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Pharma industry groups are sounding the alarm, warning that President Donald Trump’s tariffs could worsen drug shortages, drive up prices, and push generic manufacturers out of the U.S.
The Trump administration announced Saturday a 25% tariff on imports from Mexico and Canada, with a lower 10% tariff on Canadian energy exports. Additionally, imports from China are set to face a 10% tariff. All the tariffs were supposed to take effect on Tuesday and stay in place until these countries curb the flow of illegal immigrants and drugs into the U.S., according to the White House.
On Monday morning, Trump announced a one-month pause on tariffs for Mexican goods after striking a deal with Mexican President Claudia Sheinbaum. But it’s the tariffs on China that have the pharmaceutical industry most worried.
The Healthcare Distribution Alliance issued a statement on Sunday, cautioning that tariffs could disrupt the industry’s supply chain and affect American patients, especially those that rely on generic drugs.
“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,” the alliance said in its statement. “Distributors and generic manufacturers cannot absorb the rising costs of broad tariffs.”
The group noted that profit margins for many generic drug makers are razor-thin — sometimes as low as 0.3%. As a result, the U.S. could face new or worsening shortages of medications, with the added costs inevitably falling on payers and patients.
The Association for Accessible Medicines echoed a similar warning.
“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,” John Murphy III, President and CEO of the Association for Accessible Medicines, said in a statement. “Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages.”
Additionally, Murphy warned that some generic drugmaker would be forced to exit the American market.
When it comes to Big Pharma, the drug companies with close ties with Chinese firms — such as AstraZeneca (AZN-1.36%) and Johnson & Johnson — firm are the most likely to be impacted.
“Big Pharma is increasingly looking to China to find promising new drug candidates, while the country supplies much of the active pharmaceutical ingredients pharmas use in manufacturing,” said Seeking Alpha analysts Edmund Ingham.