If President-elect Donald Trump fulfills his pledge to slap broad tariffs on goods from China and other foreign nations, many consumers may have to pay more for generic medications, according to policy experts.
Trump suggested 20% general taxes on all imports and at least 60% tariffs on Chinese goods throughout his campaign.
The premise is that raising the cost of imported goods will incentivize American businesses to source more and consumers to purchase more domestically.
However, experts point out a significant problem with that strategy: very few generic medications are indeed produced in the United States.
As manufacture in the United States has become less viable over the past few decades, the manufacturing of generic drugs has shifted more and more to other countries.
According to Dr. Aaron Kesselheim, a Harvard Medical School professor of medicine, over 80% of all active pharmaceutical ingredients, or APIs, are made in China, India, and other countries, and almost half of all generic medications are made overseas.
The Association for Accessible Medicines, a trade association that represents generic drugmakers, estimates that 90% of all prescriptions filled in the United States are generic medications.
According to Dr. Janet Woodcock, a former acting commissioner of the Food and Drug Administration, importing generic medications is likely to become more costly if Trump doesn’t provide some sort of exemption. This expense could be passed on to patients or force more struggling generic drugmakers to leave the United States.
Woodcock stated, “I believed tariffs were meant to level the playing field and support the growth of domestic industry.” But what are you doing if there isn’t any home industry? All you’re doing is charging customers more.
“For drugs at least, it just seems like the wrong tool for the problem,” she continued.
Even if the tariffs are only applied to the active substances and not the final goods, they may still result in higher prices, according to Arthur Caplan, chairman of the medical ethics section at NYU Langone Medical Center in New York City. Drugs are manufactured in the United States, although some of their constituents are produced elsewhere.
“That’s where you need to exercise caution,” he remarked.
It is also doubtful that tariffs would encourage the production of additional generic medications in the United States. According to Woodcock, there is no incentive for pharmaceutical companies to invest in new domestic facilities because generic pharmaceuticals generate such low profits.
A pressure on the market for generic medications?
Trump’s transition team spokesman Karoline Leavitt refused to comment on whether the president intended to provide an exemption for generic medications.
In a statement, Leavitt said: “President Trump implemented tariffs against China during his first term, which led to no inflation, increased investment, and generated employment. By reshoring American jobs, reducing inflation, increasing real wages, decreasing taxes, reducing regulations, and unleashing American energy, President Trump will act swiftly to repair and rebuild an economy that puts American workers first.
According to Kesselheim, the increased expense would exacerbate the current medicine shortages.
The United States is facing a scarcity of a number of popular prescriptions, such as pain and ADHD meds, as well as numerous life-saving treatments, such as IV fluids and chemotherapy therapies.
Half of the 277 ongoing medicine shortages in the United States have lasted for two years or more, according to the American Society of Health-System Pharmacists, a body that monitors drug shortages.
“There are close links between the supply chain, the price, and the cost of production, which includes shipping a product,” Kesselheim stated. “Shortages can result from supply chain disruptions, such as tariffs, which will raise prices.”
Shortages can result from any disruption in the system, including natural catastrophes. That’s what happened this year when a plant controlled by Baxter International, the biggest IV fluid maker in the US, in North Carolina was devastated by water brought on by Hurricane Helene.
Redundancy is necessary. We must be resilient. We don’t want to be dependent on a single manufacturer in China, India, or Indonesia,” Woodcock stated. “However, the United States’ purchasing and financial systems are pushing it in the direction of one or two winners.”
According to Kesselheim, the tariffs would also increase the price of name-brand medications, but since they are already so costly, it is doubtful that patients would notice a difference.
According to him, such is not the case with generic medications, which are less expensive and frequently offered for sale at prices that are comparable to their original cost.
According to him, “name-brand medications are sold at monopoly prices, which are frequently hundreds or thousands of times the cost of production.” “It is unlikely that those marginally higher production costs will have a significant effect.”
He went on to say that “it could quickly turn around and impact that price that patients pay” with generic medications.
Kesselheim’s main worry is that if additional generic medicine makers leave the market, tariffs might drive up the cost of generic medications.
He stated, “They stop selling if the tariffs make it so they no longer feel like they can make a reasonable profit.” “And either that means there is a risk of shortage or that the remaining manufacturers in the market can raise the price even further because they have more market concentration.”
