Trump tariffs 'would strain the pharma supply chain'

Pharma trade organisations in the US have told President Trump that tariffs such as the 10% levy on Chinese imports could drive up the cost of generic medicines, impact supply chains, and exacerbate drug shortages.
The Association for Accessible Medicines (AAM), an industry body for generic and biosimilar medicine manufacturers, and the Healthcare Distribution Alliance (HDA), which represents pharmaceutical distributors, said that these drugs rely on a global supply chain for base ingredients and finished products that – if disrupted – could make producing or sourcing some products non-viable.
Around half of the generic medicines that are used in the US are entirely manufactured overseas, along with four-fifths of active pharma ingredients (APIs), so across-the-board tariffs could have a major impact on the sector.
Along with the 10% tariff rate on China, Trump has also threatened to impose 25% on goods arriving from Canada and Mexico, although, that has been suspended for 30 days after the US neighbours hit back with tit-for-tat tariff plans and last-minute negotiations led to some new agreements on stricter border controls. Trump has also indicated that the EU could be next in line.
"The global supply chain for generic and biosimilar medicines is critically important for US patients," said John Murphy III, president and chief executive of the AAM.
"Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages," he added. "Generic manufacturers simply can't absorb new costs. Our manufacturers sell at an extremely low price, sometimes at a loss, and are increasingly forced to exit markets where they are underwater."
It is estimated that generics account for around 90% of all prescriptions filled in the US, according to the organisation, which claims that the overall value of all generic sales has gone down by $6.4 billion in five years – despite growth in volume and new generic launches – due to relentless downward pricing pressure.
It has urged the Trump administration "to follow their past practice and work with our industry on constructive policies and regulatory reforms that will bolster the resiliency and vibrancy of this critical healthcare market to the benefit of the American economy, lower overall healthcare costs, and keep America's patients healthy."
A similar argument has been made by the HDA, which maintains that pharma tariffs could strain the pharma supply chain and adversely affect American patients, either through increased medical product costs or manufacturers leaving the market.
"Distributors and generic manufacturers cannot absorb the rising costs of broad tariffs," it said in a statement. "It is worth noting that distributors operate on low profit margins – 0.3%. As a result, the US will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programmes."
One of Trump's arguments for tariffs is that they could encourage more companies to site manufacturing within the US, which does tie in with longstanding concerns about US reliance on overseas suppliers for medicines. That would likely be a delayed benefit, however, and would have to be balanced against near-term impacts on patients.
HDA is calling for the US government to establish exemptions for pharma products, as well as long implementation timelines to maintain "the safe and efficient delivery of approximately 10 million medicines and healthcare products every day."
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