A latest media report indicates that the Trump administration has proposed steep tariffs on imported medicines to the extent that the officials even suggested duties of up to 200 per cent on some drugs.
Why Would This Happen?
If this gets imposed then this would create a dramatic shift in the economy as most of the medicines which are presently entering the US market are duty-free.
Moving ahead, the administration has invoked national security provisions under Section 232 of the US Trade Expansion Act of 1962, arguing that America needs to boost domestic drug manufacturing in the media report.
Earlier, during COVID-19 pandemic, they faced highlighted shortages and heavy reliance on imports, which Washington now sees as a strategic vulnerability.
Analysts warn the move could raise prices and disrupt supply chains. ING’s Diederik Stadig noted that even a 25 per cent tariff could increase US drug costs by 10–14 per cent, with low-income households and older patients most affected.
How Does This Impact The Prices?
After this implementation, Generic medicine, which makes up over 90 per cent of US prescriptions, would be hit hardest as these manufacturers work on thin margins.
For India this matters as it is one of the world’s biggest suppliers of affordable generic medicines and active pharmaceutical ingredients (APIs).
The US has currently “excluded” Indian generics from immediate tariff enforcement because they are “crucial for affordable care” in America, said Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance.
So far, India accounts for around 6 per cent of US pharmaceutical imports, but its role is critical as many essential drugs depend on Indian inputs. Past disruptions have shown the risks: a temporary pause at an Indian factory once caused chemotherapy shortages in the US, noted by Sandeep Pandey, the co-founder of Basav Capital.
When it comes to global pharma production, it has shifted to countries like India, China, Ireland, and Switzerland over the decades.
So, it would be expensive and slow to bring manufacturing back to the US, according to the experts.
Producing all key medicines domestically would be ideal, but “it costs a lot of money” and would make drugs more expensive for patients as explained by Marta Wosinska of the Brookings Institution.
In the meantime, industry and legal pushback
Big pharma companies such as Roche and Johnson & Johnson have announced multi-billion-dollar investments in US operations.
Although experts think otherwise as they point out that this will not immediately replace imported active ingredients.
It appears that the proposed tariffs are already facing legal hurdles as the US appeals court recently ruled that such sweeping measures require Congressional approval.
So the experts believe that the case is likely to reach the Supreme Court, adding to uncertainty for global drugmakers.
For now, the disruption may be delayed because many companies have stockpiled inventories.
But, US drug prices are set to rise if tariffs of even 25–50 per cent are imposed in the coming years.
The immediate threat seems limited for India, but any shift in US policy could have major consequences for India’s $25 billion pharma export industry, Jain cautioned.
