Trump's pharmaceutical tariffs may increase costs, worsen drug shortages, negatively impacting drugmakers and patients
From CNBC: 2025-04-11 11:40:00
President Donald Trump’s planned tariffs on pharmaceuticals could significantly impact drugmakers and American patients, leading to disruptions in the complex supply chain and potentially driving up drug prices. Some experts warn that the tariffs could worsen the affordability crisis for prescription drugs in America. Trump has doubled down on plans to impose pharmaceutical-specific tariffs, causing stocks of some drugmakers to plummet. While some companies may be better positioned to weather the tariffs, experts are unsure if this will lead to increased domestic drug manufacturing. The impact of tariffs on different types of drugs will vary, with generic drugs facing potential shortages and price increases. Pharmaceutical tariffs could undermine the government’s efforts to lower healthcare costs in the U.S. Drug shortages in the U.S. could worsen due to factors like manufacturing quality control and demand surges. Generic sterile injectable drugs, commonly used in hospitals, are particularly vulnerable to shortages and supply issues. Manufacturers of these injections may struggle to absorb tariff-induced cost increases and could potentially exit the U.S. market, further exacerbating drug shortages. Manufacturers of generic oral drugs, on the other hand, may be able to more easily pass on higher costs to consumers due to less complex manufacturing and a more competitive market. Branded medications, which have patent protections and face less competition, could also be impacted by tariffs on drugs imported from Europe. The US imports about 85% of its pharmaceuticals, primarily from Europe. Branded drugs are more profitable with stable supply chains, leaving consumers vulnerable to price hikes. Patients with high-deductible plans will feel the impact of tariffs on branded drugs more than generics. Manufacturers may pass costs to consumers, affecting out-of-pocket expenses.
Reshoring drug manufacturing to the US is challenging and costly. Analysts doubt tariffs will shift production back due to complex global supply chains. Some companies like Eli Lilly and Johnson & Johnson have invested billions in US manufacturing. However, the industry worries about the impact of tariffs on research and development, potentially leading to staff cuts or reduced innovation.
Read more at CNBC: Trump pharmaceutical tariffs may raise costs, worsen drug shortages