The ABC Safe Drug Act would, if enacted, section off U.S. federal health program drug purchases from drugs whose active ingredients are manufactured in China and push toward domestic or FDA-approved non-China sources. Beginning in 2028, federal health programs would be limited to drugs with at least 60% of their active pharmaceutical ingredients (APIs) manufactured in FDA-compliant countries outside the People’s Republic of China; by 2030, purchases would be limited to drugs with 100% of APIs manufactured in such non-China countries. The act allows waivers for agencies unable to meet the standard but forbids waivers for drugs bought on or after January 1, 2031. It also adds a labeling requirement to disclose the country of origin for each API. Separately, the bill offer a temporary 100% expensing bonus depreciation for new qualifying pharmaceutical and medical device manufacturing property placed in service from 2025 through 2030, aiming to boost domestic U.S. manufacturing capacity, with a sunset on 2030.
Key Points
- 1Phased restriction on federal health program drug purchases: starting January 1, 2028, agencies may purchase only drugs with 60% or more of APIs manufactured in FDA-approved countries other than China; by January 1, 2030, 100% of APIs must be manufactured in such countries.
- 2Countries described: non-China countries that meet Food and Drug Administration health and safety standards; the restriction targets drugs manufactured outside PRC, subject to waivers if agencies cannot meet the requirement (but no waivers for purchases after 1/1/2031).
- 3Labeling requirement: adds a new requirement that drug labeling specify the country of origin for each active ingredient.
- 4Tax incentive for domestic manufacturing: provides temporary 100% expensing (bonus depreciation) under the tax code for qualified pharmaceutical and medical device manufacturing property placed in service between 2025 and 12/31/2030, to encourage U.S. manufacturing capacity.
- 5Termination and sunset: the 100% expensing incentive applies only to property placed in service through 12/31/2030; after that, the expensing would end, and the procurement waivers model would also phase toward full non-China API sourcing by 2031.