Washington, D.C. — President Donald Trump’s recent executive order imposing a 10% tariff on Chinese imports is expected to have significant consequences for the pharmaceutical industry, leading to higher drug prices and potential shortages, according to experts.
The tariffs directly impact the supply of generic drugs, which account for approximately 90% of all prescriptions filled in the United States. Many of these drugs, including critical medications such as cancer treatments, antibiotics, and blood thinners, are manufactured overseas, where production costs are lower.
Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School who specializes in prescription drug research, highlighted the heavy reliance on foreign manufacturing.
“Around half of the generic drugs used in the U.S. are made entirely overseas,” he said. “Even more concerning, about 80% of the active pharmaceutical ingredients (APIs) come from abroad.”
China’s Growing Role in Drug Production
Data from the United States Pharmacopeia, a nonprofit organization focused on drug safety, shows that China’s role in API production is steadily increasing. The number of API manufacturing facilities in China rose from 134 in 2021 to 219 in 2023. While India remains the largest global producer, China’s expanding presence makes the country a critical player in the global pharmaceutical supply chain.
Vimala Raghavendran, vice president of informatics product development at the U.S. Pharmacopeia, noted that companies typically hold several months of API inventory. However, she warned that policy changes like tariffs could still disrupt the supply chain. “The effects may take a while to trickle through, but shortages are a real risk,” she said.
Consumer Impact and Price Increases
Dr. Kesselheim warned that shortages may develop quickly, with price increases becoming apparent in the coming months. “When generic drugs are sold through distributors and supply chains, there are usually contracts in place,” he explained. “It might take a few months for these contracts to turn over, but eventually, we’ll see higher prices.”
Because generic drugs are sold at prices close to their production costs, any disruption to the supply chain forces manufacturers to pass additional expenses onto consumers.
Industry Response and Calls for Exemption
John Murphy III, president and CEO of the Association for Accessible Medicines, a trade group representing generic drugmakers, has called on the Trump administration to reconsider the tariffs or provide exemptions for pharmaceutical imports.
“The healthcare of millions of Americans depends on a stable supply of affordable medications,” Murphy said. “These tariffs jeopardize that stability and could lead to increased costs for both consumers and healthcare providers.”
A Developing Situation
As pharmaceutical companies navigate the new tariff landscape, concerns are mounting over the potential impact on patients who rely on affordable generic medications. Policymakers and industry leaders continue to urge the administration to mitigate these effects before the full consequences are felt.
The next few months will be crucial in determining whether these tariffs will be adjusted to protect the pharmaceutical supply chain or if Americans will face a prolonged period of higher drug prices and medication shortages.
Source: NBC News
