How US Pharma Tariffs Could Impact Prescription Costs?
Just gone through the headlines of Donald Trump proposing a hike in the US pharma tariffs by 250%? This news has spread as a threat by the US president, impacting foreign drugmakers, drug/healthcare product importers, pharmaceutical consumers, and US healthcare providers.
In this article, we will be discussing one of the potential shocks from US pharmaceutical tariffs– the rise in prescription costs.
Overview of the New US Pharma Tariffs
For decades, there were no tariffs imposed on US drug imports. However, in April 2025, Donald Trump introduced a 10% global tariff that applied to virtually all imports, including medical devices, drug intermediates, active pharmaceutical ingredients, and pharmaceutical manufacturing machinery. Additional layered tariff plans also emerged on specific imports from some countries, like China and India.
Now, in August 2025, Donald Trump came up with a new US pharma tariff plan. Trump announced that a small tariff plan will be imposed on pharma imports soon.
After it’s done, the tariff rate will escalate after a year or a year and a half, first revised to 150% and ultimately to 250%. The timing of the enforcement of the latest US pharma tariffs depends on the conclusion of the national security review of Section 232 of the Trade Expansion Act.
As per expert insights, the latest US Pharmaceutical Tariffs will have the following impacts on the pharmaceutical industry:
- Relocation of foreign drugmakers’ manufacturing units in the US and more investments for domestic drug production.
- Immediate profitability to drugmakers due to a high-tariff-driven rise in drug retail costs.
- Increased risk of shortages for essential drugs previously sourced through imports.
- Strategic realignment of drug supply chains.
- The US government’s switch to “most-favored nation” drug pricing aims to regulate the hike in drug pricing.
- Drug market collapse- A global disruption.
How Import Costs Affect Prescription Prices
Here’s a detailed breakdown of how imposing the new US pharma tariffs will lead to prescription drug price hikes:
- Imported medicines cost increase- The pricing of imported drug intermediates, active pharmaceutical ingredients, chemotherapy-supportive/cancer drugs, biosimilars/biologics, and pharmaceutical manufacturing equipment will all increase. Since many oral or injectable drugs (usually generic drugs) in the US are manufactured from imported inputs (often from India and China), the hike in imported drug costs will ultimately raise final prescription drug prices.
- Reduced competitors of generic drugmakers- The high drug import cost may make some generic drugs unprofitable. Many generic drug makers may consolidate or stop manufacturing low-margin therapeutic equivalents. Eventually, there will be generic drug shortages. The available generic drugs will be sold at 10 to 13% higher cost.
- Disturbance in punctual supply chains- The high price of drug import and prescriptions due to tariffs will eventually pass down to wholesalers, pharmacies, and the pharma consumers/insurers. Many US pharmaceutical companies rely on globally distributed supply chains and lean inventories. But with the tariffs imposed, the foreign drug suppliers may delay or cancel shipment of drugs or healthcare products to the US, and the US drug makers may face bottlenecks and shortages, which would further increase the prescription costs.
- More inflation pressure on healthcare- The increase in the cost of manufacturing and distribution of prescription drugs will impact the low-income and uninsured consumers. They will have to pay more for their healthcare, copays, and medical insurance premiums. Furthermore, they will face reduced coverage for some drugs.
- Non-adherence of patients to prescribed medications- The pharmaceutical consumers will not be able to receive their essential medications. They would delay refills, split doses, or skip doses, thus impacting their treatment plan. This will make them sicker, potentially making them go for frequent doctor visits and lengthy hospitalizations requiring higher healthcare costs.
Impact on Generic Drugs vs. Branded Medicines
Branded medicines are patent-protected and usually domestically produced. The high US pharma tariffs will cause less shock to their manufacturers. The drugmakers would have higher profit margins. Despite this, they could increase the prices of essential drugs, and consumers will have no option but to buy them. Furthermore, the tariffs may prompt some companies to open their branded drug manufacturing units in the US to avoid the drug import costs.
On the other hand, generic drugs are patent-unprotected and mostly imported. The high tariffs will make generic drugs more likely to be withdrawn from the US pharma market because of their thin profit margins. Furthermore, the generic drug manufacturers will be at high risk of drug supply shortages and disruptions in the supply chain. All of this will be economically challenging.
The Role of Supply Chains and Manufacturing Shifts
The majority of drugs manufactured in the US have raw materials imported from abroad, usually from India and China. Not only drug inputs, but even the finished therapeutic equivalents are supplied from foreign countries. The tariffs on these imports lead to cost spikes, delays or shortages in supplies, and uncertainties in drug manufacturing, including the cessation of production of drugs or inefficiency in scaling capacity.
Consequently, the manufacturing units and the suppliers have to be shifted to the US or nearshore. The switch in sources for pharma companies will lead to drug quality issues or regulatory delays and even more expense.
Steps Patients Can Take to Reduce Prescription Costs
- Switch to therapeutic equivalents of branded drugs or splitting of high doses, if approved by the pharmacist or doctor.
- Consider mail-order and bulk purchase of medicine through the online website Meds Engage.
- Enrol and use manufacturer copay and assistance programs.
- Consider nearby government hospitals, community health centers, and charity clinics for cheaper payouts on meds.
- If possible, keep a stock of the medicine or refill the drug early before there is a shortage of supply and a spike in prescription prices.
FAQs
US pharma tariffs are the taxes on the import of pharmaceutical machinery, sterile packaging material, raw materials of drugs, and finished drugs. They are being introduced to limit foreign drug dependence, encourage domestic drug production, increase trade leverage, address national security concerns, and better the political positioning of Trump.
Generic medicines, biosimilar/speciality drugs, sterile injectables and hospital drugs, active pharmaceutical ingredients and drug intermediates, and pain-relieving medicines, antibiotics, and cancer drugs cost will be impacted by US pharma tariffs.
The timing is variable depending on where the tariff is impacting the supply chain. Probably, the price changes can be initiated in 3-6 months of tariff enforcement. In 12-18 months, there will be more hokes.
Not as severe or as quickly as generic medicines. The branded medicines will be impacted by tariffs when there is reliance on imports of input or pharma machinery and packaging, and raised prices across the supply chain.
Patients can buy generics, purchase at online/mail-order pharmacies, use prescription discount cards/coupons, check for copay assistance and patient assistance programs for branded prescriptions, choose low-cost alternatives, or split pills or refill before shortage (if possible).
References
https://www.delveinsight.com/blog/us-tariffs-2025-impact-healthcare-pharma-strategies
https://www.reuters.com/business/healthcare-pharmaceuticals/us-initially-impose-small-tariff-pharma-imports-trump-says-2025-08-05/
https://www.fiercepharma.com/manufacturing/trumps-pharmaceutical-tariffs-materialize-last-new-us-eu-trade-deal
https://www.americancentury.com/insights/us-pharma-tariffs-impact/
https://publichealth.jhu.edu/2025/tariffs-and-us-drug-prices
https://www.cognitivemarketresearch.com/blog/how-2025-u-s-tariffs-are-reshaping-global-pharma-supply-chains
https://www.deccanherald.com/world/eyeing-domestic-production-donald-trump-says-tariffs-on-pharma-imports-may-go-as-high-as-250-3666898
https://www.cnbc.com/2025/08/05/trump-says-pharma-tariffs-could-eventually-reach-up-to-250percent.html
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