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Irish Times
21-04-2025
- Business
- Irish Times
US tariffs on pharmaceuticals risk shortages of lower-cost generic drugs
The generic drug industry has warned that US tariffs on pharmaceuticals risk causing shortages of medicines including cancer treatments, and that manufacturers might stop making products that become unprofitable as a result. Generic medicines, which are cheaper versions of drugs that no longer have patent protection, make up about 90 per cent of US drug supply. The majority are manufactured outside the US, in lower-cost countries such as India. The active ingredients used in the products often come from China. So far, pharmaceuticals have avoided the wide-ranging new US tariffs. But president Donald Trump has repeatedly said he plans to apply them to the sector, and the US commerce department this week has said it is investigating the national security implications of pharmaceutical imports. The department has up to nine months to publish its conclusions but commerce secretary Howard Lutnick said tariffs could happen sooner, in the 'next month or two'. READ MORE John Murphy, chief executive of the Association for Accessible Medicines, a US lobby group, said tariffs would not benefit patients or improve the security of the healthcare system. He said older injectables, such as chemotherapy for cancer, were 'particularly vulnerable'. 'For those generics already sold at a very narrow margin, you could see a situation where it becomes financially infeasible for certain products to be brought to market if they are going to lose money,' he said. Mr Murphy said he was lobbying the White House for the industry to be treated differently, arguing that there were other ways to encourage more onshoring of production, and that imposing costs on an industry that was already struggling with capital investment would not work. 'Where does the capital come from to shift production if we're already at barely the cost of goods? . . . And potentially underwater in the short term because of tariffs,' he added. The US healthcare system already struggles with supplies for some particularly low-margin products: the number of active drug shortages hit an all-time high of 323 in the first quarter of last year, according to the American Society of Health-System Pharmacists, the largest association of pharmacy professionals in the US. Mark Samuels, chief executive of the British Generic Manufacturers Association, said the costs of tariffs would be difficult to absorb because fierce competition meant prices were already 'significantly constrained' and so there would be 'potential for more shortages'. India would be particularly badly hit by pharmaceutical tariffs. It has a 20 per cent share of the global export of generic drugs and a 60 per cent share in the supply of low-cost vaccines, according to the Indian Pharmaceutical Alliance. Some in the industry say US tariffs could drive some Indian manufacturers out of business. 'Indian pharma products will become more expensive in the US market which may result in substantial loss in market share for our Indian pharma companies,' B Partha Saradhi Reddy, chair of generic company Hetero and an MP in India's upper house, said in March. This could reduce the profit margins for low-cost generic medicines, making them uncompetitive and 'not viable' for the companies making them, he said. Premier, a group purchasing organisation that buys drugs for more than 4,000 US hospitals, said there could be an increase in shortages. But it said its three-year contracts meant generic manufacturers were locked into prices, adding they often include provisions that drugmakers who fail to supply have to cover the cost of buying alternatives. Tariffs are also likely to drive up prices for consumers. Dutch bank ING estimates that a 24-week prescription for a generic cancer drug could cost $8,000 to $10,000 more if 25 per cent tariffs are imposed. Stephen Farrelly, global head of pharma and healthcare at ING, said the people who would be 'hardest hit' were those without insurance, who paid for their own drugs, though people with health insurance could face higher premiums down the line. Prashant Reddy, co-author of The Truth Pill, a book about India's pharma industry, said the US often had little choice but to buy from India. 'A lot of these drugs are not made anywhere else. They are shooting themselves in the foot because it's just going to raise prices in the US,' he said. – Copyright The Financial Times Limited 2025
CNN
16-04-2025
- Business
- CNN
Trump's tariffs could make it harder to get certain generic drugs
President Donald Trump's promise to impose tariffs on pharmaceutical imports is raising red flags among generic drugmakers and industry experts, who warn that such a move could lead to increased drug shortages and higher prices. Generic drug manufacturers have had to contend with increasing competition and tight profit margins in recent years. Slapping extra costs through tariffs could undermine their ability to do business with the US, especially since it could be tougher for them to recoup the added expense than manufacturers of brand-name drugs, experts say. 'You're going to have companies … (for which) the financial outlook is so dire, they may not be able to bring the product into the United States,' John Murphy III, CEO of the Association for Accessible Medicines, the trade group for generic and biosimilar medicine, told CNN. 'And that could amplify the drug shortages concerns we have here in the United States.' Currently, there are 270 active drug shortages in the US, down from an all-time high of 323 in early 2024, according to data from the American Society of Health-System Pharmacists. Shortages of antibiotics are a particular problem. Some 40% of generic drugs have only one or two companies making their ingredients, so it's a 'pretty fragile supply,' Rena Conti, an associate professor at the Boston University Questrom School of Business, told CNN. If one manufacturer exits, it could be harder to get the drugs — potentially posing a challenge for pharmacies and hospitals. If multiple manufacturers stop production, prices could rise. As a result, patients could have trouble finding a pharmacy that can immediately fill their prescription, Conti said, though it may not happen for several months since pharmacies typically lock in their supplies well in advance. These supply contracts may delay the impact of any changes sparked by the tariffs, but ultimately many Americans could be affected because generic drugs make up about 90% of the medicines prescribed in the US. 'The pain will ultimately be borne by the consumer, by the patient,' said Arthur Wong, managing director for US health care practice at S&P Global. The Trump administration has not revealed details about the tariffs it intends to impose on pharmaceutical imports, which were exempt from the tariffs he levied in his first term. But now, the president says he feels that he must take action to spur more drug manufacturing in the US, which is also his reasoning for imposing tariffs on other industries. 'We're going to have our drugs made in the United States, so that in case of war, in case of whatever, we're not relying on China and various other countries, which is not a good idea,' Trump told reporters on Sunday. And he is moving forward with that effort. The administration has launched an investigation into pharmaceutical imports to set the stage to impose tariffs on national security grounds, according to a notice posted to the Federal Register on Monday. The probe must be completed within 270 days, though the results could be released sooner. Meanwhile, Commerce Secretary Howard Lutnick said Sunday on ABC News that the tariffs would be announced in the next month or two. Tariffs on pharmaceutical imports from India and China will be especially consequential for the US, since manufacturers in those countries produce a large share of the ingredients for generic drugs, experts say. What's more, the tariffs will not push drugmakers to shift more operations to the US, some contend. 'Given the complexity of the Pharma supply chain, we do not expect the industry to make any major changes,' wrote Evan Seigerman, a pharmaceuticals analyst with BMO Capital Markets, in a recent research note. Tariffs could actually have the opposite effect of stalling more drug manufacturing in the US, one industry official said. 'If large tariffs are imposed, they will trigger substantially more drug shortages, cause greater US dependence on China for life-saving medications, and delay Indian companies' investments in America,' Kathleen Jaeger, US spokesperson for the Indian Pharmaceutical Alliance, said in a statement.
CNN
16-04-2025
- Business
- CNN
Trump's tariffs could make it harder to get certain generic drugs
President Donald Trump's promise to impose tariffs on pharmaceutical imports is raising red flags among generic drugmakers and industry experts, who warn that such a move could lead to increased drug shortages and higher prices. Generic drug manufacturers have had to contend with increasing competition and tight profit margins in recent years. Slapping extra costs through tariffs could undermine their ability to do business with the US, especially since it could be tougher for them to recoup the added expense than manufacturers of brand-name drugs, experts say. 'You're going to have companies … (for which) the financial outlook is so dire, they may not be able to bring the product into the United States,' John Murphy III, CEO of the Association for Accessible Medicines, the trade group for generic and biosimilar medicine, told CNN. 'And that could amplify the drug shortages concerns we have here in the United States.' Currently, there are 270 active drug shortages in the US, down from an all-time high of 323 in early 2024, according to data from the American Society of Health-System Pharmacists. Shortages of antibiotics are a particular problem. Some 40% of generic drugs have only one or two companies making their ingredients, so it's a 'pretty fragile supply,' Rena Conti, an associate professor at the Boston University Questrom School of Business, told CNN. If one manufacturer exits, it could be harder to get the drugs — potentially posing a challenge for pharmacies and hospitals. If multiple manufacturers stop production, prices could rise. As a result, patients could have trouble finding a pharmacy that can immediately fill their prescription, Conti said, though it may not happen for several months since pharmacies typically lock in their supplies well in advance. These supply contracts may delay the impact of any changes sparked by the tariffs, but ultimately many Americans could be affected because generic drugs make up about 90% of the medicines prescribed in the US. 'The pain will ultimately be borne by the consumer, by the patient,' said Arthur Wong, managing director for US health care practice at S&P Global. The Trump administration has not revealed details about the tariffs it intends to impose on pharmaceutical imports, which were exempt from the tariffs he levied in his first term. But now, the president says he feels that he must take action to spur more drug manufacturing in the US, which is also his reasoning for imposing tariffs on other industries. 'We're going to have our drugs made in the United States, so that in case of war, in case of whatever, we're not relying on China and various other countries, which is not a good idea,' Trump told reporters on Sunday. And he is moving forward with that effort. The administration has launched an investigation into pharmaceutical imports to set the stage to impose tariffs on national security grounds, according to a notice posted to the Federal Register on Monday. The probe must be completed within 270 days, though the results could be released sooner. Meanwhile, Commerce Secretary Howard Lutnick said Sunday on ABC News that the tariffs would be announced in the next month or two. Tariffs on pharmaceutical imports from India and China will be especially consequential for the US, since manufacturers in those countries produce a large share of the ingredients for generic drugs, experts say. What's more, the tariffs will not push drugmakers to shift more operations to the US, some contend. 'Given the complexity of the Pharma supply chain, we do not expect the industry to make any major changes,' wrote Evan Seigerman, a pharmaceuticals analyst with BMO Capital Markets, in a recent research note. Tariffs could actually have the opposite effect of stalling more drug manufacturing in the US, one industry official said. 'If large tariffs are imposed, they will trigger substantially more drug shortages, cause greater US dependence on China for life-saving medications, and delay Indian companies' investments in America,' Kathleen Jaeger, US spokesperson for the Indian Pharmaceutical Alliance, said in a statement.
The Hill
14-04-2025
- Business
- The Hill
Trump administration nearing pharma tariffs plan
The U.S. Department of Commerce in a Federal Register notice said the probe, known as a Section 232 investigation, began April 1, the day before President Trump announced widespread tariffs on all imported goods but specifically exempted pharmaceuticals. According to the notice, the investigation 'includes both finished generic and non-generic drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients and key starting materials, and derivative products of those items.' This investigation is a likely prelude to Trump's tariffs to come. Section 232 investigations allow the president to restrict imports deemed a threat to national security. Trump last week said he will impose 'a major tariff' on prescription drug imports in the coming weeks. A typical investigation takes 270 days before a report is given to the president, but public comments on the notice are due just three weeks from the official April 16 publication date, an indication the investigation will move much quicker. Trump's threats to impose tariffs on pharmaceutical drugs has put the industry on edge, with experts warning the plan could disrupt global supply chains. 'Our concern is actually less about price increases because [of] the tariffs and more about generic manufacturers dropping out of the market,' which would exacerbate existing shortages, Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists, told The Hill. 'While that impacts the profitability of a branded drug, for a generic drug, if it pushes them over the line to no longer being profitable, they may just drop out of the market, and then we have a shortage.'
Yahoo
09-04-2025
- Business
- Yahoo
Trump drug tariffs would drive up prices, worsen shortages before any boost to US manufacturing, experts warn
'Major' tariffs on pharmaceutical imports are coming soon, President Donald Trump says, pledging that they'd help bring drug manufacturing back to the US while lamenting that other countries pay much lower prices for the same medicines. Instead, patient advocates and drug supply chain experts warn, tariffs are likely to drive the price of medicines higher and exacerbate already dangerous drug shortages. Whether they influence manufacturers to make more drugs in the US is a source of debate, and any increase in production is at least several years away. 'We're going to be announcing very shortly a major tariff on pharmaceuticals,' Trump said Tuesday at the National Republican Congressional Committee dinner, although he didn't specify the size of the tariff or when it would be implemented. Medicines had been exempted from the president's 'Liberation Day' tariff announcement April 2, causing the industry to breathe a brief sigh of relief. The president had also exempted the industry from the tariffs he imposed in his first term. In his tariffs speech last week, Trump said it was a 'tremendous problem' that 'the United States can no longer produce enough antibiotics to treat our sick.' That problem may get worse if tariffs come into play, experts warned while agreeing that it's a problem that needs fixing. The impacts of tariffs could be largest for generic drugs, which make up about 90% of the medicines prescribed in the US and many of which rely on ingredients made in China and India. Generic drugs, whether they're antibiotics, diabetes drugs or statins to lower cholesterol, sell for 'pennies per dose,' said Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists. Increasing the cost of ingredients that go into them 'can make it so that it's no longer profitable to sell that drug in the United States.' Already, shortages of antibiotics are a major problem in the US. Antimicrobials are among the most common drugs to be in short supply, with 40 active shortages in the US as of the end of 2024, according to data from the American Society of Health-System Pharmacists. Antibiotics currently in shortage include amoxicillin, commonly used for strep throat and ear infections, and Bicillin, crucial for treating syphilis infections. Other especially precarious medicines include sterile injectable drugs used in hospitals. Those can be products as simple as IV saline bags or injectable dextrose, used in emergency settings, as well as cancer chemotherapy drugs. They're required to be manufactured under pristine conditions and have been in shortage for years because of low prices and market disruptions. 'Added costs to already low-margin products may be a tipping point for companies to discontinue production,' said Erin Fox, a drug shortages expert at University of Utah Health. 'I'm worried we'll see discontinuation and a less resilient supply chain if companies quit making essential products.' An estimated 40% of generic drugs have only one or two suppliers making their ingredients, said Rena Conti, an associate professor at the Boston University Questrom School of Business. 'That's a pretty fragile supply,' Conti said. 'If one of those manufacturers exits, well, then we're a little bit in a pickle' – causing challenges for pharmacies and hospitals in stocking the drugs in the coming months. Consumers, meanwhile, could have trouble finding the medications they need when they go to the drugstore. And when one manufacturer is the sole supplier of a medicine, prices often rise. That can sometimes be astronomical, even for generic medicines – such as when Martin Shkreli, known as the Pharma Bro, raised the price of a medicine used by people with HIV from $13.50 to $750 overnight. Public and political pressure has made moves like that less common, but they still occur. But for many generic medicines, especially sterile injectables, it may be difficult for manufacturers to pass along price increases, said Dr. Marta Wosińska, a senior fellow at the Brookings Center on Health Policy. 'One reason is immediate – group purchasing organization (GPO) contracts,' Wosińska wrote in an article analyzing the potential effects of tariffs. 'All hospitals use GPOs to contract for sterile injectable generics used in inpatient settings, with those contracts locking in prices but not quantity.' Those contracts generally last one to three years, she noted, 'and may limit price increases.' Moreover, 'there are laws that make increasing prices faster than inflation a problem for a drug company,' said David Maris, a managing partner at Phalanx Investment Partners who spent years as a financial analyst following the drug industry. 'So I am not sure how they would even be able to pass along the increase.' For branded medicines – those that still have patent protection and don't face cheaper generic copycat competition – it could be a different story, Maris said. There, it would be tariffs from Europe that could hit hardest, with a huge amount of drug manufacturing in countries including Ireland, which has a favorable tax environment. Ingredients for a branded drug may make up only 10% of the total cost to produce a product, Maris estimated, 'so if that 10% rises by 35%, the overall impact on production costs is relatively small.' Unlike with generic medicines, makers of branded drugs have more cushion to absorb price increases, Maris pointed out. But he doesn't think they will. 'These costs will be passed on, leading to higher drug prices,' he said. 'For consumers with insurance, that likely means higher premiums and potentially higher out-of-pocket copays.' Already, the US pays the highest prices for drugs in the world, an imbalance Trump has targeted in the past and one of the few issues that puts him in agreement with lawmakers like Sen. Bernie Sanders. 'Tariffs will exacerbate that problem,' said Merith Basey, executive director of the advocacy group Patients for Affordable Drugs. 'Prescription drugs aren't luxury goods; they're essential to people's health and survival.' Political and public scrutiny could stop drugmakers from raising prices precipitously, with one Wall Street analyst even begging the industry in a research note to avoid passing tariffs along in the form of higher drug prices for that reason. Umer Raffat, an analyst with financial firm Evercore ISI, wrote in a March 28 note to clients that he'd heard from multiple CEOs that 'they may have to pass on some of the impact as a price increase.' 'There is already a price discrepancy on many drugs between US vs Europe,' Raffat wrote. 'Raising prices in US will add more fire to this burning issue,' potentially backfiring 'in a big way' by accelerating conversations in Washington about bringing back a plan from Trump's first administration to tie US prices to those paid in other similar countries, known as the 'most favored nation' policy. And even as drug shortages may worsen and prices increase in the nearer term, experts are skeptical that tariffs would achieve their main stated goal of bringing drug manufacturing back to the US. 'Global supply chains are complex, with pharma among the most,' Evan Seigerman, a pharmaceuticals analyst with financial firm BMO Capital Markets, wrote in a research note. 'It's not as simple as moving where someone screws in little screws to make an iPhone.' Seigerman predicted that most large pharmaceutical companies 'are likely to look at imposed tariffs with the intention of 'running out the clock,' waiting until the end of Trump's presidency to consider more permanent manufacturing decisions.' Still, some major US pharmaceutical companies have made large investments in domestic manufacturing recently. Eli Lilly said in February that it would invest an additional $27 billion to build four manufacturing plants in the US, with the potential for tariffs in mind. The company said it anticipates that the plants could start making medicines within five years. 'We're trying to do this quickly, because I think there will be constraints in everything from supply chain of building materials to energy,' Lilly's CEO, David Ricks, told CNN at the time. Ricks also said the plan to build so many new domestic plants relies on renewal of certain favorable tax provisions for the industry. Still, the process of building new plants or establishing new manufacturing sites can take years. And while multiple experts told CNN they agree it's crucial to reduce the nation's reliance on other countries for critical medicines, they questioned whether tariffs are the way to accomplish that. 'We think that's a critical thing for us to explore with the administration over the next several years,' said John Murphy, CEO of the Association for Accessible Medicines, which represents generic drug manufacturers. 'That's a long-term proposal, right? We can't build that infrastructure overnight, but we can lose access to a number of drugs overnight, if we're not careful.'
