The cost of generic drugs could rise for many people if President-elect Donald Trump follows through on his promise to impose sweeping tariffs on products from China and other countries, policy experts say.
During his campaign, Trump proposed blanket tariffs of 20% on all imports and tariffs of at least 60% on products from China.
The idea is that making foreign products more expensive would encourage American companies to buy more and consumers to buy more products at home.
But experts say there’s one major flaw in that plan: Very few generic drugs are made in the U.S
In recent decades, generic drug production has increasingly moved abroad as production in the US has become less profitable.
Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, said that about half of all generic drugs are produced abroad and about 80% of all active pharmaceutical ingredients, or APIs, are produced abroad, in China, India and other places. .
Generic drugs are the backbone of prescription drugs in the U.S.: They account for about 90% of all prescriptions filled, according to the Association for Accessable Medicines, a trade group that represents generic drug makers.
If Trump doesn’t grant some waivers, importing generic drugs will likely become more expensive — costs that could be passed on to patients or force more struggling generic drug makers out of the U.S., said Dr. Janet Woodcock, a former acting physician. commissioner of the Food and Drug Administration
“I thought tariffs were meant to help the domestic industry thrive and level the playing field,” Woodcock said. ‘But if there is no domestic industry, what do you do? You just pass on higher costs to the consumer.
“It just seems like the wrong tool for the problem, at least for drugs,” she added.
Arthur Caplan, chief of the department of medical ethics at NYU Langone Medical Center in New York City, said that even if the tariffs are imposed only on the active ingredients — and not the finished products — they could still cause a rise in costs . Some drug ingredients are made abroad, but the drugs are prepared and packaged in the US
“You have to be careful there,” he said.
Tariffs are also unlikely to boost generic drug production in the US. Because generic drugs generate so little profit, there is little to incentivize drugmakers to invest in new domestic facilities, Woodcock said.
A squeeze on the generic drug industry?
Karoline Leavitt, spokesperson for Trump’s transition team, declined to say whether Trump planned to grant an exemption for generic drugs.
Leavitt said in a statement: “During his first term, President Trump imposed tariffs on China that created jobs, stimulated investment and led to zero inflation. President Trump will work quickly to repair and rebuild an economy that attracts American workers by redistributing American jobs, lowering inflation, raising real wages, cutting taxes, cutting regulations, and unleashing American energy .’
Kesselheim said the additional costs would also worsen ongoing drug shortages.
The US is experiencing shortages of several life-saving medications, including chemotherapy drugs and IV fluids, as well as several common medications, such as pain and ADHD medications.
According to the American Society of Health-System Pharmacists, a group that monitors drug shortages, there are 277 active drug shortages in the U.S., half of which have persisted for two or more years.
“The price and costs of production, including shipping a product, and the supply chain are closely linked,” Kesselheim said. “If there are supply chain disruptions, such as tariffs, it could lead to shortages and increase prices.”
Any kink in the system, including natural disasters, can lead to shortages. That’s what happened this year when catastrophic flooding from Hurricane Helene hit a plant owned by the nation’s largest IV fluid manufacturer, Baxter International, in North Carolina.
“We need redundancy. We need resilience. We don’t want one manufacturer, in Indonesia, India or China, to be the only group we rely on,” Woodcock said. “But the financial system, the purchasing system, in the United States is pushing the country toward one or two winners.”
Kesselheim said the tariffs would also increase the cost of brand-name drugs, although patients are unlikely to notice a difference as they are already extremely expensive.
That’s different from generic drugs, which are cheaper and often sold at the price they were made for, he said.
“Brand-name drugs are sold at monopoly prices, often hundreds or thousands of times the amount they cost to produce,” he said. “It is unlikely that the slightly higher production costs will have a substantial impact.”
With generics, “things could change quickly and impact the price patients pay,” he added.
What worries Kesselheim most is that tariffs could cause generic drug prices to skyrocket as more generic drug makers drop out.
“If the tariffs make them no longer feel like they can make a reasonable profit, they will stop selling,” he said. “And that either means that the remaining manufacturers in the market can raise prices even further because they have greater market concentration, or it means that there is a risk of shortages.”
This article was originally published on NBCNews.com
