The White House on May 5, 2025 issued an executive order requiring the US Food and Drug Administration to find ways to facilitate the opening of new drug manufacturing sites in the United States while also increasing the pressure on foreign drug and component manufacturers. As a result, pharmaceutical companies now face heightened pressure—and new incentives—to relocate operations domestically, as well as new challenges to manufacturing or sourcing finished pharmaceuticals and their components abroad. Accordingly, companies must grapple with complex regulatory and operational considerations.
Executive Order (EO) 14293, titled Regulatory Relief to Promote Domestic Production of Critical Medicines, continues the president’s efforts from his first term. In 2020, the president issued an executive order with respect to the domestic manufacturing of “essential medicines, medical countermeasures, and critical inputs.” The most recent executive order extends this effort.
As a result of the executive order (EO), and given current international sourcing challenges, companies may find it advantageous to establish or transfer manufacturing operations or supply chains to the United States. Specifically, the EO intends to eliminate regulatory barriers for new sites, including unnecessary requirements, permits, and unpredictable and untimely agency inspections and reviews. It also aims to expand programs under which FDA can provide technical advice to facility owners.
Yet, even with these steps, setting up manufacturing operations at new sites will likely continue to be a complex endeavor, requiring in-depth planning to meet the applicable regulatory requirements.
Quality and Regulatory Considerations
Establishing new manufacturing sites in the United States is a complex process that requires careful planning and execution. One of the primary steps is obtaining US Food and Drug Administration (FDA) and US Environmental Protection Agency (EPA) approval for new or recommissioned domestic facilities, which includes rigorous inspections and compliance with Current Good Manufacturing Practices (cGMPs) and environmental water and air requirements. Additionally, companies must conduct technology transfers and comparability and stability studies to ensure that the quality and efficacy of drug products remain consistent. This transfer process requires meticulous planning and documentation of all activities related to the transfer. Therefore, companies must invest in training, equipment, validation, and quality assurance measures to meet FDA standards.
Changes to manufacturing sites or operations will also require amendments to the applicable FDA marketing application. Accordingly, companies should be sure to build in a realistic timeline for transitions, as the process can be lengthy. Steps that FDA may take, however, in response to the EO, may help to streamline this process. Accordingly, companies considering transitioning to domestic manufacturing or supply chains should be on the lookout for further information from FDA on changes to regulatory requirements.
Commercial Considerations
Even if the regulatory requirements to establish a new domestic manufacturing site are eased, sponsors will also need to consider their contractual and commercial arrangements. For instance, if a foreign contracted manufacturing facility uses a proprietary process, technology transfer may also necessitate contractual negotiations or the development of new processes—new processes would also require FDA approval. Companies will also need to consider any existing contractual arrangements that they have with foreign manufacturing establishments to avoid breach of contract claims.
Sourcing Considerations
Even when a finished drug product is manufactured domestically, there will likely be some need for the sourcing of materials or know-how from outside the United States. While exact estimates vary, a significant proportion of active pharmaceutical ingredients (API) in US finished drug products are sourced from abroad. Further, companies producing finished drug products domestically may need to obtain other product components, including excipients and packaging, from foreign suppliers. Under FDA law, APIs are considered drugs and are, thus, subject to current cGMPs, just like finished drug products. While not subject to cGMPs, other product components must also still meet certain quality standards to avoid the introduction of adventitious agents or other adulterants into the finished product. This raises the need for component and component supplier quality standards and systems.
Further potentially impacting domestic manufacturing will be the potential need to source manufacturing equipment or even know-how and expertise from outside the United States. Companies may find such external sourcing to be increasingly difficult given the tariffs discussed below, potential supply chain reductions, and the increased focus on immigration.
Given the globalization of the pharmaceutical supply chain and due to a variety of factors, including cost, capacity, and technological capabilities, many companies may not be able to establish US manufacturing operations. These companies are likely to feel increasing pressures and new regulatory risks. Accordingly, they will need to take proactive steps when establishing and maintaining manufacturing and sourcing arrangements outside the United States.
Potential Increased Scrutiny on Foreign Manufacturers
FDA has historically placed significant scrutiny on foreign manufacturers, particularly those in countries like India and China, due to past regulatory violations. Issues such as data integrity, non-sterile manufacturing processes, and noncompliance with cGMPs have led to significant inspectional findings, warning letters, and import alerts. This scrutiny may increase with the stronger policy preference for US domestic manufacturing.
For example, the May 5 EO directs FDA to “develop and advance improvements to the risk-based inspection regime that ensures routine reviews of overseas manufacturing facilities. . ., which shall be funded by increased fees on foreign manufacturing facilities to the extent consistent with applicable law.” The EO further directs FDA to improve enforcement data reporting, including potentially publicly displaying a list of facilities, including foreign facilities, that are not in compliance.
On May 6, 2025, in response to the EO, FDA announced that it would be expanding its unannounced foreign inspection program, despite a prior pause. Companies sourcing from foreign countries should, accordingly, be prepared for heightened regulatory oversight through inspections, which may disrupt ongoing manufacturing. They should also plan for the potential for increased public scrutiny of quality compliance, and possibly increased costs through higher user fees or assessments for conducting foreign inspections.
Challenges in Working with Foreign Manufacturers
Working with foreign manufacturers presents several unique challenges, including a lack of or less familiarity with US regulatory requirements. All manufacturing facilities—including foreign facilities—producing drug products and active pharmaceutical ingredients that will be destined for US commerce must comply with FDA’s quality system requirements. In many respects, these requirements are similar to global quality requirements, such as those implemented in the European Union through ICH standards. However, there are key differences, including with respect to critical processes such as product release.
Accordingly, when working with a foreign manufacturer, it is increasingly important that companies conduct quality audits to ensure that the manufacturer meets current quality requirements. It is also important that these expectations are clearly set out in quality agreements so that quality expectations and responsibilities are clear to all parties. Further, in view of the heightened risk of inspection deficiency findings, it is critical for the supply and quality agreements to have updated provisions on timelines for remedial actions and options for alternative supply chain arrangements. These quality agreements must be carefully drafted because, not only are they critical legal contracts for a manufacturing arrangement, but they can also be subject to FDA review during inspections.
Companies working with foreign manufacturers should also ensure that they have strong supplier management systems on which all employees are trained. These should include proactive processes that are followed for regular supplier monitoring, auditing, and product quality reviews. Further, should there be manufacturing process failures or other deviations, sponsors will need to ensure that the deviations are fully investigated down to the root cause and adequately and effectively remediated.
Tariffs
Companies relying on foreign manufacturing may also face additional costs due to new US tariffs. On April 14, 2025, the US Department of Commerce announced that it had initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine whether imports of pharmaceutical products and pharmaceutical ingredients—and their derivative products—pose a national security risk to the United States.
The scope of the investigation includes both finished generic and non-generic drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients and key starting materials, and derivative products of those items. Under Section 232, the president has broad power to adjust imports—including through the use of tariffs—if the investigation concludes that excessive foreign imports pose a threat to US national security. As a result, companies should be prepared to manage potential new tariffs on imported foreign drug products or materials.
Country of Origin Labeling
Companies sourcing foreign prescription medication may also be impacted by a recent customs ruling by US Customs and Border Protection (CBP) that imposes new country of origin marking and repackaging requirements on pharmacies. Under the customs regulations, every article of foreign origin (or its container) imported into the United States must be marked with the country of origin so that it remains on the article until it reaches the ultimate purchaser. In June 2024, CBP issued a customs ruling concluding that retail pharmacies that receive and repackage prescription medication are not the ultimate purchasers of the imported medication for customs marking purposes; rather, they are the customer/patient.
As a result, pharmacies that repackage imported medication are required to mark the new packaging with the country of origin received from the supplier. Importers that sell to pharmacies must also submit a signed certification to CBP and provide the pharmacy with a notification of the remarking requirements (through distributors, if applicable). CBP has recently started enforcing this requirement, which may result in additional regulatory and paperwork obligations for foreign-sourced drug products.
While the move toward domestic manufacturing presents opportunities for the pharmaceutical industry, it also poses challenges that must be carefully navigated. The policy momentum favoring United States-based manufacturing demands more than relocation; it requires companies to weigh various strategic considerations, including the regulatory and operational complexity of technology transfers, site approvals, importation of equipment and other supplies, and training of personnel, particularly when transitioning from established foreign manufacturers.
For some companies, however, transitioning to domestic manufacturing may not be a realistic option. These companies will need to navigate increased scrutiny of foreign facilities and their efforts to maintain their quality systems abroad to meet US regulatory standards. Both domestic and foreign manufacturing will require complex planning, and, to remain competitive and compliant, companies must proactively assess these interconnected factors, aligning their long-term manufacturing strategies with evolving US policy and FDA oversight priorities.
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