Pharmaceutical Industry Avoids Trump’s Tariffs — For Now

President Donald J. Trump © Courtesy of the Library of Congress Prints and Photographs Division

The U.S. pharmaceutical industry is bracing for a possible wave of tariffs on foreign-made drugs, even as they received a short-term exemption this week under President Donald Trump’s sweeping new trade policies.

Industry leaders warn that long-term tariffs could drive up costs, squeeze research budgets and ultimately lead to fewer new medications, according to news reports.

The New York Times reported that drugmakers are preparing for tariffs specifically targeting pharmaceuticals, with levies potentially hitting 25 percent or higher. Trump has repeatedly vowed to enact tariffs on medications to encourage domestic production.

“The pharmaceutical companies are going to come roaring back, they’re coming roaring back, they’re all coming back to our country because if they don’t, they got a big tax to pay,” Trump said during his tariff announcement ceremony at the White House Rose Garden April 2.

Pharma CEOs have not said much about the tariffs, until Wednesday, when the head of one of the world’s largest pharma companies spoke out.

Eli Lilly Chief Executive David Ricks told the BBC that Trump’s decision to impose broad tariffs marks a “pivot” that is likely irreversible.

“It feels like it'll be hard to come back from here,” Ricks said in the interview.

He noted that pharmaceutical companies “have to eat the cost of the tariffs” because prices in major markets, including the United States and Europe, are often capped. He cautioned that research and development could be the first area to suffer if tariffs on imported drugs take hold.

Ricks also acknowledged that while tariffs may prompt some companies to relocate certain manufacturing functions back to the United States, they will not generate the “hundreds of billions” in additional revenue Trump has promised.

While some drug manufacturing remains stateside, key components for many medications — including active ingredients in antibiotics and painkillers — are typically produced overseas. Analysts have warned that even a gradual rollout of tariffs could disrupt these supply chains, raising the cost of generic drugs and risking shortages, according to the New York Times report.

BIO President and CEO John F. Crowley released a statement March 26 saying the organization looked forward to working with the president on a solution.

“We fully support strong policies and programs that incentivize the manufacture of medicines here in America," Crowley said. "Re-onshoring key parts of the biotechnology supply chain to the U.S. and our allies and strengthening the American manufacturing base should be a high priority for both national and economic security. It will take years, though, for this shift and we need to be mindful of the negative consequences of these proposed tariffs. We look forward to working with the Administration and Congress to develop incentives and policies that drive private sector dollars to spur a renaissance of U.S. biotech manufacturing."