Experts predict that President Donald Trump’s executive order placing a 10% tariff on Chinese imports will increase the price of generic medications in the US and worsen prescription shortages.
According to Dr. Aaron Kesselheim, a Harvard Medical School professor of medicine whose research focuses on prescription prescriptions, over half of the generic medications that Americans take, such as blood thinners, antibiotics, and cancer medications, are manufactured entirely abroad since manufacturing costs are lower there.
Around 80% of the active pharmaceutical components, or APIs, used in medications are imported, which is an even higher percentage, he added.
According to data released by United States Pharmacopeia, a nonprofit organization that focuses on the safety of the medication supply chain, China is becoming more involved in the production of these chemicals. According to the report, China had roughly 219 API facilities in 2023, up from 134 in 2021. India continues to be the world’s top producer of APIs, accounting for over half of all facilities.
The Association for Accessible Medicines, a trade association that represents generic medicine manufacturers, estimates that 90% of all prescriptions completed are for generic medications.
According to Kesselheim, any disruptions, such as tariffs, might result in shortages and force companies to pass on the cost to consumers because generic medications are marketed at low costs, frequently around the cost at which they were manufactured, in contrast to brand-name medications.
Although there will probably be shortages right away, he predicted that prices will rise over the next months.
According to him, there is typically a contract in place when generic medications are sold through distributors and the supply chain. A few months may pass before some of those contracts expire and we are presented with newer, more expensive ones.
According to Vimala Raghavendran, the U.S. Pharmacopeia’s vice president of informatics product development, businesses usually keep several months’ worth of API inventory on hand.
Accordingly, it might take some time for the consequences of any policy changes to spread across the supply chain, she said.
The Association for Accessible Medicines’ president and CEO, John Murphy III, urged the Trump administration to provide an exemption in a statement.
According to him, the worldwide supply chain that U.S. medications depend on, from the raw materials to the final goods, is already under stress and needs to be strengthened. The extra expenses are just too much for generic producers to bear.
A request for comment was not immediately answered by the White House.
There are safeguards in place to assist keep consumers from being directly impacted by price increases, according to Rena Conti, an associate professor at Boston University’s Questrom School of Business.This includes a Biden-era tax on pharmaceutical companies who raise their prices more quickly than inflation and state anti-price gouging legislation.
Accordingly, if a manufacturer decides to raise their pricing, they will be responsible for paying an additional tax on the opposite side, she stated.
Conti stated that she is worried about pharmacies and hospitals hoarding medications in the near future in order to save money, which could worsen inequalities in the United States. According to her, she has already heard of pharmacies reviewing their drug lists to determine which items may be subject to tariffs.
According to her, hospitals and pharmacies with greater resources have the financial means to contact their distributor and inquire about the possibility of purchasing more of a particular sort of product. Small hospitals, mom-and-pop pharmacies, and rural hospitals that don’t typically purchase a lot of medications will find it difficult to obtain supplies if they are panic buying.
It’s unlikely that the tariffs will increase production in the United States because generic medications aren’t a profitable enough industry for businesses to invest in the expense of constructing new manufacturing facilities, according to Arthur Caplan, chairman of the division of medical ethics at NYU Langone Medical Center in New York City.
He claimed that Trump’s tariffs also made it impossible for the United States to rely on its neighbors, Canada and Mexico, to assist ease the situation.
Trump levied 25% tariffs on the surrounding nations on Saturday. A month after the two nations came to an agreement, the tariffs on Mexico were postponed.
Drug prices will rise, but it will take months, according to Caplan.