A report commissioned by the Pharmaceutical Research and Manufacturers of America reveals that a 25% tariff on pharmaceutical imports to the U.S. could increase drug costs by nearly $51 billion annually, potentially raising prices by up to 12.9%. The analysis by Ernst & Young shows that in 2023, the U.S. imported $203 billion in pharmaceutical products, with 73% coming from Europe. The U.S. pharmaceutical industry had total sales of $393 billion that year.
The pharmaceutical lobby argues against tariffs, as they could hinder efforts to boost domestic manufacturing, a goal of President Trump. The Trump administration has threatened a 25% tariff on pharmaceutical imports, citing national security concerns over reliance on foreign drug production. Drugmakers are trying to show that high tariffs would hinder efforts to ramp up U.S. production and are proposing alternatives to the administration.
If tariffs are fully passed on to consumers, U.S. drug prices could increase by up to 12.9%. Approximately 30% of pharmaceutical imports were ingredients used in U.S. manufacturing, and tariffs on these would raise production costs by 4.1%. The report also highlights the potential risks to export-related jobs in the industry if higher input costs weaken demand for U.S. medicines.
The impact of possible retaliatory tariffs is not included in the report, but it is noted that the economic impact on U.S. producers would be significant. Drugmakers are lobbying for a phased-in approach to tariffs on imported pharmaceutical products and are seeking exemptions through direct talks with the U.S. government.
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