By: Alizah Mudaliar
The U.S. faces a growing dilemma at the intersection of public health, international trade, and national security: its deep reliance on foreign manufacturing for essential pharmaceuticals. Market forces and global specialization have driven a significant portion of drug production to nations like China and India, where labor and capital costs are significantly lower. However, crises like the COVID-19 pandemic, supply chain breakdowns, and export bans highlight the vulnerabilities in this interconnected system.
Policymakers increasingly advocate for “reshoring” production, which is the practice of bringing manufacturing back to the United States from overseas. Domestic manufacturing can build supply chain resilience, increase employment opportunities, and make products more effective. However, bringing pharmaceutical manufacturing to American soil comes with trade-offs, inflating production costs and raising drug prices for consumers. As tariffs, subsidies, and regulatory changes are considered to promote domestic production, dependence on foreign pharmaceutical manufacturing is either considered a national security threat or a convenient justification for protectionist trade policies.
Proponents of framing pharmaceutical dependence as a national security issue argue that reliable access to lifesaving medicines is necessary for state stability. A foreign health crisis, embargo, or military conflict could abruptly stop access to basic antibiotics, blood pressure medications, and other necessary therapies. Factory shutdowns, quality control failures, or export restrictions in foreign facilities lead to severe bottlenecks in domestic manufacturing. Even when a finished dose of a medicine is assembled in the U.S., its active pharmaceutical ingredients (APIs) and other inputs frequently originate abroad. Because specialized facilities require years and significant capital to build, domestic capacity cannot step in to replace sudden losses overnight. The FDA has identified foreign API dependence, domestic manufacturing capacity, and facility reliability as central factors in the security of the U.S. drug supply.
Critics of reshoring argue that foreign manufacturing is not a security liability and that framing international dependence as a security threat risks justifying protectionist trade policies as defensive. Global supply chains leverage international specialization, lowering overhead expenses by 30 to 40%, and keeping the cost of prescription drugs more affordable for consumers. Cost saving is important, especially for generic medicines when manufacturers operate under significant price competition. Foreign sourcing can enhance resilience through geographical diversification, allowing production to continue when a particular facility or region experiences disruption. A localized national disaster, industrial incident, or labor dispute could dismantle drug access just as easily as an international trade conflict, proving the vulnerability in prioritizing domestic manufacturing. Forcibly decoupling pharmaceutical supply chains through tariffs or restrictive trade politics risks provoking retaliatory measures, driving up production costs without guaranteeing higher product quality or uninterrupted availability.
On the other hand, encouraging domestic manufacturing requires addressing many regulatory hurdles. The U.S. Food and Drug Administration (FDA) maintains strict standards for facility inspections, process validation, and approval of manufacturing changes. These requirements are necessary to ensure that manufacturers consistently demonstrate their processes produce medicines that meet established standards. Regulatory challenges arise because this process for demonstrating compliance can be difficult to navigate, especially for companies investing in new facilities or unfamiliar technologies. The FDA’s Emerging Technology Program provides a model for more responsive oversight to domestic manufacturing without lowering safety standards. Through early communication between manufacturers and the FDA, the program helps companies identify regulatory and technical issues associated with emerging technologies before implementation, reducing uncertainty surrounding investments into new production systems. Applying this approach broadly to pharmaceutical facilities could make it easier for manufacturers to adopt advanced production methods, expand U.S. capacity, and address supply-chain vulnerabilities while maintaining the same requirements for production quality and patient safety. Domestic production should not be considered synonymous with supply-chain independence. A pharmaceutical facility in the U.S. may still depend on foreign suppliers for APIs, key starting materials, specialized equipment, or other inputs. FDA has recognized the complexity of the global pharmaceutical supply chain, and the modernization proposal would increase visibility into certain foreign establishments supplying drugs and APIs that enter the U.S. market. Successful reshoring requires both efficient domestic manufacturing regulations and greater visibility into international inputs that domestic facilities depend on.
At the same time, regulatory modernization should not become a justification for weakening Current Good Manufacturing Practices (CGMP), bypassing bioequivalence checks or reducing the level of evidence required to demonstrate a drug is safe and effective. CGMP requirements exist to prevent contamination, manufacturing errors, quality deviations, and other failures that can directly impact patients. The objective of reshoring is to make U.S. pharmaceutical manufacturing more efficient, not less regulated. Maintaining rigorous safety standards is crucial to ensuring increased domestic production strengthens the reliability of the drug supply without sacrificing the quality of the medicines patients depend on.
If domestic manufacturing is considered essential for national security, the transition will require significant capital investment and higher operational expenses. Building pharmaceutical facilities in the U.S. can involve higher labor, construction, regulatory, and compliance costs than continuing production in lower-cost markets abroad. The economic dilemma centers on the way increased costs should be distributed among pharmaceutical companies, the federal government, insurers, and patients. Requiring manufacturers to absorb some of these costs aligns with corporate responsibility when companies have benefited from highly concentrated or single-source supply chains that prioritize lower production costs. However, requiring them to bear the entire burden could discourage investment in low-margin generic drugs, potentially worsening drug shortages. The government could instead offset some costs through targeted subsidies, tax incentives, or long-term purchasing agreements for inputs considered strategically important. Public funding can be justified when maintaining domestic production provides a broad national security benefit that would not be captured by normal market incentive. Subsidies, however, should be tied to measurable supply-chain or production objectives rather than just providing financial assistance to profitable pharmaceutical companies. Lastly, shifting additional costs directly to patients through higher drug prices or rising insurance premiums raises access concerns, since patients have little control over pharmaceutical manufacturing decisions and face higher out-of-pocket costs for essential medicines.
The debates surrounding pharmaceutical manufacturing sit at the center of security policy, economics, and healthcare access. While total dependence on foreign producers may create national security risks, broad protectionist measures that dismantle global trade partnerships threaten to dramatically increase drug costs and strain existing healthcare networks. Modernizing FDA oversight and increasing efficiency in pharmaceutical production and manufacturing on U.S. soil could help address some of these vulnerabilities without abandoning the benefits of global trade. However, the success of reshoring efforts may ultimately depend on more than domestic manufacturing capacity. Many pharmaceutical products rely on globally sourced active ingredients, raw materials, and specialized equipment, meaning that trade restrictions and continued dependence on foreign suppliers could remain significant barriers to building a resilient domestic supply chain.
