Escalating Trade Conflict with China to Threaten U.S. Healthcare Prices: Experts Predict Skyrocketing Costs for American Patients Without Exemptions on Tariffs for Pharmaceuticals
Revamped Report:
Amidst the intensifying US-China trade spat, sparked by hefty tariffs imposed by Donald Trump and retaliatory levies by Xi Jinping, the pharmaceutical sector could face significant ramifications – potentially impacting American health adversely. Here's why.
With 75% of essential medicines being imported, the Trump administration's investigation into medication and active ingredient imports has surfaced, citing a domestic shortage as a national security threat. Adding to the strain, potential sectoral tariffs – ranging from 7.5% to an eye-watering 100% – could be imposed, compounding the 145% already in place on China.
Catching Up on Pharma Tales
While pharmaceuticals have so far bypassed Trump's reciprocal tariffs, it remains unclear for how long. Emerging sectoral levies suggest otherwise.
In the immediate term, consumers are shielded from the escalating prices by a lag in the complex pharmaceutical supply chain. Because prescription pills have a long shelf life, it means a slower trickle-down effect.
Our chat with Bruce Y Lee, professor of health policy at the CUNY Graduate School of Public Health and Health Policy, revealed these medications could weather the initial price hike. "A lot of these medications, especially ones that are, like, in pill forms, are pretty stable for a long time," Lee pointed out.
However, pharma giants can't absorb the cost indefinitely. Under pressure to meet their fiduciary responsibilities, these corporations might take measures like renegotiating drug prices or upping insurance premiums – bearing a downstream effect on patients.
The Social Divide
According to a report published by Exiger last week, the US depends on China for up to 80% of active pharmaceutical ingredients (APIs), particularly for generic antibiotics, where the dependence soars to a staggering 90%.
Since China is the prime producer of generic drugs – which are 80-85% cheaper than brand-name substitutes – tariffs on China will disproportionately target low-income communities.
"If there's a place where you save money, it is generic, and that's exactly where the increases will be. Generic companies work on the slimmest margins, and they're just not in a position to absorb [that]," Michael Abrams, partner at Numerof and Associates, explained.
Cancer patients could see as much as a $2,000 jump in medication costs for a 24-week supply, if a mere 25% pharma tariff were imposed, according to recent analysis from ING.
The potential withdrawal of generic drug manufacturers from the US could also lead to drug shortages for American patients. About 90% of the medications prescribed in US pharmacies are generic or biosimilar[2].
Americans are already grappling with the costs of healthcare. A quarter admit they can't afford their prescribed medications, and 11% can't meet their healthcare expenses[2]. Should Trump enforce pharmaceutical tariffs, public health experts predict a rise in insurance premiums and increased pressures on patients.
"They're going to spread that out among anyone paying insurance as a whole. That's the whole concept of insurance," Lee summarized[2].
Repercussions could extend to drugs manufactured in Europe, already subjected to a 10% tariff, potentially rising when location-specific tariffs kick in.
Stay tuned for updates. The consequences of pharmaceutical tariffs remain to be seen, but what's clear is the repercussions could be severe.
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- The US-China trade spat, instigated by tariffs, is causing concerns in the pharmaceutical industry, with potential impacts on American health.
- A significant percentage of essential medications are imported, and the Trump administration's investigation into medication imports has been triggered due to a domestic shortage being considered a security threat.
- The pharmaceutical sector has so far eluded Trump's reciprocal tariffs, but emerging sectoral levies indicate otherwise.
- In the short term, consumers are sheltered from rising prices due to a delay in the complex pharmaceutical supply chain, but pharmaceutical corporations may struggle to absorb these costs indefinitely.
- Under pressure to meet their fiduciary duties, pharmaceutical companies might respond by renegotiating drug prices or raising insurance premiums, which could affect patients.
- The United States relies on China for up to 80% of active pharmaceutical ingredients, particularly for generic antibiotics, where the dependence is as high as 90%.
- Tariffs on China will disproportionately impact low-income communities, as generic drugs, which are cheaper, are targeted.
- According to ING's analysis, cancer patients could face a $2,000 increase in medication costs for a 24-week supply if a 25% tariff on pharmaceuticals were imposed.
- The withdrawal of generic drug manufacturers from the US could lead to drug shortages for American patients, as about 90% of the medications prescribed in US pharmacies are generic or biosimilar.
- Public health experts forecast a rise in insurance premiums and increased pressures on patients should Trump enforce pharmaceutical tariffs.
- Repercussions could also extend to drugs manufactured in Europe, subject to a 10% tariff that may escalate when location-specific tariffs become effective.
