Could Trump’s proposed pharmaceutical tariffs trigger a drug shortage in the U.S.?

American patients could soon experience increased drug prices and potential shortages if US President Donald Trump goes ahead with proposals to impose tariffs on drug imports, experts have cautioned.

Although the life-saving drugs were initially exempt from the 10 per cent tariff on imported goods, Trump on April 8 announced a ‘major tariff’ on them. He claimed it would push companies to move production back to the United States.

According to USA Today, the Department of Commerce on April 14 launched a probe under Section 232 of the Trade Expansion Act. This is typically used to assess whether certain imports threaten national security.


Public opinions were invited to understand how dependent Americans are on foreign supply chains for essential medicines, the report added.

How much are Americans dependent on imported drugs?

The USA Today report states that imported drugs are central to US healthcare. Washington imported $213 billion worth of pharmaceutical products in 2023 — almost three times the $73 billion it imported back in 2014.

As per reports, many of these drugs and their components originate from India and China.

Additionally, brand-name drugs are manufactured in European countries like Ireland, where drugmakers are given tax benefits.

What could tariffs mean for drug prices?

Experts have opined that generic medicine will be hit hardest by the tariffs. These low-cost alternatives to brand-name drugs are already operating on thin margins.

They observed that the tariffs could force manufacturers to raise prices, reduce production, or maybe even withdraw from the market. They said that the patients will have to bear the brunt of the tariff-induced cost rise, particularly those without insurance.

Mariana Socal, a health policy professor at Johns Hopkins, told the news outlet that tariffs on generic medicines can impact millions. Mariana added that it could potentially push manufacturers to cut quality or production.

The report stated that generic medicines accounted for only 13.1 per cent of total US drug spending in 2024 in spite of their widespread use.

Can this lead to drug shortages?

The US healthcare system is said to have struggled with drug shortages for over two decades. At the beginning of 2024, nearly 323 drugs were listed in shortage. The list includes two crucial medications for cancer, like cisplatin and carboplatin.

Experts reportedly fear that these tariffs could worsen issues like manufacturers likely discontinuing unprofitable drugs.

Secondly, sudden changes in trade policies can also disrupt supply chains, especially for time-sensitive or essential medicines.

Lastly, shortages could affect millions, particularly those reliant on generics.

Will drug manufacturing return to the US?

While the intention behind imposing tariffs was to boost domestic pharmaceutical manufacturing, experts have warned that the reality is rather complex.

Building new manufacturing facilities within the US is cost-extensive and time-consuming, they noted, and added that it would require significant investment and planning.

They stated that tariffs on their own may not motivate manufacturers to move production away from low-cost nations like India, where infrastructure and supply chains are already well-established.

Additionally, the uncertainty around how long these tariffs will remain in place also poses a challenge. This could make companies hesitant to commit to long-term investments in domestic production.

Moreover, initiatives like Civica Rx, a non-profit formed by hospitals, are aimed at stabilising supply through local manufacturing. However, experts have stated that a more comprehensive, planned approach is needed, not abrupt policy shifts.

What about other drug pricing policies?

According to Reuters, the Trump administration is also considering international reference pricing, a policy under which US drug prices would be linked to prices paid for drugs in other developed countries.

It added that this methodology could theoretically create an enormous drop in drug costs for American consumers.

However, pharmaceutical companies see it as a threat to their profits and ability to innovate.

For instance, Eliquis, a blood thinner, costs $606 in the US, but under the new Medicare pricing, which will come into effect in 2026, it will fall to $295.

The report added that the drug costs $114 in Sweden, and in Japan, it is less than $20. It added that the Biden administration’s Inflation Reduction Act allowed limited negotiations on drugs for Medicare patients, but Trump’s proposal could do even more. However, it is subject to follow-up legal and administrative difficulties.

FAQs

Will tariffs truly bring drug-making back to the US?

This might not happen overnight. Although tariffs would force companies to look at domestic manufacture, expenses, planning horizons, and economic volatility mean it is not feasible in the near term.

Will certain drugs disappear from the shelves?

Yes. Critical drugs that are not lucrative under new tariffs could be withdrawn, resulting in shortages, particularly in hospitals.