As tensions rise between the U.S. and European Union over expanding tariffs, the pharmaceutical industry is urging both sides to exclude medical goods from these trade battles. With the possibility that the U.S. might include life-saving medicines in the ongoing tariff disputes, drugmakers fear that the prices of top-selling drugs could increase, potentially creating barriers to patient access.
Concerns Over Impact on Drug Prices
Pharmaceutical companies are engaging with U.S. officials to stress the potential consequences that tariffs could have on drug prices. Many of these companies argue that tariffs would undermine President Donald Trump’s efforts to lower drug costs and improve healthcare access, two priorities highlighted in his health-related executive orders. According to multiple sources with direct knowledge of the discussions, the industry is concerned that tariffs would significantly drive up costs for essential medications.
“The price increase due to tariffs would directly impact patients, raising access barriers,” said a senior executive at a European pharmaceutical company. “We are firmly delivering the message to the Trump administration and the European Union that patients will pay the price for tariffs.”
EU Concerns and the Global Supply Chain
The pharmaceutical industry has long been shielded from tariff wars, primarily due to the potential harm to public health. However, with the growing trade tensions between the U.S. and EU, there are now fears that essential drugs could become collateral damage. Pharmaceutical companies are also lobbying the European Commission to resist retaliatory tariffs if President Trump includes medicines in the conflict. The argument being made is that interrupting the interconnected global supply chains for these drugs would harm patient access to critical treatments.
“Western countries have interconnected supply chains in this sector,” said a senior executive at a large European drugmaker. “Interrupting these flows will hurt patient access to lifesaving medicines. It’s a lose-lose situation.”
Many of the world’s most vital medications are produced in Europe, with the U.S. relying on these imports for drugs like Novo Nordisk’s Wegovy (for weight loss) and Merck’s Keytruda (for cancer treatment). Drugs like these contribute billions of dollars in revenue, and tariffs could significantly impact both production and cost for U.S. consumers.
Impacts on U.S. Drug Manufacturing
Some drug companies are considering increasing domestic production within the U.S. to mitigate potential tariff issues. Novo Nordisk, for example, has invested $4.1 billion to expand its production in North Carolina, acknowledging that short-term impacts from tariffs are inevitable but manageable.
“We will continue to expand manufacturing domestically,” said Novo Nordisk’s CEO, Lars Fruergaard Jørgensen. “While tariffs could impact us in the short term, the long-term focus is on increasing production in the U.S.”
Cost Implications for U.S. Healthcare
If tariffs were imposed, the U.S. government, which is a major buyer of drugs through Medicare and Medicaid programs, could face higher drug prices. This could offset efforts to reduce the cost of medicines for patients who rely on government-funded health programs.
Emily Field, head of European pharma equity research at Barclays, noted that tariff concerns regarding prescription drugs are now being raised frequently by clients. This was previously considered a minor risk, but the escalating situation has changed that perception.
Pharmaceutical Industry Resistance
The pharmaceutical industry is pushing back against the potential shift in U.S. trade policy, emphasizing that this is a sector where tariff imposition would harm public health, disrupt supply chains, and lead to price increases. While Trump has occasionally delayed or suspended tariffs after announcing them, the ongoing trade disputes have created uncertainty for the pharma industry. With companies like Eli Lilly also announcing significant investments in U.S.-based production facilities, the situation remains in flux.
One European drugmaker executive expressed that shifting more manufacturing to the U.S. would divert critical funds away from research into future medicines, calling it a “fix for something that isn’t broken.”
Looking Ahead: Potential for More Manufacturing in the U.S.
While some companies may choose to invest in domestic manufacturing as a solution, the high cost and lengthy timelines associated with building U.S. production facilities make it difficult for many drugmakers to follow suit. The cost of constructing a new facility can run up to $2 billion and take 5 to 10 years to become operational, which could slow down the industry’s ability to adapt quickly.
In the meantime, many pharmaceutical companies are hoping that the U.S. and EU will recognize the detrimental effects of including medicines in tariff disputes and find a way to exempt them from the ongoing trade wars. As the situation evolves, it remains uncertain how the global pharmaceutical supply chain will be impacted by these tariff negotiations.
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