Introduction to the Tariff Storm
In the dim basement of a Salt Lake City pharmacy, hundreds of amber-colored plastic pill bottles sit stacked in rows, one man’s defensive wall in a tariff war.
Independent pharmacist Benjamin Jolley and his colleagues worry that the tariffs, aimed at bringing drug production to the United States, could instead drive companies out of business while raising prices and creating more of the drug shortages that have plagued American patients for several years.
The Rationale Behind Tariffs
In principle, Jolley said, using tariffs to push manufacturing from China and India to the U.S. makes sense. In the event of war, China could quickly stop all exports to the United States. “I understand the rationale for tariffs. I’m not sure that we’re gonna do it the right way,” Jolley said. “And I am definitely sure that it’s going to raise the price that I pay my suppliers.”
The Impact on Independent Pharmacists
Squeezed by insurers and middlemen, independent pharmacists such as Jolley find themselves on the front lines of a tariff storm. Nearly everyone down the line — drugmakers, pharmacies, wholesalers, and middlemen — opposes most tariffs. Slashing drug imports could trigger widespread shortages, experts said, because of America’s dependence on Chinese- and Indian-made chemical ingredients, which form the critical building blocks of many medicines.
Industry Reactions
Industry officials caution that steep tariffs on raw materials and finished pharmaceuticals could make drugs more expensive. “Big ships don’t change course overnight,” said Robin Feldman, a UC Law San Francisco professor who writes about prescription drug issues. “Even if companies pledge to bring manufacturing home, it will take time to get them up and running. The key will be to avoid damage to industry and pain to consumers in the process.”
Trump’s Statement
Trump on April 8 said he would soon announce “a major tariff on pharmaceuticals,” which have been largely tariff-free in the U.S. for 30 years. “When they hear that, they will leave China,” he said. The U.S. imported $213 billion worth of medicines in 2024 — from China but also India, Europe, and other areas. Prescription drugs sit ready to be distributed to patients at 986 Pharmacy in Alhambra, California. ((Jackie Fortiér/KFF Health News)/KFF Health News/TNS)
The Effect on Drug Prices
Trump’s statement sent drugmakers scrambling to figure out whether he was serious, and whether some tariffs would be levied more narrowly, since many parts of the U.S. drug supply chain are fragile, drug shortages are common, and upheaval at the FDA leaves questions about whether its staffing is adequate to inspect factories, where quality problems can lead to supply chain crises. On May 12, Trump signed an executive order asking drugmakers to bring down the prices Americans pay for prescriptions, to put them in line with prices in other countries.
Stockpiling Medications
Meanwhile, pharmacists predict even the 10% tariffs Trump has demanded will hurt: Jolley said a potential increase of up to 30 cents a vial is not a king’s ransom, but it adds up when you’re a small pharmacy that fills 50,000 prescriptions a year. “The one word that I would say right now to describe tariffs is ‘uncertainty,’” said Scott Pace, a pharmacist and owner of Kavanaugh Pharmacy in Little Rock, Arkansas. To weather price fluctuations, Pace stocked up on the drugs his pharmacy dispenses most. Pills sit in the tray of a pill-counting machine at 986 Pharmacy in Alhambra, California. ((Jackie Fortiér/KFF Health News)/KFF Health News/TNS)
The Fate of Independent Pharmacies
Pace said tariffs could be the death knell for the many independent pharmacies that exist on “razor-thin margins” — unless reimbursements rise to keep up with higher costs. Unlike other retailers, pharmacies can’t pass along such costs to patients. Their payments are set by health insurers and pharmacy benefit managers largely owned by insurance conglomerates, who act as middlemen between drug manufacturers and purchasers.
Expert Opinions
Narrowly focused tariffs might work in some cases, said Marta Wosińska, a senior fellow at the Brookings Institution’s Center on Health Policy. For example, while drug manufacturing plants can cost $1 billion and take three to five years to set up, it would be relatively cheap to build a syringe factory — a business American manufacturers abandoned during the covid-19 pandemic because China was dumping its products here, Wosińska said.
Conclusion
The imposition of tariffs on pharmaceuticals is a complex issue with far-reaching consequences for the healthcare industry and patients. While the intention behind the tariffs is to bring drug production back to the United States, the reality is that it could lead to increased costs, drug shortages, and decreased access to essential medications. As the situation continues to unfold, it is crucial for policymakers to consider the potential effects of their decisions on the healthcare system and the people it serves.
FAQs
Q: What is the main concern of independent pharmacists regarding tariffs?
A: Independent pharmacists are concerned that tariffs will increase the cost of medications, leading to higher prices for patients and decreased profit margins for pharmacies.
Q: How do tariffs affect the pharmaceutical industry?
A: Tariffs can lead to increased costs for raw materials and finished pharmaceuticals, potentially making drugs more expensive for consumers.
Q: What is the potential impact of tariffs on drug shortages?
A: Tariffs could trigger widespread shortages due to America’s dependence on Chinese- and Indian-made chemical ingredients.
Q: How do European countries differ from the United States in terms of drug pricing?
A: European countries pay less for brand-name products and more for generics compared to the United States.
