The executive order signed by President Donald J. Trump to promote American-made prescription drugs addresses a real and pressing issue. However, it oversimplifies the economic and structural factors behind the offshoring of drug manufacturing and misrepresents the nature of what kinds of pharmaceuticals are produced abroad versus domestically. The decision-making process for pharmaceutical manufacturing is not based primarily on patriotic ideals or national security rhetoric; it is driven by cost, supply chain efficiency, and market dynamics. Companies will bring pharmaceutical manufacturing jobs to the U.S. only when it makes economic sense—and in many key areas, it already does.
The bulk of drugs manufactured overseas are low-cost, low-margin generic drugs. According to a 2021 report by the U.S. International Trade Commission, approximately 72% of active pharmaceutical ingredients (APIs) for generic drugs are sourced from foreign suppliers, especially from countries like India and China, which dominate the low-cost generic drug market. Generic drug production thrives on economies of scale and thin profit margins—conditions that are difficult to sustain in the U.S. due to higher labor, environmental, and operational costs.
In contrast, brand-name and high-cost biologic and innovator drugs are predominantly manufactured in the U.S. already, with almost 86% manufactured in-house. For example, data from the U.S. FDA shows that many of the world’s largest biologics manufacturing facilities are located in the U.S., producing high-value therapies such as monoclonal antibodies, gene therapies, and cell therapies. These facilities employ highly skilled workers, generate higher-wage jobs, and already reflect strong domestic investment. Repatriating generic drug production would not yield comparable economic benefits and would require substantial government subsidies to be viable.
By emphasizing regulatory streamlining and protectionist measures (e.g., increasing fees for foreign manufacturers), the executive order assumes that manufacturers will shift operations back to the U.S. if given fewer bureaucratic hurdles. However, the core barrier is cost competitiveness—not regulation. The primary factors contributing to outsourcing are cheaper labor and less expensive infrastructure. U.S. manufacturers cannot easily replicate that price structure without significantly increasing consumer costs or receiving major government subsidies.
Moreover, pharmaceutical companies operate in a global marketplace. Many U.S. pharmaceutical firms already own or partner with offshore facilities to optimize costs, diversify risk, and manage global supply chains. Forcing a repatriation of low-cost manufacturing without parallel economic incentives could lead to supply disruptions or increased drug prices.
Rather than pushing across-the-board reshoring, policies should recognize that America already dominates in the development and production of complex, high-value pharmaceuticals. The U.S. leads the world in biologics production capacity, including advanced therapies like CAR-T and mRNA vaccines, which are among the most profitable and scientifically intensive sectors of the industry.
Bringing back the production of basic generics or raw APIs, while important for supply chain resiliency, will not drive job growth or innovation in the same way. Companies will make manufacturing decisions based on return on investment. High-wage, innovation-heavy manufacturing stays in the U.S. because it aligns with those goals. Low-wage, commodity production goes abroad for the same reason.
The executive order aims at an important target—improving supply chain resilience and national security—but misses the nuance required for meaningful policy. The decision to manufacture drugs domestically is primarily economic, not regulatory. High-value drug manufacturing already takes place in the U.S., creating jobs and economic value. The challenge lies in balancing resilience with market realities: ensuring access to generics without imposing unworkable costs on producers or patients. A smarter approach would offer selective incentives for reshoring essential API production, while continuing to invest in the high-end pharmaceutical manufacturing already thriving in the United States.
