A new executive order from President Donald Trump aims to cut down the 5-to-10-year timeline to build new facilities while stepping up the rigor of inspections on foreign plants.
President Donald Trump has ordered the FDA to cut down the time it takes to approve pharmaceutical manufacturing plants in the U.S. The new executive order also sets the groundwork for the FDA to implement surprise inspections on foreign plants, instead of planned visits as is the current process.
“We have had this crazy system in the United States where American pharma manufacturers in the United States are put through the wringer with inspections, and the foreign sites get off easy with scheduled visits,” FDA Commissioner Marty Makary said from the White House Monday afternoon. “A scheduled visit is no inspection, so we are, at the FDA, delivering on this promise in the President’s executive order and switching from announced to surprise inspections overseas.”
The order will also cut down on the time inspectors spend in the countries, allowing them to “get in and out,” conducting more inspections with the same amount of resources, Makary said.
The action on pharmaceutical manufacturing is the latest in Trump’s salvo to onshore the industry’s manufacturing. The executive order, issued Monday afternoon, aims to cut down the 5-to-10-year timeline to build new facilities. This lengthy process is “unacceptable from a national security standpoint,” according to the order.
“We don’t want to be buying our pharmaceuticals from other countries because if we’re in a war, we’re in a problem, we want to be able to make our own,” the president said in a statement accompanying the executive order.
At the Monday press briefing, Trump also foreshadowed more to come on drug pricing and tariffs, promising an announcement next week on the cost of medicines. When asked by a reporter on the timeline for tariff policy on the pharmaceutical industry, he said he’d provide more information over the next two weeks.
“We’re being ripped off, as you know, very badly being ripped off compared to the rest of the world,” Trump said of drug prices.
Building a ‘Tariff Wall’
Trump’s executive order came as Bristol Myers Squibb added itself to the list of Big Pharmas that have announced massive manufacturing spending on U.S. facilities. On Monday, CEO Chris Boerner said the company would spend $40 billion over the next five years, following similarly commitments from Eli Lilly, Novartis, Johnson & Johnson, Merck and more, all seemingly hoping to ease the administration’s concerns and avoid expensive tariffs on drug imports.
Pfizer CEO Albert Bourla acknowledged Trump’s “legitimate” concerns about national security during an earnings call last week. But he urged the president to move on from the tariffs and instead implement tax reform to encourage manufacturing to move to the U.S. His comments echoed those of J&J CEO Joaquin Duato and Amgen CFO Peter Griffith.
Despite the suggestion of tariffs to come, Jefferies analysts saw an inkling of good news in Trump’s latest posturing on the issue. The firm wrote Monday evening that the resulting policy “would not be as bad as expected.” Jefferies said that Trump has suggested he may allow 100% tax deductible expensing for four years as companies build U.S.-based plants, followed by what the president has called a “tariff wall.” Previously, rumors had swirled that this tax period would only be a year before the tariffs came down.
Trump’s drug pricing comments have also suggested that the feared revival of Most Favored Nations drug pricing may only apply to Medicaid drug pricing rather than cutting applicable patients, which would lessen the blow.
The House of Representatives, however, has been pushing for massive cuts to Medicaid, which Jefferies noted is at odds with what’s coming out of the White House. A recent House proposal called for $880 billion in cuts from Medicaid.
Mandate for Makary
The new executive order boosts fees for foreign plant inspections and requires the FDA to step up enforcement of active pharmaceutical ingredient source reporting.
Trump has also called on FDA commissioner Marty Makary to review existing regulations that relate to domestic manufacturing to eliminate any steps that may be slowing down the build out of manufacturing facilities. Makary should review all processes related to the inspection and approval of new and expanded facilities.
The order also calls for increased fees for foreign plant inspections and the implementation of surprise inspections on these ex-U.S. facilities. The order argues that facilities in the states face more robust inspections. It also calls for a public report of the number of foreign inspections the FDA performs, with detail on where they were conducted and on which manufacturer.
Trump’s order also called for coordination with the FDA to streamline environmental permits required to build out a pharmaceutical manufacturing facility.
