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Forbes
09-04-2025
- Business
- Forbes
InnovationRx: Trump Vows That ‘Major' Pharma Tariffs Are Coming
In this week's edition of InnovationRx, we look at the impact of tariffs on healthcare costs, pioneers of treating MS, AI for clinical decision-making, and more. To get it in your inbox, subscribe here. Inside an Indian pharmaceutical manufacturing plant. Last week, Trump made good on a core campaign promise to enact sweeping tariffs, slapping a baseline of 10% tax on imports from every country, with many others singled out for harsher rates, with China now set at 108%. While pharmaceuticals were spared at first, on Tuesday President Trump said that 'a major tariff' on pharmaceuticals would be announced soon. It's now only a question of when and how hard they will hit. When they do, one of the biggest losers would likely be generic drug manufacturers. Since they account for about 90% of all prescriptions in the United States, a huge segment of Americans who rely on them. About 47% of all generics prescribed in the U.S. are made in India, which is currently facing a 26% tariff. For some generics, costs could become excruciatingly high. ING analyst Diederik Stadig estimated that a 24-week course of generic cancer medication could see cost increases of as much as $10,000 under a 25% tariff. Mark Cuban, whose Cost-Plus Drug Company manufactures and sells generic drugs, such as penicillin imported from Portugal, told Forbes that any costs elevated by tariffs will absolutely be passed through to patients. 'With only a 15 [percent] markup, we can't absorb any additional costs,' he said. Meanwhile, despite months of aggressive lobbying, medical device makers did not get a carveout. And with perhaps 40% of all devices manufactured overseas, they're likely headed for a heavy hit that will ripple out through device manufacturers, hospitals, insurers and the millions of people whose health relies on them. Mexico, where the tariff rate has been set at 25%, is a major hub for manufacturing, while other devices are made in Europe, where the rate is now 20%. That means items like pacemakers, insulin pumps and hearing aids are likely to get more expensive. These increases could be significant for healthcare systems around the country. As Erik Wexler, CEO of Providence, a non-profit Catholic health system based near Seattle that includes 51 hospitals, said: 'Potential cuts to Medicaid on top of tariffs will cripple health systems across the country, which could create a national emergency in terms of access to health care, especially for those who are most vulnerable.' Alberto Ascherio and Stephen L. Hauser, 2025 Breakthrough Prize in Life Sciences winners Stephen Hauser and Alberto Ascherio, two pioneers in the study of multiple sclerosis, received one of the $3 million Breakthrough Prizes in Life Sciences last week. The money for the awards comes from the Breakthrough Prize Foundation, founded by Yuri and Julia Milner, as well as from Mark Zuckerberg, CEO of Meta, and Priscilla Chan; Google cofounder Sergey Brin and 23andMe cofounder Anne Wojcicki. MS is a progressive autoimmune disease where the body's own immune system attacks myelin, the protective cover that surrounds nerve fibers, disrupting interactions between the brain and the rest of the body. This can result in patients eventually losing the ability to walk or move. Hauser, a neurologist at the University of California San Francisco, was recognized for his key discovery for MS. For decades, the prevailing wisdom was that rogue T-cells were responsible for the damage seen in MS patients. Hauser became skeptical of the conventional wisdom, when he realized that the animal models being used to study MS didn't line up with what he observed in his own MS patients, he told Forbes. He and his colleagues eventually determined that white blood cells called B cells were the actual culprit. That insight has led to new therapies that have revolutionized treatment for the disease. Hauser credits the National Institutes of Health for enabling his work. 'It's the NIH that was the anchor for the science that has moved us in one generation from a time when a person with MS would be completely disabled within 15 years to today, where a person whose MS is just beginning can anticipate a life free from disability,' he said. Ascherio, an epidemiologist at the Harvard T.H. Chan School of Public Health, received the prize for his discovery that MS is fundamentally caused by infection with Epstein-Barr virus–which is also the cause of mononucleosis. Proving this required an extraordinary rigorous study tracking the records of more than 10 million military servicemembers over time. Ascherio told Forbes he hopes this finding could eventually lead to an antiviral or even a vaccine against multiple sclerosis. 'A vaccine to prevent infections is challenging,' he said. 'But if you could prevent infection, you could prevent MS.' A new study found that using Fertilo, a stem cell-based fertility treatment developed by biotech company Gameto, in conjunction with in vitro maturation (IVM) more than doubled the rate of successful pregnancies compared to conventional IVM methods. The study, which has not yet been peer-reviewed, involved 40 patients and tested both safety and efficacy of the treatment. The company is currently enrolling patients into a phase 3 clinical study of Fertilo. In December, Gameto (founded by Forbes 30 Under 30 alumna Dina Radenkovic) announced the first birth of a baby conceived using the Fertilo treatment. Can artificial intelligence rival doctors' decision-making? A new study by researchers at Cedars-Sinai, Tel Aviv University and digital health startup K Health says yes—at least in certain circumstances. The new study, published in the peer-reviewed Annals of Internal Medicine, looked at the recommendations of K Health's AI chatbot compared to those of the real-life doctors for patients who came to virtual urgent-care appointments with acute respiratory, urinary, vaginal, eye or dental symptoms. It found that the AI matched doctors' clinical decisions in two-thirds of cases, and offered higher-quality care overall for the remaining one-third. Additive manufacturing firm 3D Systems said that it had 3D-printed the first high-performance plastic facial implant at the point of care. The custom medical device was used during a successful surgery in mid-March at University Hospital Basel in Switzerland. A new report from RAND highlights the precariousness of emergency departments in hospitals across the country. The report finds that ERs are increasingly dealing with more complex–and acute–medical issues. Meanwhile, payments are falling and sometimes even being withheld. The study's authors recommend more funding to support emergency departments and greater investments in primary care to help reduce crowding. Plus: RFK Jr. plans to tell the CDC to stop recommending fluoride, which strengthens teeth and reduces cavities, in drinking water across the country. Recently launched biotech firm RayThera raised $110 million led by Foresite Capital and OrbiMed Advisors to develop small-molecule therapies in immunology. The San Diego-based company will use the funds to move its drug candidates into Phase 1 clinical studies. Cofounder and CEO Qing Dong sold his previous startup, XinThera, which was working in the areas of oncology and inflammation, to Gilead in 2023 for an undisclosed sum. Plus: GSK has entered into a licensing agreement with Korean biotech ABL for its neurological therapeutics in a deal worth up to $2.6 billion. Measles outbreaks may be the new normal as the Trump Administration's actions set the stage for a resurgence of the disease. A second child died of the disease over the weekend in Texas, where the number of cases has now risen above 500. The Trump Administration won't expand Medicare and Medicare coverage for GLP-1 drugs, rejecting a proposal from the Biden Administration to help people pay for the popular obesity drugs. Over the past few decades, public health efforts have made HIV a manageable disease rather than a deadly one. The Trump Administration's budget cuts threaten to change that. Biotech startups are struggling as the NIH slashes funding. Health insurance company stocks soared after the federal government announced that reimbursement rates for Medicare Advantage plans would increase by more than 5%. Trump's gutting of environmental programs could lead to worsening asthma attacks, increased ER visits and other big health problems for Americans. Hinge Health considers delaying its IPO after Trump tariffs send markets plummeting. Cuts at the FDA are so significant that they may prevent the government from spending user fees, which could significantly slow the drug approval process. There's currently no acting director of the CDC, as Susan Monarez had to step back from the role once Trump nominated her for the permanent director role. That means crucial decisions for the agency can only be made by HHS Secretary Robert F. Kennedy, Jr.
Forbes
08-04-2025
- Business
- Forbes
Trump's Tariffs: Coming To Your Medicine Cabinet Soon
Donald Trump holding up the executive order enacting reciprocal tariffs with countries around the world. On average, Americans pay about twice what other countries do for prescription drugs. Thanks to President Trump's aggressive tariffs and the global trade war they are inciting, they might soon pay even more. Last week, Trump made good on a core campaign promise to enact sweeping tariffs, slapping a baseline of 10% tax on imports from every country, with China, India and EU countries singled out for harsher rates, ranging from 20% to 34% (and Trump has threatened to add another 50% to China for enacting its own retaliatory tariff). Although pharmaceuticals are currently exempt, it's widely expected that won't last. In his remarks announcing tariffs last week, Trump said, 'The pharmaceutical companies are going to come roaring back. … because if they don't, they've got a big tax to pay,' suggesting it's only a question of when and how hard pharmaceutical tariffs will hit. When they do, one of the biggest losers would likely be generic drug manufacturers and, since they account for about 90% of all prescriptions in the United States, a huge segment of Americans who rely on them. About 47% of all generics prescribed in the U.S. are made in India, which is currently facing a 26% tariff. Some, like common heart medications, cost less than a dollar a pill — a price that if tariffed might cause their manufacturers to reconsider the value proposition of making them. 'Most of them are selling with low profit margins and some are operating at a loss,' said Rajiv Leventhal, a healthcare analyst at Emarketer. 'They could be forced to consider whether it's even worth it to be in the market.' That could hurt consumers who rely on those low-cost alternatives to brand-name drugs for everything from antibiotics like penicillin to blood pressure medication. Mark Cuban, whose Cost-Plus Drug Company manufactures and sells generic drugs, such as penicillin imported from Portugal, told Forbes that any costs elevated by tariffs will absolutely be passed through to patients. 'With only a 15 [percent] markup, we can't absorb any additional costs,' he said. For some generics, costs could become excruciatingly high. ING analyst Diederik Stadig estimated that a 24-week course of generic cancer medication could be run as high as $10,000 under a 25% tariff. Name-brand medications are likely to be hard hit as well. Weight loss medication Wegovy, cancer immunotherapy drug Keytruda and HIV drug Norvir are manufactured in European Union countries, which currently face a 20% tariff. For a patient whose insurance doesn't cover Wegovy, that could mean an extra $100 a month if Novo Nordisk passed on the whole tariff cost. And a recent analysis published in the Journal of the American Medical Association suggested that tariffs on Canadian pharmaceuticals alone would increase annual drug costs in the U.S. by $750 million a year. Even if a drug is manufactured in the United States it could still be impacted by tariffs. Nearly 90% of American biotech companies rely on imported components for a significant portion of their FDA products, according to a survey from trade industry group BIO. Cancer drug Imbruvia, for example, imports a key ingredient from China–which also produces about 72% of the pharmaceutical ingredients imported to the U.S. That's unlikely to change any time soon because there's simply not enough domestic manufacturing capacity to meet demand. Nearly half of the responding biotechs said that finding alternative suppliers could take more than two years. For American companies manufacturing drugs in the states, tariffs are still a concern because the active ingredient of a medication is what matters under tariff law. That means a drug like the blood thinner Eliquis is considered to be entirely imported because its key ingredient is made in Switzerland, even though final manufacture happens in the United States This has sparked a scramble from larger pharmaceutical companies, who are both working to expand their manufacturing capacity in the United States (such as Johnson & Johnson's recently announced $55 billion investment) and to outsource production to contract manufacturers located in the United States. That might change how investors allocate their dollars to startups, said Sarah Choi, a partner at Wing VC, who foresees 'a rise in popularity for VCs to back companies that are sort of next generation manufacturing plays that are located here in the United States.' Companies like Johnson & Johnson who are bringing manufacturing home stand to gain relative to their peers, but it doesn't mean they'll escape unscathed. China slapped a retaliatory 34% tariff on U.S. goods last week that, if that's applied to drugs, 'will hurt the $20 [billion in] exports in chemicals that the U.S. currently sells to China, much of it health related such as packaged medicines,' Jack Zhang, director of the Trade War Lab at the University of Kansas, told Forbes. One consequence of a trade war, noted Orr Inbar, CEO of consultancy service Quanthealth, is that if it snowballs, some larger pharma companies may find themselves building multiple manufacturing facilities across the globe to avoid tariffs. While that might help mitigate their impact, it would still raise costs. 'The more sites you have, the more overhead and management costs you have,' he said. Which would ultimately be passed on to consumers. Beyond all this, tariffs will likely have another chilling effect: on innovation. In the fraught economic environment Trump's tariffs have created, it's going to be a lot harder for startups and smaller companies to bring new breakthroughs to market, making it easier for incumbents to dominate the marketplace, said Kaz Helal, an analyst at Pitchbook. 'Big Pharma will just get bigger.' Sara Choi, a partner at VC firm Wing Ventures, echoed that sentiment. She told Forbes tariffs will likely force smaller companies working on new drugs to seek out capital via collaborative licensing deals with large pharmaceutical companies rather than investors. One consequence of this, she said, is that biotech startup exits are much more likely to occur via acquisition than IPO, making for a less competitive environment in the long-term. 'I see pharma asking to take a look at our companies at a much earlier stage, if only because they want first dibs before another company sees assets,' she said, adding that trend will likely be exacerbated by a high tariff environment. This too is likely to slow innovation, and narrow focus. Choi said she suspects tariffs will encourage companies to focus more of their resources on illnesses that affect larger numbers of people and therefore have larger revenue potential. That might diminish investment in R&D for new treatments for rare or emerging diseases. 'I don't want to be a doomsayer here,' she said. 'But I do think it's going to continue to be really tough for these startups to get their footing.'
