Makary underscored the seriousness of persistent drug shortages and pharmaceutical supply chain disruptions and their implications for patient care and national preparedness. Makary framed the issue as a priority concern for the Food and Drug Administration (FDA), noting the agency's central role in ensuring the safety, quality, and availability of medicines and emphasizing the importance of addressing supply chain vulnerabilities with urgency and sustained attention. In his remarks, Makary cited examples of FDA initiatives intended to support manufacturing reliability and address supply chain vulnerabilities. These examples included FDA initiatives such as (1) earlier engagement with manufacturers during facility development, (2) expedited review pathways for certain applications, (3) changes to inspection practices, and (4) efforts to modernize regulatory review processes.

Opening Remarks from the Workshop Sponsors: Data Gaps and Limited Visibility

The workshop sponsor session set the analytical foundation for subsequent discussions by highlighting federally

BOX 1 Overarching Considerations to Inform the Development and Application of a Make–Buy–Invest Decision Framework

• Pharmaceutical supply chain risks are systemic and multidimensional: Addressing these risks requires integration of public health, economic, and national security perspectives rather than isolated interventions. (Bollyky, Gorman, Kadlec, Manning)
• Data gaps limit informed action: Limited visibility into where drugs and their components are manufactured constrains risk assessment, prioritization, and effective use of Make–Buy–Invest strategies. (Dai, Gray, Socal)
• Not all disruptions warrant the same response: Distinguishing routine market variability from high-consequence or strategically significant risks is essential. (Baeder, Biggs, Burton, Haddock)
• Market structure matters: Supply concentration, foreign dependency, manufacturing complexity, and quality performance vary widely across drug categories and influence which strategic options are viable. (Bozer, de Graaf)
• Economic incentives shape feasibility: Pricing, reimbursement, and procurement signals often determine whether reliability, redundancy, or domestic and allied production can be sustained. (Colvill, Oshmyansky, Yadav)
• Implementation capacity is as important as strategy: Distribution, logistics, regulatory feasibility, data visibility, workforce readiness, and the durability of actions and infrastructure beyond crisis periods determine whether decisions translate into reliable access to drugs. (Louissaint, Patel)
• Time and uncertainty must be managed: Tools such as scenario planning, stockpiling, and vendor-managed inventory may provide ways to preserve flexibility while longer-term actions take effect. (Clark, Patel, Singer)
• Coordination is critical: Fragmented governance and unclear authority can undermine otherwise sound decisions; effective application of the make–buy–invest framework depends on alignment across agencies and sectors. (Colvill, Wosińska)
• Private-sector execution is central: While government plays a role in reducing investment risk and facilitating coordination, supply chain resilience ultimately depends on actions embedded within private-sector systems. (Kadlec, Louissaint, Marston)

  This list is the rapporteurs' summary of points made by the individual speakers identified, and the statements have not been endorsed or verified by the National Academies of Sciences, Engineering, and Medicine. They are not intended to reflect a consensus among workshop participants.

supported research and data initiatives focused on pharmaceutical supply chain vulnerabilities, particularly as they relate to public health preparedness and national security.

John Gray, The Ohio State University, described a multi-year research effort supported by federal funding to examine vulnerabilities in the U.S. pharmaceutical supply chain, with a particular focus on manufacturing quality, offshore production, and domestic capacity for critical medicines.^{2 Gray outlined several coordinated lines of effort, including the development of drug-level indicators of quality and resilience, analysis of controlled substances and essential medicines, mapping of existing federal supply chain initiatives, and efforts to improve visibility into manufacturing locations. Gray emphasized that growing interest has created momentum for more integrated, data-informed approaches to supply chain risk, while noting that limited access to consistent, shareable data remains a persistent challenge for research and policy analysis.}

Building on this framing, Mariana Socal, Johns Hopkins University, explained that many persistent drug shortages stem from a lack of transparency and usable data across the pharmaceutical supply chain, which constrains the ability of purchasers, policymakers, and providers to assess risk beyond price alone. Socal described the development of the Johns Hopkins Pharmaceutical Supply Chain Dashboard, an open-data resource designed to integrate publicly available information on drugs, substances, manufacturing locations, inspection histories, and shortage status.3 Socal noted that the dashboard is intended to support risk identification and preparedness across both public health and national security contexts, while also making visible the data gaps that limit proactive planning and timely intervention.

Tinglong Dai, Johns Hopkins University Carey Business School, further emphasized the importance of end-to-end system visibility, noting that many supply chain risks arise from structural concentration and limited redundancy rather than isolated disruptions. Dai said that supply chain risks are often hidden because data are not organized around products or substances but are instead dispersed across facility-level regulatory records, trade data, and proprietary systems. Dai explained how the Johns Hopkins Pharmaceutical Supply Chain Dashboard links drugs to specific manufacturing facilities and associated regulatory actions, enabling users to examine upstream dependencies, inspection frequency, and potential points of failure. Dai highlighted the potential value of system-level publicly accessible data for a wide range of stakeholders, including policymakers, health systems, manufacturers, researchers, and national security officials, particularly in shifting from reactive shortage response toward anticipatory risk management.

Socal and Dai noted that these data gaps affect both routine decision making and crisis response. Socal observed that during shortages or disruptions, the absence of baseline sourcing information makes it difficult to rapidly assess exposure or identify alternative supply options. Dai added that without consistent visibility into supply chain structure, scenario planning and preparedness efforts are inherently constrained.

In summary, Socal and Dai concluded that a fundamental challenge in addressing pharmaceutical supply chain risk is the lack of basic, reliable data about where drugs and their components are produced. Socal and Dai underscored the central role of data transparency and integration in understanding pharmaceutical supply chain vulnerabilities and how improved visibility can inform make–buy–invest decisions, strengthen resilience, and support national preparedness.

National Security Framing and Supply Chain Disruption Scenarios Shaping Strategic Choices

Nicolette Louissaint, Healthcare Distribution Alliance, framed the workshop by emphasizing that pharmaceutical supply chains constitute critical infrastructure whose resilience and agility are central to national security, enabling effective response to biological threats, sustaining defense readiness, and protecting public health during national emergencies. Louissaint said the United States can contribute to improving the reliability and responsiveness of its supply chain using a make–buy–invest decision framework, which encompasses expanded domestic manufacturing capacity, strategic procurement, and government financial or strategic support to expand, modernize, or secure manufacturing capacity.

^{2 For more information on related federally supported research, see Pharmaceutical Supply Chain Research, Uniformed Services University of the Health Sciences,} https://chsr.usuhs.edu/pharmaceutical-supply-chain (accessed January 9, 2026).

^{3 For more information, see Johns Hopkins Pharmaceutical Supply Chain Dashboard, Johns Hopkins University,} https://supplychain.jhu.edu/supply-chain-dashboard/ (accessed January 9, 2026).

Douglas C. Throckmorton, retired from FDA, noted that national security threats to the pharmaceutical supply chain extend beyond routine disruptions to include cyberattacks and economic coercion. Throckmorton emphasized that addressing these risks requires balancing traditional market priorities, such as cost, efficiency, and access, with national security considerations including resilience, deterrence, and continuity of operations. Balancing both sets of needs will enable the design of a pharmaceutical supply chain capable of withstanding hostile actions and global instability. Louissaint and Throckmorton emphasized that reframing pharmaceutical supply chain vulnerabilities through a national security lens is important because it captures risks, such as the scale, duration, and intentionality of disruptions, that are not fully addressed through market or public health frameworks alone.

Thomas J. Bollyky, Council on Foreign Relations, maintained that U.S. approaches to strengthening pharmaceutical supply chains consider a wide spectrum of disruption scenarios, including natural disasters, biological threats, and the potential weaponization of supply chains for economic leverage, which may vary in both geographic scope (localized versus global) and duration (short-term versus prolonged). Daniel Singer, formerly at the National Security Council, explained that disruptions may arise from natural, accidental, or deliberate events, including extreme weather, logistics or planning failures, cyberattacks, and other malicious actions. Bollyky emphasized that such threats differ from routine market fluctuations in both scale and consequence, requiring consideration of continuity of operations under adverse conditions. Scott Biggs, IQVIA, warned that dependence on a single manufacturer to produce the majority of a drug can result in shortages following facility damage, bankruptcies, or other unpredictable events. Chandresh Harjivan, Medical Countermeasures Coalition, cautioned that future drug shortages may be deliberately engineered through cyber interference or misinformation campaigns rather than arising solely from traditional market failures. These emerging threat vectors, he said, highlight concerns about exposure to hostile actions and strategic manipulation.

Timothy Manning, Georgetown University, explained that national security encompasses protecting the health, safety, and well-being of the U.S. population, alongside readiness for warfare, biosecurity threats, natural disasters, and foreign policy and trade challenges. From this perspective, he stated, resilience involves maintaining system functionality during periods of disruption or austerity, rather than optimizing solely for efficiency during steady-state conditions. In the pharmaceutical context, this framing requires balancing access and affordability with manufacturing and logistics capacity, including consideration of ally-shoring and nearshoring, Manning said.⁴

Robert P. Kadlec, former Department of Health and Human Services (HHS) Assistant Secretary for Preparedness and Response,5 emphasized that maintaining uninterrupted access to medicines, particularly generic drugs, is foundational to ensuring health care system functionality during crises. Kadlec noted that the Department of War (DoW) relies on consistent access to pharmaceuticals during both peacetime and conflict to support warfighters, civilian personnel, and contractors across all services, including for routine medical care, trauma response, infectious disease control, and force health protection. Kadlec cautioned that uncertainty in pharmaceutical supply chains is a persistent condition rather than an episodic risk and highlighted that national defense planning is increasingly integrating pharmaceutical supply chain resilience as a core readiness concern. Because modern conflict relies more and more on non-kinetic tactics such as cyber operations, economic coercion, disinformation, and supply chain manipulation, Kadlec framed current supply chain vulnerabilities in the context of hybrid warfare. Kadlec stated that pharmaceutical supply chains represent a battlespace in which adversarial nations may exploit U.S. dependencies to exert pressure on civilian health and national security. Kadlec cited assessments from the U.S. Strategic Posture Review6 to illustrate the seriousness of these risks.

Monica Gorman, Crowell Global Advisors, noted that applying a national security lens to pharmaceutical supply chains can

help reframe vulnerabilities that are not readily addressed through market incentives alone. Gorman emphasized that this framing highlights strategic choke points and dependencies that may otherwise be overlooked. It may also support reforms that strengthen preparedness for both civilian and defense needs. Singer added that although public health and national security communities historically approached supply issues from different perspectives, there is growing recognition that ensuring consistent availability of medicines is integral to national preparedness, not separate from it.

Resilience and Reliability

Several speakers noted ongoing debate across policy, industry, and national security communities about what is meant by resilience and reliability in the context of pharmaceutical supply chains, and about these concepts' implications for preparedness, investment, and continuity of supply. For example, Diane Hustead International Society for Pharmaceutical Engineering (ISPE) and Merck, noted that discussions of reliability are hindered by the absence of a shared definition, emphasizing that inconsistent interpretations make it difficult to measure reliability or use it effectively in purchasing and policy decisions. Clarifying these terms, Louissaint and Throckmorton emphasized, is important for understanding how different types of risk are addressed and for informing strategic choices about manufacturing, sourcing, and capacity. Additionally, Anita Patel, Walgreens, stressed the importance of clearly defining the supply chain problem, given that health care, pharmacy, and pharmaceutical manufacturing systems are highly complex. Various stakeholders perceive the challenge differently, and Patel contended that solutions must acknowledge system complexity, identify loopholes, and proceed incrementally.

COL Matthew Clark, Supreme Headquarters Allied Powers Europe (SHAPE) Healthcare Facility, introduced the concept of “deterrence by resilience,” emphasizing that preparedness efforts could focus not only on recovering from disruptions but also on maintaining the ability to resist and absorb shocks before supply is interrupted. From Clark's perspective, resilience serves an operational and a strategic function by reducing vulnerability to disruption in the first place.

Christine Baeder, Apotex USA, expanded on this concept by noting that resilience often requires redundancy across multiple dimensions of the supply chain, including suppliers, geographic locations of manufacturing facilities, ingredients, and labor. Such redundancy, Baeder explained, can reduce exposure to single points of failure and improve the system's ability to withstand unexpected disruptions. However, Baeder cautioned that while redundancy may enhance resilience, it does not align easily with current market conditions, which tend to prioritize efficiency and cost minimization over preparedness, and especially with generics when margins are already thin.

Marta E. Wosińska, Brookings Institution, distinguished between resilience and reliability, explaining that while “resilience” refers to the ability of a system to absorb shocks and continue functioning, “reliability” reflects the consistent availability of products under routine conditions. Reliability, Wosińska said, depends on sustained manufacturing capacity, stable quality performance, and predictable supply, all of which can be undermined by factors such as geopolitical dependencies, concentration of production, or the sudden loss of a critical manufacturing facility. Addressing reliability therefore requires attention to both upstream and downstream vulnerabilities within the supply chain.

CRITERIA TO DETERMINE Whether TO MAKE, BUY, OR INVEST

Against this backdrop of evolving national security risks, several speakers addressed the question of how policymakers and other stakeholders might systematically assess pharmaceutical supply chain vulnerabilities and determine appropriate strategic responses. Celeste Frankenfeld Lamm, Merck, described how a make–buy–invest framework could be a flexible tool for structuring decision making about pharmaceutical supply chain interventions. Frankenfeld Lamm emphasized that such a framework could help decision makers assess market conditions and risk factors. It could also help them to apply consistent criteria when determining whether domestic manufacturing is appropriate, whether procurement from existing suppliers is sufficient, or whether targeted government investment is needed to strengthen or secure supply.

Several speakers described a set of structural risks in the current pharmaceutical manufacturing landscape that

were presented as key criteria for evaluating when to rely on existing sources of supply and when alternative strategic responses may be warranted. These risks span foreign production dependency, upstream vulnerabilities, global competitive dynamics, exposure to deliberate disruption, quality and safety concerns, and differing manufacturer incentives. Together, they might inform a framework for assessing pharmaceutical supply chain vulnerability across products, manufacturing tiers, and markets, and guide decisions about whether to make, buy, or invest in supply chain capacity.

Degree of Foreign Dependency Across the Pharmaceutical Supply Chain Continuum

Other speakers emphasized that the degree of foreign dependency is best understood across a continuous, multitier pharmaceutical supply chain rather than at a single point of production. Some described this dependency as spanning finished-dosage forms (FDF), APIs, KSMs, and the underlying chemical and materials infrastructure; concentration or disruption at any tier can affect downstream availability. For example, Manning explained that many shortages affecting vaccines, therapeutics, and personal protective equipment originate multiple tiers upstream from finished products, particularly in raw materials and KSMs. Manning stated that enhancing resilience and ensuring national security therefore require evaluating the full, multitier manufacturing supply chain and its geopolitical exposure. Evaluating the extent and location of foreign dependency across these tiers, several speakers noted, is a foundational criterion for assessing supply chain risk and for informing decisions about when to make, buy, or invest in manufacturing and supply chain capacity.

Natalie de Graaf, API Innovation Center (APIIC), presented APIIC's analysis of domestic pharmaceutical manufacturing sites,^{7 and noted that of nearly 1,700 U.S. pharmaceutical manufacturing sites number, approximately 69 percent of these facilities manufacture only FDF drugs. Stephen Bozer, Flavine, added that U.S. companies sometimes overstate domestic API production, when in reality, only late-stage processing of imported intermediates occurs domestically.}

Wosińska emphasized that nearly all drugs in the U.S. supply chain contain at least one component sourced from China. Melanie Hart of the Atlantic Council noted that many medications used in the United States rely on a chemical sourced exclusively from China, creating significant vulnerability to the loss of domestic manufacturing capability for a wide range of drugs. Prashant Yadav of the Council on Foreign Relations added that while India hosts numerous FDA-approved finished formulation manufacturing plants and is a major pharmaceutical exporter, it remains dependent on China for some active pharmaceutical ingredients and intermediates, with even greater reliance on key starting materials, in some cases sourced entirely from China.

De Graaf added that 92 percent of medications consumed in the United States are generics and that nearly all KSMs for those drugs are sourced abroad, with 98 percent originating in China and India. Furthermore, de Graaf said, 80 percent of APIs used in generic drugs are manufactured outside the United States, with China and India together producing 87 percent of APIs for fluoroquinolone antibiotics.

Recognizing the advanced manufacturing ecosystems already established in China and India, Bozer noted that examples of genuine pharmaceutical manufacturing repatriation remain rare. While the United States has strengths in advanced technologies emerging from academic innovation, Bozer noted, Asia continues to dominate bulk generic production. Bozer cited Ireland as an example of an ecosystem supporting innovative brand-name API manufacturing.

Many speakers also emphasized that supply chain vulnerability extends to upstream chemical and materials/consumables infrastructure. Gorman highlighted the pharmaceutical sector's dependence on upstream chemical manufacturing, noting that this reliance limits the feasibility of isolated domestic investments. Bozer described the global dominance of China and India in chemical manufacturing and emphasized the scale of infrastructure, safety systems, and engineering expertise required to reestablish this ecosystem domestically. A Although emerging technologies such as continuous flow chemistry, CRISPR-Cas9 gene editing, and artificial intelligence (AI)–assisted drug discovery are advancing rapidly, Bozer emphasized that they do not eliminate the need for a robust chemical manufacturing base. Bozer concluded that high infrastructure costs, stringent safety requirements, and shortages of chemical engineering

^{7 For more information, see API Innovation Center, Building a Resilient Domestic Drug Supply Chain: The Path to National Health Security,} https://apicenter.org/wp-content/uploads/2025/03/APIIC-White-Paper-2025-Building-a-Resilient-Domestic-Drug-Supply-Chain.pdf (accessed January 9, 2026).

expertise remain significant barriers to repatriating upstream manufacturing capacity.

Intensity of Global Manufacturing Competitiveness

Another topic discussed was global competition as another consideration shaping manufacturing location and resilience. Makary discussed heightened competition from countries such as China and Australia. In particular, Makary noted, China has rapidly expanded pharmaceutical output and clinical trial activity, launching three times more phase I trials than the United States in 2024. Australia, Makary added, offers streamlined regulatory approvals, centralized institutional review boards, and government-coordinated clinical trial infrastructure. Bozer described Chinese manufacturing facilities as exceptionally large and efficient, reflecting longstanding national prioritization, extensive workforce expertise, and low labor costs. Bozer noted that integrated infrastructure and streamlined land-use authority enable manufacturers to share utilities and achieve highly efficient production, allowing low-cost API manufacturing, even in the presence of tariffs.

Exposure to Deliberate Disruption and Economic Coercion

Several speakers noted that pharmaceutical supply chain risk increasingly includes deliberate actions by state actors. Hart explained that China systematically uses supply chain dependencies as tools of economic coercion. Hart noted that China's ability to act as a unified buyer or seller allows it to restrict or enable trade in ways that may be difficult to distinguish from routine quality or market actions. Hart added that China's use of rare earth mineral controls illustrates how similar tactics could theoretically be applied to pharmaceuticals. Kadlec stated that U.S. generic drug manufacturing operates within a coercive strategic environment that requires awareness of both adversarial intent and internal vulnerabilities. Kadlec explained that determining intent in such cases is often difficult in hybrid conflict environments.

Degree of Pricing Signals and Payment Structures

Several speakers discussed pricing dynamics not as policy levers in themselves, but as structural conditions that influence cost recovery, supplier participation, and the feasibility of sustaining reliable or domestic supply. Alexander Oshmyansky, Mark Cuban Cost Plus Drug Company, highlighted that when pricing structures fail to reflect quality, reliability, or sourcing considerations, even technically feasible manufacturing or sourcing options may be difficult to maintain over time. Oshmyanksy explained that inflated list prices and rebate-driven discount structures can distort perceptions of cost, as post-discount prices may bear little relationship to actual production costs. Such distortions complicate assessments of whether manufacturers can recover the costs associated with reliability, redundancy, or domestic production, Oshmyansky continued.

Bozer described a case in which a major foreign manufacturer of a generic oncology drug received an FDA warning letter and ceased supply, triggering a shortage. Despite the availability of compliant alternatives, purchasers continued to insist on prices tied to the noncompliant manufacturer and rejected higher-priced options. Bozer noted that contractual provisions prohibiting purchase of products with limited remaining shelf life further prolonged the shortage and resulted in destruction of usable product. Louissaint added that facility-level (i.e., individual hospital or site-of-care) brand preferences can similarly impede uptake of clinically interchangeable alternatives during shortages.

Several speakers discussed payment model structures as a factor influencing how financial resources flow through the supply chain. Oshmyansky noted that price markups by pharmacy benefit managers (PBMs) can inflate costs and divert resources away from manufacturing. Gray noted that in 2024, PBMs captured approximately 46 percent of generic drug spending, while manufacturers received about 21 percent. Manning stated that current payment structures can limit consumer choice, and de Graaf suggested that alternative purchasing arrangements, such as hospital associations purchasing directly from manufacturers, could allow decisions to be based more explicitly on quality rather than price alone.

Degree of Difference in Market Economics Across Product Types

Another issue discussed was how supply chain risks vary by manufacturer type and market segment. From a branded manufacturing perspective, Haddock stated that decisions about production are influenced by regulatory success, capacity, cost, and production lead time. Haddock noted that co-locating drug substance and drug product manufacturing can reduce production lead times and that manufacturers

may pursue dual sourcing once certain revenue and supply thresholds are reached. Haddock added that planned investments in U.S. manufacturing are expected to emphasize high safety and quality standards, as well as launch facilities designed to support rapid adaptation to new products and technologies. Haddock added that partnerships with FDA and companies towards establishing more flexible frameworks could help accelerate submission and approval processes.

Emphasizing that generic drugs constitute 90 percent of all U.S. prescriptions across almost all therapy areas, Biggs highlighted that the generic market faces deflation and long delays between FDA approval and launch, contributing to shortages. Biggs noted that in 2018, sales from the entire generics portfolio, comprising more than one thousand medications, were comparable to those of seven branded drugs; by June 2025, sales of just two branded molecules, largely GLP-1 receptor agonists, had eclipsed total generic sales, based on current market trends. Noting that the generic market does not incentivize quality or onshoring, Baeder described how Apotex USA, a generic manufacturer, makes decisions based on supply availability, labor, and cost. Profit margins for generic drugs are very thin, and current policy does not incentivize manufacturing critical drugs. Baeder asserted that developing effective solutions depends on collaboration and engagement among government, industry, and payers. Baeder added that economic realities preclude redundancy in generic manufacturing when the government does not incentivize redundancy.

Craig Burton, Fresenius Kabi USA, described structural features of the generic market that inhibit domestic manufacturing, including long-term price deflation, manufacturing fragmentation, and consolidation among purchasers (e.g., group purchasing organizations and health systems). Burton stated that policies aimed at encouraging repatriation must account for these realities and reflect the distinct cost structures of oral solids and sterile injectable medicines. Makary added that increased automation, regulatory reform, transportation savings, and greater market certainty could help offset cost differences for domestically produced generics. Hilary Marston, Canal Row Advisors, cautioned that incremental fixes are unlikely to succeed where fundamental market failures persist and noted limitations in existing pull incentives such as advance market commitments.

Degree of Quality Performance, Safety Risk, and Regulatory Oversight

Several speakers cited quality and safety as criteria for assessing supply chain risk. Public concern about the quality, safety, and availability of drugs is growing in the United States, said Gray. Drug shortages are increasing in both frequency and duration in the United States, with some shortages persisting for more than a decade, Socal added. De Graaf emphasized that most drug shortages in the United States are driven by manufacturing quality and safety issues.

De Graaf noted that reliance on drugs or components manufactured abroad raises quality concerns, given that approximately half of FDA inspections in China and India have identified compliance issues. De Graaf added that global inspection activity declined sharply during the COVID-19 pandemic and that some countries paused inspections in China due to geopolitical concerns. Biggs stated that FDA inspections of foreign manufacturing facilities have not yet returned to pre-pandemic levels. On the other hand, Wosińska emphasized that quality problems are not limited to foreign manufacturers. Shortages of generic sterile injectable drugs, Wosińska said, are largely driven by manufacturing quality issues, with approximately 40 percent of finished-drug production occurring in the United States and 32 percent in China and India combined.

Applying Risk-Based Criteria to Strategic Decisions

Louissaint and Throckmorton summarized that the pharmaceutical manufacturing landscape marked by concentrated foreign production, upstream chemical dependencies, intense global competition, exposure to deliberate disruption, persistent quality challenges, and divergent manufacturer incentives. These interrelated risks are critical criteria for assessing pharmaceutical supply chain vulnerability across products and markets, they continued. They emphasized that understanding how these criteria vary by drug type, manufacturing tier, and market structure is essential for applying a consistent framework to decisions about when to make, buy, or invest in pharmaceutical supply chain capacity.

MECHANISMS TO ENABLE MAKE, BUY, OR INVEST

Louissaint and Throckmorton emphasized that while the workshop explored criteria for determining when to make, buy, or invest in pharmaceutical supply chain capacity,

applying those criteria in practice requires mechanisms that shape behavior and enable execution. They noted that decisions about manufacturing, sourcing, and investment are mediated by incentives, authorities, and implementation capacity across the pharmaceutical system, and without attention to these factors, even well-defined criteria may not translate into action. They cautioned that no single mechanism is budget-neutral or universally applicable, underscoring the importance of tailoring strategies to specific products, market segments, and disruption scenarios.

Framing the discussion around urgency and scope, Kadlec emphasized that the U.S. pharmaceutical supply chain faces existential and urgent threats that have not yet been adequately addressed and observed that policy discussions are shifting from problem definition toward the implementation of effective solutions to strengthen resilience. Kadlec outlined several overarching actions to bolster supply chain resilience from a national security perspective, including active monitoring and prediction of supply chain risks, identification of gaps and dependencies, development of distributed and redundant manufacturing capacity, and strengthened cyber and physical protections through public–private partnerships.

Many speakers pointed out that proposed solutions must be evaluated through a practical policymaking lens. Wosińska stated that solutions proposed to policymakers must be evaluated considering the problem, players, politics, price, and payoff, particularly when addressing geopolitical and economic drivers of shortages. Wosińska noted that generic sterile injectables exemplify an economically fragile, low-margin market in which transparency measures such as FDA shortage reporting have improved visibility but failed to address root economic causes. Wosińska added that recent legislative proposals targeting payment and economic issues have stalled or remain too limited in scope to meaningfully change supply dynamics. On a related note, Hustead underscored that many efforts to prevent drug shortages have failed to scale due to the complexity of global supply chains, inconsistent regulatory approaches, and lagging digital transformation. Hustead cautioned that overly prescriptive regulations often focus on compliance processes rather than enabling manufacturers to adapt. Hustead highlighted persistent barriers to scalable solutions, including market dynamics that reward low cost over reliability, the discretionary nature of investments required for resilience, and the limits of routine forecasting in anticipating large-scale disruptions.

Transparency, Prioritization, and Metrics as Decision Enablers

Several speakers described transparency, prioritization, and metrics as key considerations for operationalizing a make–buy–invest framework. The discussion focused on how timely visibility into shifting pressure points, together with standardized measures of quality, reliability, resilience, and patient impact, could help distinguish routine disruptions from higher-consequence risks and inform how limited resources are focused on the most critical products. In this framing, monitoring systems, essential medicine prioritization approaches, and comparable performance metrics were discussed as decision supports that help determine when intervention is warranted and which tools are appropriate.

Transparency, Data Sharing, and Analytics

Yadav remarked that pharmaceutical supply chain pressure points are dynamic and change frequently, necessitating ongoing monitoring for shifts that would benefit from greater visibility and transparency into the supply chain.

Socal highlighted how the Johns Hopkins Pharmaceutical Supply Chain Dashboard helps close the persistent information gap that has impeded efforts to take actionable steps to safeguard the pharmaceutical supply chain. The dashboard aggregates publicly available data to provide insights across tens of thousands of medications, illustrating how data integration can support system-level understanding. Socal also noted the inherent challenges of tracking generic drugs across fragmented global supply chains and described ongoing efforts to integrate and systematize disparate data sources.

Several speakers emphasized that visibility alone is insufficient without analytic capacity to anticipate risk. Patel underscored the need for end-to-end system visibility to assess progress and guide intervention. Frankenfeld Lamm noted that data analytics can help detect geopolitical signals and support preventative planning, while Hustead highlighted

the potential for digital tools to create strategic, end-to-end views of supply chains that improve coordination.⁸

Discussions described how analytics can inform demand, procurement, and investment decisions. Dai suggested that making domestic manufacturing data visible to consumers could increase demand for products made domestically and incentivize domestic investment. Clark described how transparency tools, including blockchain integrated with sales and operations planning systems, could allow manufacturers, distributors, and purchasers to securely share near-real-time information on production status, inventory levels, and demand signals, thereby improving forecasting, stabilize demand expectations, and enhance risk management.

Several speakers also cautioned that data sharing must be designed carefully avoid unintended consequences, such as triggering panic buying or market distortions; revealing sensitive commercial information or supply chain chokepoints that could enable adversarial targeting; and discouraging manufacturer participation due to regulatory, legal, or competitive concerns. Louissaint underscored the importance of improved data sharing between public and private stakeholders in the drug supply chain, while de Graaf described how data analytics can increase shortage prediction and preparation capability. Using 119 indicators, APIIC is able to predict shortages up to two years in advance, and increased public-private collaboration to merge data silos could improve prediction capabilities, said de Graaf. Marston cautioned against requesting data from the private sector without a clear plan for action to address failures within the system, given the effort data provision entails. Moreover, data are often distorted during crises due to panic ordering, and true demand must be understood during non-crisis periods, Marston explained.

Discussions highlighted structural and authority-related limitations. Patel expressed concern that U.S. situational awareness lags that of foreign counterparts. Hart noted that China has systematically mapped U.S. supply chain dependencies. Singer emphasized that although FDA holds detailed, non-public data on API and KSM sources, current reporting requirements prevent full visibility into production concentration and choke points. Singer argued that additional authorities and improved interagency data sharing would be needed to act on early warning signals, although premature disclosure could trigger panic buying. Hustead similarly cautioned that poorly designed transparency measures can exacerbate shortages.

The discussions included opportunities to better leverage existing data assets. Gorman noted that FDA drug master files offer a potential source of enhanced visibility into supply chain structure. Bozer explained that these files contain detailed information on KSM suppliers and, when combined with import-export data and warning letter histories, could support analytic identification of concentration risks; however, much of the underlying FDA data on APIs and KSMs is not publicly available. Throckmorton responded that FDA already conducts such analyses internally and coordinates carefully to avoid market disruption, while noting the possibility of applying existing data analytics to support national security considerations. Singer added that FDA employs advanced AI tools but faces constraints in acting on early signals without triggering unintended consequences. Kadlec emphasized that while government can identify risks, corrective actions ultimately lie with the private sector.

Finally, the discussion highlighted both progress and remaining challenges in secure information sharing. Harjivan described advances through public–private dashboards, academic collaborations, and industry-led data-sharing models, suggesting these approaches could be expanded to manufacturers, distributors, and other stakeholders. Kadlec cited cybersecurity protections developed during Operation Warp Speed, coordinated with the National Security Council, as evidence that proactive defense of supply chain data is essential. Stephen Colvill, Duke-Margolis Institute for Health Policy, noted that emerging therapies, such as cell and gene therapies, introduce additional privacy and national security considerations because they involve highly sensitive patient-specific biological data, complex manufacturing processes, and cross-border data and material flows, reinforcing the importance of trusted, secure data-sharing mechanisms.

Prioritization of Essential Pharmaceuticals

Discussions examined how prioritizing essential pharmaceuticals is a critical but evolving element of supply chain decision making, and that no single approach has yet resolved the challenges associated with defining, ranking,

^{8 Several speakers referenced U.S. Pharmacopeia's (USP) Medicine Supply Map as a predictive platform to score vulnerabilities and predict potential drug shortages, from KSMs through FDFs, based on a number of factors. For more information about the USP Medicine Supply Map, visit} https://www.usp.org/supply-chain/medicine-supply-map (accessed January 30, 2026).

and operationalizing priority drugs. Colvill stated that domestic manufacturing capacity could be prioritized for certain drugs based on their clinical criticality and economic impact in terms of job creation and economic growth. De Graaf suggested identifying essential medicines that have exclusive, versus partial, foreign dependency to prioritize in resilience initiatives. Hustead called for simplifying the critical essential medicines list to prioritize drugs that have the greatest clinical ramifications for patients. Clark noted that the Joint Deployment Formulary^{9 narrows its focus to essential pharmaceuticals and guides prioritization within his operational domain. Across discussions of priority and essential medicines, Louissaint noted the existence of multiple, overlapping lists maintained by different entities, highlighting the need to align consistent criteria for identifying and prioritizing critical medicines. Clark maintained that preparedness entails maintaining a 180-day supply to support six months of response activity and outlined a planning approach that evaluates capability requirements, available capacity measured in days of supply, and surge needs. Clark acknowledged that the approach is imperfect but stated that it enables actionable risk analysis and prioritization. Clark expanded on the importance of prioritization by emphasizing the potential to use repurposing strategies for high-priority drugs identified through the Joint Deployment Formulary. Given the frequency of drug shortages, Singer emphasized that not all disruptions warrant the same level of response and that attention should be focused on shortages with the most severe clinical, economic, or operational consequences, particularly those affecting clinically critical medicines or lacking viable alternatives and therefore justifying more costly or disruptive intervention. Clark emphasized the importance of evaluating shortages based on population impact, national security implications, and the unique needs of different populations, and noted that refining prioritization approaches involves continued evaluation, clearer criteria, and iterative adjustment as supply chain conditions and threat environments evolve.}

Quality, Resilience, and Reliability Metrics

Biggs stated that the government should prioritize higher-quality generic drugs rather than the least expensive. De Graaf similarly suggested creating incentives for purchasing prioritized, higher-quality generic drugs, thereby simultaneously stimulating demand for U.S. manufactured drugs, improving quality control, and reducing foreign dependency. Because regulatory incentives are not readily applicable to generics, especially given that they are older drugs, Baeder remarked that payment differentiation for quality domestic sourcing could spur investment.

Colvill highlighted the value of system-level reliability and resilience measurements.10 Currently, data related to reliability are confidential to manufacturers, and organizations such as the Healthcare Industry Resilience Collaborative11 and U.S. Pharmacopeia12 have voluntary resilience measures. Colvill contended that establishing and tying standardized resilience measures to Centers for Medicare and Medicaid Services (CMS) financial incentives could encourage manufacturer participation and ultimately benefit the supply chain.13 Moreover, standardizing resilience and reliability metrics would enable purchasers to compare manufacturers, said Colvill. Purchasers have indicated they would pay 5–15 percent more for drugs rated as resilient, if such metrics were available, said Michael Ganio, American Society of Health-System Pharmacists.14

Hustead suggested leveraging AI tools and existing government records of recalls and inspection outcomes to identify reliable manufacturers. A new standard for quality could become a component of the criteria for designating high-performing manufacturers. Other factors for identifying high-performing manufacturers could include low recalls, constructive engagement with FDA, and successful progression through filings. High performance could then be incentivized via lower FDA review obligations and more expedient inspections and post-approval changes, said

^{9 The Joint Deployment Formulary (JDF) is a standardized list of pharmaceuticals required for the first 30 days of contingency operations for deployed forces, used to guide military medical logistics and ensure common pharmaceutical support across services. See} https://health.mil/-/media/Files/MHS/Policy-Files/SignedandDatedDHAPM643008JointDeploymentFormularyJDF.ashx (accessed January 9, 2026).

^{10 For more information about drug supply chain reliability assessment programs, visit} https://healthpolicy.duke.edu/publications/drug-supply-chain-reliability-assessment-programs (accessed January 9, 2026).

^{11 For more information about the HIRC Resiliency Badge, visit} https://hircstrong.com/resiliency-badge/ (accessed January 9, 2026).

^{12 For more information about the USP drug supply chain resilience initiative, visit} https://www.usp.org/file/usp-issue-brief-drug-supply-chain-resilience-initiative-will-better-support-patients-2025 (accessed January 9, 2026).

^{13 For more information about addressing the root causes of drug shortages, visit} https://healthpolicy.duke.edu/sites/default/files/2025-10/Addressing%20the%20Root%20Causes%20of%20Drug%20Shortages_Updated%2010.27.25.pdf (accessed January 9, 2026).

^{14 For more information about the 2023 ASHP drug shortages survey, visit} https://www.ashp.org/-/media/assets/drug-shortages/docs/ASHP-2023-Drug-Shortages-Survey-Report.pdf (accessed January 9, 2026).

Hustead. Moreover, creation of a regulatory fast track with reduced filing and review requirements for manufacturers with high performance ratings could speed improvements, Hustead added.

Patient Outcome Metrics

Colvill remarked that the effects of drug shortage on patient outcomes and quality of care are not adequately quantified, and Colvill suggested that establishing and monitoring patient outcome metrics could strengthen the investment case made to CMS, an agency that seeks to improve quality of care. Harjivan noted the methodological difficulty of attributing clinical outcomes directly to shortages or substandard drug quality, particularly for medications with narrow therapeutic indexes. Gorman stated that policymakers outside the supply chain field often do not understand the ramifications of drug shortages on patient outcomes. Given the influence of CMS reimbursement signals on pharmaceutical supply, Gorman contended that clearer narratives about the connections between payment models, shortages, and outcomes would offer lawmakers and political appointees a compelling case for framing CMS reimbursement within the context of supply chain resilience.

Demand Certainty to Support Reliable Supply and Domestic Capacity

Several speakers emphasized that demand uncertainty weakens the viability of domestic pharmaceutical manufacturing and complicates decisions about when to make, buy, or invest in supply chain capacity. Natalie de Graaf, citing APIIC analyses, noted that many U.S. manufacturing sites operate at roughly half capacity due to the absence of assured demand. De Graaf explained that the lack of clear demand signals makes investments in reliability, redundancy, or domestic production difficult to sustain.

Several speakers discussed the role of CMS as a central demand-side lever. Reimbursement structures as an influential mechanism shaping demand signals were discussed. Burton observed that many shortages occur in sterile injectable medicines, whose costs are typically embedded within bundled diagnosis-related group payments rather than reflected in patient cost sharing. As a result, Burton said, reimbursement does not differentiate among products based on quality, reliability, or sourcing, weakening incentives for manufacturers to invest in more resilient supply. Louissaint added that the separation between the buyer and the payer further dampens demand signals, making it difficult for procurement decisions to reflect supply chain risk.

Gorman described CMS reimbursement as a significant policy advantage for influencing pharmaceutical markets relative to other sectors. Erin Fox, University of Utah Health, noted that current CMS reimbursement practices favor the least expensive medicines, failing to incentivize quality or reliability. Manning suggested that CMS and Department of Veterans Affairs (VA) reimbursement policies could be recalibrated to better reflect national security and drug quality considerations. Louissaint similarly contended that reimbursement structures could be adjusted to support and reward domestic production of vulnerable, low-margin generics. In contrast, Wosińska cautioned that the purchasing power of DoW or VA alone may be insufficient to meaningfully alter broader market dynamics, emphasizing that such approaches would likely need to be paired with wider reimbursement or policy changes to influence system-wide supply resilience.

Discussions explored how existing reimbursement constraints may actively discourage domestic investment. Wosińska remarked that approximately half of U.S. hospitals participate in the 340B Drug Pricing Program, which limits price increases to inflation and constrains hospitals' ability to pay more for quality or resilience. Burton added that inflation penalties and interactions with the 340B Program reduce manufacturers' ability to recover the costs of maintaining reliable or domestic production capacity. Ganio suggested that the Medicaid inflation penalty could be redesigned to allow modest price increases, specifically for multi-source generic drugs, to better reflect production costs. Baeder proposed establishing a low-price threshold, such as $50 per course of treatment, below which drugs would be exempt from punitive pricing provisions.

Some speakers indicated that even modest adjustments to reimbursement could materially affect supply outcomes for high-impact products. Harjivan noted that generic medicines deliver exceptionally high societal value relative to cost, but this value is not well reflected in reimbursement signals. Harjivan suggested that small, targeted payment increases for a limited set of critical generics, particularly antibiotics, would remain negligible relative to their health benefits

while improving supply stability. Ganio cited lorazepam as an example of a drug in shortage that costs less than $5 per vial and is not separately reimbursed under CMS policy. The lack of separate reimbursement reinforces a race to the bottom in pricing, but given the costs of managing drug shortages, many health care budgets can absorb modest increases if tied to improved reliability.

Singer emphasized that payers, such as insurers and public reimbursement programs, may lack awareness of their own exposure to supply chain risk and noted that more direct engagement could help assess what level of premium they would accept to ensure supply security. Singer cited molybdenum-99, a diagnostic radioisotope with limited and geopolitically sensitive sourcing, as an example where modest reimbursement adjustments could significantly improve domestic production viability. Several speakers emphasized that without reimbursement structures that support demand certainty, investments in domestic manufacturing or alternative sourcing are unlikely to be sustained, even when technical capacity exists.

Procurement and Contracting Tools

Procurement and contracting were discussed key mechanisms to shape demand signals and reward desired supply chain attributes. Several speakers explained that how government entities purchase pharmaceuticals, what they prioritize, how contracts are structured, and how demand is aggregated can materially influence manufacturer behavior and supply chain resilience. Burton discussed how federal procurement practices often default to lowest-cost purchasing, even when stated policy preferences favor domestic sourcing or resilience, and this dynamic can undermine efforts to support domestic manufacturing and reliability. Burton suggested that clearer visibility into which products on federal schedules are manufactured or finished domestically could provide a foundation for better alignment between procurement practices and policy goals.

Louissaint explained that government preferences for domestic or nearshore sourcing are typically addressed contractually with government contracts typically going to the lowest bidder, thus excluding even slightly more expensive options that may offer more resilience or reliability. Emphasizing that finished dose and API sourcing are distinct issues, Louissaint noted that contractual preferences could account for the many products that have no domestic source. Louissaint added that excessive rigidity could unintentionally strain supply. Yadav explained that KSMs are sold on the spot market (i.e., sold for immediate payment and delivery at the current market price), and prices can fluctuate as much as 50 percent, leading to supply disruptions. Yadav suggested that advance purchase contracts with KSM suppliers, under which purchasers commit in advance to future volumes and prices, could provide greater price stability. Burton noted that manufacturers require certainty and stable demand, and long-term government contracts hold potential to motivate U.S. manufacturers to scale capacity. Colvill remarked that committed contracts provide surety of demand to manufacturers and surety of supply to purchasers and suggested that CMS could change its payment policies to incentivize committed contracts between manufacturers and purchasers, offering mutual supply–demand assurance and long-term stability. Emphasizing the importance of value metrics and transparency, Harjivan suggested that in addition to long-term contracting, aggregating demand across purchasers (i.e., consolidated purchasing) could increase the feasibility of purchasing based on factors other than cost.

Manning, Yadav, Louissaint, and Ganio described stockpiling and vendor-managed inventory as mechanisms that support make, buy, or invest strategies by managing short-term risk and preserving flexibility while longer-term responses are implemented. These approaches were discussed not as permanent solutions but as tools to stabilize supply, reduce panic-driven demand, and create time for manufacturing expansion, alternative sourcing, or investment decisions to take effect.

Manufacturing Capacity Expansion and Alternative Pathways

Discussions explored a range of approaches intended to expand, sustain, or reconfigure pharmaceutical manufacturing capacity when criteria indicate that reliance on existing supply arrangements is insufficient. These approaches include addressing baseline capacity, geographic diversification, feasibility of production shifts, and sustainability of manufacturing over time.

Increasing Domestic Production

Alignment among regulatory, economic, and demand-side conditions was discussed as central to expanding domestic

manufacturing capacity. Colvill contended that the United States could establish minimum baseline levels of domestic pharmaceutical manufacturing, supported by improved regulatory measures for branded drugs and pricing, reimbursement, and contracting incentives for generics. Manning similarly maintained that government incentives are necessary to support domestic production.

Oshmyansky described two broad categories of incentives that influence the viability of domestic manufacturing: payment model structures across the supply chain and technological innovation supported through federal programs. Burton suggested that the United States could prioritize increasing utilization of existing domestic fill-finish capacity before constructing new facilities. Gorman cautioned against supply-only approaches, citing pandemic-era personal protective equipment manufacturing as an example of capacity expansion that lacked sustained demand. Gorman stressed that domestic production goals must be paired with demand-side incentives to remain viable.

Discussions examined the role of interagency coordination in enabling investment. Colvill suggested that increased coordination between DoW and HHS could support direct investment in industrial-base expansion, noting that federal procurement and CMS levers could help incentivize consistent delivery of products. Kadlec suggested exploring tax credits to offset the incremental cost of domestically sourced products, while cautioning against repeating pandemic-era investments that resulted in short-lived capacity. Clark stated that clearer requirements for the Defense Health Agency could improve communication and engagement with Congress and industry regarding investment needs.

Ally-Shoring and Nearshoring

Ally-shoring and nearshoring were discussed as complementary approaches to domestic production that can diversify supply and reduce exposure to concentrated risks. Manning stated that manufacturing and logistics capacity could be developed with allied partners through nearshoring arrangements with Western hemispheric partners. Clark maintained that aligning national priorities could enable shared multinational production and generate sufficient demand to sustain allied manufacturing capacity. Clark emphasized the importance of international engagement and suggested shared production agreements with allies, along with greater international regulatory collaboration. De Graaf noted that Europe is expanding API and finished-dosage manufacturing capacity and that partnerships with Europe, Japan, and South Korea could further diversify the U.S. pharmaceutical supply. Colvill suggested that ally-shoring initiatives could involve formal specialization agreements, allowing allied nations to focus on areas of comparative strength while avoiding duplication. For example, Japan could focus on antibiotic APIs while the United States invests in oncology APIs. Colvill added that international regulatory harmonization could reduce barriers to selecting reliable suppliers from allied countries and enable a swifter response during crisis shortages.¹⁵

Production-Linked Incentives

Production-linked incentives were described as one approach to making capacity expansion economically viable. Yadav described India's use of production-linked incentives during the COVID-19 pandemic to boost domestic manufacturing of 45 critical KSMs, APIs, and intermediates by offering incentives equal to 6 to 10 percent of gross sales.16 The initiative supported production of 25 products, including key antibiotics and other essential ingredients. Yadav noted, however, that some firms withdrew from the program despite the subsidies. Withdrawals were attributed in part to program design features that favored greenfield construction over brownfield upgrades,17 as well as requirements for 70 to 90 percent domestic value addition that proved difficult to verify. Yadav cautioned that the applicability of such incentives in the United States may be limited to specific high-volume products and that quality considerations would require careful attention.

Establishing Alternative Manufacturing Pathways

Several speakers explained that shifting manufacturing pathways is time-intensive and constrained by technical

^{15 For more information about building a resilient and secure pharmaceutical supply chain and the role of international cooperation, visit} https://healthpolicy.duke.edu/publications/building-resilient-and-secure-pharmaceutical-supply-chain-role-international (accessed January 9, 2026).

^{16 For more information, see Government of India, Department of Pharmaceuticals: Production Linked Incentive Scheme for Promotion of Domestic Manufacturing of Critical Key Starting Materials, Drug Intermediates, and Active Pharmaceutical Ingredients, available at} https://pharma-dept.gov.in/schemes/guidelines-production-linked-incentive-pli-scheme-promotion-domestic-manufacturing-critical (accessed January 9, 2026).

^{17 Greenfield construction refers to building new facilities on undeveloped sites, while brownfield upgrades involve expanding, modernizing, or repurposing existing facilities or previously developed sites.}

and operational realities. Hustead noted that repositioning manufacturing footprints requires prioritization and clarity about timelines, particularly for multinational companies serving global markets. Baeder explained that transferring production for existing drugs typically requires 18 months to five years and that manufacturers face limits on the number of technology transfers they can execute simultaneously. These constraints, Baeder said, extend timelines when multiple products are involved and complicate rapid capacity reconfiguration.

Ready-to-Scale Manufacturing Capacity

Maintaining capacity in a semi-active, ready-to-scale state was discussed as a potential mechanism for sustaining production over time. Clark cautioned that this approach has often been applied too broadly and argued for a more product-specific strategy. Patel suggested reframing the concept to emphasize adaptable infrastructure rather than maintaining idle capacity, proposing applications to API development, warehousing, and flexible manufacturing systems that can be repurposed for routine use.

Regulatory and Legislative Levers

The discussion noted that pharmaceutical markets are fundamentally price driven and that regulatory guardrails and statutory authorities can either reinforce lowest-cost incentives or help counterbalance them in support of reliability, resilience, and domestic capacity.

Gorman cautioned that durable change in the pharmaceutical market depends on regulatory and legislative approaches that explicitly account for price-driven dynamics. Gorman attributed China's dominance across many commodity markets to policies designed to operate effectively within such environments and highlighted the potential role of new legislative frameworks or adjusted regulatory requirements in addressing pharmaceutical economic challenges.

Louissaint cautioned that existing statutes carry regulatory implications that may affect strategic API flows and noted that these implications are an important consideration when evaluating supply chain interventions. Bozer cited the Hatch–Waxman Act of 1984^{18 as an example of a legislative framework that successfully balanced innovation, competition, and affordability while enabling a robust domestic pharmaceutical ecosystem. Bozer proposed that a modernized “Hatch–Waxman 2.0” framework—framed as a thought exercise rather than a defined proposal—could extend the legislative logic used to balance innovation and affordability to incentivize U.S.-based API production and promote resilience, redundancy, and manufacturing modernization while preserving market competition. Bozer further explained that a modernized framework would need to recognize the technical and economic realities of pharmaceutical manufacturing, including the complexity of API chemistry, the need for specialized containment facilities, and the existence of globally concentrated manufacturing ecosystems which cannot be easily or cheaply replicated domestically. Bozer cautioned that repatriating production involves more than building facilities and would require rebuilding entire chemical and engineering networks. Hustead emphasized that targeted incentives embedded within an agile, risk-based regulatory approach could provide safeguards against low-likelihood but high-impact events, such as sudden market exits by key manufacturers or large-scale disruptions. Manning underscored the importance of using regulatory levers to build resilience and capacity during steady-state conditions rather than relying exclusively on emergency responses.}

Manning described how, the U.S. government employed authorities such as the Defense Production Act (DPA),19 federal acquisitions authority supporting Operation Warp Speed, and advance market commitments to enable rapid vaccine manufacturing at scale during the COVID-19 pandemic. However, Manning noted that many facilities atrophied once emergency funding ended due to the absence of sustained market incentives, and some companies terminated agreements because of the burden associated with government requirements. Manning cautioned that while emergency authorities can be effective, they must be used judiciously, as they may divert production capacity from other critical medicines or create shortages elsewhere.

The discussion noted that regulatory authorities alone cannot overcome unsustainable market economics. Manning noted that although DPA Title III20 can support investment in capacity and industrial-base expansion, additional facilities

^{18 Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch–Waxman Act), Pub. L. No. 98-417, 98 Stat. 1585 (1984).}

^{19 Defense Production Act of 1950, Pub. L. No. 81-774, 64 Stat. 798 (1950), as amended.}

^{20 Defense Production Act of 1950, Title III (Expansion of Productive Capacity and Supply), 50 U.S.C. §§ 4531–4534, as amended.}

are insufficient if demand signals and pricing conditions do not support long-term viability. Manning added that DPA Title VII^{21 provides authority for industry collaboration that would otherwise be restricted by antitrust constraints, highlighting its potential relevance for coordinated supply chain responses.}

Several speakers also discussed regulatory pathways that could affect the adoption of advanced manufacturing technologies and the speed of capacity expansion. Haddock suggested that regulatory paths to expedite approvals for new facilities, including those envisioned by the FDA PreCheck program22 along with cost competitiveness, workforce development, and tax incentives, could streamline the review and inspection process, particularly for facilities that implement platform or other advanced manufacturing processes. Haddock added that ensuring financial competitiveness, from stable cost-effective energy supply, workforce training programs, and competitive tax and labor costs may strengthen ability for growing domestic manufacturing.

Implementation and Systemic Enablers

Several speakers highlighted that even when decisions about whether to make, buy, or invest in pharmaceutical supply chain capacity are well supported by criteria and incentives, those strategies most likely will fail without effective implementation and system-level enablers. Distribution, coordination, partnerships, and scenario planning were discussed as crosscutting considerations shaping the feasibility and durability of supply chain interventions.

Distribution and Logistics Capacity

Louissaint described the distribution sector as a critical component of national pharmaceutical resilience, explaining that distributors connect approximately 1,400 manufacturers to 300,000 health care facilities each day. Louissaint stressed that effective resilience planning must extend beyond manufacturing capacity to account for the distribution systems required to transport products reliably, particularly for cold-chain items and controlled substances.

Yadav highlighted distribution and dispensing challenges both domestically and abroad, particularly in regions outside of the traditional military system. Clark introduced the concept of contested logistics, explaining that it refers to any condition that restricts the movement of supplies, including shortages, transportation disruptions, panic buying, or cold-chain failures. Clark stated that contested logistics reduces freedom of movement from point A to point B and is a persistent challenge in both pandemics and conflict scenarios.

Throckmorton raised the question of whether distribution merits elevation as a top national priority for building supply chain resilience. Patel responded that products without distribution capacity are ineffective and stressed the importance of institutionalizing lessons learned and prioritizing implementation alongside procurement. Clark underscored that logistics must be treated as a core priority, noting that Operation Warp Speed was led by a senior logistician and required sustained push strategies rather than delivery after demand emerged. Louissaint added that existing domestic distribution capacity was underutilized during the COVID-19 pandemic, and Louissaint maintained that engaging the full private-sector distribution network and increasing domestic manufacturing capacity and inventory levels could enhance resilience and free federal capabilities for overseas or force-protection missions.

Actors, Coordination, and Public–Private Partnerships

Pharmaceutical supply chains were discussed as a collective action problem requiring coordinated action across government and industry (Box 2). Discussions noted that no single entity was identified as accountable for integrating make, buy, and invest actions across the system.

Manning emphasized that coordination challenges stem from fragmentation rather than a lack of activity and noted that a complex network of agencies is involved in identifying supply chain pressure points, underscoring the importance of a central coordinating function. Patel cautioned that unresolved coordination gaps inevitably become crisis gaps. Colvill emphasized that while individual actors may lack incentives to act alone, coordinated federal leadership can help align priorities and galvanize action. Clark similarly advocated for structured coordination across civilian agencies, military organizations, and industry, noting that clear national priorities are necessary even when they require deprioritizing routine needs in favor of national security considerations.

^{21 Defense Production Act of 1950, Title VII (General Provisions), 50 U.S.C. §§ 4551–4568, as amended.}

^{22 For more information, see U.S. Food and Drug Administration (FDA). FDA PreCheck Pilot Program. FDA Pharmaceutical Quality Resources, available at} https://www.fda.gov/drugs/pharmaceutical-quality-resources/fda-pre-check-pilot-program (accessed January 9, 2026).

Across discussions, several speakers noted that while government plays a critical coordinating and enabling role, execution of make, buy, or invest decisions ultimately rests with the private sector. Patel stressed that strong public–private partnerships are essential to a resilient pharmaceutical supply chain. Clark called for greater use of structured partnerships that leverage contracting mechanisms prioritizing speed, quality, and reliability. Kadlec emphasized that resilience efforts are most effective when embedded within private-sector systems, with the federal government playing a supporting role by reducing investment risk, sending clear market signals, and facilitating coordination rather than managing operations.

Several speakers cautioned, however, that public–private partnerships must be sustained beyond emergency periods to remain effective. Louissaint noted that while emerging partnership models show promise, they are insufficient without broader system-level alignment. Marston described how abrupt shifts in government engagement after crises can leave private-sector partners bearing unrecovered costs, citing experiences during the Ebola and Zika responses as well as in diagnostics development, where demand failed to materialize after government requests. Marston emphasized that durable coordination and partnership structures are necessary to ensure that private-sector actors can confidently execute decisions over time.

Durability of Actions and Infrastructure

The discussion emphasized challenges related to the durability of actions, infrastructure, and decision frameworks developed during periods of crisis. Clark noted that while emergency-driven investments and authorities can rapidly expand capacity, their impact is often limited if they are not translated into standing capabilities that persist in steady-state conditions. He emphasized ensuring that surge mechanisms, repurposing strategies, and distribution capabilities remain viable beyond discrete response periods.

Colvill similarly emphasized that resilience depends on system-level reliability rather than episodic interventions, noting that actions taken during crises frequently lack mechanisms for continuation once emergency funding, contracting authorities, or heightened attention recede. He highlighted that without durable structures, such as standardized metrics, predictable demand signals, and institutionalized coordination, investments in manufacturing capacity or redundancy risk being short-lived.

BOX 2 Public and Private Actors in Make–Buy–Invest Strategies

• Federal agencies, including the Food and Drug Administration and the Department of War, were discussed as responsible for setting regulatory conditions, procurement priorities, and national security requirements that shape market behavior. (Throckmorton)
• Manufacturers were described as making decisions about production location, capacity, and investment based on economic incentives, regulatory timelines, and demand certainty. (Baeder, Haddock)
• Purchasers and health systems were identified as key actors influencing demand signals through contracting and sourcing practices, though often constrained by reimbursement structures and existing procurement norms. (Ganio, Fox)
• Payers, including public and private insurers, were noted as indirectly shaping supply chain incentives through reimbursement policies, despite limited visibility into supply chain risk. (Singer, Wosińska)
• Academic and research institutions were described as supporting these actors by developing data, metrics, and analytical tools to inform decision making. (Dai, Gray, Socal)

  This list is the rapporteurs' summary of points made by the individual speakers identified, and the statements have not been endorsed or verified by the National Academies of Sciences, Engineering, and Medicine. They are not intended to reflect a consensus among workshop participants.

Drawing on these perspectives, Louissaint noted that while partnerships can accelerate action during emergencies, durable resilience depends on embedding infrastructure, incentives, and implementation pathways into routine operations. Without mechanisms to carry crisis-era actions forward, efforts to strengthen pharmaceutical supply chains risk remaining reactive rather than becoming enduring components of national preparedness.

Multisectoral Threat Assessment and Scenario Planning

Clark described multisectoral threat assessment and scenario planning as mechanisms for translating make, buy, or invest criteria into concrete decisions about prioritization, timing, and scale. Rather than serving as abstract preparedness exercises, scenario-based approaches were discussed as tools for identifying which products, inputs, and system capabilities are most critical under different threat conditions and therefore warrant targeted manufacturing, sourcing, or investment actions.

Patel said that effective response requires years of advance planning to enable rapid action and described scenario-based planning as a practical method for prioritization. Louissaint similarly emphasized the value of threat-based discussions focused on high-likelihood, high-consequence scenarios. Clark noted that high-level, transparent threat assessments can inform industry without revealing sensitive details. Clark added that scenario planning can help operationalize demand by improving forecasting and stabilizing expectations, noting that tools such as sales and operations planning systems and blockchain-enabled visibility can increase predictability and reduce costs.

Scenario planning was discussed as a mechanism for strengthening coordination and shared understanding across sectors. Patel noted that scenario exercises help develop the public workforce's understanding of private-sector operations and build trusted relationships during steady-state conditions. Singer discussed cross-sector, public–private mechanisms as a way to support ongoing scenario-based supply chain planning.

Concluding Remarks

In closing remarks, Louissaint and Throckmorton emphasized that fragility in the U.S. pharmaceutical supply chain is no longer a theoretical concern; it is a persistent, ongoing, multidimensional challenge with direct implications for public health, economic stability, and national security. They noted that rising drug shortages, geopolitical tensions, and concentrated global manufacturing have increased exposure to both accidental disruptions and deliberate economic coercion. Throughout the workshop, discussions explored how shortages, quality failures, and foreign dependencies relate to deeper structural market dynamics, misaligned incentives, and fragmented governance.

Louissaint and Throckmorton emphasized a shift from diagnosing supply-chain problems to developing and implementing solutions. Throckmorton noted that while improvements in transparency, data dashboards, and forecasting tools are enhancing visibility into supply chain vulnerabilities, they emphasized that data alone cannot correct market incentives that prioritize lowest cost over reliability, quality, and resilience. Louissaint highlighted that redundancy, geographic diversification, and surge capacity are essential for absorbing shocks but remain difficult to sustain under current economic conditions. Louissaint added that while reimbursement structures and federal procurement practices were discussed as potential levers to support reliability and quality, these mechanisms can also reinforce price-driven behavior that may discourage domestic or allied investment.

Louissaint and Throckmorton concluded that pharmaceutical supply chain resilience is fundamentally a collective action challenge that cannot be addressed by government alone. They noted that effective solutions must be embedded within private-sector systems, with the federal role focused on reducing investment risk, enabling regulatory agility, and supporting shared governance. Louissaint and Throckmorton stated that the absence of a central coordinating mechanism to align efforts across the federal government emerged is a critical gap. They concluded that the workshop's central contribution was clarifying how a make–buy–invest decision framework can integrate systemic challenges, market-specific factors, incentives, and implementation enablers to guide strategic choices that strengthen the U.S. pharmaceutical supply, help minimize investment risk for domestic manufacturers, and protect national security and health.

Disclaimer: This Proceedings of a Workshop—in Brief has been prepared by Lisa M. Brown, Anna Nicholson, and Tamara Haag as a factual summary of what occurred at the meeting. The statements made are those of the rapporteurs or individual workshop participants and do not necessarily represent the views of all workshop participants; the planning committee; or the National Academies of Sciences, Engineering, and Medicine.

Planning Committee: Nicolette A. Louissaint (Co-Chair), Healthcare Distribution Alliance; Douglas C. Throckmorton (Co-Chair), retired U.S. Food and Drug Administration; Thomas J. Bollyky, Council on Foreign Relations; Erin Fox, University of Utah Health; Celeste Frankenfeld Lamm, Merck; Chandresh Harjivan, Medical Countermeasures Coalition; Alexander Oshmyansky, Mark Cuban Cost Plus Drug Company; and Anita Patel, Walgreens. The National Academies' planning committees are solely responsible for organizing the workshop, identifying topics, and choosing speakers. Responsibility for the final content rests entirely with the rapporteurs and the National Academies.

REVIEWERS: To ensure that it meets institutional standards for quality and objectivity, this Proceedings of a Workshop—in Brief was reviewed by Kunal J. Rambhia, MITRE Emerging Technologies, and Betsy Baer, U.S. Pharmacopeia. Kirsten Sampson-Snyder, National Academies of Sciences, Engineering, and Medicine, served as the review coordinator.

SPONSORS: This workshop was sponsored by Johns Hopkins University, with funding provided by the Uniformed Services University Center for Health Services Research via a grant from the U.S. Defense Health Agency, Department of War Grant #HU00012520014.

STAFF: Lisa M. Brown, Senior Program Officer; Lina Stankute-Alexander, Program Officer; and Rayane Silva-Curran, Senior Program Assistant.

Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2026. Improving the Resilience of the U.S. Pharmaceutical Supply Chain Through Make–Buy–Invest Strategic Actions. Washington, DC: The National Academies Press. https://doi.org/10.17226/29382.

For additional information regarding the workshop, visit https://www.nationalacademies.org/projects/PGA-GLOBAL-25-03.

Copyright 2026 by the National Academy of Sciences. All rights reserved.