Generic drugs at risk from Trump tariffs
China a large supplier of needed ingredients
By: Ken Alltucker
USA Today
..... As President Donald Trump contemplated extending a global trade war to imports form Europe last week, [03/13/2025] health care industry is gauging potential fallout from tariffs levied on goods imported from China.
.....
Health analysts and generic drug manufacturers said the 20% Levy from two rounds of tariffs on goods imported from China - a major supplier of medical equipment and prescription drugs for the U.S. - could shrink inventories and raise prices. Hospitals, doctors and consumers filling prescriptions at their local pharmacy might feel the effects, though not immediately, pharmaceutical supply and pricing experts told USA Today.
..... China is among the largest suppliers of ingredients sued in generic drugs, and about 90% of prescriptions filled in the U.S. are generics, research shows.
..... White House officials said the tariffs are a necessary emergency actions because China hasn't halted the flow of fentanyl prosecutors chemicals to cartels who smuggle the illicit drugs to the U.S. China has promised to "resolutely counter" pressure for the U.S. according to Reuters.
.....
Organization representing makes of generic drugs and hospital pharmacists warn that added financial pressure from tariffs could strain the nation's generic drug supplies.
..... Tariffs would "exacerbate already-problematic drug shortages," said John Murphy president and CEO of the Association for Accessible Medicines, in a letter Tuesday [03/18/2025] to U.S. Representative Jamieson Greer.
..... "Generic manufactures simply can't absorb new costs," Murphy said in a statement last month. [02/2025] "Our manufacturers sell at an extremely low price, sometimes at a loss, and are increasingly forced to exit markets where they are underwater."
.....
The American Society of Health-System Pharmacists warned the extra costs from tariffs, combined with Biden-era penalties levied on drug companies that raise prices more than the rate of inflation, could exacerbate drug shortages. Before the tariff took effect, pharmacists grappled with shortages of IV solution, chemotherapy drugs, attention deficit/hyperactivity disorder medications and injectable drugs.
..... The groups urged the federal government to exempt tariffs on imported drug ingredients and prescription medications, but the Trump administration so far hasn't granted a reprieve for drugs or other medical supplies.
.....The impact of the tariffs might not be immediate, said Erin Fox, senior pharmacy director at University of Utah Health and an expert on drug supply chains.
..... Domestic drug manufacturers and distributors might've stockpiled drug ingredients in anticipation of supply hiccups. that means it could take several months for companies within the global pharmaceutical supply chain to decide how to absorb the costs of tariffs.
..... One possibility - drug manufactures could decide it's not worth it to continue making cheap generics. "A lot of these companies are making a razor-thin margin," Fox said.
..... And while there have been efforts in recent years to bolster domestic manufacturing, such projects take time and money. If drug companies want to return manufacturing to the U.S. from overseas, that process can take two to three years to execute, Fox said.
..... And the economics of returning more generic drug manufacturing to the U.S. will be difficult, Fox said.
..... "My main concern is the increasing fragility of the overall supply chain," fox said. some generic manufactures may decide it :literally may not be worth it to them to kind of suck up the added cost of the tariffs."
..... Global drug supply strains worsened during the COVID-19 pandemic, and the number of drugs in shortage peaked at 232 during the first three months of 2024, according the American Society of Health-Systems Pharmacists.
..... The reason for the shortage varied, ranging from disruptions caused by hurricanes to factory contamination that shut down manufacturers stopped making a drug.
.....
Because so many U.S. generic drug companies purchase drug ingredients from large factories in China and India, htey can be particularly susceptible to shortage due to manufacturing disruptions or factory shutdowns.
..... Geopolitical tensions between the U.S. and china have prompted some drug companies to adopt a "China plus backup strategy to ensure they have a backup supplier in other nations, If needed, where they can purchase drug ingredients, said Markus Felgenhauer, CEO of QYOBO, German company that tracks pharmaceutical supply chains, drug shortages and prices.
..... Prices for brand-name drugs are less likely to increase due to the trade war, drug pricing experts said.
..... Big pharmaceutical companies command higher prices for brand-names drugs, which are sold exclusively under patient protection for several years. when the patient expire, generic drug companies can offer competing versions at lower prices.
.....
Ohio-based drug research firm 46brooklyn Research tracks drug price changes enacted in January, [2025] which is when pharmaceutical companies often hike or cut drug prices. In January, [2025] the firm reported more generic drug prices decreased than increased.
..... While some generic drug manufacturers will likely seek to pass along costs from tariffs, there will be some roadblocks.
.....
Medicare and Medicaid, the federal health programs for older adults, low-income families and people with disabilities, have enacted policies that seek to limit how much drug companies can increase prices.
..... Former President Joe Biden Inflation Reduction Act, passed in 2022, included a provisions that penalized pharmaceutical companies which raised Medicare drug prices faster than inflation. another rule under the American Rescue Plan Act required pharmaceutical companies to pay rebates when they significantly raise Medicaid drug prices over time.
..... These inflation rebate penalties - combined generics - have limited how much companies have been able to raise prices. these constraints are one challenge to reopening domestic factories to make generic drugs in the U.S., said Fox of University of Utah Health.