Hospitals brace for rising drug costs amid tariffs: 6 things to know

In its latest drug expenditure forecast, the American Society of Health-System Pharmacists  identified potential pharmaceutical tariffs as a policy threat that could drive up hospital drug costs and worsen supply chain instability. 

The American Hospital Association, in a May 6 letter to the Commerce Department, echoed similar concerns, urging the government to preserve tariff exemptions to avoid further disruption to patient care and drug supply chains. 

Here are five more things to know:

1. The ASHP identified tariffs as the top policy risk that could raise drug prices in 2025. This is because the U.S. relies heavily on global sourcing, and tariffs could raise costs directly on finished drugs or indirectly through increased prices for active pharmaceutical ingredients and other essential components, the report said. 
   
   The report also projected that drug expenditures in nonfederal hospitals will rise 2% to 4% in 2025. In addition, one of the most pressing concerns the report outlined was how more hospitals may lose eligibility for 340B discounts due to declining Medicaid reimbursement. 
   
2. The organization also noted that while tariffs on China would likely have a limited impact on national drug spending due to generic drugs’ small share of total expenditures, tariffs on other countries — including India and European Union nations — would be more disruptive, as these regions are key suppliers of finished drugs and APIs.
   
   
3. In its letter to the Commerce Department, the AHA called for federal policymakers to keep pharmaceuticals and APIs exempt from tariffs, especially products that are already in shortage or where international suppliers dominate.
   
   
4. According to the AHA, a recent survey of healthcare experts found that 82% expect hospital costs to increase by at least 15% if pharmaceutical tariffs are imposed, and 90% of experts expect procurement disruptions.
   
   
5. The AHA also said as of Q1 in 2025, there are 270 drugs on the active shortage list, including intravenous fluids that are still in short supply due to disruptions from the Baxter plant closure during Hurricane Helene. The AHA emphasized that additional trade escalations could exacerbate shortages, endangering patient care and inflating hospital costs for crucial treatments.