The pharmaceutical industry is bracing for chaos if President Trump follows through on his threat to impose “a major tariff” on prescription drug imports.
Tariffs would disrupt international supply chains, force companies to decide whether to pass increased costs on to patients and exacerbate existing drug shortages.
The administration wants more drug companies to onshore their manufacturing, but experts said such a process would take years, while the pain from tariffs could be much more immediate.
“We’re going to be announcing very shortly a major tariff on pharmaceuticals,” Trump said Tuesday, without elaborating on details.
He said it is a “tremendous problem” that “the United States can no longer produce enough antibiotics to treat our sick.”
Trump on Wednesday announced a 90-day pause on most of his country-specific “reciprocal” tariffs, but Treasury Secretary Scott Bessent said that would not apply to sector-specific tariffs such as pharmaceuticals.
The administration is also keeping in place escalating tariffs on imports from China, which were raised to 145 percent on Wednesday.
Trump indicated the pharmaceutical tariffs could range anywhere from 50 percent to 200 percent.
Administration officials have indicated the mechanism for tariffs on pharmaceuticals would be different than the global and country-specific tariffs so far unveiled and then largely paused.
For industry-specific tariffs, stakeholders and Wall Street analysts think the administration will simultaneously announce tariffs and launch an investigation into whether importing certain products presents a threat to national security.
Experts and industry stakeholders have said if Trump follows through, the impact would be felt hardest on generics, which make up about 90 percent of the medicines prescribed in the country and many of which rely on ingredients made in China and India.
“Our concern is actually less about price increases because [of] the tariffs and more about generic manufacturers dropping out of the market,” which would exacerbate existing shortages, said Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists (ASHP).
Kraus said manufacturers of brand-name drugs have already started moving production back to the U.S. and are much better situated than generic makers to absorb the cost of tariffs because of their higher profit margins.
“If [generic] costs go way up, they just don’t have a lot of flexibility to increase price,” Kraus said. “While that impacts the profitability of a branded drug, for a generic drug, if it pushes them over the line to no longer being profitable, they may just drop out of the market, and then we have a shortage.”
Drug shortages already pose significant problems in the country, and they have become more frequent and disruptive in recent years. Antimicrobials and sterile injectable drugs are among the most common shortfalls, according to ASHP data.
For instance, sterile IV fluid used in hospitals has been in shortage for years, and it was made worse after Hurricane Helene flooded a manufacturing plant that makes about 60 percent of the IV fluid in the country.
Patients will likely be hit hard no matter which drugs they take.
“We use generics and spend on brands,” Marta Wosińska, a senior fellow at the Brookings Institution, wrote in a paper last month.
While brand-name drugs are not at the same risk of shortage, tariffs will likely set off a fight about whether to eat the cost increase or pass it on to patients. Rather than China, it would be tariffs from Europe that could hit branded drugs hardest.
Executives of major pharmaceutical companies are calling on the administration not to move forward.
“We still strongly believe that medicines should be exempted from any kind of tariffs because at the end it is just harming patients’ health systems and restricting health equity,” AstraZeneca chairman Michel Demaré said during the company’s annual shareholder meeting on Friday.
Eli Lilly CEO David Ricks told the BBC shortly after the initial tariff rollout that his company would end up cutting back on research and development rather than raising prices, because of new penalties for companies that raise drug prices too quickly.
“We can’t breach those agreements, so we have to eat the cost of the tariffs and make tradeoffs within our own companies,” Ricks said. “I think it’s a pivot in U.S. policy, and it feels like it’ll be hard to come back from here.”
The pharmaceutical industry is already facing uncertainty because of massive layoffs across the Food and Drug Administration, as well as the increasingly hostile rhetoric coming from Health and Human Services Secretary Robert F. Kennedy Jr.
In a CBS News interview that aired Wednesday, Kennedy said pharmaceutical drugs “are the third-biggest killer of Americans.”
“Pharma has given us extraordinary inventions and extraordinary medical treatments,” Kennedy said. “But the profit orientation of the industry has sometimes given us also reverse outcomes and outcomes that, you know, we need to do everything that we can to guard against.”
