U.S. pharmaceutical tariff plan could raise drug prices by $51Bn
LONDON, UNITED KINGDOM — A proposed 25% United States tariff on pharmaceutical imports could raise drug costs by nearly $51 billion annually, with prices surging as much as 12.9%.
The move, now under federal review, threatens to disrupt global supply chains and domestic production while increasing consumer expenses.
Higher drug prices and supply chain disruptions
The Ernst & Young analysis that is not publicly available was reviewed by Reuters and found that 73% of U.S. pharmaceutical imports, worth $203 billion in 2023, come from Europe, primarily Ireland, Germany, and Switzerland.
According to a Pharmaceutical Research and Manufacturers of America (PhRMA) report, rising drug prices approaching 12.9% could become a burden for patients, together with their insurers, when tariffs are completely transferred to buying consumers.
As the Pharmaceutical Research and Manufacturers of America (PhRMA) represents companies including Pfizer and Eli Lilly, they argue that trade restrictions would damage U.S. domestic production activities.
Drugmakers argue that sudden cost hikes would disrupt supply chains without significantly boosting U.S. production capacity.
Tariffs threaten U.S. pharma exports and jobs
About 30% of imported pharmaceuticals are ingredients used in U.S. drug manufacturing, which could see production costs rise 4.1% under tariffs.
This would weaken the global competitiveness of American-made medicines, potentially harming $101 billion in annual exports.
As reviewed, the report estimates that higher input costs could endanger some of the 490,000 export-related jobs in the industry.
Companies like Swiss drugmaker Roche are lobbying for exemptions, warning that tariffs could backfire by raising domestic costs without securing supply chain independence.
Read more here.
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