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Trump’s Tariffs and the Price of Prescription Drugs

Posted by bryan hanley On May 13, 2025 at 7:58 pm | Comments Closed

Money and Pharmaceuticals on a table

Tariffs and the Pharma Supply Chain

The impact of the Trump Administration’s tariffs extends across numerous industries. While the reality of tariffs is yet to hit Finished Pharmaceutical Products (FPPs), the threat has become more and more real. Tariffs on FPPs have largely been avoided over the past decades as a result of the 1994 Pharmaceutical Agreement between the United States, the European Union, China, and a few other participants; the agreement was established to eliminate trade barriers on a large number of pharmaceutical substances.

A few weeks ago, however, the Trump administration proceeded with probes into pharmaceutical imports, setting the stage for potential tariff implementation. The administration has argued these tariffs will incentivize companies to bring production back into the U.S., helping make the supply chain more robust and decreasing the potential for disruptions. A few major pharmaceutical companies have already indicated plans to invest in the U.S. in response to this threat, including Roche, Novartis, AstraZeneca, and Eli Lilly.

Higher Costs, Higher Prices

However, many pharmaceutical leaders have spoken out against tariffs, arguing that tariffs could lead to supply chain disruptions and higher prices. According to Giovanni Barbella, the global head of strategy at Sandoz, because the margins of generic pharmaceuticals are so small, higher production costs stemming from these tariffs would directly increase the prices paid by consumers.

Barbella added that if tariffs further reduce these already tight margins, some players within the pharmaceutical supply chain may elect to leave the U.S. market altogether, instead focusing on more profitable markets. This will threaten the supply of U.S. pharmaceuticals, and in turn, lead to higher prices for drugs that remain in the U.S. as competition subsides.

Ernst & Young analyzed the potential increase in drug costs in the U.S. if tariffs are implemented, and the results are quite significant: a 25% tariff would increase drug costs by almost $51 billion annually. If companies choose to pass these tariffs onto consumers, Americans would be expected to pay 12.9% more (on average) for their prescription medications.

Remain Focused on Compliance

With the DSCSA Deadline just around the corner (May 27th, 2025, for manufacturers), the threat of tariffs and the additional costs associated with them are another added burden. Don’t let the threat of tariffs take away from compliance efforts – the penalties for noncompliance are substantial.

Gateway Checker’s suite of traceability and conformance testing services provides trading partners the confidence that their exchanges meet strict DSCSA requirements, all at a fraction of the cost. With the threat of tariffs and compliance demands on the rise, see how Gateway Checker makes compliance both simple and affordable.

To learn more, contact us or visit our website:

Coming Up Next

Trump’s recent executive order, which gave drugmakers a 30-day deadline for lowering the price of prescription drugs, will likely have a big impact on all stakeholders within the supply chain.

In the coming days, as the dust settles, I will provide some insights on how this legislation may play out alongside potential FPP tariffs.

With tariffs expected to raise prices, and the executive order seeking to lower them, what will the outcome be?

Trump’s Tariffs and Drug Prices

Posted by bryan hanley On December 11, 2024 at 12:18 pm | Comments Closed

Following his election victory, president-elect Donald Trump announced intentions of implementing tariffs on Canada, Mexico, and China; these tariffs include 25% tax on imports from both Mexico and Canada, and an additional 10% increase on the tariffs already in place on Chinese exports to the United States. The goals of these imports, according to the Trump administration, are to protect U.S. manufacturing; incentivize companies to build facilities in the U.S. (and create American jobs); provide billions to the federal reserve to help offset the cost of tax cuts; and deter the flow of illegal immigrants, fentanyl, and other illicit drugs.

However, those opposed to the tariffs (including many economists) emphasize how taxing goods could result in price increases for consumers, including prescription drugs. About 85% of the Active Pharmaceutical Ingredients (APIs) used by U.S. manufacturers for generic pharmaceuticals are from India and China; Mexico and Canada are also exporters of these materials. Taxing these APIs as they enter the United States could result in higher prices for finished goods. Companies importing these goods may simply pass the cost of the tariffs to end consumers, who are already burdened by inflation.

According to the Active Pharmaceutical Ingredient Innovation Center (APIIC), this overreliance on China, India, and other foreign nations for most of our APIs is detrimentally impacting the supply of essential medications in the United States. The APIIC also believes rising imports of pharmaceuticals to the U.S. “creates serious risks to national security and patient safety.” In the past decade, the number of API-facility locations has decreased by 61%, while foreign nations continue to scale their operations. Reshoring the manufacturing process could help mitigate these concerns, and eliminate the financial risk of higher costs associated with tariffs; could Trump’s tariff plan present further opportunity to invest in domestic API production facilities?

What do you think about the impact of tariffs on drug prices? Will tariffs raise prescription drug prices, or could the benefits of in-country production outweigh the potential-price hikes in the long run?