerned about ensuring the access to safe and effective drugs. And as you noted, we were doing a number of studies; the 860 study that we've referred to and then also the study for the Uniformed Services University that's evaluating, in particular, a quality scoring tool by Dabestani that was published in the Journal of the American Pharmacy Association just last year; as an additional factor for us to consider as we purchase medications on the market. And you pointed out the various FDA recalls and the issues that have been coming up.

Additionally, we've heard that within the generics where there are multiple manufacturers using the same API, that there may be a variance in those generics. And so, we thought with all of those factors, it would be useful to conduct this pilot study that you refer to that, ultimately, will look at 42 drugs from our joint deployment formulary to see if we can differentiate between the generics and make us actually a better buyer and actually reward manufacturers that produce the products that's spot on over.

Senator Warren: Good. So, you're talking about a study that you're doing because you hear a lot of problems out there. And also, this may help you figure out how to respond to those going forward. Is that a fair summary?

Dr. Smith: Yes ma'am, I think that's fair.

Senator Warren: Good, good.

So, when DoD is making decisions about purchasing drugs, price is often the most important consideration. But, it shouldn't be the only consideration. Whether a drug is made by a reliable manufacturer or whether its active ingredients are made, and where they're made, should also inform purchasing decisions.

The Defense Logistics Agency is responsible for procuring pharmaceuticals on behalf of the Military Health System, but DHA can put requirements on the purchases.

Dr. Martinez, if DoD identifies significant risks to the safety of its drugs supply chain, will DHA add requirements on drug quality to ensure that we're buying effective, safe, the best drugs for our service members?

Dr. Martinez: Senator, based on the information that Valisure gave us, I think we'll be in a position to - if that's indicated - to make it so.

Senator Warren: Okay. So, you can put that into your requirements and you're telling me that if you're concerned about quality, you will put it into your requirements?

Dr. Martinez: Yes.

Senator Warren: For the drug. Good. That's what I want to hear.

You know, I'm glad that DoD has taken steps to evaluate drug quality, and the Department should be prepared to use this information to improve quality and accessibility of the prescription drugs that our service members need.

Thank you.

Panel 1, Round 2 - DHA Supply Chain Risks and Capabilities

Senator Warren: So, I just want to follow-up on this about the risks we run from having overseas manufacturing, that is either in China or some other nation that is not an allied nation. Right? Because they all pose this risk, and we need to worry about it.

So, I mentioned in my opening remarks that Senator Rubio and I got a provision in the FY23 NDAA, for DoD to put together a report, and it came out last November, about drug supply chain risks in the military. It evaluated 211 drugs. And it found that half of those were either at high or very high risk, because the active pharmaceutical ingredients, the API's, for those drugs, are sourced from China or non-trade agreement act countries, or are just simply unknown. Nobody knows where they're coming from.

So, you identified, Mr. Beebe, that 27 API's are sourced exclusively from China. But I just pointed out, there's only a little over 10% of the drugs, it's not half the drugs we're talking about here. We've got a lot more drugs, that if you're right, that it's only 27, then we've got a lot of other drugs that are being sourced overseas that we think there's a substantial risk.

And so, the question becomes whether or not we should bring that manufacturing back to the United States. Is that in our national defense?

So let me put that question to you, Mr. Beebe. Should we be manufacturing these drugs domestically? And what is the risk if we keep running these manufacturing facilities overseas for our- for China or non-Trade Agreement Act countries?

Mr. Matthew R. Beebe, Director of Acquisition, Defense Logistics Agency: So yes, ma'am. First of all, Dr. Smith is the one that made reference to the 27.

Senator Warren: Sorry, sorry.

Mr. Beebe: But, I'll go ahead and address the question first.

So yes, we studied the FDA essential medicines list. And that is what was the basis for the report that identified a high amount of API's sourced in China or other non-TAA countries. Since then, we have doubled that population, adding some of the highest volume pharmaceuticals that are purchased by our medical treatment facilities, as well as the overlap with the joint deployment formulary to expand the amount that we have reviewed. And the results are essentially the same by percentage, as in same percentage of those coming from countries of high risk, as well as the same percentage of unknown which is to me equally troubling that I don't even know how to characterize the risk.

Do I support bringing more domestic capacity? Absolutely. I mean, not only does domestic capacity mean that we have better access, but it also means that the government can better influence prioritization when there needs to be decisions of priority. That is very important, too.

Senator Warren: Okay. So, let's talk a little bit about what's involved in increasing domestic manufacturing of these pharmaceuticals.

Last summer, DoD released its inaugural DoD Biodefense Posture Review. This outlined the Department's capabilities to counter bio-threats and identified domestic manufacturing as a priority reform initiative.

According to the posture review, we've reduced drug manufacturing here in the United States so much that we simply do not have the commercial capacity to manufacture what our troops need. And because the Department's quote, "unique biodefense demands are small and not commercially competitive," reliable, domestic manufacturing partners are actually hard to find.

But, that's not the end of the story.

DoD has its own manufacturing capabilities. Capabilities with a proven track record of success.

DoD's Advanced Development and Manufacturing Biopharmaceutical Facility to help manufacture medical countermeasures became fully operational. as a second biomanufacturing facility at the Walter Reed Army Institute for Research, or WRAIR. The Walter Reed facility has developed many vaccines that DoD relies on today to protect our troops from a number of diseases including Zika, Ebola, and adenoviruses.

So, Dr. Dertzbaugh, you help oversee WRAIR and WRAIR has developed many essential products that both service members and civilian populations use today. Can you explain why WRAIR was the best place to develop these discoveries rather than just leaving it to private industry?

Dr. Mark Dertzbaugh, Principal Assistant for Research & Technology, US Army Medical Research & Development Command: Thank you, Chairwoman, for the question.

So, appreciate the opportunity to talk about DHA R&D's infectious disease research capabilities. Our two laboratories, the Walter Reed Army Institute of Research and then the U.S. Army Medical Research Institute of Infectious Diseases, have the capabilities and the subject matter experts to get after these infectious disease threats that our service members might encounter when they're deployed overseas, or you're fighting an adversary, or even in training. And so those capabilities help us find countermeasures for solutions to medical infectious disease threats that are not commercially viable in the U.S. because there's no market for this. There's no threat to the U.S. population in general.

Senator Warren: All right, that's very helpful.

Thank you because WRAIR's Pilot [Bioproduction] Facility has been crucial in addressing these potential threats, and keeping our service members safe, especially when private sector is not in a position to fulfill that role.

As DoD considers how to implement the recommendations it has identified on domestic manufacturing, the Department should also think about how to replicate the capabilities at facilities like WRAIR to strengthen supply chain resilience and to keep our members safe and bring that manufacturing home.

Thank you.

Panel 2, Round 1: DoD Domestic Manufacturing

Senator Warren: Thank you, Colonel Suarez, I appreciate it.

So, I'm going to start the questions here. Most of the time, DoD will continue to purchase drugs from the commercial drug market. But there are some instances when it makes sense for DOD to produce the medication itself. For example, when DoD is the only customer.

An example is the adenovirus vaccine. While adenovirus typically causes mild cold or flu-like symptoms, it is a major cause of serious respiratory illness amongst service members, particularly during basic training. And that is why WRAIR developed an adenovirus vaccine, which it then licensed to private industry.

But because there isn't a broad market for the adenovirus vaccine, it has sometimes been difficult to find a manufacturer that was willing to produce it. In fact, for over a decade, DoD was unable to vaccinate new recruits for adenovirus because the manufacturer decided to stop producing the vaccine, and there was no other manufacturer who was interested in doing this.

Mr. Mendez, you've studied the defense health care system closely. So, first, let's start with, how did this disruption affect the health of service members?

Bryce H. P. Mendez, Specialist in Defense Health Care Policy, Congressional Research Service: Thank you for the question, Senator. And that's correct.

DoD exhausted their last supply of the adenovirus vaccine in about 1998, 1999. At that time, DoD estimated that the absence of that supply of vaccine would lead to about over 10,000 preventable infections from adenovirus, over 4,200 medical visits of recruits in the recruit training pipeline who are at risk of-for adenovirus, and over 850 hospitalizations-

Senator Warren: Wow.

Mr. Mendez: Within a year. To an extent DoD did observe that in the absence of the vaccine.

Senator Warren: Okay, so, in other words, people got sick, they had to go to the doctor, there were even some deaths associated with these adenovirus and all of that potentially affects warfighter readiness. You've got all these young people who are together and the disease is moving among them, right? The virus is moving among them.

So Dr. Barber, you are an expert on pharmaceutical manufacturing. What did it take to finally get a new manufacturer to produce the adenovirus vaccine for DoD?

Melissa Barber, Postdoctoral Fellow, Collaboration for Regulatory Rigor, Integrity, and Transparency: So, after its stocks were depleted in 1999, DoD does what it usually did: it put out a tender.

And the previous manufacturer that had pulled out of the market, Wyeth, they agree to do tech transfer, but only if DoD would reimburse them for it, which is quite the demand, given as we've heard today, DoD developed that vaccine and had done tech transfer to them free of charge in the first place. So, only one manufacturer even considered bidding at the time, Greer, but they withdrew because they asked DoD for $10 million up front, and DoD could not agree to it at the time. All in all, it's estimated that it took about $100 million and 10 years for new vaccines to become available again.

Senator Warren: You know, this is just stunning. So, DoD, as you say, does the research, develops the vaccine, gives it away to try to be able to, to get a manufacturer going, and they end up paying a private manufacturer, I think you said $100 million, is that about right?

Dr. Barber: In the end, yes.

Senator Warren: In the end. In order to build a facility to manufacture this vaccine that we need, on top of the money they paid to purchase the vaccine from the manufacturer, all because DoD is at the mercy of private actors who just aren't interested in marketing these products for a relatively small market.

Now, Mr. Mendez, is the adenovirus vaccine the only example of a product that the private market has been unwilling to manufacture for DoD?

Mr. Mendez: No, the adenovirus is not a unique case. DoD has many challenges in finding a lot of medical countermeasures over many decades. Current challenges that they experience and are working through include products to address anthrax, botulism, cholera, hemorrhagic fevers, tularemia, and other health threats.

Senator Warren: Alright, so. You know, this is a real problem with where the market just doesn't meet what it is that DoD needs, and this is going to continue- we're going to continue to have medications that DoD requires in order to keep service members healthy- and that simply aren't profitable for private industry to come in and produce.

Dr. Barber, what would be the advantages if DoD decided to manufacture these drugs itself?

Dr. Barber: So, public manufacture is likely, depending on the drug, to be enormously cost-saving.

So, to bring back the adenovirus example, the current contract with Teva is worth about $38 million per year. That's actually a lot of money to pay for a single vaccine. As a point of comparison, it's about 80% annually of how much California has budgeted to build an entire insulin factory.

A report by the army estimated adenovirus factory startup cost at $100 million, with annual cost of $10 million per year. So that works out to DoD breaking even from building and running a manufacturing facility in just three years.

Besides costs, by manufacturing their own drugs, DoD could ensure reliable supply and support wider strategic aims and restoring domestic production capacity.

Senator Warren: Okay, so you pencil this out and discover, at least for some of these drugs, it would be cheaper for DoD to manufacture it themselves, and it would have the added benefit of you know what your supply chain is, there wouldn't be any secrets in the supply chain, and we'd have a reliable source for these drugs.

This is why I'm introducing a new bill, the Keep DoD's Drug Supply Secure Act, to direct DoD to manufacture the drugs, devices, vaccines, and other medical products when there is a risk of shortage or quality concerns. This bill gives us an opportunity to resolve drug shortages, to secure the pharmaceutical supply chain, and to ensure a safe and effective drugs for our service members.

Thank you

Closing Statement

Senator Warren: I, I very much appreciate this.

What I think we're hearing over and over is we need to bring pharmaceutical manufacturing back to the United States, and that it is a critical national defense issue. It is also critically important for the health of our people. And I hear this break into two parts.

One is commercial manufacturing, which, as you rightly point out, we don't have the right incentives in place, we don't even have the right information in place to require meaningful domestic manufacturing and meaningful insight into the supply chain to know that we are safe in the drugs that we are getting, and into the API's that we are getting. And that's one part of the problem.

And then the other part of the problem is the manufacturing challenges for what are much more modestly scaled projects that we are going to have to move to military manufacturing. Otherwise, we're just not, we're just not going to get this stuff- or we will pay prices that are so outrageous, that we would have been a lot better off. It would have been cheaper to have built it internally. And so I think those are the two challenges we face and I know that we both want to work on here.

I want to thank all of our witnesses for their testimony today. I also want to thank Jon Clark, Gary Leeling, Noah Sisk, and Katie Magnus for their work in helping putting today- putting today's hearing together.

We have a letter from the National Association of Manufacturers. They have asked that it be included in the record. Any objection?

Without objection on that. With that, do we have a period of time for questions?

Nope. Alright. We've got seven days for questions for anybody who wants them. You'll have 30 days to reply to those if there are answers that are needed.

And with that, this hearing is adjourned. Thank you all.

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