Former President Donald Trump’s proposal to impose tariffs on pharmaceutical imports into the U.S. has triggered alarm among health policy experts and the pharmaceutical industry. While Trump claims these tariffs will incentivize drugmakers to relocate manufacturing to the U.S., experts warn the move could backfire, driving up drug prices, deepening drug shortages, and destabilizing a supply chain that is already under stress.
The U.S. already faces a major affordability crisis when it comes to prescription medications. Mariana Socal, a health policy professor at Johns Hopkins University, warned that any additional cost burden in the pharmaceutical supply chain would likely trickle down to consumers. Americans already pay two to three times more for prescription drugs than patients in other developed countries, and tariffs could exacerbate this disparity. Even modest increases in drug production costs could worsen access, particularly for vulnerable populations.
Trump’s Pharmaceutical Tariffs Could Reshape Industry, Strain Supply Chains, and Impact Prices
Trump recently doubled down on his intention to introduce “major” pharmaceutical-specific tariffs. While he temporarily paused broad tariffs on some countries, this exemption doesn’t appear to extend to specific industries like pharmaceuticals. His announcement led to a noticeable dip in pharmaceutical stock values, reflecting market uncertainty and fears of new costs to the industry.
A key argument from Trump’s team is that tariffs will motivate companies to bring drug manufacturing back to the U.S., reversing years of offshoring. However, experts say this goal is easier said than done. The pharmaceutical supply chain is deeply globalized, with different parts of the production process, especially for raw ingredients, distributed across continents. Reshoring production would require billions of dollars in investment and take several years to implement, making it unlikely that the short-term effects of tariffs will be offset by domestic capacity.
Trump’s Drug Tariff Plan Sparks Fears of Higher Prices, Deeper Shortages, and Global Supply Disruptions
Not all drugmakers will be affected equally. Firms like Eli Lilly, AbbVie, and Bristol Myers Squibb have substantial manufacturing capacity within the U.S. and could better weather the storm. Others, including Novartis and Roche, operate fewer American plants and rely more heavily on overseas manufacturing, leaving them more vulnerable to increased import costs. These structural differences could lead to shifts in market competitiveness if tariffs are enacted.
One of the most concerning impacts of the proposed tariffs could be on generic drugs, which account for roughly 90% of prescriptions in the U.S. These drugs are typically inexpensive and operate on thin profit margins. Tariffs could hit these manufacturers hardest, especially since many rely on ingredients from countries like India and China. As a result, some companies might find it unprofitable to continue operating in the U.S. market, reducing access to essential medicines for millions of patients.
Tariffs May Exacerbate Drug Shortages, Raise Prices, and Threaten Innovation in Pharmaceuticals
The U.S. is already experiencing a historic shortage of drugs, with 270 medications currently in short supply. Experts worry that tariffs could intensify this problem, especially for complex and low-margin drugs like generic sterile injectables.
These medications, used in hospitals for treatments ranging from cancer therapy to pain management, are already vulnerable due to fragile supply chains. If cost increases can’t be passed on due to fixed-price contracts with purchasing organizations, manufacturers may exit the market or reduce production, potentially leading to dangerous shortages.
Trump’s Drug Tariff Plan Sparks Fears of Higher Prices, Deeper Shortages, and Global Supply Disruptions
Branded, patent-protected drugs will be impacted differently. These medications, often manufactured in the U.S. or Europe, have higher profit margins and more stable supply chains. As a result, manufacturers can more easily absorb or pass on added costs. However, this comes at a cost to patients, particularly those in high-deductible insurance plans. A rise in branded drug prices due to tariffs could significantly increase out-of-pocket costs, making life-saving treatments less accessible for many Americans.
Pharmaceutical companies face a delicate balancing act. While they may be forced to raise prices to cope with tariffs, doing so could spark public and political backlash. The high cost of prescription drugs is already a major issue in the U.S., and any price increases could intensify calls for regulatory action. Analysts warn that this might even revive efforts from Trump’s first term to tie U.S. drug prices to those in other countries—a move strongly opposed by the industry.
Ultimately, while Trump’s tariffs may be aimed at boosting domestic manufacturing, the unintended consequences could be severe. Analysts note that the global nature of pharmaceutical supply chains makes relocation highly complex. Some large companies, like Eli Lilly and Johnson & Johnson, have already invested billions in U.S. facilities, but even they caution against tariffs.
Eli Lilly CEO Dave Ricks recently stated that absorbing these costs would likely mean cutting spending in areas like research and development. Such reductions could stifle innovation and slow the development of new treatments.
Trump’s proposed pharmaceutical tariffs, though politically popular with some voters, may have counterproductive consequences. From higher consumer prices and worsened shortages to potential stifling of innovation, the industry and patients alike could face serious challenges if these policies are implemented. Whether the tariffs will deliver their intended benefit—reshoring drug manufacturing—remains uncertain and highly debated among experts.
