New Bill Mandates Shift Away From China for Federal Drug Purchases by 2030, Offers Tax Breaks for US Pharma Manufacturing

Here's the deal on the "Anyone But China Safe Drug Act" or "ABC Safe Drug Act." This proposed legislation tackles two big things: changing where the federal government gets its drug ingredients and encouraging more drug and medical device manufacturing here in the U.S. The core idea is to reduce reliance on China for critical medicines used in programs run by agencies like the VA, Department of Defense, and Health and Human Services.

Sourcing Shake-Up: Where Your Meds Come From

Starting January 1, 2028, federal programs wouldn't be allowed to buy drugs unless at least 60% of their active pharmaceutical ingredients (APIs) – the core components that make a drug work – are manufactured somewhere other than China, specifically in countries meeting FDA safety standards. That requirement jumps to 100% by January 1, 2030. Think about medications provided through Medicare, Medicaid, or the VA – this bill dictates a major shift in their supply chains over the next six years. There's a potential waiver process if agencies can't meet the deadlines, but even that door closes permanently after January 1, 2031. Additionally, Section 2 mandates a label change: drug packaging will eventually have to list the country of origin for each API, giving more transparency about where the key ingredients are made.

Building at Home: A Tax Incentive Boost

To encourage companies to make these drugs and devices domestically, Section 3 offers a temporary tax incentive. It allows businesses to use 100% bonus depreciation for investments made in building or expanding U.S. facilities for pharmaceutical and medical device manufacturing. In plain English, this means companies can deduct the entire cost of qualified property (like new buildings or high-tech equipment) from their taxes in the year they put it into service, rather than spreading that deduction out over many years. This tax break applies to property activated between the end of 2024 and the start of 2031, aiming to make building or upgrading factories in the U.S. financially attractive right now.

The Bottom Line: Security vs. Practical Hurdles

This bill aims for a more secure domestic drug supply chain, less dependent on a single foreign source. The tax breaks could spur investment in U.S. manufacturing jobs and infrastructure. However, shifting complex pharmaceutical supply chains isn't simple or cheap. Companies currently relying on Chinese APIs will face significant operational changes. There's also the practical question of whether alternative, FDA-compliant sources can scale up quickly enough to meet demand without disrupting supply or increasing costs for federal health programs – costs that could potentially trickle down. The effectiveness of the tax break also depends on whether it genuinely incentivizes new investment or primarily benefits projects already planned. The labeling requirement adds transparency, but the core challenge lies in executing this major sourcing shift by the 2030 deadline without unintended consequences for drug availability or cost within federal programs.