At my annual checkup last month, my doctor--someone who strongly believes in taking every possible precaution--urged me to lose 15 pounds, exercise more, and get more sleep.
In the same spirit, when renewing my prescriptions, he had the pharmacy fill them immediately--along with the next two refills.
Why the urgency? It appears that my doctor had been following the news about proposed tariffs on imported drugs and was concerned about how they might disrupt the supply chain. He did not want me to risk being unable to fill my prescription.
It turns out that my doctor understands economics as well as medicine. If President Trump follows through on his executive order to encourage U.S. drug manufacturing and imposes tariffs on drug imports, patients like me could face not only higher costs but also reduced access to medications.
Most drugs taken by people in the U.S. are generic drugs--the FDA estimates that proportion is over 90 percent. These medications are already highly affordable--typically just a few dollars per prescription--and they save health plans enormous sums. That translates into lower premiums and--for those insured through their employer--lower employer healthcare costs and ultimately higher wages.
Tariffs would jeopardize that system.
First, drug manufacturers cannot easily pick up and move their complex global supply chains back to the U.S. on short notice, which seems to be what the authors of the proposed tariff rules think would happen.
The incredible amount of uncertainty in the tariff regime at present means that manufacturers cannot make a rational decision about where to produce: Do they move their facilities back to the U.S.--at a considerable cost that would take several years to recoup--to avoid lower tariffs or do they take their chance that they will be lessened in the next administration?
Even if they choose to relocate, manufacturing in the U.S. is far more expensive, which is exactly why so many facilities moved overseas to begin with. For low-margin generics, those extra costs would have to be passed along to patients, either through higher insurance premiums or out-of-pocket costs.
The situation is even worse for biosimilars--the biologic drug equivalent of generics. These complex, often fragile medications are far costlier to produce and require specialized facilities. Relocating their production thousands of miles is not just expensive, it can be practically unworkable. In prior research, we found that manufacturing such drugs works best when done near the research labs that developed them. If those labs are in Europe or Asia, forcing production into the U.S. risks disrupting both innovation and access.
Tariffs on pharmaceuticals are a solution in search of a problem. They will not create domestic jobs. They will not improve the security of supply chains. And they certainly will not lower drug costs. Almost no one wins from this policy, but patients and employers will pay the price.
