"Drug tariffs, a loss for Americans" - Pharmaceutical industry warns of the consequences of Trump's measures
Americans will suffer more if Donald Trump imposes tariffs on pharmaceutical imports, as medicines will become more expensive and unaffordable for some people, industry sources have warned.
Drugmakers have been bracing for border taxes, similar to 25% duties on steel, aluminum and car imports, after the US president threatened to hit the sector and announced an investigation last month. Trump hinted there would be some relief for companies, saying they would be given time to move their operations to the US, but "after that there will be a tariff wall," he added.
The head of a major Swiss company said the tariffs would lead to supply disruptions and price hikes, hitting American patients hardest. This would be felt most in the free drug market.
“We are producing products with a very small price difference. That is the nature of our industry. So, ultimately, the higher cost of production, including tariffs, will lead to higher prices. There could be even more supply disruptions, because some firms could leave the US and focus on markets where they can do more business. The risk is that the American patient will suffer more,” said the head of the Swiss company.
There are already chronic shortages of drugs in the US, UK and elsewhere, and tariffs would potentially make the situation worse, disrupting long and complex global supply chains. A 25% US tariff on pharmaceutical imports would increase the cost of drugs in Britain by almost $51 billion a year, raising prices by up to 12.9% if enacted, according to an analysis by an accounting firm.
To avoid the looming tariffs, Swiss drugmakers Roche and Novartis are investing $50 billion and $23 billion, respectively, in the U.S. in the coming years. Britain's AstraZeneca announced a $3.5 billion investment in November and said last week it was moving production of some drugs from Europe to the United States.
Johnson & Johnson is also investing $55 billion in U.S. manufacturing over the next four years. The New Jersey-based company is more vulnerable to any U.S. tariffs because of its large manufacturing footprint across Europe, including the United Kingdom, Ireland, Switzerland, Italy and Belgium.
But while pharmaceutical companies, demanding higher prices for their products, can shift production to the U.S., it is much harder for smaller drugmakers. The drugs they make are cheap and the firms operate on tighter profit margins. Industry experts warn that lives are at risk if tariffs are imposed on drugs.
"Some treatments cannot afford a disruption in the global supply chain. You can't compare it to tariffs on automobiles. If you can't afford a BMW, buy a Ford and you can still go to work. If you have a 25% increase in chemotherapy and you can no longer afford your treatment, what is the alternative? People will die because of the rising cost of drugs," they warn.
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