US Tariffs on Pharma: Price Hikes, Shortages & Impact

For many years, the US pharmaceutical industry has depended on an intricate worldwide supply chain to maintain continuous availability and reasonable medicine prices. This delicate equilibrium is about to be upset, though, by the newly imposed US tariffs on pharmaceutical imports. The consequences might be extensive, ranging from additional strain on already overburdened supply systems to pharmaceutical import tariffs on necessary medications and raw materials.

The new regulations may result in generic medicine shortages, higher prescription prices in the US, and repercussions for patients, pharmacists, and healthcare professionals throughout the healthcare system. This post will explain the new tariffs, why it is anticipated that they will increase the cost of medications, and what can be done to minimize their effects.

What Are the New US Pharma Tariff Plans?

The new pharmaceutical tariffs imposed by the US government aim to reduce reliance on foreign drug production, particularly from countries such as China and India, which are two of the world’s largest exporters of active pharmaceutical ingredients (APIs) and generic drugs.

These new rules will impose pharmaceutical import tariffs ranging from 5% to 25% on a range of imported drugs, APIs, and even certain medical devices. The goal of this measure is to encourage domestic drug manufacturing as part of a broader shift in trade and economic policy.

The immediate worry is that US pharmaceutical production capacity is now insufficient to replace imports, even though increasing domestic manufacture seems like a good strategy for long-term resilience. Since more than 70% of the US’s supply of APIs, the chemical building blocks of the majority of medications, comes from abroad, APIs are most impacted.

These tariffs will raise the cost of importing raw ingredients and completed medications unless there is quick investment in domestic facilities, which could result in short- and medium-term price increases for consumers.

Why Drug Prices Could Rise Under the New Tariffs

In the US, pharmaceutical pricing is already a contentious topic, and the tariffs make it more complicated. The probability of rising medicine prices in the US is influenced by several factors:

• Higher Production Expenses: For US pharmaceutical businesses, the cost of production will increase if APIs and completed medications are imported at increased tariff rates. Customers and insurance companies will most likely be charged more for these additional costs.

• Limited Capacity at Home: Drug producers in the US are unable to quickly increase production to match foreign supplies. Short-term substitution is not feasible because of the multi-year process of building API factories and passing FDA criteria.

• Delays in the Supply Chain: Increased tariffs might deter international exporters from giving US purchasers priority, which would delay shipments. Due to scarcity, any changes to delivery schedules may result in higher rates.

• Effects on Smaller Producers: If tariff costs make their products unprofitable, smaller generic drug manufacturers with narrow profit margins may reduce production or leave the market entirely, further diminishing competition.

The overall result is probably going to be a rise in drug costs, along with generic medications shortage, which typically control the price of branded drugs.

Generic Drug Supply Chain Risks and Shortages

Nearly 90% of all prescriptions issued in the US are for generic medications, which mostly depend on imported APIs. The entire supply chain for generic medications may be at risk if import taxes on pharmaceuticals increase the price of these inputs.

Among the main issues are:

• API Shortages: Pandemic interruptions and international transportation problems had already put pressure on API supply chains before the tariff announcement. Imports may be further slowed by tariffs.

• Manufacturing Halts: If importing APIs becomes too costly or unprofitable, manufacturers may decide to halt or stop manufacturing.

• Market Withdrawal: Patients may be forced to rely on more costly branded alternatives if low-cost generics are completely removed from the market.

Impact on Branded Drugs and Insurance Premiums

Branded medications are not exempt from the impact of US tariffs on pharmaceuticals, despite the fact that they are frequently manufactured domestically. This is the reason:

• Shared Supply Chains: APIs are frequently sourced from abroad by even well-known pharmaceutical companies. Production costs will increase if certain imports are subject to tariffs.

• Competitive Pressure: Branded medication manufacturers may be less inclined to provide discounts if generics become more expensive or scarce, which would raise retail costs.

• The cost of insurance. Insurance rates are directly impacted by rising prescription costs. Higher monthly premiums or out-of-pocket expenditures may be incurred by patients as a result of insurers having to modify coverage costs to account for more costly prescriptions.

• Over time, rising prices for both name-brand and generic medications may make the US’s already high healthcare spending even worse, increasing consumer concerns about affordability.

What Patients and Pharmacies Can Do to Save Costs

Patients and pharmacists can take proactive measures to lessen the impact of pharmaceutical import tariffs on routine healthcare costs, even though they have no control over tariff policies:

• Request Therapeutic Substitutes: Patients can discuss similarly effective but possibly more accessible or reasonably priced alternatives with their doctors if a prescription medication is unavailable or has become too costly.

• (Within Limits) Stock Up: In order to prevent temporary price increases or shortages, patients may ask for a 90-day supply of chronic drugs rather than a 30-day one.

• Employ Mail-Order Drugstores: To get around these supply problems, several online and mail-order pharmacies provide access to medications from other vendors or bulk discounts.

• Examine Costs at Various Pharmacies: The cost of drugs might differ greatly between pharmacies. Cheaper options can be found by phoning ahead or using price comparison apps.

• Utilize Programs for Patient Assistance: For eligible patients, a number of pharmaceutical corporations and charitable groups provide discounts or free prescription drugs. These programs can be a lifesaver during expense hikes.

• Buying Medicines in Bulk: Independent pharmacies can pass savings on to customers by joining group buying organizations (GPOs) to purchase medications in bulk at a cheaper price.

• Patients and pharmacies may reduce the burden of the new tariffs by being educated, making plans in advance, and looking into all available cost-saving options.

Building a more robust and independent domestic pharmaceutical industry is the aim of the new US pharma tariffs. But before any long-term advantages are felt, the short-term problems like US drug price increases, shortage of generic medications, and pressure on the supply of active pharmaceutical ingredients are probably going to materialize.

The issue is whether the US can quickly increase domestic output to make up for the disruption brought on by lower imports. To do it, they should focus on:

• large expenditure on indigenous production facilities for APIs.

• streamlined the FDA’s approval procedures for new production facilities.

• Critical drugs are strategically stocked to avoid shortages.

Working together, producers, legislators, and healthcare practitioners can lessen reliance on imports without compromising accessibility or affordability. However, before the full benefits of reshoring pharmaceutical production can be realized, patients and pharmacies should be ready for a period of adjustment and increased pricing.

The US medication industry is about to change as a result of the recent US Tariffs on pharma. Although the goal was to boost home production and lessen dependency on imports, the immediate consequences include sharp rises in the cost of US pharmaceuticals, shortages of generic medications, and increased strain on patients and healthcare professionals. It is possible to overcome these obstacles without sacrificing health results by being proactive in seeking out affordable alternatives and supporting wise policy implementation.

FAQs:

References:

https://www.jmcp.org/doi/full/10.18553/jmcp.2025.25090

https://publichealth.jhu.edu/2025/tariffs-and-us-drug-prices