Experts Warn Tariffs Could Negatively Impact 'Pretty Fragile Supply' Of Generic Drugs

• With pharmaceutical tariffs expected to be announced in the next 30 to 60 days, experts are warning they could negatively impact the "pretty fragile supply" of generic drugs
• The financial consequences of the levies on countries like China and India, which make many of the ingredients necessary for the drugs, may be so dire that the companies stop doing business with the U.S. entirely
• This could have massive consequences, as 90% of medications prescribed in the U.S. are generic

When President Donald Trump announced his first round of tariffs on April 2, pharmaceuticals were exempted. But at an April 8 dinner of the National Republican Congressional Committee, he told attendees that "major" pharmaceutical tariffs would be announced "very shortly." Now, experts are warning that the imposition of those levies could lead to major shortages and price increases for generic drugs.

According to CNN, generic drug companies are already struggling to deal with increasing competition and tight profit margins. Adding hefty levies on top of those existing issues could leave these companies in a position where they'd be unable to recoup the additional expenses, and therefore unable to do business in the U.S.  

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"A resilient and reliable generic medicines supply chain is critical to patient health, U.S. healthcare and national security interests. Tariffs, however, will only amplify the problems that already exist in the U.S. market for affordable medicines. Without substantive regulatory and reimbursement changes to the U.S. market, tariffs will exacerbate current shortages that hinder patient access today, John Murphy III, CEO of the Association for Accessible Medicines, said in a statement.  

There are currently over 250 drug shortages in the U.S., down from the all-time high of 323 in early 2024. According to the American Society of Health-System Pharmacists, shortages of antibiotics are a particular problem. 

And it's poised to get worse. Rena Conti, an associate professor at Boston University, told CNN that there's already "a pretty fragile supply" of generic drugs in general, as nearly 40% of generic medications have just one or two companies making their ingredients. If these factories are hit by tariffs or forced to shut down by rising prices, we could see a huge drop in supply and/or a huge spike in prices.

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For the American consumer, that's bad news. Generic drugs make up about 90% of the medications prescribed in this country. "The pain will ultimately be borne by the consumer, by the patient," Arthur Wong, managing director for US health care practice at S&P Global, told CNN.

These warnings have fallen on deaf ears among the Trump administration. Earlier this month, officials began an investigation into pharmaceutical imports, hoping to set the stage for future tariffs established on national security grounds. The probe must be completed within 270 days, though results may be expected earlier. 

Trump told reporters on April 13 that the investigation and resulting tariffs were necessary safeguards. "We're going to have our drugs made in the United States, so that in case of war, in case of whatever, we're not relying on China and various other countries, which is not a good idea," he said.  

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But experts aren't convinced that things will play out the way the Trump administration hopes. Evan Seigerman, a pharmaceuticals analyst with BMO Capital Markets, told CNN, "Given the complexity of the Pharma supply chain, we do not expect the industry to make any major changes." 

Kathleen Jaeger, US spokesperson for the Indian Pharmaceutical Alliance, agreed with Seigerman, saying, "If large tariffs are imposed, they will trigger substantially more drug shortages, cause greater US dependence on China for life-saving medications, and delay Indian companies' investments in America." India is a major global supplier of generic drugs, and the US, in particular, is heavily reliant on the country to meet demand. 

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