A proposed 25% tariff on pharmaceutical imports to the United States could raise annual drug costs by nearly $51 billion, according to a study for the Pharmaceutical Research and Manufacturers of America, Reuters reported.
The analysis, conducted by Ernst & Young and reviewed exclusively by Reuters, outlined the potential consequences of levies being considered by the Trump administration to boost domestic drug manufacturing.
Tariffs could also drive up consumer prices by as much as 12.9%, the report showed.
In 2023, the US imported $203 billion worth of pharmaceutical products, with 73% of those imports originating from Europe, including major supplies from Ireland, Germany, and Switzerland.
According to the report, any move to apply tariffs could strain an already pressured healthcare system, especially if the full costs are passed on to patients.
Generic drugs, which account for around 90% of all prescriptions but just 13% of total spending, will notably be impacted. These medications are largely manufactured in countries such as India and China and operate with thin profit margins, making them less able to absorb the shock of new tariffs.
The report warns that patients relying on generics, particularly those in lower-income communities, could face immediate cost increases and reduced access.
Beyond price hikes, the report highlights the risk of worsening drug shortages. Ongoing supply issues in the US could be exacerbated if generic drug manufacturers scale back or exit the market due to financial pressures. Essential medications, including certain cancer treatments, may become harder to obtain.
Domestic drug production would also be negatively impacted by the tariffs, with Ernst & Young estimating that US-based manufacturing costs would rise by 4.1%.
Pharmaceutical companies have urged a gradual implementation of any tariff policy to avoid financial disruptions. Some firms are also seeking exemptions.