FDA assembles policy toolkit to rebuild U.S. generic drug manufacturing

Overview

Only 9% of the factories that make active pharmaceutical ingredients for American medicines are located in the United States. China and India account for roughly two-thirds of the rest. For decades, this arrangement kept drug prices low and went largely unchallenged — until the COVID-19 pandemic exposed how quickly a foreign export ban could empty American pharmacy shelves. Now the Food and Drug Administration (FDA) is quietly assembling what amounts to a three-layer incentive stack designed to reverse that dependency: the PreCheck pilot program to accelerate new factory buildouts, a priority review track for generics manufactured entirely on U.S. soil, and a proposed three-year fee waiver for new domestic plants under the next Generic Drug User Fee Amendments (GDUFA) reauthorization.

Each piece addresses a different barrier. PreCheck tackles the five-to-ten-year regulatory timeline for standing up a new pharmaceutical plant. The Abbreviated New Drug Application (ANDA) prioritization pilot rewards companies that source both their active ingredients and bioequivalence testing domestically with faster application reviews. The fee waiver, still being negotiated for fiscal years 2028 through 2032, would eliminate annual facility fees that can run into six figures for a new plant's first three years of operation. Taken together, the three programs represent the most coordinated federal attempt in decades to change the economics of making generic drugs in America — though whether the incentives are large enough to overcome the structural cost advantages that drove manufacturing offshore in the first place remains an open question.

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Key Indicators

U.S.-based API manufacturers

Only 9% of active pharmaceutical ingredient manufacturers supplying FDA-approved products are located in the United States, compared to 22% in China and 44% in India.

PreCheck pilot slots

The FDA will select seven facilities for the initial PreCheck cohort, with applications accepted from February 1 to March 1, 2026.

3 years

Proposed fee waiver period

Under GDUFA IV negotiations, the FDA has proposed waiving annual facility fees for three years for new domestic generic drug or API manufacturing plants.

90%+

Generics share of U.S. prescriptions

Generic drugs account for more than 90% of all prescriptions filled in the United States, making domestic manufacturing capacity a mass-market concern.

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People Involved

Marty Makary

Serving as FDA Commissioner; leading onshoring policy efforts

Organizations Involved

U.S. Food and Drug Administration

Federal regulatory agency

Implementing three-pronged domestic manufacturing incentive strategy

The federal agency responsible for approving drugs, inspecting manufacturing facilities, and reviewing generic drug applications — making it the central gatekeeper for any onshoring effort.

Civica Rx

Nonprofit Generic Drug Manufacturer

Building a $140 million sterile injectable facility in Petersburg, Virginia; drugs expected to reach market in 2026

A nonprofit generic drugmaker formed by a consortium of health systems to combat drug shortages, now building one of the first major new domestic injectable manufacturing plants.

Phlow Corporation

Pharmaceutical Manufacturer

Operating under a $354 million BARDA contract to build domestic API and drug production capacity

A Virginia-based company that received the largest-ever federal contract for domestic pharmaceutical manufacturing, tasked with producing essential medicines from raw ingredients through finished dosage forms entirely on U.S. soil.

Timeline

September 1984 February 2026

10 events Latest: February 1st, 2026 · 4 months ago

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February 2026
PreCheck Pilot Opens for Applications; Fee Waiver Proposed
Latest Program Launch

The FDA begins accepting applications for the PreCheck pilot, with a March 1 deadline and seven slots in the initial cohort. Simultaneously, during GDUFA IV negotiations, the agency proposes waiving annual facility fees for three years for new domestic generic drug or API manufacturing plants.
February 1st, 2026
December 2025
BIOSECURE Act Signed into Law
Legislation

The BIOSECURE Act, restricting U.S. government procurement from certain Chinese biotechnology firms including WuXi AppTec and BGI Group, becomes law as part of the National Defense Authorization Act. The law adds legislative pressure to decouple U.S. pharmaceutical supply chains from Chinese companies.
December 18th, 2025
October 2025
ANDA Prioritization Pilot Launches for Domestic Generics
Policy Launch

The FDA launches a pilot program granting priority review to generic drug applications where the finished product, active ingredient sourcing, and bioequivalence testing all occur within the United States.
October 3rd, 2025
August 2025
FDA Announces PreCheck Program
Policy Announcement

FDA Commissioner Marty Makary unveils the PreCheck program, a two-phase initiative designed to reduce regulatory uncertainty for companies building new pharmaceutical manufacturing facilities in the United States by front-loading inspections and quality discussions.
August 7th, 2025
July 2025
GDUFA IV Reauthorization Negotiations Begin
Regulation

The FDA holds a public meeting to begin negotiations over the next five-year cycle of the Generic Drug User Fee Amendments, covering fiscal years 2028 through 2032. The current GDUFA III authority expires in September 2027.
July 11th, 2025
May 2025
Executive Order Directs FDA to Streamline Domestic Manufacturing
Executive Action

Executive Order 14293, "Regulatory Relief to Promote Domestic Production of Critical Medicines," directs the FDA to eliminate duplicative requirements, maximize review predictability, and accelerate development of domestic pharmaceutical manufacturing capacity.
May 5th, 2025
May 2020
Phlow Corporation Receives $354 Million Federal Contract
Government Action

BARDA awards the largest-ever federal contract for domestic pharmaceutical manufacturing to Phlow Corporation, tasking it with building an end-to-end U.S. supply chain for essential medicines from raw ingredients to finished drugs.
May 1st, 2020
March 2020
India Restricts Drug Exports as COVID-19 Spreads
Supply Chain Crisis

India bans exports of 26 active pharmaceutical ingredients and their formulations to protect domestic supplies during the pandemic. The move sends shockwaves through U.S. hospitals already facing shortages of antibiotics, anesthetics, and oncology drugs, exposing the fragility of the global pharmaceutical supply chain.
March 3rd, 2020
October 2012
GDUFA I Launches to Clear 3,000-Application Backlog
Regulation

Congress authorizes the first Generic Drug User Fee Amendments, imposing fees on generic manufacturers to fund FDA review capacity. At the time, roughly 3,000 generic drug applications sit in an unreviewed backlog, with median approval times exceeding 31 months.
October 1st, 2012
September 1984
Hatch-Waxman Act Creates the Generic Drug Pathway
Legislation

The Drug Price Competition and Patent Term Restoration Act establishes the Abbreviated New Drug Application (ANDA) process, allowing generic manufacturers to rely on existing safety and efficacy data rather than running full clinical trials. Generic prescriptions rise from 19% to eventually over 90% of U.S. prescriptions filled.
September 24th, 1984

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

August 2022

CHIPS and Science Act (2022)

Facing a similar concentration-of-supply problem in semiconductors — with 92% of advanced chips made in Taiwan — Congress passed the CHIPS and Science Act, committing $39 billion in manufacturing subsidies and a 25% investment tax credit to bring chip fabrication back to the United States. The law was a response to COVID-era chip shortages that had shut down auto factories and disrupted electronics production.

Then

Major chipmakers including Intel, TSMC, and Samsung announced over $200 billion in planned U.S. factory investments. The Commerce Department began distributing subsidies in 2024.

Now

The law established a template for industrial policy as supply chain security, demonstrating that direct subsidies and tax incentives can attract manufacturing investment — though whether new plants will be cost-competitive without ongoing support remains unproven.

Why this matters now

The FDA's onshoring toolkit uses regulatory incentives and fee waivers rather than the tens of billions in direct subsidies that the CHIPS Act deployed. Whether the pharmaceutical approach — lighter on funding but tailored to the industry's specific regulatory bottlenecks — can produce comparable results is the central policy experiment.

March 2020

India's 2020 Pharmaceutical Export Ban

As COVID-19 spread globally, India restricted exports of 26 active pharmaceutical ingredients and their finished drug formulations to protect its own domestic supply. India supplies roughly 40% of U.S. generic drugs and is itself dependent on China for 70% of its API inputs, meaning the ban simultaneously exposed two layers of American vulnerability.

Then

U.S. hospitals reported shortages of antibiotics, anesthetics, and critical care medications. India reversed most restrictions within weeks under diplomatic pressure, but the episode demonstrated how quickly supply could be cut off.

Now

The crisis catalyzed bipartisan support for pharmaceutical supply chain reform and led directly to the $354 million BARDA contract with Phlow Corporation to build domestic manufacturing capacity.

Why this matters now

The 2020 export ban is the inciting event for the entire FDA onshoring effort. Every program now being launched — PreCheck, the ANDA pilot, and the GDUFA fee waiver — traces its political urgency to the moment Americans realized a single foreign government decision could cause domestic drug shortages.

October 2012

GDUFA I and the Generic Drug Backlog Crisis (2012)

By 2012, the FDA had accumulated a backlog of nearly 3,000 unreviewed generic drug applications, with median approval times exceeding 31 months. Congress authorized the Generic Drug User Fee Amendments, allowing the FDA to collect fees from generic manufacturers to fund dedicated review staff. The user-fee model had already worked for brand-name drugs under the Prescription Drug User Fee Act since 1992.

Then

The FDA hired hundreds of new reviewers and began systematically clearing the backlog. By the end of GDUFA I's five-year term, 90% of pre-2012 applications had been reviewed.

Now

GDUFA established the fee-funded review infrastructure that the current onshoring pilots now build upon. It also created the facility fees that the proposed three-year waiver would temporarily eliminate for new domestic plants.

Why this matters now

The GDUFA framework is both the tool and the constraint. The ANDA prioritization pilot works within GDUFA's existing review structure, and the fee waiver is being negotiated as part of GDUFA IV reauthorization. Understanding that the FDA's generic drug review capacity depends on manufacturer-funded user fees explains why the fee waiver is controversial — waiving fees for new entrants means existing manufacturers effectively subsidize their future competitors.