Medications that are low in cost and yield little profit are particularly at risk if the U.S. imposes tariffs on pharmaceuticals. These medicines, many of which are manufactured abroad, are invaluable in treating a myriad of health conditions. However, if tariffs are placed as proposed by former President Donald Trump, these drugs could potentially face shortages and transformations in their usage could be imminent, according to experts.
The prospect of a significant tariff could drive pharmaceutical companies to halt the production of low-profit, low-cost drugs. Example of such drugs could be the components used in epidurals. In such a scenario, patients may be compelled to resort to alternative treatments due to a lack of supplies in hospitals.
An expert on drug shortages indicated a potential regression to older methods. The availability of epidurals, for instance, might not be guaranteed. President Trump’s enduring trade disagreements had, up to a point, exempted pharmaceuticals. Pharmaceuticals were notably absent from the exorbitant import levies announced on what he termed ‘Liberation Day’.
But there is growing concern that this exemption may not be here to stay. During his time in office, former President Trump has continually reiterated his belief that pharmaceutical tariffs could incentivize drugmakers to bring their manufacturing operations back to American soil. The announcement of this tariff on pharmaceuticals was impending, according to Trump.
In addition, the Department of Commerce revealed in April an ongoing investigation into the national security implications revolving around pharmaceutical imports. The findings of this investigation could potentially be used to advocate tariffs on drugs as a solution. This prospect has already led pharmacists in the U.S. to begin stockpiling common drugs.
When it comes to the supply chain for medications, clarity is elusive, making it hard to predict which participants will be most affected by the tariffs. However, should a high tariff be imposed on pharmaceuticals, it is expected that certain types of drugs are more likely to vanish from availability for needy patients.
Pain relievers mostly come from China and are easily accessible over the counter in the U.S. This wouldn’t be immediately noticeable due to existing stockpiles, but if tariffs were to be implemented starting June 1, shortages might become apparent around occasions such as Halloween and Christmas.
A significant portion of U.S. prescriptions is for generic drugs, and many of the active pharmaceutical ingredients (APIs) for these drugs are sourced from overseas. Basic yet essential drugs that are used daily by hospitals, like lidocaine and morphine, are inexpensive to make but could be at risk of ceasing production under high tariffs as pharmaceutical companies may opt to produce more profitable drugs.
Cancer treatment medicine could be the most impacted by these proposed pharmaceutical tariffs, leading to shortages in hospitals. These drugs are already dealing with pre-existing supply issues. For instance, in 2023, there were shortages of ‘Cisplatin’, a critical chemotherapy drug, due to manufacturing compliance issues in an Indian facility which held half the market share for this vital drug. This highlights that a single malfunction in the supply chain can trigger a domino effect.
The disruption in 2023 was due to quality issues; however, if these broad pharmaceutical tariffs were to be imposed by former President Trump, it could lead to shortages driven by financial concerns. Cancer medications are typically administered by a physician and many are covered under the ‘340B’ safety-net program of the U.S. government. This program, aimed at increasing access to outpatient medications, allows qualified healthcare providers to buy certain outpatient drugs at discounted rates from manufacturers.
Implementing tariffs of 20-25% could render it unprofitable for manufacturers to continue producing these cancer medications, leading to potential discontinuation. But the feasibility of building a new medication factory in the U.S. in the near future is highly unlikely. The process, taking at least three years factoring in FDA regulations and inspections, is both complex and time-consuming.
Hospital drugs usually come in a vial, to be applied with a syringe, the majority of which are manufactured in China. A tariff specifically targeting China might encourage countries like India to reduce their dependency on China for active pharmaceutical ingredients. This could indirectly benefit the U.S., given its extensive trade with India.
However, a generalized tariff including India might heighten the risk of generic drug shortages and tend to push India towards more affordable Chinese resources. At this point, the former President continues to uphold his policy of tariff imposition.
If a 25% tariff on foreign pharmaceuticals becomes a reality, it would be a significant, albeit troublesome, landmark. Losing access to preferred or essential treatment options due to drug shortages is not a desirable prospect for future memory. In the coming winter, when the need for cold medicine arises, the sought-after remedy might not be available on the shelf.
Ultimately, tariffs on pharmaceuticals could have unforeseen consequences and potentially detrimental effects on healthcare practices. Low-profit drugs play a vital role in everyday medical treatment. Disruptions in the supply of these critical medications could noticeably impact patient care and the overall functioning of the healthcare system.