Dive Brief:
- The Food and Drug Administration should look for ways to streamline regulations on new U.S. drug manufacturing facilities to speed their completion and boost domestic supply, under an executive order signed Monday by President Donald Trump.
- The order also seeks to increase inspections of overseas manufacturing plants supplying the U.S. market funded by increased fees “to the extent consistent with applicable law.” The FDA will disclose the annual number of overseas inspections by country and by manufacturer.
- Big pharma companies this year have announced investment of more than $170 billion in new manufacturing facilities in the U.S. as they seek to consolidate their supply chains and avoid potential new tariffs. Public comments are due Wednesday on a Commerce Department investigation on the national security risks of drug and ingredient imports, which could set the stage for new sector-wide tariffs.
Dive Insight:
The pharmaceutical industry finds itself pressured by the Trump administration along three different channels: taxes, trade and drug pricing. Company executives have credited the Tax Cut and Jobs Act — passed in 2017 during Trump’s first administration and due to expire later this year — for sparking investment in domestic manufacturing, including the billions of dollars announced so far in 2025.
Meanwhile, the threat of tariffs to drugs and ingredients manufactured overseas poses a risk to their profit outlook, one that can’t be easily resolved by raising prices established through negotiations with insurers. Finally, the White House is looking at ways to restrain drug prices that could go beyond what was enacted in the Inflation Reduction Act.
Alongside Monday’s executive order, Trump said an announcement on tariffs and drug pricing rules could come in the next two weeks.
The push from Johnson & Johnson, Eli Lilly, Merck & Co., Novartis and Roche is one part an effort to reshore the U.S. drug supply chain and one part public relations trying to persuade Trump to reverse course on any plans to set new tariffs or new drug price controls.
Building new drug factories takes time — the executive order claims it now takes five to 10 years — which means the billions of dollars spent on new manufacturing capacity this year will have a negligible effect on securing the supply chain. To get them built faster, the executive order instructs FDA to reduce “duplicative or unnecessary requirements” review steps and maximize “timeliness and predictability.”
On licensure inspections, the order tells FDA to “ensure all required inspections are prompt, efficient, and limited to what is necessary to ensure compliance,” as well as evaluate whether all scheduled inspections are necessary. Meanwhile, the new inspection requirements on overseas plans supplying the U.S. could provide a further incentive to move production stateside.
Alex Schriver, senior vice president of public affairs at the industry lobbying group the Pharmaceutical Research and Manufacters of America said in a statement that the order was a “welcome step toward supporting the hundreds of billions of dollars in new U.S. investments.”
But he added, “Imposing tariffs on medicines or adopting foreign price setting policies would result in less U.S. investment and weaken U.S. leadership at a time when we are facing growing competition from China.”
