A pharmacist collects medication for recipes in a pharmacy.
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The planned tariffs of President Donald Trump for pharmaceuticals imported in the USA could have far -reaching consequences for drug manufacturers and American patients, some experts said CNBC.
The tasks could disrupt the complex pharmaceutical supply chain, increase the prices for medicines in the USA and make the bottlenecks of critical medicinal products worse, some experts in health policy said. Drug manufacturers often rely on a global network of manufacturing points for various steps in the production process.
“We are already in a state in which prescription drugs are unaffordable for many,” said Mariana Socal, professor of health policy at the Johns Hopkins Bloomberg School of Public Health, to CNBC.
“Everything we change, every trade policy, every tariff policy, everything that costs for prescription medication, be it in the supply chain, the sales network, the risks of further increasing the costs for the consumer, and the affordability crisis for drugs in America, which we have had for a long time,” she said.
This week, Trump doubled plans to impose “Major” Pharmaceutical-Specific Customs “, which confiscated the shares of some drug manufacturers in the early Wednesday. He said that after a market failure on the same day, he would take steep tariff rates for dozens of countries, but it does not seem to apply to taxes for certain industries such as cars, steel, aluminum and medicines.
Trump frees pharmaceuticals from his relaxed tariffs, which were introduced last week. Nevertheless, he said that the duties for drugs will encourage drug manufacturers to bring production operations to the USA, at a time when domestic production in the industry has shrunk considerably.
However, experts said it was unclear whether tariffs will lead more companies to do more drugs in the United States. Drug makers would cost billions of dollars and at least several years so that they do this, added them.
Some drugmakers such as Eli Lilly, Bristol Myers Squibb and Abbvie can be better positioned than others for weather tariffs, since they have larger production facilities in the USA than internationally, said TD Cowen Analyst Steve Scala last week in a note. Most of their locations that are responsible for the production of the active ingredients in drugs are also in the United States, he added.
In the meantime, Novartis and Roche are “rather at risk” because they only have a few US plants and a higher proportion of international locations, said Scala.
The effects of tariffs will look different depending on the type of drug, according to experts. Manufacturers of already cheaper generics that make up about 90% of the drugs prescribed in the USA could be pressed most by tariffs, according to Arda Urals, head of Ey America's bio -science.
These drugs, which are much more affordable for patients, have far less profit margins than branded medication and often rely on ingredients made in China and India. Therefore, tariffs could force some generics to leave the US market as a whole.
According to a report from Rand 2024, the government's efforts could ultimately undermine the government's efforts to pay the high costs for health care in the US US in order to curb the high costs for health care in the US Americans as for prescription drugs for prescription drugs.
Drug shortage could get worse
The tariffs could worsen the unprecedented lack of medicine in the United States, which is powered by factors such as quality control and demanding points. According to the American Society of Health system pharmacists, there are 270 active drug shortages in the USA in the USA, which have remained unchanged in the last three quarters.
However, some drug categories will probably be more susceptible to bottlenecks than others when the tariffs come into force, said Marta Wosińska, a senior scholarship holder at the Center on Health Policy of the Brookings Institution.
Generic sterile injectable drugs that are often used in hospitals are already more susceptible to bottlenecks and have had continued care problems for years. This includes products such as IV salt bags, cancer chemotherapy and lidocaine that are used to deaf pain.
Generic sterile injection values have complex manufacturing processes and low profit margins, which could make it more difficult for their manufacturers to absorb cost increases caused by tariff.
IV line for liquid for patients who lie on the bed in the hospital
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The manufacturers of these injections can not increase cost increases due to certain contracts with so -called group purchase organizations that blocked the prices but did not save the amount of their buying. Group shopping organizations Broker drug acquisitions for hospitals and other healthcare providers and their contracts with manufacturers generally last one to three years.
If manufacturers of generic sterile injections cannot pass on higher costs, you can leave the US market and worsen the lack of these essential medication, said Wosińska. She said her other option was the costs that “in relation”, since they could influence the quality of a product and some manufacturers could cause production to temporarily slow down production due to problems such as contamination.
Generic oral drugs are also exposed to low margins, but their production is less complex and the market is more competitive. This includes frequent pills such as statins for high cholesterol levels, several blood pressure medication and metformin for blood sugar control.
These oral drugs are used most by Americans, since in 2024 in retail and in post pharmacies in retail and in Post pharmacies in 2024 generic medicines tablets and capsules were spent, a recently from Wosińska.
She said CNBC that these medication acts more like a “Spot market” on which pharmacies and buyers can quickly change suppliers when a source of tariffs is disturbed. While taxes can increase prices, the manufacturers of these medicines have fewer binding contracts, so that according to Wosińska, they can cost more than their injectable counterparts.
Costly medication could become more expensive
The effects of tariffs on costly branded medication that have a patent protection and are not exposed to any competition by generics will look very different, some experts said. Customs for drugs imported from Europe would probably be the most difficult because there is a considerable amount of medication production there and in the USA
“Brand products are already produced in the United States with around 50%, and the primary import comes from Europe at around 35%,” said Ey's Ural.
In China or India there is “little to no production” of these medication, he said.
Nevertheless, branded medication usually have higher profit margins and more stable supply chains than generic medication. This makes brand manufacturers better positioned in order to absorb higher costs of tariffs or to hand them over to payers – and ultimately the consumers.
Since manufacturers of a certain branded medication monopolize its market, they could increase its price and “leave the American consumer behind without any other choice, since these products are protected by patents that no one else has,” remarked John's Hopkins' Socal.
“In tariffs, the question of how much higher prices will pay for these branded products will pay?” she said.
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Patients will probably notice higher prices for branded medication than more than increases in generic medication prices, said Wosińska. A price increase of a branded medication would lead directly to higher expenses for people in high commercial insurance plans or with high civil insurance rates, as it stated.
It is still unclear what Trump's tariffs will look like. However, a patient with a 20% insurance rate could increase his monthly utilization costs if the tariffs are collected, since their share of the costs is bound directly to the price of the mark drug.
In contrast, generic medication already has lower price points, “even if a drug worth 3 US dollars increases by 25%, this will not be something that will really appear for patients,” Wosińska told CNBC. She added that many patients have insurance plans with solid CO-Pays for these medication.
Overall, “the primary influence on patient pocket books would be indirect – the premia would probably increase if the payer expenditure for medicinal products increases,” she said in her Brookings report.
The question is whether the manufacturers want to increase prices because they face patients and legislators on both sides of the gang to calculate higher drug prices in the USA compared to other countries. Both the Trump and Biden management have targeted this imbalance.
In a grade of March 28, the evercore -isi -analyst IMer Raffat said that he had heard of several CEOs of pharmaceuticals that “they may have to pass on some of the effects [from tariffs] as a price increase. “
But he said that this would “add more fire to the higher prices of many drugs in the United States in the United States in the United States. Raffat said that it could go back “in great way” and could revive a plan from Trump's first term that paid the US prices to the other similar countries.
The redesign of the production will not be easy
A sign with the Company logo is located on March 17, 2024 in Indianapolis, Indiana, outside the headquarters of Eli Lilly and Company.
Scott Olson | Getty pictures
Some Wall Street analysts have made concerns that it will be difficult to redress production in the United States because it is expensive and could take several years.
“The global supply chains are complex, and Pharma among most – it is not as easy to move where someone reads on an iPhone,” said Evan Seigerman, analyst by BMO Capital Markets, in a note on Wednesday.
He said that the tariffs will “probably do little to push back to the United States, since companies already have robust operations in the country. Seogerman said he assumed that most major pharmaceutical companies will probably set the goal of” waiting for Trump until the end of the presidency in order to consider more permanent production decisions “.
Some companies have already invested billions to increase US production. This year, Eli Lilly And Johnson & Johnson Both announced new domestic investments worth 27 billion US dollars and 55 billion US dollars for several years.
However, some of these drumakers have already pushed back to tariffs and warns of their potential effects on research and development in the industry.
“We cannot violate these agreements, so we have to eat the costs for the tariffs and compromise in our own companies,” said Dave Ricks, CEO of Eli Lilly, last week to BBC. “As a rule, this will be in the reduction of employees or research and development, and I assume that F&E will come first. This is a disappointing result.”
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