Trump's tariffs could increase the price of generic drugs in the United States

The cost of generic drugs for many people could rise if President-elect Donald Trump follows through on his promise to impose drastic tariffs on products from China and other foreign countries, policy experts say.

During his campaign, Trump proposed blanket tariffs of 20% on all imports and tariffs of at least 60% on products from China.

The idea is that making foreign products more expensive would encourage U.S. companies to source more and consumers to buy more products at home.

But experts say this plan has a major flaw: Very few generic drugs are actually made in the United States.

In recent decades, generic drug manufacturing has increasingly moved overseas as production in the United States has become less profitable.

Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, said that about half of all generic drugs are made overseas and about 80% of all active pharmaceutical ingredients, or APIs, are produced abroad, in China, India and elsewhere. .

Generic drugs are the backbone of prescription drugs in the United States: They account for about 90 percent of all prescriptions filled, according to the Association for Accessible Medicines, a trade group that represents generic drug makers.

If Trump does not grant some sort of exemption, importing generic drugs will likely become more expensive, a cost that could be passed on to patients or force struggling generic drugmakers to leave the United States, said Dr. Janet Woodcock, former acting commissioner of the Food and Drug Administration

I thought the tariffs were meant to help domestic industry thrive and level the playing field, Woodcock said. But if there is no national industry, what do you do? You're just passing on the higher costs to consumers.

It just seems like the wrong tool to solve the problem, at least for drugs, she added.

Arthur Caplan, chief of the division of medical ethics at NYU Langone Medical Center in New York, said that even if the tariffs are imposed only on active ingredients and not on finished products, they could still lead to higher costs. costs. Some drug ingredients are manufactured overseas, but the drugs are finished and packaged in the United States.

This is where you have to be careful, he says.

The tariffs are also unlikely to further boost generic drug manufacturing in the United States. With generic drugs bringing in so little profit, there is little incentive for drugmakers to invest in new domestic facilities, Woodcock said.

Pressure on the generic drug industry?

Karoline Leavitt, a spokeswoman for Trump's transition team, declined to say whether Trump planned to grant an exemption on generic drugs.

Leavitt said in a statement: During his first term, President Trump instituted tariffs against China that created jobs, spurred investment and caused no inflation. President Trump will move quickly to repair and restore an economy that favors American workers by reshoring American jobs, reducing inflation, raising real wages, cutting taxes, reducing regulations, and freeing up American energy.

Kesselheim said the added cost would also worsen current drug shortages.

The United States is facing shortages of several life-saving medications, including chemotherapy drugs and intravenous fluids, as well as several common medications, such as pain and ADHD medications.

According to the American Society of Health-System Pharmacists, a group that tracks drug shortages, there are 277 active drug shortages in the United States, half of which have persisted for two years or more.

Price and the cost of production, which includes shipping a product, and the supply chain are closely linked, Kesselheim said. When there are disruptions in the supply chain, such as tariffs, it can lead to shortages and lead to increased prices.

Any problem in the system, including natural disasters, can lead to shortages. That's what happened this year when catastrophic flooding from Hurricane Helene hit a facility owned by the nation's largest intravenous fluid manufacturer, Baxter International, in North Carolina.

We need redundancy. We need resilience. We don't want one manufacturer, in Indonesia or India or China, to be the only group we rely on, Woodcock said. But the financial system, the purchasing system, in the United States, pushes them toward one or two winners.

Kesselheim said the tariffs would also increase the cost of brand-name drugs, although patients are unlikely to notice a difference because those are already extremely expensive.

That's different from generic drugs, which are cheaper and often sold for close to what they were made for, he said.

Brand-name drugs are sold at monopoly prices, often hundreds or thousands of times higher than their cost of production, he said. These slightly increased production costs are unlikely to have a substantial impact.

With generic drugs, the situation could quickly change and impact the price patients pay, he added.

What worries Kesselheim most is that the tariffs could cause generic drug prices to skyrocket if more generic drug makers abandon their participation.

If the tariffs make them no longer feel like they can make a reasonable profit, then they stop selling, he said. And either this means that the remaining manufacturers in the market can raise prices further because they have greater market concentration, or there is a risk of shortages.

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