Trump’s tariffs could raise prescription drug prices, cause shortages

Trump meets with retail CEOs to discuss tariffs

President Trump recently met with executives from major retailers, including Walmart, Home Depot, Lowe’s and Target to discuss the impact of his tariffs.

Cheddar

Americans medicine cabinets are filled with prescription drugs that are often made in or contain ingredients from China or India.

Pharmaceutical experts warn patients will likely eventually see higher prices and possibly some shortages if President Donald Trump follows through on his vow to assess tariffs on prescription drug imports.

While pharmaceutical companies were exempted from the across-the-board 10% tariff on most imported goods announced earlier this month, the president has repeatedly said he plans trade actions for drug imports.

April 8, Trump said his administration would soon impose a “major tariff on pharmaceuticals” imported to the U.S. And he predicted drug companies would move factories to the United States to avoid paying duties on imports.

While speaking to reporters from the Oval Office on April 9, Trump said, “We don’t make our drugs and our pharmaceuticals in this country.” He added, “We’re going to put tariffs on the pharmaceutical companies, and they are going to all want to come back.”

And April 14, Trump’s Department of Commerce said in a Federal Register filing it’s investigating whether imports of pharmaceuticals and pharmaceutical ingredients pose a threat to the United States’ national security.

The Department of Commerce filing opened a 21-day public comment period seeking input on how much Americans rely on foreign supply chains for their prescription drugs. The investigation will seek to address how trade policies impact domestic drug production and whether tariffs are needed to protect national security.

The Trump administration has used these filings − section 232 of the 1960s-era Trade Expansion Act − to assess industry-specific tariffs on imports of steel, aluminum and the auto industry. Under section 232, the administration must complete the investigation within 9 months, but Commerce Secretary Howard Lutnick said drug tariffs will come in “a month or two.”

Should the administration impose tariffs on pharmaceuticals, the impact will likely ripple to hospitals and doctors, pharmacy chains and consumers, pharmaceutical industry experts say.

“There are clearly going to be tariffs that impact pharmaceutical supply chains,” said Tom Kraus, vice president of government relations of the American Society of Health-System Pharmacists, which represents hospital pharmacists.

Kraus said brand-name drugs that already command higher prices are less likely to be impacted by tariffs. Generic drugs − which account for the vast majority of prescriptions filled by U.S. consumers − have small profit margins and are more likely to feel the financial squeeze from tariffs, Kraus said.

Generics vs brand name drugs

Drug pricing experts warn generic drugs face greater risk of tariff-related price increases and possible shortages.

Brand-name drugs are protected by patents allowing drug companies to exclusively sell medications without direct competition. Drug companies have no limits when setting prices for brand-name drugs, but the amount consumers pay depends on negotiations hashed out with insurers and pharmacy benefit managers.

Once a drug is no longer eligible for patent protection, generic manufacturers can make and sell similar versions of branded drugs, which lowers prices for consumers.

Tariffs are more likely to disrupt prices and production of generic drugs because these medications rely on lower-cost materials, ingredients and manufacturing in China and India, said Mariana Socal, associate professor of health policy and management at Johns Hopkins Bloomberg School of Public Health.

Whether tariffs impact how much U.S. consumers pay for prescriptions is a “question that will probably keep everyone awake at night.”

Americans pay “the highest prices in the world for our drugs,” Socal said. “We pay three to four times higher prices than than other comparable countries.”

Brand-name drugs typically drive prescription drug expenses. Most consumers have health insurance, which typically charges a copay for consumers when they fill a prescription. Many also must pay coinsurance, which is a percentage of a total drug’s cost.

Socal said said global competition keeps generic prices lower for consumers. If generic drugmakers and distributors must pay tariff-related costs, they might need to further cut production costs. That could mean generic manufacturers ship a “lower quality product that has a lower cost,” Socal said.

With a tariff on generic imports, “it’s likely millions and millions of people will be affected by this,” Socal said.

Generics accounted for 90% of U.S. prescriptions but 13.1% of total drug spending, according to a 2024 report released by the Association for Accessible Medicines, which represents generic drugmakers.

John Murphy III, President and CEO of the generic drugmakers group, said a reliable supply of generic medicines is “critical to patient health, U.S. healthcare and national security interests. Tariffs, however, will only amplify the problems that already exist in the U.S. market for affordable medicines,” Murphy said.

Could tariffs create drug shortages?

The U.S. health care system has grappled with periodic drug shortages for more than two decades. The number of drugs in shortage peaked at 323 during the first three months of 2024, but dropped to 270 as of March, according to the American Society of Health-System Pharmacists.

The reasons for the shortages ranged from disruptions caused by hurricanes to factory contamination that shut down production lines. In some cases, drug manufacturers stopped making a drug.

Marta Wosińska, a health economist and senior fellow at the Brookings Institution, worries tariffs could lead to drug shortages. If generic manufacturers face higher costs and can’t pass those costs on to consumers, they might choose to discontinue production of critical drugs, according to Wosińska.

“What I worry is that thresholds, the comfort level that manufacturers might have for walking out of a market, might change,” due to the tariffs, Wosińska said. “They were basically forced into that situation.”

Two years ago, more than a dozen cancer drugs were in shortage, including cisplatin and carboplatin, used to treat lung, breast, prostate and gynecologic cancers. The National Cancer Institute said cisplatin and similar drugs are prescribed for 10% to 20% of all cancer patients.

Generic drug manufacturers also face financial pressure from federal programs such as the 340B, which requires manufacturers to discount drugs.

Another wild card on pricing is Trump’s executive order released April 15 that aims to lower drug prices.

Among other strategies, the order calls on expanding imports of cheaper drugs from Canada, although it’s unclear how or whether tariffs would apply to such imports. The executive order “demonstrates this administration’s commitment to exploring innovative approaches to reduce prescription drug costs for American patients,” said Vianca N. Rodriguez Feliciano, press secretary of the U.S. Department of Health & Human Services.

The combination of tariff costs and price pressures from programs such as 340B might prompt some drugmakers to cut back or halt production, leading to drug shortages.

“I particularly worry about cancer drugs – all chemotherapy drugs,” Wosińska said.

Will drug manufacturing return to the United States?

Pharmaceutical products has become a global affair over the last three decades with large factories in India and China producing a large share of generic drugs and drug ingredients. What’s more, drugmakers have shifted production to European nations such as Ireland due to tax advantages. Factories in Ireland make brand-name drugs such as Eli Lilly’s weight-loss medication Zepbound and Merck’s cancer therapy Keytruda.

Nearly $213 billion in pharmaceutical products were imported to the U.S. last year, almost triple $73 billion imported in 2014, Reuters reported.

Although domestic factories still produce drugs and drug ingredients, pharmaceutical experts say it will be difficult for the United States to dominate drug manufacturing like the nation once did.

If a company plans to build a factory in either the United States or Europe – wealthy nations where project costs could be comparable – then corporate decision-makers might consider how tariffs would impact overall expenses, Wosińska said.

But she said tariffs might not be as important for deciding whether to open a plant in India, where costs are lower.

Furthermore, drug companies calculate a project’s cost and potential return over several years and it’s uncertain how long the tariffs, if implemented, will last.

“Making a billion-dollar investment in the United States when I don’t even know whether tariffs are going to be there a month from now makes it a really difficult calculus for companies,” Wosińska said.

Melissa Barber, a drug pricing expert and an affiliate of the Yale Collaboration for Regulatory Rigor, Integrity and Transparency, said merely assessing tariffs on imports isn’t enough to revive domestic manufacturing.

She noted organizations such as Civica Rx, a nonprofit formed by hospitals and philanthropies, formed to domestically manufacture drugs such as insulin. She said domestic manufacturing could ensure a guaranteed supply of critical medicines to counter a market that is dysfunctional. However, abruptly changing trade policies won’t achieve that goal, she said.

“This is not groundbreaking, new stuff. It’s just a question of let’s have a plan,” Barber said. “Let’s prioritize the drugs and let’s not throw the markets in chaos.”

No Byline Policy

Editorial Guidelines

Corrections Policy

Source