Pharma Organizations Respond to Proposed Tariffs

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President Donald Trump is set to impose tariffs on a variety of imported goods from China, Canada, Mexico, and possibly other countries. Reuters reported that Trump plans to place tariffs on various items including computer chips and pharmaceuticals.¹

The President has argued that his tariffs would have a variety of positive impacts on the United States, such as pushing more companies to produce goods within the country. However, critics of the President say that these tariffs will increase costs for American consumers and even potentially cause disruptions in the availability of goods. For the pharmaceutical industry, this could have far-reaching implications.

In a press release, president and CEO of the Association for Accessible Medicines John Murphy III said, “The global supply chain for generic and biosimilar medicines is critically important for U.S. patients.² From the base ingredients to the finished products, U.S. medicines rely on a global supply chain that is already stressed and in need of strengthening. Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages.”

He continued to discuss the impact the tariffs could have on generic manufacturers, who often operate at lower margins. According to Murphy, the generics market in the US has grown in volume and launches, but sales have actually decreased by $6.4 billion in the past five years. As a result, these manufacturers could struggle to absorb new costs and may be forced to exit markets where they are already struggling.

“Americans pay less for generics than almost anywhere in the world but are facing growing challenges of drug shortages,” he continued. “The previous Trump Administration opted not to impose tariffs on generic and biosimilar manufactures. AAM and its members urge the Administration to follow their past practice and work with our industry on constructive policies and regulatory reforms that will bolster the resiliency and vibrancy of this critical healthcare market to the benefit of the American economy, lower overall healthcare costs, and keeping America’s patients healthy.”

The Healthcare Distribution Alliance (HDA) also issued a statement, saying that it believes that strategic investments in domestic manufacturing would result in positive change for the healthcare industry.³ However, it also believes that the proposed tariffs would result in creating more challenges than solutions.

“We respectfully urge caution on instituting tariffs on sectors that will impact medical products,” the HDA said in its statement. “Tariffs on pharmaceuticals would strain the pharmaceutical supply chain and could adversely affect American patients, whether through increased medical product costs or manufacturers leaving the market. Accordingly, we ask the administration to consider establishing exemptions for pharmaceutical products and long implementation timelines to maintain the safe and efficient delivery of approximately 10 million medicines and healthcare products every day.”

The statement continued, “We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers and cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins - 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs.”

Aside from direct tariffs on pharmaceuticals, tariffs on computer chips and other technologies could strain the industry’s relationship with AI. Some of the proposed tariffs could also significantly impact power prices, which is already a significant cost for AI procedures.

President Trump has laid out multiple targets for tariffs and has stated a variety of reasons for why he’s implementing these tariffs. At this stage, it’s still unclear what impact these tariffs will have and how the various industries involved will react. The only thing that’s clear is that this issue will likely impact major decisions across the pharma industry for the foreseeable future.

Sources

1. Trump Tariffs on Chips and Drugs Would Hit U.S. Allies in Asia. Reuters. January 28, 2025. https://www.reuters.com/world/trump-tariffs-chips-drugs-would-hit-us-allies-asia-2025-01-28/
2. Association for Accessible Medicines Comments on New Tariffs. AAM. February 2, 2025. https://accessiblemeds.org/resources/press-releases/aam-comments-new-tariffs/
3. HDA Statement on Proposed Tariffs of Pharmaceutical Products. HDA. February 2, 2025. https://www.publicnow.com/view/2525CA83682869F4874B9C804258FAD64F88899A?1738547314