\u201cWhen they hear that, they will leave China,\u201d he said. The U.S. imported $213 billion worth of medicines in 2024 \u2014 from China but also India, Europe, and other areas.<\/p>\n
Trump\u2019s statement sent drugmakers scrambling to figure out whether he was serious, and whether some tariffs would be levied more narrowly, since many parts of the U.S. drug supply chain are fragile, drug shortages are common, and upheaval at the FDA leaves questions about whether its staffing is adequate to inspect factories, where quality problems can lead to supply chain crises.<\/p>\n
On May 12, Trump signed an executive order<\/a> asking drugmakers to bring down the prices Americans pay for prescriptions, to put them in line with prices in other countries.<\/p>\n Meanwhile, pharmacists predict even the 10% tariffs Trump has demanded will hurt: Jolley said a potential increase of up to 30 cents a vial is not a king\u2019s ransom, but it adds up when you\u2019re a small pharmacy that fills 50,000 prescriptions a year.<\/p>\n \u201cThe one word that I would say right now to describe tariffs is \u2018uncertainty,\u2019\u201d said Scott Pace, a pharmacist and owner of Kavanaugh Pharmacy in Little Rock, Arkansas.<\/p>\n To weather price fluctuations, Pace stocked up on the drugs his pharmacy dispenses most.<\/p>\n \u201cI\u2019ve identified the top 200 generics in my store, and I have basically put 90 days\u2019 worth of those on the shelf just as a starting point,\u201d he said. \u201cThose are the diabetes drugs, the blood pressure medicines, the antibiotics \u2014 those things that I know folks will be sicker without.\u201d<\/p>\n Pace said tariffs could be the death knell for the many independent pharmacies that exist on \u201crazor-thin margins\u201d \u2014 unless reimbursements rise to keep up with higher costs.<\/p>\n Unlike other retailers, pharmacies can\u2019t pass along such costs to patients. Their payments are set by health insurers and pharmacy benefit managers largely owned by insurance conglomerates, who act as middlemen between drug manufacturers and purchasers.<\/p>\n Neal Smoller, who employs 15 people at his Village Apothecary in Woodstock, New York, is not optimistic.<\/p>\n \u201cIt\u2019s not like they\u2019re gonna go back and say, well, here\u2019s your 10% bump because of the 10% tariff,\u201d he said. \u201cCosts are gonna go up and then the sluggish responses from the PBMs \u2014 they\u2019re going to lead us to lose more money at a faster rate than we already are.\u201d<\/p>\n Smoller, who said he has built a niche selling vitamins and supplements, fears that FDA firings will mean fewer federal inspections and safety checks.<\/p>\n \u201cI worry that our pharmaceutical industry becomes like our supplement industry, where it\u2019s the wild West,\u201d he said.<\/p>\n Narrowly focused tariffs might work in some cases, said Marta Wosi\u0144ska, a senior fellow at the Brookings Institution\u2019s Center on Health Policy. For example, while drug manufacturing plants can cost $1 billion and take three to five years to set up, it would be relatively cheap to build a syringe factory \u2014 a business American manufacturers abandoned during the covid-19 pandemic because China was dumping its products here, Wosi\u0144ska said.<\/p>\n It\u2019s not surprising that giants such as Novartis and Eli Lilly have promised Trump they\u2019ll invest billions in U.S. plants, she said, since much of their final drug product is made here or in Europe, where governments negotiate drug prices. The industry is using Trump\u2019s tariff saber-rattling as leverage; in an April 11 letter, 32 drug companies demanded European governments<\/a> pay them more or face an exodus to the United States.<\/p>\n Brandon Daniels, CEO of supply chain company Exiger, is bullish on tariffs. He thinks they could help bring some chemical manufacturing back to the U.S., which, when coupled with increased use of automation, would reduce the labor advantages of China and India.<\/p>\n \u201cYou\u2019ve got real estate in North Texas that\u2019s cheaper than real estate in Shenzhen,\u201d he said at an economic conference April 25 in Washington, referring to a major Chinese chemical manufacturing center.<\/p>\n But Wosi\u0144ska said no amount of tariffs will compel makers of generic drugs, responsible for 90% of U.S. prescriptions, to build new factories in the U.S. Payment structures and competition would make it economic suicide, she said.<\/p>\n Several U.S. generics firms<\/a> have declared bankruptcy or closed U.S. factories over the past decade, said John Murphy, CEO of the Association for Accessible Medicines, the generics trade group. Reversing that trend won\u2019t be easy and tariffs won\u2019t do it, he said.<\/p>\n \u201cThere\u2019s not a magic level of tariffs that magically incentivizes them to come into the U.S.,\u201d he said. \u201cThere is no room to make a billion-dollar investment in a domestic facility if you\u2019re going to lose money on every dose you sell in the U.S. market.\u201d<\/p>\n His group has tried to explain these complexities to Trump officials, and hopes word is getting through. \u201cWe\u2019re not PhRMA,\u201d Murphy said, referring to the powerful trade group primarily representing makers of brand-name drugs. \u201cI don\u2019t have the resources to go to Mar-a-Lago to talk to the president myself.\u201d<\/p>\n Many of the active ingredients in American drugs are imported. Fresenius Kabi, a German company with facilities in eight U.S. states to produce or distribute sterile injectables \u2014 vital hospital drugs for cancer and other conditions \u2014 complained in a letter to U.S. Trade Representative Jamieson Greer that tariffs on these raw materials could paradoxically lead some companies to move finished product manufacturing overseas.<\/p>\n Fresenius Kabi also makes biosimilars, the generic forms of expensive biologic drugs such as Humira and Stelara. The United States is typically the last developed country where biosimilars appear on the market because of patent laws.<\/p>\n Tariffs on biosimilars coming from overseas \u2014 where Fresenius makes such drugs \u2014 would further incentivize U.S. use of more expensive brand-name biologics, the March 11 letter said. Biosimilars, which can cost a tenth of the original drug\u2019s price, launch on average 3-4 years later<\/a> in the U.S. than in Canada or Europe.<\/p>\n In addition to getting cheaper knockoff drugs faster, European countries also pay far less than the United States for brand-name products. Paradoxically, Murphy said, those same countries pay more for generics.<\/p>\n European governments tend to establish more stable contracts with makers of generics, while in the United States, \u201crabid competition\u201d drives down prices to the point at which a manufacturer \u201cmaybe scrimps on product quality,\u201d said John Barkett, a White House Domestic Policy Council member in the Biden administration.<\/p>\n As a result, Wosi\u0144ska said, \u201cwithout exemptions or other measures put in place, I really worry about tariffs causing drug shortages.\u201d<\/p>\n Smoller, the New York pharmacist, doesn\u2019t see any upside to tariffs.<\/p>\n \u201cHow do I solve the problem of caring for my community,\u201d he said, \u201cbut not being subject to the emotional roller coaster that is dispensing hundreds of prescriptions a day and watching every single one of them be a loss or 12 cents profit?\u201d<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. 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