- Proposed Tariffs Impact: President Trump’s proposal to impose tariffs of up to 250% on pharmaceuticals aims to shift production to the US but would likely increase drug prices for consumers, lead to shortages, and hinder long-term drug innovation.
- Market Dynamics: The pharmaceutical market consists of branded and generic drugs, with generics making up 90% of prescriptions but only 10% of spending. Tariffs would disproportionately affect generics, pushing up costs and potentially resulting in consumers opting for more expensive branded alternatives.
- Innovation and Supply Chain Concerns: Increased costs from tariffs could slow drug development, particularly for expensive orphan drugs. While firms may restructure to mitigate tariff impacts, this could lead to drug shortages in the short term, ultimately raising prices and risking consumer access to essential medications.
Source Tax Foundation
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