TRUMP’S TARIFFS MAY TARGET PHARMACEUTICALS – HERE’S HOW DRUG PRICES COULD CHANGE

Commonly used drugs like Novo Nordisk’s Ozempic were exempt from President Donald Trump’s expansive reciprocal tariffs announced earlier this week, which are expected to drive prices up across several industries, though analysts and Trump have warned that future tariffs will likely target imported medicines.

Trump imposed a baseline 10% on most U.S. imports in an address on Wednesday, though pharmaceuticals were among the goods exempt from the sweeping tariffs, in addition to some energy products, minerals and chemicals used in energy, manufacturing and vaccine production.

While announcing his reciprocal tariffs, Trump warned pharmaceutical companies to return production to the U.S., saying, “[They] are going to come roaring back … they’re all coming back to our country because if they don’t, they’ve got a big tax to pay.”

Trump floated tariffs on semiconductors and pharmaceuticals in February, suggesting levies would be “25% and higher” and would become “very substantially higher over a course of the year” unless companies shift production to U.S.-based facilities.

How Much Would Drug Prices Increase Under Trump’s Tariffs?
It’s unclear how pharmaceutical companies would respond to tariffs, including whether tariffs would drive up the prices for generic drugs. Researchers from the University of Toronto, the Hertie School in Berlin and the University of Pittsburgh reported in an analysis published Monday that $3 billion of pharmaceuticals sold in the U.S. rely on Canadian manufacturing, and tariffs on pharmaceuticals would likely add $750 million in costs. Extending tariffs to other exporters like China, India and Europe would likely “worsen the predicted effects,” which include increased healthcare costs and disrupt drug supplies, researchers claimed. Diederik Stadig, a healthcare analyst at ING, estimated that tariffs on all pharmaceutical imports to the U.S. would increase the price for low-cost, generic drugs by up to $0.12 per pill, or an additional cost of roughly $42 per year. More expensive drugs, like those used to treat cancer, could increase by up to $10,000, Stadig said.

Where Does The U.s. Import Drugs From?
The U.S. largely relies on European Union countries for pharmaceutical imports, with 20% of imports coming from Ireland, 10.7% from Germany and 8.5% from Switzerland, according to estimates from Stadig. India (6.2%), Singapore (5.6%) and Japan (3.7%) also supply a portion of pharmaceutical imports, Stadig reported. The EU and Singapore face a baseline 10% tariff, whereas India and Japan face levies of 26% and 24%, respectively. Active ingredients for several drugs or medical devices are produced outside of the U.S.:
• As of 2021, none of the active ingredients for most of the top-consumed generic drugs in the U.S., in addition to several antibiotics and antivirals, were produced at U.S.-based plants, according to Clarivate, a healthcare industry analyst firm.
• The American Hospital Association and other industry lobbying groups warned that tariffs could lead to shortages for medical devices like syringes and blood pressure cuffs, which are mostly sourced from China.
• Novo Nordisk’s popular obesity and diabetes drugs Wegovy and Ozempic rely on an active ingredient, semaglutide, that is largely manufactured in Denmark, though the company has also increased production in the U.S. in recent years, the company told Forbes in a statement.
• Tirzepatide, the active ingredient for Eli Lilly’s obesity and diabetes drugs Mounjaro and Zepbound, is dependent on imports from Germany and the Netherlands, while the company told Forbes in a statement it sources production materials “internally.”
• Novavax’s Covid vaccine is manufactured at a plant in India.
• Amoxicillin—a commonly used antibiotic—relies on production primarily in China, India and Europe, Clarivate reported.
• The active ingredient for lidocaine, a commonly used anesthetic, is largely produced in India, according to Clarivate.
• Norvir, AbbVie’s Food and Drug Administration-approved HIV medication, relies on imports from Germany and Ireland, though the company told Reuters it relies on a “robust, diversified and redundant manufacturing network with geographic balance and multiple supply sites.”

Could Drug Companies Move Manufacturing To The U.S.?
Some companies, like Novo Nordisk and Eli Lilly, have spent billions to expand manufacturing in the U.S. in recent years, though construction on new facilities for either company is expected to take years to complete. It’s unlikely that pharmaceutical manufacturers in India, which account for 6% of all U.S. drug imports, will shift manufacturing to the U.S., Stadig said, as production in India is much cheaper. If India-based companies did decide to move to the U.S., however, Stadig said the construction of new facilities would take about 10 years.

Key Background
Trump imposed sweeping reciprocal tariffs on most U.S. trade partners on Wednesday, which Trump had referred to as “Liberation Day.” The levies were roughly half of the total charges imposed on the U.S., Trump said, arguing his approach was “kind.” Some economists and analysts criticized Trump’s tariff formula, however, including the global political scientist Ian Bremmer, who pointed out Trump’s numbers were based on a simpler calculation than what U.S. trade officials claimed. Bremmer wrote Trump’s formula is “incredibly stupid.” During his reelection campaign, Trump floated a universal 20% tariff on all imported goods and later announced a 25% tariff on all goods imported from Canada and Mexico. A 10% tariff was also levied on China. The latest tariffs are expected to raise prices for several commonly used products like coffee, chocolate and even iPhones.

Source: Forbes

About STELLAPHARM

Stellapharm J.V. Co., Ltd. is currently known as one of leading generics pharmaceutical companies and strong manufacturers in Vietnam. Established in 2000, Stellapharm was built on the foundation of a manufacturing factory in Vietnam and formed a joint venture with a partner from Germany. We focus on both prescription drugs and non-prescription especially in cardiovascular diseases, anti-diabetics drugs, etc. Products of Stellapharm are now used by millions of patients in more than 50 countries worldwide.

The company is globally recognized for its quality through our facilities have been audited and approved by stringent authority like EMA, PMDA, Taiwan GMP, local WHO and others.

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