Drugs Giant Roche pledges to invest in US $50 billion
Drugs giant Roche said he will invest $50 billion in the US over the next five years as he is tackling Donald Trump’s global tariffs.
Amid a trade war that could strain imports of life-saving drugs, President Donald Trump wants to ease restrictions and strengthen domestic drug production.
On May 5, the president signed an order directing the Food and Drug Administration to speed up approvals and to eliminate duplicate or unnecessary regulations that would slow businesses seeking to build pharmaceutical factories in the United States.
The order arises as the Trump administration plans to assess tariffs on drug imports, and drives proposals to link drug prices to lower amounts paid by foreigners.
The pharmaceutical industry remains wary of tariffs and pricing, but authorities welcomed the push to stimulate domestic manufacturing. The global drug supply chain has allowed pharmaceutical companies to manufacture cheap drugs with fewer regulatory barriers, but experts say it is consistent with persistent challenges such as drug shortages.
Civicarx is a non-profit, generic drug company formed by hospitals and charities. The entity has built a US facility to strengthen the supply of drugs that are facing shortages.
“There’s been a 30-year trend that this industry is coming out of the US,” said Allan Coukell, Chief Government Affairs and Public Policy Officer at Civicarx.
Although shortages are also occurring at U.S. facilities such as Baxter’s North Carolina plant, Coukell, the leading IV fluid supplier, which was temporarily closed last year due to the floods at Hurricane Helen, cited a shortage of drugs made overseas in a low-cost country. This trend is driven in part by economic pressure to create inexpensive generics.
“So it’s good to make sure we have a robust industry for home remedies,” Koekel said.
Trump is promoting new drug factory as tariffs are looming
In a fact sheet distributed by the White House on May 5th, Trump said the building’s factory would take five to ten years. “This is unacceptable from a national security perspective,” he said.
The White House highlighted Gilead Sciences’ plans on May 7th, which announced that it would spend another $11 billion on US projects over the last decade. Gilead said in addition to the $21 billion announced investment, the spending will pay for three new facilities, three existing sites, and new technology. The president also promoted projects announced by 10 pharmaceutical companies, including $500 million at the Abbott Institute on Texas and Illinois sites, and a plan to spend $27 billion on building four new US factories.
When Trump announces that he will announce “massive tariffs on drugs” imported into the US within two weeks, it will create a spotlight for domestic manufacturing.
Pharmaceutical industry experts warn that patients are likely to ultimately see a shortage due to higher prices and tariffs.
Drug industry trade group Phrma praised Trump’s plans to accelerate domestic production, but the group said drug makers have historically been exempt from tariffs.
“Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or in developing future treatments and treatments for patients,” said Alex Schriver, Senior Vice President of Public Relations for Phrma.
Scriver added that the pharmaceutical company shares Trump’s goal of energizing US manufacturing, and recently announced billions in domestic investments. But “putting tariffs on drugs would have the opposite effect on these efforts,” Scriver said.
In a May 7 comment letter to the Commerce Department on potential tariffs, the American Cancer Society warned that the market for generic, sterile injectable cancer drugs is “multi-national and vulnerable.”
In 2023, a lack of risky access to the chemotherapy drug cisplatin has accessed patients. The shortage came when Indian factories that supplied half the US market were closed to resolve quality issues.
An assessment of tariffs on drug imports risks damaging the supply chain, “advancing shortages and putting the health and safety of Americans with cancer at risk,” a cancer patient advocacy group said in a letter.
Other groups warned of potential confusion if the Trump administration plans to tie Medicaid drug prices to the same amount that foreign countries pay for these drugs. According to Bloomberg, the drug pricing proposals could cost as much as $1 trillion over a decade.
The Alliance for Aging Research said the White House proposal and the broader bill introduced with such pricing is “a fraud for American beneficiaries.”
Overhauled overseas inspections
Trump’s domestic manufacturing order seeks to eliminate FDA commissioner Marty McCurry saying it was a “double standard” – “Although American manufacturers are bound to strict standards without such warning,” foreign drug factories receive a high-level warning before testing.
The FDA has suspended the most routine on-site inspections of drug factories overseas during the first two years of the Covid-19 pandemic. According to a 2022 report from the US Government’s Accountability Office, from October 2020 to April 2021 to April 2021, 18 overseas inspections of factories, mainly in China, were completed with 18 “priorities.”
In a statement on May 6, the FDA said it completes approximately 12,000 domestic and 3,000 foreign tests each year.
Even with advanced notifications, the FDA said it was defective twice as often at overseas facilities.
The FDA said it would review policies to improve government agencies’ foreign testing programs. In the change, the FDA said it would develop a policy specifying that FDA inspectors must refuse accommodation and transportation from drug and device companies in order to “maintain the integrity of the monitoring process.”
The FDA said it is permitted to take action against companies that “delay, deny or limit the inspection” or that deny access to the site.
“This is an important step for the FDA as part of a broader strategy to keep foreign testing on track,” McCurry said.
Some analysts question what authority the FDA will have if overseas pharmaceutical companies refuse to allow inspectors on-site.
“What happens if a trading partner simply refuses to test? What leverage does the FDA have? Zip. Zero,” said Rosemary Gibson, senior advisor at Hastings Center, in a social media post.
In her book, “China RX: Exposing the Risk of Reliance on China on Medicine,” Gibson examined China’s growing role in the global pharmaceutical industry.
She admits that the FDA may not have the authority to force overseas inspections from factories that it denied, but she said drug buyers could benefit in other ways.
The executive order directs the FDA to disclose inspections by the state and manufacturers. Government agencies and US companies that buy drugs may want to know if their overseas factories follow US rules and standards, Gibson said.
“That information can be used to inform you of your purchase decision,” Gibson told USA Today. “And they can direct the procurement of medicines from manufacturers that respect and comply with US standards.”