Tariffs on Drug Imports Spark Warnings from Experts and Industry

The Trump administration’s plan to impose sweeping tariffs on pharmaceutical imports is drawing sharp criticism from health policy experts and drug industry leaders, who warn it could raise costs, worsen drug shortages, and strain the U.S. healthcare system.

President Trump said Tuesday the White House is preparing “a major tariff on pharmaceuticals,” citing dependence on foreign sources for essential medications. “The United States can no longer produce enough antibiotics to treat our sick,” he said.

This move is part of a broader push to reduce reliance on Chinese imports and bolster domestic manufacturing. On Wednesday, the administration raised tariffs on Chinese goods to 145% and paused certain “reciprocal” tariffs for 90 days—excluding pharmaceuticals.

Short-Term Shield, Long-Term Risk

Analysts say consumers won’t feel the effects immediately. Drugmakers are likely to absorb the added costs, especially for patented drugs, which are already priced at market maximums.

Health insurers also shield consumers by covering most prescription costs, with patients paying co-pays or a portion of pre-negotiated prices.

But long-term impacts may be more disruptive—especially for generic drugs, which account for about 90% of U.S. prescriptions.

Generics Under Pressure

“Branded companies can better absorb tariff costs or relocate production,” said Thomas Roades of the Duke-Margolis Institute. “Generics are another story.”

Generic manufacturers often operate on razor-thin margins and rely heavily on low-cost API production in China and India. Over 80% of APIs are imported, with India itself dependent on China for raw materials.

“Our concern is less about price hikes and more about manufacturers exiting the market,” said Tom Kraus of the American Society of Health-System Pharmacists. “If generics become unprofitable, companies may drop out—leading to shortages.”

A Fragile System

Drug shortages have already become more frequent, causing care delays, medication errors, and even increased mortality. Tariffs could further stress the system.

While brand-name drugs are less prone to shortages, tariffs—especially on European imports—may force companies to absorb costs or cut spending. Eli Lilly CEO David Ricks said his company would reduce R&D to offset penalties for raising drug prices.

“We have to eat the cost of tariffs and make trade-offs,” Ricks told the BBC. “It’s a major policy shift that may be hard to reverse.”

AstraZeneca Chair Michel Demaré urged that medicines be exempt from tariffs, warning they harm patients and restrict health equity.

Barriers to Onshoring

While the goal is to shift production back to the U.S., experts say that’s a slow and complex process. Building new facilities takes 5–10 years and requires regulatory approvals.

“Qualifying a new site takes years,” said Stephen Colvill of Duke-Margolis. “We currently lack the specialized capacity for many drugs, especially antibiotics.”

Tariffs could also raise the cost of building domestic facilities, delaying progress further.

Political and Regulatory Headwinds

The industry is also facing political pressure. FDA layoffs have led to regulatory delays, and HHS Secretary Robert F. Kennedy Jr. has ramped up criticism, calling drugs “the third-biggest killer of Americans” in a CBS interview—while acknowledging their benefits.

Analysts recommend alternatives to tariffs: investing in domestic manufacturing, tax incentives, reforming reimbursement policies, and prioritizing domestic suppliers in federal contracts.

Incentives Over Penalties

Industry leaders argue incentives would be more effective than tariffs. Johnson & Johnson CEO Joaquin Duato called for favorable tax policies to strengthen domestic production.

PhRMA proposed a 25% tax credit for building and upgrading U.S. facilities, along with reduced tax rates on income from domestic manufacturing. These measures, they argue, could better secure the pharmaceutical supply chain without disrupting access or affordability.