Recent tariffs aimed at encouraging U.S. domestic manufacturing and production have raised concerns about their effectiveness in ensuring immediate supply chain resiliency.
Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists, told Becker’s that while the organization supports expanding domestic manufacturing, he cautioned that this approach does not guarantee quick fixes. The process of ramping up U.S. production, particularly for essential drug ingredients, can take years to implement, he said.
Risk of shortages
Mr. Kraus said that, while the current tariffs do not apply to finished drug products or active pharmaceutical ingredients, key starting materials often sourced from China are still affected.
“Building a pharmaceutical manufacturing plant is a four- or five-year undertaking,” he said. “And so, in the meantime, until you have that capacity, the tariff is just increasing the risk of a shortage.”
Mr. Kraus also pointed out that the new tariffs could lead to cost increases, particularly for generic drug manufacturers who have slim profit margins, making absorbing higher costs more challenging.
“If you have to pay a higher cost because of the tariff for a generic manufacturer, those are very slim-margin products, and so they don’t have the ability to absorb as much of that increase,” Mr. Kraus explained. “As a result, you might have to make a decision about exiting the market for that type of drug, and we see manufacturers already doing that before the tariffs.”
Erin Fox, PharmD, associate chief pharmacy officer at Salt Lake City-based University of Utah Health, echoed concerns about drug shortages, particularly in the context of injectable medications, ABC News reported April 9.
“An injectable product might only have two to three suppliers, max,” Dr. Fox said. She added that medicines people take everyday in pill form are less likely to be impacted because there are many suppliers of those products.
She also said that while most generic drug companies have a six- to 12-month supply of active pharmaceutical ingredients, the tariffs will have a long-term effect when it comes time to purchase additional supplies.
Cost increases
Ernie Tedeschi, director of economics at The Budget Lab at Yale (University), a nonpartisan policy research center, told ABC that an assessment from the Lab found that a 25% tariff would raise pharmaceutical costs by 15% on average.
“Based on our assessment, costs for prescription drugs would rise by an average of around $600 per year per household in the United States,” he said.
Although President Donald Trump announced April 9 a 90-day pause on some trading partners, he said April 8 that he is still serious about imposing tariffs on pharmaceuticals to boost U.S. drug manufacturing. In addition, he raised China’s tariff to 145%, Bloomberg reported April 9. This follows the country’s retaliation placing an 80% tariff on U.S. imports.
“We’re going to want to put tariffs on the pharmaceutical companies, and they’re going to all want to come back,” President Trump said, according to ABC.
Risks with U.S. domestic manufacturing
Mr. Kraus also addressed concerns over domestic manufacturing of essential drugs, especially in light of the sudden IV fluid shortage that began in late September 2024.
He emphasized that while domestic manufacturing entirely based in the U.S. may seem like a solution to supply chain issues and increasing supply chain resiliency, it doesn’t necessarily ensure the elimination of shortages.
“With the IV fluids shortage that we had at the end of last year, one thing to keep in mind is that those were domestic manufactured drugs, right? Just merely being domestic manufactured doesn’t mean that it’s a secure supply chain. It can help in some circumstances, but what actually ends up helping secure a supply chain is having diversity in your supply chain, so that when there’s a problem, you have access from somewhere else,” he said.
